Venezuela has the largest oil reserves in the world
created: 24 Jan 2011 12:19
tags: reserves venezuela
I have known since I were a small boy, that the largest oil reserves in the world, were laying beneath the sands of Saudi Arabia. The Saudis have not always had the highest production levels, but their position concerning reserves was unchallenged.
Now however, the President of the Bolivarian Republic of Venezuela begs to differ.
In the submission to the National Assembly (AN) of the results of political management, economic, social and administrative affairs of national government in 2010; the President of the Bolivarian Republic of Venezuela, Hugo Chávez, said that it is recognized worldwide that Venezuela has the largest oil reserves in the world, and it is felt that the country has oil for the next 200 years.
This statement should not be seen as an idle boast by a Caudillo whose grasp of reality is shaky at best, because we have seen similar announcements from other sources.
An estimated 513 billion barrels of technically recoverable heavy oil are in Venezuela’s Orinoco Oil Belt. This area contains one of the world's largest recoverable oil accumulations, and this assessment is the first to identify how much is technically recoverable.
Interestingly enough, when the source of the news was a US organisation, the Great Leader was unimpressed. He claimed that it was US misinformation.
These reserves are important, as they represent potential production in a world where conventional resources are declining. Thankfully Venezuela has squandered so much cash, that they now need foreign investment. ENI is an example of one company working to make something of these reserves. They had previously chased out the likes of Exxon, for being nasty capitalist imperialists.
There is no guarantee that history will not repeat itself, which reminds us once again that peak oil is a political issue, not a geological one. As long as countries like Venezuela give open access to international companies, then our oil supply is secure. Iraq shows that the terms can be very tough, making concessions is only necessary due to political risks, and those stem from politicans not oil companies.
If only countries like Mexico would be as open minded.
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Bolshoi Petroleum, No More Opportunities
created: 19 Jan 2011 05:28
tags: bp deals rosneft russia
The proposed marriage between BP and Rosneft has ruffled a lot of feathers. In Russia, TNK-BP is upset that BP is going it alone, feeling that it should be involved. In the USA, BP a company already with a big PR problem, has taken more stick for cosying up to the Russia Bear. One new nickname is Bolshoi Petroleum.
From an industry prospective, it raises serious questions as to why the company should be once again risking so much in the Kingdom of King Putin.
Russia is a country where the leadership seems to make up the rules as they go along, and veer between recognition of the need for international expertise, and xenophobic desires for self reliance.
Rosneft undoubtedly needs the experience of a company like BP, which despite the fiasco of in the Gulf of Mexico has a huge amount of offshore experience. Yet that doesn’t insure the company from smash and grab politics in the future.
Bob Dudley, BPs Chief Executive has his own personal reasons to dislike his partners in TNK-BP, and the possibility that he is gaining a little revenge has crossed a few peoples’ minds. A very knowledgeable analyst that I spoke to raised this possibility before making any other comments.
However, the harsh reality is that BP has very little other options. With the closing of the US market to a company that had so much activity there, and the loss of so many reserves in a series of deals to raise cash to placate an angry and vindictive US government, BP desperately needs replacements, wherever they are.
At least in the same week they announced new ventures in the land of Oz, one of few places left that seem to understand the importance of the rule of law.
Its a little brazen for US politicians to be complaining about the deal, or to be raising doubts about its wisdom. A year ago, one would have said that the USA and Russia were light years apart in terms of political risk. It was the wish of the “chosen one” to “kick ass” that pushed Mr Dudley into the waiting arms of Putin.
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Fueling Refineries With Gas
created: 04 Jan 2011 10:28
tags: gas orl refinery reliance valero
A number of recent news items got me thinking about the potential impact of refineries switching fuels. Refineries use a lot of energy, and that energy has been typically supplied by fuel oil, produced from the crude that is being processed. When refiners talk about their production numbers, this volume is usually hidden, so if a refinery starts to purchase its fuel, the production volumes would increase.
Currently there is a big price differential between Fuel Oil and Natural Gas, and the indications are that this will not go away in a hurry. So we are starting to see a lot more interest in substituting fuel oil with natural gas as the energy source for refineries.
Reliance is the latest.
Reliance Industries Ltd is mulling the establishment of a USD 1.2 billion liquefied natural gas (LNG) import terminal on either the East or West Coast to meet demand at its refineries and petrochemical plants.
This however comes hot on the heels of Valero.
Generating power through liquefied natural gas rather than more expensive fuel oil has significant potential to reduce costs both for the refinery and the island.
Bearing in mind that this refinery is only just being restarted after 18 months due to poor economics, it shows how energy strategy can impact refinery feasibility.
Finally we have a company that actually puts a figure on the savings. ORL who has signed an agreement to buy natural gas from Egypt, has great expectations from the deal.
Annual Saving for the Group is Estimated to be in Excess of US$130m, Based on Full Year Consumption, Following Connection to the Natural Gas Delivery Line in Haifa Bay and on Current Fuel Prices.
Nort only does this approach reduce the cost to the refiner, it increases the amount of product available for sale. If this fuel oil is cracked to produce diesel or gasoline, it amounts to an effective way of converting excess natural gas into scarce oil products, without converting any vehicles at all.
