[M_B_S]

http://oilprice.com/Energy/Crude-Oil/Ar ... -Time.html

...The fact that a major Middle East oil exporter would hold such a conference on what has long been a verboten subject was quite remarkable and a dramatic change from decades of PO denial.

The two and a half day meeting was well attended by people from the GCC as well as other regional countries....


The going-in assumption was that “peak oil” will occur in the near future.
*********************************************

Now we know that they know we know it: PEAK OIL!

M_B_S

[ROCKMAN]

I read this article back then and didn’t really think much about it one way or the other. Now that I’ve focused on the big move China is making into refining, especially in JV’s with exporters like Saudi Arabia, one passage does jump out at me more now: “Accordingly, much of the conference focus was on how the GCC countries might use their current and near-term largesse to build sustainable economic and government futures.” IOW instead of exporting oil and letting foreign refiners and marketers have that portion of the profit why not expand in that direction themselves. And while the Saudis may not have the expertise or work force China certainly does. And by controlling more of the refining end of the system China will have more control over the distribution of those products. A distribution that may have a huge impact on the economies of all oil importing countries not too far down the road.

[americandream]

I read this article back then and didn’t really think much about it one way or the other. Now that I’ve focused on the big move China is making into refining, especially in JV’s with exporters like Saudi Arabia, one passage does jump out at me more now: “Accordingly, much of the conference focus was on how the GCC countries might use their current and near-term largesse to build sustainable economic and government futures.” IOW instead of exporting oil and letting foreign refiners and marketers have that portion of the profit why not expand in that direction themselves. And while the Saudis may not have the expertise or work force China certainly does. And by controlling more of the refining end of the system China will have more control over the distribution of those products. A distribution that may have a huge impact on the economies of all oil importing countries not too far down the road.

The wonderful irony is that China sits at the heart of global capital and is an investment blackhole. In granting it access to the oil centres, the process of depletion is being moved up a few gears.

[ROCKMAN]

It seems the depletion aspect is being amplified by tw other dynamics. The old ELM: export land model. It takes into account not just the depletion of an oil exporter but their internal consumption. Saudi Arabia is a good example l: the growing population is consuming more oil all time leaving less to export.
Now it looks like China's big moves into refining, along direct ownership of on ground oil reserves will be taking even more oil out of the market place. In X years depletion may reduce global production by Y%. But ELM and Chinese refinery JV'S may take an additional Z% of oil off the market. I can't guess the magnitude but it could rival the depletion rate.

[americandream]

It seems the depletion aspect is being amplified by tw other dynamics. The old ELM: export land model. It takes into account not just the depletion of an oil exporter but their internal consumption. Saudi Arabia is a good example l: the growing population is consuming more oil all time leaving less to export.
Now it looks like China's big moves into refining, along direct ownership of on ground oil reserves will be taking even more oil out of the market place. In X years depletion may reduce global production by Y%. But ELM and Chinese refinery JV'S may take an additional Z% of oil off the market. I can't guess the magnitude but it could rival the depletion rate.

Where you have a finite core commodity (of a magnitude capable of amplifying labour surplus many times over as you have with oil) driving a particular social relationship's exponential function, namely consumerism, I suspect the peak event will be sudden and cataclysmic as that surplus falls off a cliff in short order. I expect to see globalisation quickly disengage in that process. China's entry into the domain of capital has set us on a fast track to that outcome. Enjoy the discounts whilst you can.

[ROCKMAN]

AD – I’ve never been a “cliff” pusher at least as far as production levels go. But now it seems that the focus should be on PI…Peak Imports. IMHO that’s what will impact the economies much sooner than when PO has or will occur. PI has a component of PO but estimating global production rate changes (increases or decreases) isn’t the end of the dynamic. I don’t think we’ll go rushing off a PI cliff either but access to oil and products may become limited much sooner than some expect. Until now everyone is focused on pricing limiting access. Some years down the line being able to pay higher oil/product prices might not guarantee supplies. And will have a great impact on the price of that which is on the open market.

