Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
In the run up to OPEC’s meeting in Vienna on Sunday, the cartel is split along the usual lines, with Iran and Venezuela calling for further cuts in output, and Saudi reported to prefer closer adherence to existing quotas. In Guest Commentary this week, Sadad Al Husseini, former Executive Vice President for Exploration and Production at Saudi Aramco, offers five reasons why no further cuts are necessary.
The US Energy Information Administration (EIA) cut its global oil demand forecast yet again in its Short-term Energy Outlook released this week. The EIA now expects demand to fall by 1.4mbd 2009, 200,000 barrels more than it predicted only last month.
With no end to the economic gloom and reports that China has filled its strategic oil reserve and is reducing imports, some commentators anticipate a further price collapse. Many energy companies are hurting even at current prices, but Exxon in contrast promised this week to increase its 2009 capital spending and predicts global energy demand will grow 35% by 2030.
As the Copenhagen climate change summit approaches governments are grappling with low carbon ways of meeting their future energy demand. Spain, a country with no domestic fossil fuel resources, announced this week that it is now producing nearly 30% of its electricity from locally installed renewables. Another possibility that is gaining currency is to combine a wide range of renewables through a supergrid although, as with carbon capture and storage, the concept has not yet been demonstrated at scale.
In the UK this week the Business Secretary, Lord Mandelson and the Energy and Climate Change Secretary, Ed Miliband launched a new UK vision for a low-carbon industrial strategy. However, with the cabinet reportedly split over funding, the document was more fanfare than strategy. With growing concern that the UK is becoming too reliant on gas for heat and power, and time running short to replace opted-out coal and the ageing nuclear fleet, the government’s low carbon credentials will soon be tested.
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Saudi wants OPEC to comply, not cut more-report
Iran and Venezuela lead calls for cuts in production within Opec
Guest Commentary: Sadad Al-Husseini
Lately there is more talk about re-establishing a price band or a floor price as alternatives to reducing quotas. These are of course very problematic to agree on, let alone implement.
Beyond these there are also the issues of quota adherence. Pronouncements of over 80% adherence by some OPEC ministers sound good but are not consistent with OPEC's own February monthly report. We'll need to see what they report in their March estimate based on external sources.
Meanwhile dry cargo to China in the form of metals is reported to have increased significantly in recent weeks while oil shipping out of the Gulf is down to 16 million bd.
Perhaps the Chinese claim of 8% GDP growth for 2009 is starting to gain traction even though oil exports are marginally down. The global monetary stimuli packages followed by fiscal relaxation in the US (presumed) may improve the demand factor for finished goods and products in the US but we are still looking at a six months minimum lag time.
With Russian and Mexican declines, onshore rig levels at 60% in North America and slow-downs in capacity spending, oil supply capacity is diminishing across the board.
Could all this start lifting prices in late 2009 to clear Iran's desired $65 per barrel?
Sadad Al-Husseini, was the Executive Vice President for Exploration and Production for Saudi Aramco
EIA lowers oil demand forecast in latest short-term outlook
Wondering if Crude Could Fall Even More
Oil majors ease with current crude prices will not last
China govt oil reserve full - shipper
Iran Needs $24 Billion for Oil Projects This Year, Etemaad Says
Oil giant to increase 2009 spend to $29bn
Government rescue plan for North Sea jobs
Sasol slashes capital expenditure
Expansion of LNG threatens gas glut
Hungary, Russia to sign pipeline deal
Trouble in store
£50bn of European investment needed to kick-start Saharan solar plan
Windmills tilt Spain to cleaner green energy
Wind farms seek state aid to keep moving
Waterways invests in hydro-power
World Bank offers dire forecast for world economy
Darling vetoes plans for green revolution in snub to Mandelson
Scottish Power to build gas-fired station
Britain has only four days of gas left in reserves
Airline industry ‘in crisis’
Maersk is rocked by 20% fall in shipping