and now a word from the CIA.
>> Highlights of Dr. John Gates' presentation at the NCE Energy Trust Info Meeting, 31 Oct 2000
(Dr. Gates is a former director of the Central Intelligence Agency, and is now a political and foreign affairs analyst.)
Worldwide oil consumption:
* Now about 76 million bbls/day.
* In 2005 will be approx 85 million bbls/day.
Excess oil production-Only 2.5 million bbls worldwide. All from Saudi Arabia. Doesn't know of any country that's holding back production. OPEC won't be able to cap oil prices; too much demand.
US oil stocks at lowest level in 24 years.
* Number of active oil rigs in US is at lowest level since 1940.
Gas situation even worse than oil.
* In 2000 demand for gas exceeded supply in US for first time in history.
* 58 million US homes use natural gas, compared with 10 million homes using oil.
* 97% of future electricity generation in US is designed to use natural gas. But isn't known where this gas supply will come from.
Worldwide situation:
Middle East: Disruptions unlikely, because all Middle East oil producers don't want them (oil prices are too good).
Persian Gulf-Iran & Iraq both producing at max capacity.
* Iraq-French and Russian companies have signed $11b US in oil investment agreements, so are hoping to have sanctions against Iraq removed.
* Iran-Serious economic troubles, particularly with youth unemployment (ages 18-29: no jobs, therefore lots of riots, unrest, etc.).
Saudi Arabia-Emphasizing economic diversification, trying to decrease youth unemployment. Western companies now being invited to explore for gas. Have decreased tax rates for foreigners, and are allowing foreigners to own companies. In 2000 Saudi government ran it's 17th straight deficit, and the national debt stands at 120% of their national income.
Algeria-Government attempting to restore order; allowing for new gas exploration/discoveries.
Libya-Long-term sanctions have been dropped, allowing for increased opportunities for gas exploration.
Russia-Entire 2000 budget was $30 billion. Estimated that 200,000 to 300,000 bbls of oil leak from Russian pipelines every day. Widespread and blatant corruption makes any further foreign investment unlikely.
Central Asia-All countries ending with "stan" have big problems with oil production logistics, corruption, etc.
Nigeria-Riots, corruption, ethnic conflict all hamper any increase in oil exploration or production.
Venezuela-Pres Chavez wreaking havoc on oil industry. 3m bbls/day in production, but foreign companies and their expertise are leaving in droves; loss of about 7 billion /yr in revenues.
Indonesia-1.3m bbls monthly production (Sep 00). New president is hopeless, lots of violence, expansion of oil/gas industry unlikely.
Mexico-PEMEX constantly overstates oil reserves, not heavily involved in exploration, so difficult to estimate future production. Have made inquiries about importing gas from the US and Canada.
Summary:
* Oil and gas demand will remain high.
* Outside North America and North Sea-serious problems exist with oil/gas industries.
* China is now importing oil for first time ever.
* OPEC expansion of oil production? Not likely outside Saudi Arabia.
* Problem-cost of exploration and need for good return on investment.
* Interruption of oil supply? Grave problems would result; even losing 1-4 million bbls/day would be problematic.
* Shift from long-term oil contracts to buying on the spot market was bad idea; increased price volatility.
* Natural Gas is plentiful worldwide, but just not where the consumers are; so need transport mechanisms (ships, pipelines). No short-term solution to natural gas shortage in US.
* US is boxed in; needs electrical power, but can't generate power through nuclear plants; coal is a no-no; oil and gas still most acceptable option.
* Demand for electricity in US will drive/keep oil and gas demand high, so high prices will remain.<<
Not a positive view but perhaps more realistic than most.
'jaggs |