Again, the POD trumps PO.

[ROCKMAN]

Turns out China isn’t the only player tieing up Saudi oil exports using the refinery angle. From :

http://www.total.com/en/our-energies/oi ... 40870.html

«Total and Saudi Aramco created the SATORP joint venture to build and operate a refinery. In 2009, we began building our biggest refinery on the Persian Gulf coast. The ultra-efficient facility will process heavy crude oil to supply markets in Asia and the Middle East.

While petroleum product consumption in Europe is declining, demand is growing rapidly in Asian markets. The refinery will enable us to supply Asia and the Middle . The SATORP refinery will be able to process up to 400,000 barrels of crude oil a day. But SATORP is also an integrated complex, combining refining and petrochemical facilities. This means that 700,000 metric tons of paraxylene, 150,000 metric tons of benzene and 200,000 metric tons of high-purity propylene will also be produced at the site each year.»

Now did Total need additional refining capacity? Total is the largest refiner in Western Europe with a capacity of 1,742 kb/d in 2012. The Group operates eight refineries in Western Europe. So Total is expanding capacity by almost 25% when they are currently able to process every bbl of oil available to them. Obviously Total won’t have to worry about future oil supplies for the new refinery given that the KSA will be splitting those profits with them. Combined with just the supply of oil to the Chinese/Saudi refinery that’s 800,000 bpd of oil removed from the global open market for decades to come. For countries presently buying oil from the KSA that’s the equivalent to an almost 10% decline in KSA production in a few years. A much higher rate of loss then the most pessimistic have predicted for KSA naturel depletion decline.

That's 800,000 bopd lost via the POD...not PO.

[ROCKMAN]

China’s refinery expansion via major JV’s with oil exporters is even more extensive than previously noted. This in addition to in ground oil reserves they acquired over the years. An article on the Reuter’s website detailed that one of China’s largest oil refiners, Sinopec, will pay nearly 1.5 billion dollars for overseas gas and oil producing assets. And as seen below China isn’t the only country making such moves.

In the words of the president of Saudi’s Aramco:

“The world has watched in awe as China has emerged as a global industrial giant and taken its rightful place in the international business arena. China's opening of its petrochemicals business ventures to foreign participation is yet another instance of the nation's economic rise and integration into the global economy, and Saudi Aramco is honored to participate with Sinopec.

Saudi Aramco's participation in these projects is another step forward in our Kingdom's growing economic relationship with China. Saudi Aramco opened a new Aramco Overseas Company office in Shanghai to focus on strategic sourcing of commodities and services from China. I am proud to say that Saudi Arabia is China's biggest trade partner in the West Asia and North Africa regions. At the same time, we place great value on our leading role in providing China, the world's second-largest consumer, with the energy to power its tremendous economic, industrial and social growth.”

And China isn't just pushing into third world countries: PetroChina and INEOS completed transactions to form joint ventures related to the refining operations in Scotland and France. The Chinese have completed the deal to form refining Joint Ventures between PetroChina International and INEOS Investments. Li Keqiang, the Chinese Vice Premier, and Nick Clegg, the British Deputy Prime Minister, witnessed the signing of the framework agreement to form the Joint Ventures. “The Joint Ventures with INEOS are consistent with PetroChina’s strategy to build its broader business platform in Europe as a leading international energy company,” said Si Bingjun, General Manager of PetroChina International London.

And some of that oil the cornucopians were expecting out of newly developing fields won’t make it to the open market. China is financing the construction of Kyrgyzstan’s first major oil refinery. The refinery is expected to produce 600,000 tons of fuel annually, enough to end Kyrgyzstan’s dependency on Russian imports. Slated to receive crude piped from Chinese-run fields in Kazakhstan.

