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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (8479)	8/22/2008 3:50:37 PM
From: Wharf Rat	Read Replies (1) \| Respond to of 24246

Raymond James Says State of Russian Oil ‘Much Worse than We Would Have Imagined 6 Months Ago’ (Pt. 1 of 2) Posted: August 21, 2008 Russian oil production will decline over 1%, or approximately120,000 barrels a day, through 2010, a situation that is “much worse than we would have imagined as recently as six months ago,” Raymond James & Associates, the investment banking firm, said in a new report. Raymond James blamed the expected decline on factors including “the creeping nationalization of energy assets and the fact that much of the ‘low-hanging fruit’ has been picked.” The firm’s Houston-based energy analysts concluded, “The deteriorating investment climate in the Russian energy sector has clearly deterred foreign investment, and it goes without saying that fighting wars with neighbors is not going to make the Kremlin look warm and fuzzy,” the latter a reference to Russia’s ongoing conflict with Georgia. Asked to comment, independent Texas-based petroleum geologist Jeffrey Brown said he expects that the decline in Russian oil production “will be pretty steep,” noting, “The Russians are highly dependent on old oil fields, with rising water cuts.” (The older a well, the more likely water is being pumped in so as to force the remaining crude to the surface.) Brown indicated that as sharply as he expects Russia’s output to fall, the amount of oil Moscow will have available for export will fall even more, reflecting rising oil consumption inside Russia. In the first half of 2008, Russian oil exports reportedly fell 5.2% compared with the prior-year period. (For more on Brown’s oil analyses, see Does Your Financial Adviser Know What Jeffrey Brown Knows About Mexico’s Oil Exports? (If Not, Listen Up) and Jeffrey Brown’s Warning On Oil Producers’ Own Rising Consumption Gains New Wall Street Backing.) Noting that Russia accounted for two thirds of the increase in non-OPEC oil production between 2000 and 2007, the Raymond James report further concluded that “with Russian oil production now heading south, it will be extremely difficult for non-OPEC oil supply to post any meaningful growth in the future.” More on this disturbing development tomorrow in Part 2. energytechstocks.com