Tag Archives: oil sector

Is a lack of oil refineries boosting global fuel prices? Al Jazeera asked us, in Houston & Berlin

From: Inside Story, 20 July 2020 – The Saudi Arabian foreign minister, in Tokyo, said the problem with high prices at the pump is a lack of global capacity to refine crude. Out panal included::

  • Bob Cavnar – Energy and oil industry analyst – Houston
  • Thomas O’Donnell – Energy and geopolitical analyst – Berlin
  • Josh Young – Chief investment officer at Bison Interests – Houston

Presenter: Nastasya Tay of Al Jazeera – Doha

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AlJazeera live: EU failes to agree on Russian oil embargo. With months of oil in storage, Druzhba inland refineries are no excuse.

Above ENGLISH Audio || Below ARABIC Video

You comments and critiques rae much appreciated. Tom O’D.

Asharq live: No EU embargo agreed vs. Russian oil. Some too cautious (Germany), others pro-Putin (Hungary). Yet, EU has months of oil in storage. [EN audio, AR video]

Above: ENGLISH Audio }} Below: ARABIC video
I was on with the expert, Sona Muzikarova,a chief economist at GLOBSEC in Bratislava, Slovakia.

We discussed the EU’s repeated failures to impose an embargo in Russian oil. Now, (after Monday 30 May) they are considering a sea-borne-oil-only embargo.

Le dije a Radio Clarín Buenos Aires: Putin amenaza con cortarle el gas a la UE/Alemania, pero no tiene otra fuente de dinero. Si lo hace, Biden y la UE organizarán un “Gas-Lift” … [Spanish]

Lo sentimos, la calidad de la comunicación celular desde Alemania no es buena. Por lo tanto, he escrito mi respuesta larga a la primera pregunta a continuación. Las otras preguntas también están abajo. Muchas gracias a los periodistas de Radio Clarín y La Nacion en Argentina (y en París).

Re: Urgente Pedido de Entrevista Periodística – Corresponsales Clarín y La Nación – Argentina

De Maria E… … Fri, Apr 29, 11:50 PM

Dr. O ´Donnell, … Estas son las preguntas para la entrevista del domingo:

1¿Alemania tiene otra posibilidad que no sea seguir comprando el gas ruso? ¿Cuáles serían sus otras opciones?

Repuesta: Antes que nada, muchas gracias por esta oportunidad de hablar con su audiencia argentina.

Pues, debo señalar que hay dos problemas diferentes: el suministro de petróleo ruso a Alemania y Europa y el suministro de gas ruso a Alemania y Europa. Me preguntas por el gas. El gas es mucho más difícil para Europa y para Alemania que el petróleo Hay dos casos: una reducción gradual o parcial de gas o un corte inmediato.

Un corte gradual se puede manejar bastante bien. Ahora Putin está tratando de dividir y conquistar Europa cortando el suministro de gas a Polonia y Bulgaria.

Un recorte inmediato, ya sea por parte de Putin o debido a las sanciones de la UE, crearía una gran crisis energética en Europa. Sin embargo, es importante entender que, al final, Putin está en una posición mucho más débil.

Si Putin corta todos los suministros de gas a Europa, ahora no hay suficiente gas en el mercado mundial para compensar. Pero Occidente, y especialmente EE. UU., la administración Biden, se ha estado preparando para esto al menos dos meses antes de que Putin invadiera Ucrania, incluso antes de que Europa creyera las advertencias de EE. UU. de que Putin atacaría Ucrania.

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Would EU sanctions on Russian oil cost Germany “too much”? No. Scholz & Habeck pose the wrong questions. [Asharq/Bloomberg live: En & Ar]

Above: English Audio || Below: Arabic Video
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24 April 2022: My Asharq/live evening TV news interview is a bit over seven minutes.

Would an oil embargo be “effective”?

I respond, What is “effective”? Clearly it would not end the war. However, a Ukranian soldier who decides to give his life to resist the Russian invaders has no illusion that his or her sacrifice, on its own, will end the war. But, he will makes what contribution he can.

So, the German leadership refuses to send Ukraine heavy weapons, and certainly won’t send German troops. However, Germany and the EU can at least step up and make this contribution – sanctionRussian oil now. This will greatly hinder Putin’s ability, within two to three months, to finance his war.

  • We discuss the question raised by the German leadership – by Chancellor Scholz (SPD party), Energy and Environment Minister Habeck (Greens) and Finance Minister Lindner (FDP liberals) – that supposedly an embargo in Russian oil (or gas) would do more harm to German citizens than to the Russian leadership.
  • The argument heard repeatedly from Berlin is that this is “not worth it” and also, that such an embargo it “would not end the war.”
  • Also, I answer the question of how much oil could Putin’s Russia divert from Europe to India if the EU and Germany embargoed oil.