And China is cutting crude oil deals with Russia: China and Russia agreed to invest around $5 billion in a joint oil refinery in the Chinese port city of Tianjin. China National Petroleum Corp. and Russia's OAO Rosneft agreed to build a 260,000 barrels-a-day refinery. Last year, China secured 300,000 barrels a day in Russian crude supplies for the next 20 years in exchange for a $25 billion loan.

And moves by countries other than China:

Kuwait and a Japanese partner will build a $9 billion refinery in Vietnam that will have an ultimate capacity of 400,000 bopd supplied by Kuwait. More future oil that won’t be available on the open market.

And another 600,000 bopd that will also disappear from the future market as one of Indonesia's main oil suppliers, Azerbaijan, is planning a $4.8 billion oil refinery in Batam, a free-trade zone that is 20 kilometers off Singapore's south coast.

And this transformation has been studied in detail. From:

coast.ttp://www.atkearney.com/paper/-/asset_p ... ame-/10192

“Over the next 10 years, operators at one in every three refineries in North America and Western Europe will need to reconsider their operating models and how they are integrated across the value chain. Otherwise, they will struggle to keep up with changing global markets and compete with improving global standards in refining. By 2021, refineries will need to restructure, strategically reposition their assets, or leave the market. More than half the refineries in Asia, the Middle East, and Eastern Europe have been constructed or significantly upgraded during the past decade. Elsewhere, the industry has seen major shutdowns, especially in Western Europe and on the east coast of North America. These trends have accelerated during the past 10 years.

These stark prospects are among the findings of a recent study of the global refining market. In North America and Western Europe, the current trend of refinery closings is expected to continue, with one in five refining assets being squeezed out of the market over the next five years. Meanwhile, the boom in demand in Asia and the Middle East will lead to substantial changes in capacity and partnership structures.

The supply side is responding differently to these trends in different parts of the world. China and the Middle East—notably Saudi Aramco—are building more refineries and planning to integrate more closely with upstream activities. Brazil, meanwhile, is aiming to become an exporter of refined products and is leading capacity expansion in South America.

Middle East - most new investment is going downstream. The continuing trend is toward mega-refining and petrochemical integration, while forming joint ventures for local exports and target-market assets are increasingly becoming part of corporate strategies. Another trend is emerging as talks between Middle East refiners and Chinese downstream integrated players are underway to secure supply for Asia Pacific and outlets for the Middle East—these are the archetypal "win-win" situations”

And in other quarters: State-owned Hindustan Petroleum Corp Ltd (HPCL) has approved the incorporation of a joint venture company to set up an oil refinery and petrochemical complex in Rajasthan. The refinery will run on crude oil from neighboring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported. The refinery will process crude oil produced in Rajasthan as well as Arab mix crude. Cairn India currently produces about 175,000 barrels per day oil and has potential to go up to 300,000 bpd. More oil pulled from the open market.

And what about those liquids from the big foreign NG fields that will be produced with all that LNG? State-owned Qatar Petroleum signed a joint venture agreement with France's Total and Japan's Idemitsu for a new condensate refinery to be built in Qatar. Under the agreement Qatar will hold 84% of the refinery. It will produce petroleum products including naphtha, kerosene, diesel oil and LPG by refining condensate produced at Qatar's North Field, which is one of the largest natural gas fields in the world. It will be equipped with a diesel hydrotreater to increase the added value of diesel oil products. The new refinery will have daily production capacity of 60,000 b/d of naphtha, 43,000 b/d of jet fuel, 24,000 b/d of gas oil and 9,000 b/d of liquid petroleum gas (LPG). The new refinery will have a capacity of about 300,000 b/d, making it one of the largest single-site facilities of its kind in the world.

BTW: were you keeping count of such JV’s being put together by US companies and the US govt's national oil company?

[SeaGypsy]

All of which indicates no serious drop in prices.

