I see deflation of all things worthwhile, including equity, bonds, real estate and manufactured goods not tied to cost of oil, such as Mercedes coupe; I see competitive rolling devaluation of all major currencies against each other, possibly against gold, certainly against platinum, especially if S.African mining workers health deteriorate further and Russia is business-like; and I see what you see concerning OPEC production problems, claimed, self-inflicted, and some genuine.
Do you see oil prices going up in the middle of a world-wide recession/deflation ? My assumption would be the opposite in view of reduced demand. But I could certainly be wrong.
. Any one here have symbols for Venezuelan, Mexican and Canadian oil field owning company equities? The ones who can price gouge with impunity from nationalization?
Not to worry about nationalization as both Venezuela (1975-76) and Mexico (1937 - 38) have nationalized their oil industries.
Venezuela...
eia.doe.gov
pdv.com
OIL
Venezuela is home to the western hemisphere's largest oil reserves at 77 billion barrels. In 2000, Venezuela produced an estimated 3.1 million barrels per day (bbl/d). Venezuela exported about 2.6 million bbl/d, of which about 1.5 million bbl/d went to the United States, about 58% of net Venezuelan exports. The United States has become increasingly reliant on oil imports from Venezuela in recent years. EIA estimates that Venezuelan oil consumption in 2000 amounted to 476,000 bbl/d, up 14,000 bbl/d from 1999. Consumption is subsidized by the Venezuelan government
Sector Organization and Foreign Investment
Venezuela nationalized its oil industry in 1975-76. PdVSA, one of the world's largest oil companies, is by far the largest business and employer in the nation. In an unexpected response to a labor dispute in October 2000, Chavez replaced Hector Ciavaldini, PdVSA president since August 1999, with Guaicaipuro Lameda Montero. Lameda is a military general and engineer who had headed the government budget office. The company experiences periodic labor disputes and strikes. Talks between Lameda and the oil workers' union in order to avoid a strike were scheduled for the end of February/beginning of March 2001.
Privatization of the company is banned by the 1999 constitution. Since 1996, auctions and investments in oil and gas rights have earned PdVSA billions of dollars in joint venture agreements with major international oil companies. PdVSA has established "strategic alliances" and "production sharing agreements" (PSAs) with foreign oil companies. However, political uncertainty and disappointing returns on investments have worked against increased private involvement in the sector.
Since 1996, private oil companies from around the world have participated in rounds of bidding for "operating services agreements." The deals, part of Venezuela's reopening to foreign companies under former PdVSA head Luis Giusti, were designed to help PdVSA attain its goal of increasing production capacity. In the third round of bidding in 1997, over 100 foreign companies pre-qualified for bidding on 20 blocks. The 16 eventual foreign winners included U.S. Chevron, Phillips, Arco, Union Texas, and Pennzoil; Argentina's Perez Companc; Canada's Pancanadian; China's CNPC; Spain's Repsol; and UK Lasmo. Reserves and production capacity at these fields proved to be lower than the companies had hoped, and the 1998 oil price collapse further cut investment at the fields. Analysts believe that only 3 of the 18 marginal fields awarded in 1997 have proven valuable.
Some foreign companies remain committed to Venezuela's marginal fields. In October 2000, Chevron pledged to invest $4 billion in the Lake Maracaíbo region over the next 20 years. Brazil's Petrobras is considering involvement in new marginal fields, as part of a larger energy cooperation plan being pursued by Brazil and Venezuela.
In the past, PdVSA has adjusted its own production to ensure that Venezuela as a whole meets its OPEC production targets. Thus, during periods of OPEC production cuts, private companies operating in joint ventures with PdVSA could maintain steady output. Energy and Mines Minister Alvaro Silva now plans to include in the cuts some joint venture projects in the Orinoco extra-heavy crude belt that were previously exempt. While most joint venture contracts prohibit cuts, the government believes that some are unprotected.
____________
Mexico:
eia.doe.gov
pemex.com (Could not find an English version PEMEX site.)
The Mexican oil industry was nationalized in 1938. Petroleos Mexicanos (Pemex), the state oil company, is one of the world's largest oil companies, the single most important entity in the Mexican economy, and a symbol of Mexican sovereignty and independence. Pemex is the only company in the Mexican oil market, upstream and downstream. While the company is criticized widely as being bloated and inefficient, privatization is not on the agenda. The state-run organization of the sector enjoys enthusiastic public support, and President Fox retracted early campaign promises to privatize Pemex and has vowed instead to modernize and streamline the oil giant. Toward that end, a new board of directors was named in mid-February 2001. The board, consisting heavily of corporate heads, is charged with renewing Pemex through "corporate innovation."
A maritime boundary dispute between Mexico and the United States was settled in June 2000. The Western Gap area, halfway between the Yucatan and Texas coastlines, is more than 200 miles from either shore and therefore outside either country's "exclusive economic zone". Under international law, Mexico and the United States had to agree on a boundary, and the two countries have agreed that 62% of the region belongs to Mexico and 38% to the United States. Companies are expected to take active interest in the area, as technological advances now will allow drilling in the 10,000-foot-deep waters.
Pemex is upgrading its oil transport infrastructure. Currently, there are 2,625 miles of crude oil pipelines and 5,322 miles of oil product pipelines. A 700-mile pipeline currently under construction will connect production from offshore Veracruz to refineries.
____________
Canada
eia.doe.gov
Oils Sands:
oilsandsdiscovery.com
oilsandsdiscovery.com
Synthetic Crude Oil
Much of the exploration in Alberta in coming years likely will be for heavy crude and oil sands, as conventional oil reserves are being depleted. Unlike conventional oil, oil sands are a mixture of bitumen, sand, water and clay. The bitumen, a thick and tar-like hydrocarbon, surrounds the sand and water. To develop oil sands, bitumen is separated from the sand, water and clay. Once separated, bitumen can be upgraded into a high-quality oil called "synthetic crude." Operating costs with current technology stand at $8/bbl, according to press reports, although companies are targeting $6/bbl to $7/bbl for new projects.
The Athabasca Oil Sands deposit, in northern Alberta, is one of the two largest oil sands deposits in the world (the other is in the Orinoco Belt, Venezuela). There are also oil sands deposits on Melville Island, in the Canadian Arctic, and there are three smaller deposits in northern Alberta.
Current output of synthetic crude is estimated at 600,000 bbl/d. As much as $20 billion was invested in oil sands in 2000, as major producers Suncor and Syncrude expanded development and Koch and Shell pursued new projects. Production by 2010 could increase to more than 1.8 million bbl/d, according to press reports. |
