westexas on April 15, 2011 - 6:22am
It seems likely that 2011 will be the sixth year in a row that Saudi (total petroleum liquids) net oil exports will be below their 2005 annual rate of 9.1 mbpd, despite the fact that it appears that annual US spot crude oil prices will have exceeded the $57 level that we saw in 2005 for six straight years, with five of the six years showing year over year increases in annual oil prices. (Soon, the Saudis will have been showing declining net oil exports, relative to 2005, longer than the Second World War, 1939 to 1945).
My standard Saudi comment:
Regarding Saudi Arabia, it's really a story of two countries: (1) Saudi Arabia through 2005 and (2) the post-2005 Saudi Arabia. Let's look at 2002 to 2010 Saudi net oil exports versus US annual spot crude oil prices (Total Petroleum Liquids, EIA):
From 2002 to 2005, the Saudis responded to rising oil prices with sharp increases in net oil exports:
2002: 7.1 mbpd & $26
?2003: 8.3 mbpd & $31?
2004: 8.6 mbpd & $42?
2005: 9.1 mbpd & $57
But then we have post-2005 Saudi Arabia, when the Saudis responded to generally rising oil prices with declining net oil exports:
2006: 8.4 mbpd & $66?
2007: 8.0 mbpd & $72?
2008: 8.4 mbpd & $100
?2009: 7.3 mbpd & $62
?2010: 7.4* mbpd & $79
*Estimated
Annual US spot crude oil prices:
Post-2005 Saudi Arabia has of course shown the same pattern as Texas after 1972, i.e., declining production, relative to a prior peak, in response to rising oil prices. The 1972 Texas peak (black) lined up with 2005 Saudi production (C+C):
i1095.photobucket.com
In my opinion, what passes for excess capacity worldwide, including Saudi Arabia, largely consists of what Matt Simmons called "Oil stained brine."
By increasing their output of "Oil stained brine" and by depleting inventories, I suspect that the Saudis could show some kind of short term boost in delivered oil, but I think that the time has passed when they could bring global prices down via a steady increase in net oil exports in excess of their 2005 annual rate. The Saudis have some new production coming on line, but that was true of other post-peak regions too.
For example, Sam Foucher looked at new oil fields in the North Sea whose first full year of production was 1999 or later, and these new oil fields had a peak of about one mbpd in 2005 (versus the overall peak of six mbpd in 1999). These new fields, equivalent, at peak, to one-sixth of 1999 production only served to slow the overall decline to about 5%/year.
BTW, there were certainly have two stock markets in Saudi Arabia: (1) Through 2005 and (2) Post-2005:
tradingeconomics.com
Interesting coincidence that the Saudi stock market crashed at precisely the same point at which the Saudis started "voluntarily" reducing their net oil exports.
Remember the OPEC price band?
independent.co.uk.
April, 2004: Mr Al-Naimi said: "Saudi Arabia continues to be committed to OPEC's $22-28 price band. There are signs that worldwide inventories have begun to build but no one really knows for sure. I do not believe there is a fissure [within Opec]. There is dialogue. Opec in general is committed to the band," he said.
And a look at global net oil exports (BP + Minor EIA Data):
A Nine mbpd Shortfall, Between "Expectations" & Reality
One of the interesting aspects of "Net Export Math" that I had been overlooking is that while production is increasing in oil exporting countries, the rate of increase in net exports, in most cases, tends to exceed the rate of increase in production. We just went back and looked at the 2002 to 2005 global data. Here are the 2002 to 2005 global net export data (2005 net exporters with 100,000 bpd or more of net exports, Total Petroleum Liquids):
2002: 39 mbpd
2003: 42
2004: 45
2005: 46
From 2002 to 2005, production by these countries increased at 4.6%/year, but net exports increased at 5.1%/year. At 5.1%/year, global net exports would have increased to about 54 mbpd in 2008, but let's look at what actually happened:
2006: 46 mbpd
2007: 45
2008: 45
2009: 43
Given that the market was "expecting" about a 5%/year rate of increase in net oil exports, I think that the shock of going to a zero rate of increase, and then actual net export declines was quite severe, probably more so than we initially thought. And then we have the so far relentless increase in Chindia's combined net oil imports, increasing from 11% of global net oil exports in 2005 to 17% in 2009.
theoildrum.com |
