Tag Archives: oil sector

China’s big NOCs slash prices to take market from private oil refiners ~ I’m quoted in “China Oil Week”

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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: 

The developments with Tea Pots in China now have ramifications for the Global Barrel oil market in this time of oversupply and low prices driven especially by US shale’s constant productivity improvement and its continued high-level production, … all of which OPEC and non-OPEC (esp. Russia) producers — the so-called “Vienna Group” — are desperately trying to counteract.

Feedback is always welcome!

 

“Energy independence” won’t free the USA from global oil market & geopolitics [I’m cited: CNNMoney]

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Credit: CNNMoney, 9 August 2016

Mr. Trump promises he’d use the USA’s shale-oil revolution to deliver “complete” independence from foreign oil, telling voters in May: “Imagine a world in which our foes and the oil cartels (sic) can no longer use energy as a weapon. Wouldn’t that be nice?” But, he is confusing two quite distinct things:

“Energy independence” – in the sense of the USA producing more oil than the country consumes – is indeed possible, even “tantalizingly close” as this CNNMoney article (Aug. 9, 2016, by Matt Egan) makes clear, citing myself and other experts.  For clarity, I’ll call this “net oil-exporter status.”

However, Donald Trump asks us to “imagine” he can use this net oil exporter status, to make the US independent of the global oil market and oil in geopolitics where our “foes” and “cartels” have leverage. Continue reading

How fast can Libyan oil recover? (I’m quoted by CNN)

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CNN 20 July 2016

The oil market remains glutted, with price in the mid-$40’s.  Despite furtive hopes over recent weeks  by the business press about “imminent re-balancing” of global supply v. demand and about “draw downs” of record-high global storage inventories, data reveal only incremental re-balancing has occurred since fall of 2014 when this all began. (And, from November 2014,  the Saudi’s responded by fighting for their market-share rather than for boosting price, which would have been impossible for OPEC to do on its own given the huge supply glut.)

Continue reading

New US tech squeezing oilfields & rivals [IBD quotes me]

U.S. oil companies are developing new technologies and techniques to produce oil cheaper and faster.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.”

Latin American Oil: Beijing Still Lending, But for How Long? – I’m quoted by Energy Compass

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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

Wikistrat Report “Saudi Arabia & the Future of Oil” cites my views

Wikistrat - my quote on US continued interestThis Wikistrat Report on the Saudi kingdom’s “reform” plans and the future of oil is from a press webinar I did on 17 May together with Dr. Ariel Cohen (Atlantic Council, Washington) and Prof. Shaul Mishal (Middle East Division, IDC Herzliya & Tel Aviv U.).  A nicely done report on oil market and geopolitical hot topics.

30May16 note: A couple typos I had found have been fixed by Wikistrat since I initially posted this Report.  The latest version is now linked here. – T.O’D.

Falling oil price & Saudi strategy: My Sky News interview (London)

Here’s my live interview recently on Sky News – the all-news UK channel. It just went up.

Here’s the gist: Years-long high prices brought the US shale revolution and other new higher-cost oil online like offshore of Brazil and Africa. This glut was already dropping prices when the Saudi’s decided in November 2014 that OPEC alone could not cut enough production to reverse the slide. So what to do if Russia and Mexico won’t join an OPEC cut? Continue reading