[ROCKMAN]

SeaGypsy - As usual I try to avoid predictions especially about prices. Consumption still dominates the dynamic IMHO. Rising energy costs reduce consumption and thus puts downward pressure on prices. But as more export oil is removed from the open market via long term contracts with the new refineries the importers are competing for a smaller pool of oil supplies. Of course, regardless of who is doing the refining, this transition doesn't necessarily reduce the supply of product in the world. But in an increasing number of cases it does change who the consuming nations are trading with for those commodities. Those nations will become more dependent upon their relationship with China to supply their needs. An amazing turn around IMHO on a geopolitical level: countries will be more dependent upon China, a net oil importer, for their economic stability. A country they are already somewhat dependent upon for much of their other imports as well as financing a fair bit of their debt.

Last I heard the “Golden Rule” has not been repealed.

[ROCKMAN]

Now that I’ve become obsessed with China et al acquiring oil reserves in the ground and expanding control over oil exports via refinery JV’s it seems I can’t thumb thru any publication without such stories jumping out at me.

“Italian major Eni confirmed Thursday that it has sold a 20-percent share of its Area 4 license block in Mozambique to China National Oil Company.
The agreed price was $4.2 billion. Eni pointed out that CNPC's entrance into the license is "strategically important for the project thanks to the worldwide relevance of the new partner in the upstream and downstream sectors".

Hmm…”downstream sectors”. Recall China’s plans to build the largest Egyptian refinery (with easy access to a lot of Libyan oil) in the country’s history just a short hop across the Med from Italy. And that Mozambique is a short hop down the coast to South Africa where China plans to build the largest refinery on the continent. In a country with insignificant oil export capability.

And: China's largest oil company is due to start commercial production of crude oil in Afghanistan shortly, heralding a resource boom that could transform the country's economy over the next decade. Nearly all of Afghanistan's recoverable mineral resources, estimated by the U.S. Geological Survey to be worth $1 trillion, are still under the ground.

And another short cruise around the Indian coast from the Persian Gulf: Myanmar - New pipelines. The pipelines are majority-owned by the Chinese and stretch from the Bay of Bengal to China's Yunnan province. When completed, they will be able to supply up to 440,000 barrels of Middle Eastern and African crude oil a day and 12 billion cubic meters of natural gas a year from Myanmar offshore fields.

And it’s not just a Chinese game: Malaysia's Petroliam Nasional Bhd. is the latest Asian state-owned oil company to snap up significant stakes in overseas oil-and-gas assets with its planned purchase of 40% stakes in two offshore blocks in Brazil's Tubarao Martelo oil field. The proposed $850 million acquisition follows last year's $5.16 billion acquisition by the Malaysian Petronas of Progress Energy Resources Corp. Petronas's massive Canadian deal was overshadowed by an even bigger deal that occurred around the same time, with China's state-owned Cnooc Ltd. paying $15.1 billion for Canada's Nexen Inc.

And why is an oil exporter buying reserves in the ground? Malaysia has the third-largest oil-and-gas reserves in the Asia-Pacific region, but it is struggling to maintain its status as a net exporter of fossil fuels. "We expect Petronas to continue its hunt for overseas assets," said Aaron Tan, an energy analyst at Kuala Lumpur-based MIDF Research. The IEA has forecast Malaysia will become a net oil importer by 2017. Nevertheless, Petronas has scope to purchase significant overseas reserves with a capital-expenditure budget of $106 billion for the 2011-2015 period. Nearly two-thirds of the budget will likely to be spent on exploration and acquiring existing energy assets.

The state-owned company has qualified to bid for exploration blocks in Brazil in mid-May--the first such auctions to be held in four years. Petronas began acquiring energy assets in the early 1990s, mostly in developing countries. It has amassed hydrocarbon interests in more than 20 countries. Petronas will purchase stakes in the two DW Brazil blocks with reserves estimated at 145 billion barrels of oil.

And I’m still looking for stories about US companies and USNOC (the US National Oil Company) making similar moves.

