My Wikistrat webinar transcript “Oil Price War & COVID” from a couple weeks ago is now available on their website as a PDF. Issues discussed include:
- Why did Moscow declare the “war”? [Note: Putin & Sechin’s initial boasts Russia would hold out for “years”, kill shale & end sanctions all stopped in only a couple days!]
- The Saudi response was sharply focused against Russian oil-pipeline markets in W Europe (Druzhba) & Asia. [I believe this focused Mr. Putin’s attention on economic realities as opposed to Mr. Sechin’s anger-driven desire for revenge against US sanctions that had inflated his (self-)image of Rosneft and Russian oil-market prowess when up against a concerted Saudi counter-war, and the prospects of various US responses. Reports are that Putin spend three days on the phone to undo this fiasco and, in the end, had to accept significant cuts to Russian output. See my GlobalBarrel.com post of last week explaining the initial, flawed Russian strategy.]
- The options Trump had to choose from undermine his long antipathy to OPEC. (Did he secretly offer Putin any Nord Stream 2, Ukraine or Venezuela sanctions relief? If so, Congress won’t approve.) Also: Big Oil (American Petroleum Institute) and W. Texas/other independent producers are pulling at Trump in two very different policy directions re. OPEC, tariffs, production controls, etc
- And more (esp. in the Q&A): probable impact on carbon mitigation policies, the China market for LNG, US shale’s financial and production future, etc.
Posted in Aramco, China, Economic Crisis, Energy and Geopolitics, Gazprom, geopolitics, Global Oil Market, international relations, LNG, Nord Stream, oil price war, Oil prices, OPEC, opec-plus, Putin, Rosneft, Russia, Sanctions, Saudi Arabia, Sechin, shale gas, shale oil, Uncategorized
Tagged China, Economics, Nord Stream, oil, oil price war, shale oil, USA
A Sinopec station in China. Sinopec and other big NOC’s are slashing prices to take business from Chna’s small private “Tea Pot” refiners.
Last week, I was quoted on my assessment of how China’s “Tea Pot” refineries (small, private outfits) will fare in the face of China’s big National Oil Companies (NOCs) cutting prices to grab the Tea Pots’ business. My main point to Newsbase reporter Saw Wright was that China is far from a completely “free market” and the state can be expected to weigh in on one side or another, complicating any outcome predictions based on market and/or tech strengths and weaknesses. I’m quoted a couple times near the article’s end, here:
Posted in China, Energy and Geopolitics, Global Oil Market, Global Oil system, Oil prices, Oil supply, OPEC, shale oil, Tight oil, Trade and Commerce, U.S. oil, Uncategorized
Tagged China, Economics, noc, oil sector, refineries, shale, tea pots
Gillian Rich at Investors’ Business Daily News (17 June 2016) writes a quite informative survey of the many new technological methods pushing the cost of US shale production ever downward. Here’s Gillian’s article. She asked me about the impact on OPEC producers and my central point (my quotes are below) was that it will be the high-tech, most-efficient producers (such as US shale) and NOT necessarily those with the largest and easiest-to-access proven reserves (e.g., countries such as Venezuela and much of OPEC, many corrupt Russian and Chinese state-dominated firms, etc.) that will set the pace in the new oil order
If the latter actors can’t find ways to innovate in technology and operational methods they will be at a disadvantage because shale production looks more like manufacturing than traditional oil extraction. Many OPEC and other state-owned firms never had to think like a combination of Henry Ford and Silicon Valley, but could instead count on huge, low-cost reserves, inefficient exploration and production and cheap local labor.
Eventually, the new shale methods will of course spread to promising shale fields in Argentina, China, Eastern/Central Europe and elsewhere; but this will require big advances in local infrastructure, training and government regulatory capacity. Again, things those countries must think about very seriously. Here are my quotes (from near the end of her long article).
New Oil Order
…. OPEC countries like Nigeria and Venezuela that haven’t invested in newer technology will be hurt by advances in the U.S., said Thomas O’Donnell, a senior energy analyst at the consulting firm Wikistrat. Russia also can’t exploit shale and Arctic assets because of economic sanctions that limit Westerners from helping develop the new fields.
Meanwhile, Saudi Arabia has low-cost production fields, and state-run oil company Saudi Aramco can bring in foreign experts knowledgeable about fracking and new technologies, he added.
Still, OPEC must now grapple with U.S. shale producers on the rebound, which could lead to volatility, O’Donnell said. “The oil order has changed. It’s conventional oil on one side, and new shale oil on the other.”
Posted in Energy and Geopolitics, Enhanced oil production, Global Oil Market, Global Oil system, High technology, Oil prices, OPEC, Saudi Arabia, shale gas, shale oil, The USA, Tight oil, Uncategorized, Venezuela oil
Tagged China, Energy, oil sector, OPEC, Saudi Arabia, United States, Venezuela
Last week, Energy Intelligence (EI) quoted me on China’s continued appetite for oil and gas investments in Latin America even with its own economic slowdown and LatAm’s many political upheavals. (Sincere thanks to EI for a PDF of their proprietary Energy Compass to share on my blog. You can access it below here.)
Some thoughts on China’s strategy: In the case of Venezuela, as the price of oil fell, Beijing quickly eased up on PDVSA’s repayment terms for its huge outstanding loans which are repayable in oil. This shows some willingness to help Venezuela cope with the falling market value of oil. Why? Because, mainly, it is the oil that China has always been laser-focused on – not making interest on these loans.