I think I posed useful answers to these questions given the time we had. Your thoughts and critiques are welcomed, and solicited.

Best, Tom O’Donnell, Berlin

My Al Jazeera: Yes, the EU can embargo Russian oil now: OPEC’s role, Germany’s Druzhba refineries OK, SPRs, weak demand. [Arabic & English]

Above: ENGLISH AUDIO }} Below: ARABIC VIDEO

Can the EU embargo Russian oil now? I explain yes, it can, and how. Also what OPEC will do. My Live Al Jazeera interview on 12.03.22 (ca. 00:20 CET, 18:20 EST). Here are the main points coved, quickly, from memory.

Afer an initial price spike from an EU embargo, the IEA’s SPR – strategic pertroleum reserves – can make up any shortall of oil for some weeks or so or months while OPEC and the USA increase production.

Especially the UAE and most especially Saudi Arabia have significant excess capacity, at least 2 million barrel/day (mbd) they can add to the market. Oil is fungable, there is one global market, so in principle the shock of an embargo could be ended rather quickly.

Regarding Germany: it is the main EU Member state now opposed to an immediate Russian oil embargo. However, I am confident it is being overly cautious and that Germany can do this now without significant disruptions.

In particular, Germany worries about the fact that several refineries in Germany and Central Europe are located inland, and supplied by the Druzhba Pipeline bringing about 700,000 barrels per day of Urals grade oil (i.e., hevier, sulferous oil) as their feedstock. So, the German government is claiming it would be very difficult to supply these refineries. However, this is not such a problem.

Consider that two German refineries, in the South of Germany, Bavaria for example; these two refineries are on a second pipeline, the Transalpine pipeline. This comes from the port of Trieste Italy. So these two refineries are fine. In an embargo of Russian Druzhba Pipeline oil they can be supplied from Trieste.

However, the refinery the German leaders most worry about is called Svedt, and it is located in Germany near the Polish border, also on the Druzhba pipeline [i.e., PCK Oil Refinery, at Schwedt, Oder River, Brandenburg State, Germany]. However, I can make some immediate points about this refinery.

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My Nexus TV: Sanctions hobble Putin; we agreed in London, Berlin, Kyiv & Moscow | Me: Putin must sell oil/gas at any price; they’ll be sanctioned too

My comments start at timestamp 15:20.

TRT’s Nexus with Matthew Moore, was recorded 30 April 2021, from London.

My fellow guests were:

  • Patrick Boyle, Professor of Finance at Kings College — London, UK
  • Andrii Dligach, Co-Founder of the Centre for Economic Recovery — Kyiv, Ukraine
  • Maxum Bouev, Vice Rector at the New Economic School — Moscow, Russia
  • Myself, Thomas O’Donnell, Energy and Geopolitical Analyst, also teaching in — Berlin, Germany

My further comment: Russian oil can perfectly well be sanctioned now by Europe, and they should do it. It would deprive Putin’s regime of his main remaining source of income. Natural gas will be more difficult, but it is also possible to be sanctoned. It shoudl be done.

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My Al Jazeera: Global oil price expectations due to Russia’s war on Ukraine [Arabic & English]

Here’s: i) English audio ii) Arabic video iii) my English blog points

My Al Jazeera, Arabic 07 March 2022 live:The 2022 Global Oil Crisis of Russia’s Ukraine war has begun.

Al Jazeera asked me, about the Russian Foreign minister’s declaration that oil prices could go to $300/barrel if the West sanctions its oil. [Note: this interview was a week ago; but still relevant.]

I said: Finally the Russian minister has said something true. However, I explained that USA sanctions – as the EU also wanted – initially (Note: at the time of this interview, President Biden had not yet banned USA imports of Russian oil) had included exemptions from the larger SWIFT sanctions on Russian bank transactions specifically allowing continued payments for Russian oil and gas exports. And, last week, Putin, for his part, specifically also said he would not cut off Russian oil and gas deliveries to the West. So, why do we suddenly have the beginnings of a crisis of undersupply of Russian oil to the “”‘Global Barrel’ (dot com)”” oil market? It turned out that global-oil market actors themselves – the western banks that finance purchases, the spot market traders who make daily deals and oil-tanker owners who have to send their tankers to Russian ports to pick up oil – have broadly and voluntarily backed off from buying Russian oil. There are various reasons – there is over-compliance to sanctions, being super careful not to inadvertently violate the complex sanctions, reduce risk of sudden supply disruption from the Russian side, and also the fact that no tanker will pick up oil in a war zone or nearby without appropriate insurance, etc. There are also reputational issues of being seen by civil society as engaging in war profiteering if an entity purchases what is now deeply discounted Russian crude. I also explained that the Strategic Petroleum Reserve (SPR) system of the OECD states, which should hold at minimum 90-days of the total imports of any OECD state’s oil imports, will soften the shortage of oil should the purchase of Russian oil be sanctioned by the USA and/or EU, or if Putin and Lavrov decide to cut off Russia’s oil supply to Europe.

