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Saudi Arabia’s Plan to Extend the Age of Oil

General discussions of the systemic, societal and civilisational effects of depletion.

Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Pops » Mon 13 Apr 2015, 08:21:33

Saudi Arabia’s Plan to Extend the Age of Oil
The biggest exporter has let prices plummet—delaying the day when climate concerns, efficiency, and fuel switching break the world’s dependence on crude.

by Peter Waldman
April 12, 2015

Last fall, as oil prices crashed, Ali al-Naimi, Saudi Arabia’s petroleum minister and the world’s de facto energy czar, went mum. He still popped up, as is his habit, at industry conferences on three continents. Yet from mid-September to the middle of November, while benchmark crude prices plunged 21 percent to a four-year low, Naimi didn’t utter a word in public.
For 20 years, Bloomberg Markets reports in its May 2015 issue, the world’s $2 trillion oil market has parsed Naimi’s every syllable for signs of where supply and prices are heading. Twice during previous routs—amid the Asian financial crisis in 1998 and again when the global economy melted down 10 years later—Naimi reversed oil’s free fall by orchestrating production cutbacks among members of OPEC. This time, he went to ground.


http://www.bloomberg.com/news/articles/ ... age-of-oil
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby americandream » Tue 14 Apr 2015, 16:38:59

The Islamic empire is heavily invested in global capital. Thus much of this jihad rioting rick is a load of bunkum designed to keep the muslim masses sedated.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby viewcrafters » Sat 25 Apr 2015, 08:59:55

More like shorten the age of oil.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Pops » Sat 25 Apr 2015, 09:16:12

Since Twilight in the Desert Peakers have been obsessed by the idea KSA is about to run dry. I think the current price war between KSA and US frackers, if that is indeed what this is, shows they aren't too worried.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Subjectivist » Sat 25 Apr 2015, 10:38:26

Pops wrote:Since Twilight in the Desert Peakers have been obsessed by the idea KSA is about to run dry. I think the current price war between KSA and US frackers, if that is indeed what this is, shows they aren't too worried.


It does make one wonder what their end game is. Recently I read things around here saying KSA would be broke financially in three years, but that is predicated on prices staying low even as the American fracking companies go out of business. KSA does not exist in a vacuum, if Frackers go out of business the prices will have to go up as a result. They might not be back to $100/bbl this winter, but the higher they go the longer KSA can weather the price gap between income and spending. Also the US has been technically in massive debt for half a century, what makes people think KSA can't run a deficit when jst about every other government has been doing it?
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby ROCKMAN » Sat 25 Apr 2015, 13:44:46

"Recently I read things around here saying KSA would be broke financially in three years". I can't begin to imagine what the KSA being "broke financially" looks like. If one looks at how the KSA sets their budget in recent years it has been based upon their projected income and not their "needs". That's why they ran a budget surplus when oil prices unexpectedly rose. And why they now have a budget deficit because oil prices have fallen. And why they'll probably have a balanced budget (maybe even a surplus) next year since they'll base that budget on a lower projected oil price. They've already announced cutting $billions from planned capex projects.

And they'll still have hundreds of $billions in foreign currency and the increased revenue from selling refined products instead of oil now that they are able to capture more if the margin thanks to the expansion of their oil refining capacity.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby rockdoc123 » Sat 25 Apr 2015, 14:57:07

The problem with Saudi Arabia is that there is only so much they can cut from the capital expenditure plan without running the risk of upsetting the masses who likely wouldn't need too much of a push to start supporting the radical element. I believe they are running a $50 billion deficit this year after cutting some descretionary spending.

If they continued at that pace of year on year deficit then they would be through their reserves in about 4-5 years I believe.

It remains to be seen how much spending they can reign in and still guaranty a continued power base.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Pops » Sat 25 Apr 2015, 15:33:29

I can't see KSA going broke. Aaramco was valued by the Financial Times at $10 Trillion. Pretty sure they could float a line of credit, LOL

$714 billion in official reserves according to the IMF
https://www.imf.org/external/np/sta/ir/ ... cursau.htm
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby kanon » Sat 25 Apr 2015, 18:22:18

This article closer-look-saudi-arabia says that water injection and CO2 injection are mostly responsible for Saudi Arabia oil production continuing at high levels. I don't know much about these EOR methods, but I wonder if they can be turned on and off. Is it possible that Saudi Arabia keeps production high because they have to due to EOR methods?
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Pops » Sat 25 Apr 2015, 18:33:16

I don't know the answer to that question K but the post you linked from a year ago kinda implies what I just ventured upthread: "KSA is on the verge of collapse"

But a year later they don't appear that way to me. If they were planning for lower production, would they be protecting share rather than price? I'd guess just the opposite, cut back on production, let the price rise and let a few clients go elsewhere seems like a better plan.