[Ibon]

Rockman, the well known saying comes to mind..... "Follow the money".
The outsourcing of all the jobs and technology to China over the past 30 years planted both the seeds of the weakening of the US economy and the emergence of the Chinese economic juggernaut that today has become a dominant force in competing for the remaining global petroleum resources.

Post World War II the strength of the US economy was largely based on the fact that we exported both energy (oil) and finished manufactured goods. Today we import both.

Who would have predicted that all that outsourcing to China starting 30 years ago would have lead so quickly to such a reverse of fortune?

[ROCKMAN]

Ibon - Even the Brits helped China make the transition. Check the story out about the free trade zone China is planning. The Brits did an outstanding job of designing the Hong Kong FTZ. And now it appears the Chinese are cloning it on the mainland. As long as TPTB in China keep their thinking caps on they can use their authoritarian style of govt to direct their economy in the most effective manner. The US has to rely on free market dynamics to guide our system. Which isn't always the best path for the public majority.

[ROCKMAN]

Even though Japan doesn’t have a nationalized oil industry their govt is willing to chip in on the effort. Hmm…could be a model for some other industrialized nations. Naa.
From: http://www.rigzone.com/news/oil_gas/a/1 ... s/?all=HG2

The Japanese govt is pledging $2 billion for energy and mineral projects in Africa, capping a conference with government resource officials from across the continent as it seeks to catch up with years of Chinese investment.
Japan needs to secure long-term reliable sources of natural materials. It is also eager to provide its technologies to build roads, railways and utilities, providing a competitive alternative to the Chinese state-owned companies that have helped the Asian giant become Africa's dominant investor.

The government funding will be used for direct loans, underwriting of debt offerings and equity stakes in projects covering crude-oil, natural-gas, coal and mineral projects over the next five years. This puts in place the building blocks to encourage investment from Japanese companies and to help create Africa's sustainable growth. Japan put together the conference in hopes of demonstrating the appeal of the long-term approach typical of Japanese companies as many African countries begin to complain about what they see as the heavy-handed approach of China's investments.

Delegates to the conference appeared receptive to the overtures. The idea is to encourage more faithful investors like those from Japan which is admired its reputation for honesty and willingness to provide technical assistance and long-term investments. For many Japanese industrial companies, the reasons for the increased level of interest is clear--the need to secure resources. Attendees also said that the Japanese overture was more than welcome and that the continent's dependence on China was because of necessity, not necessarily by choice.

[ROCKMAN]

Looks like refiners other than those in the US are about to get squeezed pretty hard by some of the oil exporters as well as by China. From:

http://online.wsj.com/article/SB1000142 ... 71286.html

“Asia's oil-refining sector is getting crowded—and margins could be squeezed. Persian Gulf oil producers are building both at home and across the region, and with their guaranteed, relatively cheap supplies and geographical advantage, look set to challenge long-established Asian refiners in local and global markets.”

The key word there IMHO is “guaranteed”. IOW that oil will be withdrawn from the open market and won’t be available at any price.
.
“A 400,000 barrel-a-day joint venture at Jubail in Saudi Arabia owned by Saudi Arabian Oil Co. and Total will be first of the new behemoths, pumping out gasoline, diesel and other products within three months. Three more such supersize operations will follow in the Gulf region alone—at Ruwais in the United Arab Emirates by 2015; at Yanbu, on the Red Sea in Saudia Arabia, by 2017; and at Jazan, Saudia Arabia, also on the Red Sea. Countries in the Middle East now have a strategy to diversify from exporting only crude oil to exporting value-added oil products. Those countries will also dry up as export markets for Asian refiners.

