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Page added on September 15, 2014
Tony Hayward: Sanctions against Russia could spur $150 oil
Western sanctions against Russia, coupled with ongoing political instability in Libya and the advance of ISIS militants in Iraq, could leave the global oil supply exposed and push up oil prices to $150 per barrel, former BP chief Tony Hayward has warned.
The former CEO of BP and now chairman of Glencore Xstrata said the recent boom in US shale production has painted an unrealistic image of the world’s global oil supply, and created a false sense in energy security.
“The world has been lulled into a false sense of security because of what’s going on in the US,” Hayward said in an interview with the Financial Times.
The hydraulic fracturing boom in the US began in 2008 and has increased US crude output by 60 percent, but Hayward warned it could wane.
“When US supply peaks, where will the new supply come from?” Hayward said.
Instability in oil producing countries in the Middle East, such as Libya and Iraq, in theory would have driven up oil prices to $150 per barrel, had it not been for the new supply from North America.
So far, Brent crude has fallen from about $108 a barrel at the start of the year to about $97 today.
Hayward said oil supplies from the North Sea and Alaska are nearing maturity, and the world oil supply is dependent on new wells in places such as Russia, Iraq, and Canada.
Rosneft’s Bazhenov field may be even larger than the North Dakota Bakken shale shelf, which currently produces 1 million barrels of oil per day and has brought about the shale revolution in the America.
Sanctions may stymie output
Russia, the world’s second-largest oil producer, outputs about 10.5 million barrels of oil per day, shy of the record from the Soviet era.
His comments followed decisions from the EU and US to widen sanctions against Russia on Friday, targeting state-run and private oil and gas companies, including Gazprom, Rosneft, Transneft, and Lukoil. They can no long obtain US or EU technology or equipment for extracting deep water, Arctic, or shale oil.
Analysts believe there will be no sudden shock to the Russian oil and gas industry, but that future projects and long-term development are at risk.
“Because of financial sanctions, the big gorillas are going to start cutting their activities,” Hayward said, speaking about Russian companies.
The sanctions will also create problems for Western companies like Exxon Mobil, BP, Shell and others, who have joint ventures worth billions in Russia.
ExxonMobil, for example, has a joint venture with Rosneft to explore Russia’s Arctic, and also owns a 19.75 percent stake in the company.
11 Comments on "Tony Hayward: Sanctions against Russia could spur $150 oil"
dissident on Mon, 15th Sep 2014 6:56 pm
But according to the intellectual giants, who back the Kiev butcher regime and its indiscriminate attacks with artillery and rockets on civilians, we live in a fracking utopia. Who needs more oil we have so much unconventional supply the party will never be over.
Hayward is like prophet in the desert, his words are not music to the ears of the deluded morons in charge.
Makati1 on Mon, 15th Sep 2014 8:51 pm
Reality is a bitch…
rockman on Mon, 15th Sep 2014 9:11 pm
And again folks don’t appreciate the time lag in the real oil production world. The oil futures market can swing wildly in just 24 hours. Drilling programs and oil coming out the ground can take many months if not years to fully respond to changing dynamics. And the same holds true for revering a trend. Bottom line: nothing changes very fast in the global oil dynamic. Which is good and bad at the same time.
GregT on Mon, 15th Sep 2014 11:20 pm
I lost all respect for Tony when he whined about getting his life back during the Macondo GOM spill, and his recent ventures with the Rothschild dynasty in my minds eye, make him even more of a slimeball. That being said, I believe that in this case, he is entirely spot on.
Perk Earl on Tue, 16th Sep 2014 2:26 am
This is like trying to jam a stick into the spokes of the very bicycle we are collectively riding on.
shortonoil on Tue, 16th Sep 2014 9:08 am
Tony Hayward, a graduate petro-geologist, came from the same era as Jeremy Leggett (author of “The Energy of Nations”). They worked on the same projects together during graduate school. After the Macondo spill, and marine biologist became concerned that the sinking residuals in the oil would do damage to the Gulf sea bed marine flora and fauna, Hayward was quoted as saying “Everyone knows that oil floats”. Quite an incredible statement from a graduate petro-geologist!
Hayward is a political animal, and corporate con man. His shenanigans during his tenure as CEO of BP are well known. Any statement made by him is almost assuredly intended to advance his present, personal agenda. He evidently sees the truth as a slippery creature intended to be bent, and twisted for his benefit.
Davy on Tue, 16th Sep 2014 9:22 am
If anyone wants to see the true BP watch the PBS documentary show “Frontline”:
http://www.pbs.org/wgbh/pages/frontline/the-spill/
Hayward is a disciple of this unholy organization.
Chris Hill on Tue, 16th Sep 2014 9:51 am
No, it wouldn’t push the oil price up to $150, the worst it could do is cause another recession. Look how long the economy lasted in 2007-8 for proof.
Crap like this is almost enough to make me turn it all off
Makati1 on Tue, 16th Sep 2014 10:47 pm
$150 oil? Bring it on! The last Western depression has never ended. Maybe another on top of it will finally crash the system?
OFT on Wed, 17th Sep 2014 5:33 am
Rockman – too true. I was clearing out old work and noted some 2005 info on the Goliath field – 5 years after it was discovered. (It is the first field scheduled to come on stream in the Barents Sea, North Norway). I note online that the field is now due to start producing mid 2015. Commitment to develop assets takes a long time, and the development phase even longer!
For a guide as to stalling/delaying future development work, look at the CAPEX cuts that the majors are announcing in their current budgets.
Davy on Wed, 17th Sep 2014 7:04 am
OFT, it is not only the oil majors talking capex cuts we are seeing this in all industries. Instead of investment we see stock buybacks as the preferable way to maintain financial results. The overwhelming macro data for the economy now points to capex compression across the board. This is ominous for growth and the continuing growth of debt. The oil majors are the canary in the coal mine.