Generally, it is clear that new Chinese investments or loans are still possible in Latin America. In Venezuela however, Continue reading
Posted in Brazil, Chavez, China, Economic Crisis, Energy and Geopolitics, Faja of the Orinoco, Global Oil Market, Global Oil system, heavy oil, Hugo Chávez, Latin America, Oil prices, OPEC, PDVSA, PDVSA weakness, Rosneft, Russia, Sechin, shale oil, The USA, Uncategorized, Venezuela oil
Tagged Beijing, Caracas, Chavez, China, Energy, Heavy crude oil, Hugo Chávez, Latin America, Nicolás Maduro, oil sector, OPEC, PDVSA, Petróleos de Venezuela, United States, USA, Venezuela
Russian Production & Stakes in Venezuelan Oil Projects (40% stake is limit)
Last October & November I succeeded in interviewing several people in the Venezuelan private sector directly knowledgeable of Russian oil projects with PDVSA. Many Venezuelans wonder what all the Russians-known for their secrecy-are up to there. Some of my key findings are in Americas Quarterly‘s Winter 2016 edition. Read on …
Russia Is Beating China to Venezuela’s Oil Fields – By THOMAS W. O’DONNELL
The profits, politics and luck behind Russia’s growing footprint.
The late Venezuelan President Hugo Chávez, had long envisioned China becoming Venezuela’s biggest oil-sector production partner. So when Rafael Ramírez, then president of Petróleos de Venezuela, S.A. (PDVSA), announced in January 2013 that Russia would produce enough oil with PDVSA by 2021 to become “the biggest petroleum partner of our country,” very few people believed him. It sounded like empty hype.
Yet it turns out that Ramírez was serious. Three years later, Russian companies are already producing more oil in joint projects with PDVSA than their Chinese counterparts. Official figures are either unreliable or unavailable, but according to field data provided by Global Business Consultants (GBC), a Caracas-based energy consulting firm, Russia-Venezuela production as of late 2015 was 209,000 barrels per day (bpd), compared to China-Venezuela’s at a bit over 171,000 bpd.
Posted in Chavez, Chavez lagacy, China, Energy and Geopolitics, Energy and Geostrategy, Faja of the Orinoco, Global Oil Market, heavy oil, Hugo Chávez, international relations, PDVSA, PDVSA weakness, Putin, Rosneft, Russia, Sanctions, Sechin, Uncategorized, Venezuela oil, Zulia
Tagged China, geopolitics, Hugo Chávez, oil sector, PDVSA, Petróleos de Venezuela, Venezuela
Merkel and Obama at G7. Main topic was Russian threats to EU and Ukraine
An AICGS workshop with Dr. Thomas O’Donnell was held on May 27 in Washington, DC with a lively full-room attendance.
O’Donnell presented preliminary results of interviews he conducted in Washington during April and May to hear candid views of US energy-and-geopolitical experts on German and the EU energy policies. The main topics were (1) European natural-gas vulnerabilities in light of the Ukraine crisis and dependence on Russian supplies and (2) implications of Germany’s commitment to a transition to renewable energy called the Energiewende. Continue for Workshop PowerPoint & written Summary –> Continue reading
Posted in AICGS, Alternative energy, Energiewende, Energy and Environment, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, European Union, Gas globalization, Germany, Global Oil Market, Global Oil system, international relations, LNG, shale gas, shale oil, The USA, Tight oil, U.S. oil, Ukraine, unconventional energy
Tagged Berlin, Business and Economy, China, Energy, European Union, geopolitics, Germany, natural gas, OPEC, Thomas O'Donnell, United States, Washington
Presidents Rouhani of Iran and Putin of Russia holding discussions
(AICGS Analysis, by Tom O’Donnell) Since Russia’s president, Vladimir Putin, decided to annex Crimea and back east Ukrainian separatists with troops, many have worried he might use his “energy weapon” to counter U.S.-EU sanctions, as Russia supplies around a third of the EU’s natural gas imports. But what about Russian retaliation in the oil sector?
That’s hard to imagine. While gas is marketed in bi-lateral, pipeline-mediated relationships, oil is not. It’s liquid, fungible, and marketed in a unified open market—“the global barrel” [and name of this blog, T.O’D.]—which means there are no bi-lateral oil dependencies.
So, when EU leaders were cajoled by Germany’s Angela Merkel into joining the United States in applying sanctions, Russia could do little to retaliate from within the oil sector. In reality, it is the EU and the U.S., not Russia, that have an “oil weapon” in hand. And, the flurry of Russian oil diplomacy with OPEC, Iran and China over the past couple of weeks has a distinct whiff of desperation to it. Continue reading
Posted in AICGS, Aramco, China, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, Gas globalization, gas internationalization, Germany, Global Oil Market, Global Oil system, international relations, Iran nuclear, Iran sanctions, negotiations, Obama, Oil prices, OPEC, Putin, Rouhani, Russia, Sanctions, Saudi Arabia, shale oil, The USA, Ukraine, Venezuela oil
Tagged Ali Al-Naimi, Berlin, China, European Union, geopolitics, Germany, Iran, Middle East, natural gas, oil sector, OPEC, Putin, Sanctions against Iran, Saudi Arabia, United States, Venezuela, Vladimir Putin