Saudi Arabia last year imported an average of 315,000 barrels a day of gasoline, diesel and fuel oil, worth $35 million to $40 million at current prices. Asia's diesel exports to Africa, the Middle East and Latin America in 2011 totaled 308,000 barrels a day, while gasoline exports to Middle East alone amounted to 90,000 barrels a day. Meanwhile in China, Saudi Aramco, Kuwait Petroleum Corp., Qatar Petroleum International, Russia's Rosneft and Venezuela's PdVSA are all building new joint-venture refineries that will displace imports and boosting exports of products while increasing oil imports from “guaranteed” sources. In Vietnam, Kuwait Petroleum International, PetroVietnam and Idemitsu Kosan Co. have agreed to build a 200,000-barrel-a-day unit which will trim that country's imports (and thus reduce their oil exports a tad).

Other refineries are planned by Indonesia, India and China, among others, many due to be on line within a few years. China alone is expected to add around 750,000 barrels a day of refinery capacity both this year and next. Asian companies have enjoyed strong refining margins—the price difference between crude-oil and refined products—as demand has exceeded supply for three consecutive years, but the outlook isn't rosy. Australia, Latin America and East Africa may absorb some of the growing supply, and so can India, China and Southeast Asia if economic growth there accelerates further. But even so the risk of oversupply, and eroding margins, is very real. A spokesman for South Korea's largest refiner by volume confirmed that it expects the new Middle East competition to pressure margins lower.

[Subjectivist]

China’s refinery expansion via major JV’s with oil exporters is even more extensive than previously noted. This in addition to in ground oil reserves they acquired over the years. An article on the Reuter’s website detailed that one of China’s largest oil refiners, Sinopec, will pay nearly 1.5 billion dollars for overseas gas and oil producing assets. And as seen below China isn’t the only country making such moves.

In the words of the president of Saudi’s Aramco:

“The world has watched in awe as China has emerged as a global industrial giant and taken its rightful place in the international business arena. China's opening of its petrochemicals business ventures to foreign participation is yet another instance of the nation's economic rise and integration into the global economy, and Saudi Aramco is honored to participate with Sinopec.

Saudi Aramco's participation in these projects is another step forward in our Kingdom's growing economic relationship with China. Saudi Aramco opened a new Aramco Overseas Company office in Shanghai to focus on strategic sourcing of commodities and services from China. I am proud to say that Saudi Arabia is China's biggest trade partner in the West Asia and North Africa regions. At the same time, we place great value on our leading role in providing China, the world's second-largest consumer, with the energy to power its tremendous economic, industrial and social growth.”

And China isn't just pushing into third world countries: PetroChina and INEOS completed transactions to form joint ventures related to the refining operations in Scotland and France. The Chinese have completed the deal to form refining Joint Ventures between PetroChina International and INEOS Investments. Li Keqiang, the Chinese Vice Premier, and Nick Clegg, the British Deputy Prime Minister, witnessed the signing of the framework agreement to form the Joint Ventures. “The Joint Ventures with INEOS are consistent with PetroChina’s strategy to build its broader business platform in Europe as a leading international energy company,” said Si Bingjun, General Manager of PetroChina International London.

And some of that oil the cornucopians were expecting out of newly developing fields won’t make it to the open market. China is financing the construction of Kyrgyzstan’s first major oil refinery. The refinery is expected to produce 600,000 tons of fuel annually, enough to end Kyrgyzstan’s dependency on Russian imports. Slated to receive crude piped from Chinese-run fields in Kazakhstan.

And China is cutting crude oil deals with Russia: China and Russia agreed to invest around $5 billion in a joint oil refinery in the Chinese port city of Tianjin. China National Petroleum Corp. and Russia's OAO Rosneft agreed to build a 260,000 barrels-a-day refinery. Last year, China secured 300,000 barrels a day in Russian crude supplies for the next 20 years in exchange for a $25 billion loan.

And moves by countries other than China:

Kuwait and a Japanese partner will build a $9 billion refinery in Vietnam that will have an ultimate capacity of 400,000 bopd supplied by Kuwait. More future oil that won’t be available on the open market.