But I got no oil so what do I know, LOL
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby ROCKMAN » Wed 29 Apr 2015, 02:50:55

k - Not my area but I doubt completely shutting down such EOR efforts would be doable with respect to reservoir dynamics. But the injection/production rates can be reduced to some degree.

Here's something of an aside about the future of oil vs NG particularly in the ME. One would expect the countries of the region would have a good handle on future energy dynamics in their region. And it appears they are preparing for a more NG oriented future for themselves:

Pipelines are a cheaper way to deliver natural gas than tanker ships. They’re also easier to blow up. That’s one reason countries in North Africa and the Middle East are going full steam ahead on sea transport. They also want diversity of supply. Middle Eastern imports of LNG rose 31 percent last year as deliveries to Kuwait, Dubai and Israel increased at the fastest pace in four years. LNG is in demand as electricity usage surges for growing populations and industries. The Middle East and North Africa will spend $120 billion on gas-fired power plants by 2035, more than either China or the 28 member states of the European Union, according to the International Energy Agency. Strife between nations such as Morocco and Algeria have made pipelines pawns in political power plays as well as increasingly attractive targets for sabotage.

“There is no question that pipeline gas is cheaper than LNG, but we can’t rely on a single source for natural gas,” Morocco’s Minister of Energy & Mines Abdelkader Amara said. “It’s a strategic decision.” The region is home to more than half the world’s natural gas reserves. Even so, Dubai and Kuwait already are major importers, and Egypt, Jordan and Pakistan are adding import terminals with combined annual capacity equal to 80 percent of all facilities built worldwide last year, according to the International Group of Liquefied Natural Gas Importers.

Cost Comparison - Natural gas cost only $2.60 per million British thermal units at 1:33 p.m. Wednesday on the New York Mercantile Exchange. The price for LNG in May to northeast Asia was almost three times as much at $7.38 per million Btu, according to Platts, a unit of McGraw Hill Financial Inc. Morocco, which closed its border with gas-rich Algeria in 1994, is building a $4.6 billion power-plant complex to be supplied with LNG from as far away as Qatar, Russia and the U.S. Amara, the country’s energy minister, said last month that “uncertainty” over the future of a pipeline network for Algerian gas exports motivated his country to secure LNG as an alternative. Egypt halted exports by pipeline to Israel in 2012 and Jordan in 2013 amid sabotage attacks on its network in the Sinai Peninsula. Egypt’s government began importing Algerian and Russian LNG in March. Dubai, Kuwait and Israel imported 4.1 million metric tons of LNG in 2014, up from 3.1 million a year earlier.

Growing Imports - Jordan will start receiving 150 million cubic feet per day of LNG from Royal Dutch Shell Plc in May. The country will seek offers for an additional 100 million cubic feet of the fuel in July. “The region is emerging as an LNG importer,” Robin Mills of Dubai-based consultants Manaar Energy, said by phone on April 2. “Major energy producers as well as countries with few resources like Morocco and Jordan are looking at global energy markets because of the difficulty of getting regional gas.” A 61 percent drop in LNG prices since February 2014 may be spurring deals, he said. LNG deliveries to the Middle East and North Africa are set to more than double to 8.4 million tons in 2015, the fastest growth rate in the world, according to London- based consultants Energy Aspects Ltd.

A $7.4 billion project for a pipeline to Pakistan from neighboring Iran, holder of the world’s largest gas reserves, has stalled. Pakistan joined a coalition fighting in Yemen against rebels from a branch of Shiite Islam, Iran’s main religion, and started buying LNG from Qatar in March. Qatar, the biggest LNG producer in the Middle East, ships 77 million tons of the fuel per year. Iran is constrained by international sanctions over its nuclear program and has postponed plans to build a $3.3 billion LNG plant, Alireza Kameli, managing director of National Iranian Gas Export Co., said in a Dec. 18 interview in Doha. “Politics has stopped pipeline projects even though the economics of sending gas from countries with surplus supply to those with demand makes sense,” Mohamed Ramady, an associate professor at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia, said by phone on April 14.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby rockdoc123 » Thu 30 Apr 2015, 21:09:46

A news article in Bloomberg today suggesting SA is blowing through their reserves at an unprecidented rate.

http://www.bloomberg.com/news/articles/ ... i-reserves

Saudi Arabia is burning through foreign reserves at a record pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump.
The kingdom spent $36 billion of the central bank’s net foreign assets -- about 5 percent of the total -- in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman’s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world’s biggest oil exporter in January.


The video is worth watching and reiterates what I and others have said about the requirement for SA to maintain its "social contract" with the population.
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Re: Saudi Arabia’s Plan to Extend the Age of Oil

Unread postby Pops » Thu 30 Apr 2015, 21:47:02

Woowhoo, It's good to be the king!

https://www.youtube.com/watch?v=StJS51d1Fzg
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