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EU Gas Crisis: German elites chose Putin’s pipeline over Ukraine “risk” | My DW ‘Inside Europe’ interview (NPR syndicated)

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My thanks to Deutsche Welle’s (DW, German public broadcaster) Kate Laycock for this interview (and intrepid producer Helen). Their website link is below for this 25.02.22 podcast as war began

IE: Inside Europe, 2/25/2022 From: DW – Deutsche Welle Series: Inside Europe: News and Current Affairs ~ Weekly from DW

This week on the show: Russia-Ukraine war. UK sanctions on Russia. Russia gas. The mood in Russia. How ordinary people are struggling to get by…

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My CGTN TV: The growing EU v Russia asymmetry in energy trade. EU-USA nix oil/gas sanctions over Ukraine, fearing supply crisis.

I had a good live talk with CGTN TV hosts on my analysis of a growing “asymmetry” in energy relations between the EU and Russia.

Especially in natural gas, the EU is increasingly dependent on Russian supplies while Russia is decreasingly dependent on its EU market.

Under Putin, Russia and Gazprom have constantly worked not only to:

  1. Build new pipelines to Europe (principally via the Baltic Sea-to-Germany) so as to detour its exports around Ukraine. This has enabled Putin to committ his present massive aggression there without risking delivery of Gazprom gas to its European markets west of Ukraine. However it has also worked to
  2. Diversify its market for natural gas away from Europe. This includes 10-15-years of projects to build new major pipelines to China and Eurasia and plans for more still (e.g., Power of Siberia 2 pipeline), and to build large-scale LNG export terminals, owned mainly by Russia’s Novatek firm, in its Arctic regions and on Sakhalin Island in the far east. This gas is relatively sanctions-proofed in that it can be delivered by ship to any world market, though it mainly goes to Asia where LNG prices are generally highest.

I explain that this growing asymmetry is precisely why the USA-and-EU have NOT included energy sanctions in their package retaliating for Putin’s present war on Ukraine.

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My DW live: The US-German “Bad Deal” on Nord Stream 2 Pipeline

Here is my 21 July 2021 live interview on Germany’s Deutsche Welle about the new US-German deal, a “bad deal” on the Nord Stream 2 pipeline.

I told DW that the key reason the US has always opposed Nord Stream 2 (NS2) was that it undermines Ukraine’s security – as well as Poland’s and other eastern European and Baltic states’ security.

I told DW that one can argue with the Biden-Blinken assessment (as I have) that they “had to” waive sanctions on the Russian-owned NS2 company, insisting that the pipeline was going to be completed anyway. Indeed, German and Dutch regulators had already allowed work to proceed even when the insurance firm and commissioning firm had left due to sanction threats, and Berlin had promised it would be completed no matter the sanctions.

However, the additional factor, which US spokesmen cite only obliquely, is that Merkel’s government was evidently willing to deny Biden a show of transatlantic unity from which to confront Putin. This shows the extreme lengths Merkel’s government had gone to to insure success in her partnership with Putin to finish NS2..

For Moscow, the essential aim of this partnership has been to avoid the “risk” (as Russian officials have put it) of having to export its gas across Ukraine, a country Putin wants to annex and is now at war with.

For Berlin, the most essential aim of this partnership is to avoid the “risk” (as I have been told repeatedly) of having to import Russian gas via what has long been seen by German political and economic elites as an “insecure” Ukraine (although it is obviously Moscow responsible for this “insecurity”), and as an “unreliable” Ukraine (i.e., German elites had lost confidence in Ukraine to reform itself, or at least the willingness to risk the process).

This German pipeline partnership with Putin,, in other words, is a decision to pursue narrow-national interests. It elevates protection of Germany’s Russian gas supplies for its troubled domestic energy system, and protection of Russian gas supplies for its principal EU trading partners, above the interests of Ukraine’s security and independence as Putin pushes to reincorporate Ukraine into the Russian Federation.

Rather than showing solidarity by forcing Putin to continue shipping his gas to Germany and to other EU sates via Ukraine, the gas will now come directly to Germany. Germany will become the principal hub for distribution of Russian gas to Europe, and Berlin will “handle” any difficulties with Moscow and Putin. Of course, Berlin never consulted with the other EU Member states, much less Kyiv, on what amounts to its narrow-nationalist energy-security plan for Europe.

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

sinopec_station_china_newsbase_21jul17

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:
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“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.)

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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.”