And another 600,000 bopd that will also disappear from the future market as one of Indonesia's main oil suppliers, Azerbaijan, is planning a $4.8 billion oil refinery in Batam, a free-trade zone that is 20 kilometers off Singapore's south coast.

And this transformation has been studied in detail. From:

coast.ttp://www.atkearney.com/paper/-/asset_p ... ame-/10192

“Over the next 10 years, operators at one in every three refineries in North America and Western Europe will need to reconsider their operating models and how they are integrated across the value chain. Otherwise, they will struggle to keep up with changing global markets and compete with improving global standards in refining. By 2021, refineries will need to restructure, strategically reposition their assets, or leave the market. More than half the refineries in Asia, the Middle East, and Eastern Europe have been constructed or significantly upgraded during the past decade. Elsewhere, the industry has seen major shutdowns, especially in Western Europe and on the east coast of North America. These trends have accelerated during the past 10 years.

These stark prospects are among the findings of a recent study of the global refining market. In North America and Western Europe, the current trend of refinery closings is expected to continue, with one in five refining assets being squeezed out of the market over the next five years. Meanwhile, the boom in demand in Asia and the Middle East will lead to substantial changes in capacity and partnership structures.

The supply side is responding differently to these trends in different parts of the world. China and the Middle East—notably Saudi Aramco—are building more refineries and planning to integrate more closely with upstream activities. Brazil, meanwhile, is aiming to become an exporter of refined products and is leading capacity expansion in South America.

Middle East - most new investment is going downstream. The continuing trend is toward mega-refining and petrochemical integration, while forming joint ventures for local exports and target-market assets are increasingly becoming part of corporate strategies. Another trend is emerging as talks between Middle East refiners and Chinese downstream integrated players are underway to secure supply for Asia Pacific and outlets for the Middle East—these are the archetypal "win-win" situations”

And in other quarters: State-owned Hindustan Petroleum Corp Ltd (HPCL) has approved the incorporation of a joint venture company to set up an oil refinery and petrochemical complex in Rajasthan. The refinery will run on crude oil from neighboring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported. The refinery will process crude oil produced in Rajasthan as well as Arab mix crude. Cairn India currently produces about 175,000 barrels per day oil and has potential to go up to 300,000 bpd. More oil pulled from the open market.

And what about those liquids from the big foreign NG fields that will be produced with all that LNG? State-owned Qatar Petroleum signed a joint venture agreement with France's Total and Japan's Idemitsu for a new condensate refinery to be built in Qatar. Under the agreement Qatar will hold 84% of the refinery. It will produce petroleum products including naphtha, kerosene, diesel oil and LPG by refining condensate produced at Qatar's North Field, which is one of the largest natural gas fields in the world. It will be equipped with a diesel hydrotreater to increase the added value of diesel oil products. The new refinery will have daily production capacity of 60,000 b/d of naphtha, 43,000 b/d of jet fuel, 24,000 b/d of gas oil and 9,000 b/d of liquid petroleum gas (LPG). The new refinery will have a capacity of about 300,000 b/d, making it one of the largest single-site facilities of its kind in the world.

BTW: were you keeping count of such JV’s being put together by US companies and the US govt's national oil company?

ROCKMAN you used to post regular updates about these joint Chinese Arab ventures but I don't recall seeing anything recently. Can we get a 2017 update? Seems like these projects should be ready to rock & roll about now.

[ROCKMAN]

I post when I see something interesting. So I've either missed a lot or Chinese JV's cooled off a lot. But here's an interesting view I stumbled across. From

http://www.chinalawblog.com/2016/02/chi ... s-out.html

China Joint Ventures: The Tide is Out
February 22, 2016

China's faltering economy is exposing bad joint ventures

“Only when the tide goes out do you discover who’s been swimming naked.” Warren Buffet

There is an old saying about how lawyers do well when an economy is either rising or falling, just not when it is stagnating. Put simply, litigation occurs when a company has decided that the highest and best use of a particular chunk of its time and money is to sue someone. When profits are difficult to find outside litigating, litigating becomes more likely. Companies in financial pain tend to lash out by suing or by threatening to sue and we are seeing a wealth of that these days from Chinese companies.

This is my long-winded explanation for why I am about to chastise foreign companies that enter into China joint ventures without using their own lawyer to do so. I am writing about this today because as the tide of China’s faltering economy goes out, a large number of American (mostly) companies are contacting our China lawyers for our help with their faltering China joint ventures. Again though, the problem for these American companies (and thus for us as well) is that their Joint Venture agreements have been so unfavorably written that the only advise we can give them is to move on or (in one case) to sue their American lawyer who allowed them to sign it.

As multinationals revive interest in collaborating with Chinese partners, the lessons of past ventures bear remembering.

But now let's jump back to 2010 when we started seeing all the press releases about Chinese JV's. From

http://www.mckinsey.com/business-functi ... t-ventures

It's been ten years since multinationals first began turning away from joint ventures in China as the preferred way to take part in the world’s hottest growth story. Many joint ventures failed to endure, and as multinationals gained experience in China, and foreign investment restrictions loosened, multinationals found it easier in many sectors to start a business from scratch—or to acquire an existing one outright—than to negotiate, establish, and manage a joint venture in the long term.

No longer. China’s hot growth has boosted valuations and increased competition for outright acquisitions of Chinese companies that are often less interested in being acquired. That makes joint ventures a more appealing option, and so does a growing pool of healthier prospective Chinese partners. All this is prompting some multinationals to reconsider the joint-venture approach as an alternate avenue for getting a stake in the continuing strength of China’s economy.

But while the dynamics have changed, the fundamentals have not: companies pursuing joint ventures would do well to reflect on the lessons of past deals to improve the chances of success. In China, some of those lessons are especially critical, such as choosing partners that can make tangible business contributions, safeguarding intellectual property, ensuring operational control of the joint venture, and managing talent. Others are critical for joint ventures in all geographies, such as aligning strategic priorities, creating a structure that permits rapid responses to change, and preparing up front for eventual restructuring.

[onlooker]

https://www.bloomberg.com/news/articles ... et-reality
Haha sounds like a true fantasy. Their main field Ghawar is on its last legs, the age of fossil fuels seems to be sputtering and grinding to a halt and that is supposed to generate investment income ? And the kicker "enough investment income at home and abroad to dominate state revenue by 2030 " 2030 really

[sparky]

.
List of the ten largest Oil and gas companies
Saudi Aramco
Sinopec
China national Petroleum corporation
Petrochina
Exxon Mobil
Royal dutch Shell
Kuwait Petroleum Corporation
BP
Total SA
Lukoil

China has the money to buy in many of others corporations or enter into trading agreement and joint ventures for exploration , exploitation or merchandising .
In particular , the sale of Aramco will be watched with great interest .
http://www.economist.com/news/briefing/ ... order-sale

[AdamB]

http://oilprice.com/Energy/Crude-Oil/Arab-Countries-Openly-Discuss-Peak-Oil-for-the-First-Time.html

...The fact that a major Middle East oil exporter would hold such a conference on what has long been a verboten subject was quite remarkable and a dramatic change from decades of PO denial.

The two and a half day meeting was well attended by people from the GCC as well as other regional countries....


The going-in assumption was that “peak oil” will occur in the near future.
*********************************************

Now we know that they know we know it: PEAK OIL!

M_B_S

This conference took place about 2 months after some people in the upper echelons of Saudi Arabia I won't name went to Washington, and began having some serious discussions with industry, government and scientific experts in the energy field, about this "shale revolution thing".

They might have been afeared of peak oil, but based on their attitude at that meeting, they were already becoming concerned about what we now know changed their business model for the first time in half a century.