OPEC's Reserves Climb Past 1 Trillion Barrels

Due to a boost in Venezuela's proven reserves (primarily from unconventional sources, such as heavy oil located in Orinoco Belt), OPEC's cache now stands at 1.02 trillion barrels:

The OPEC Annual Statistical Bulletin for 2008 released recently now claims that proven oil reserves of the group has gone up by more than 75 billion barrels in 2007 to reach 1.02 trillion barrels in 2008. The main source of the increase is Venezuela increasing its reserves to 172 billion barrels, a rise of about 73 billion barrels over 2007.

The ASB said that this makes Venezuela the second largest crude holder within the OPEC after Saudi Arabia. And with some minor adjustments in the reserves of the rest of the world, the OPEC's share of world oil reserves after this adjustment is seen going up to over 79%. Indeed the development could be unsettling for some, one has to concede.

The increase in Venezuela's reserves in recent years has been very sharp from the 76 billion barrels in 2003, as the country now adopts the policy of adding non conventional heavy oil deposits to its conventional oil reserves.

And interestingly, if a similar practice is adopted by the US and Canada, the reserves picture in the world would alter completely. However, the world still lacks an agreed way of assessing a country's reserves independently and therefore, reports like the ASB take whatever a country claims to be its reserves, one needs to point out.

[...]

Venezuela claims that at "USD 50 per barrel, a portion of the Orinoco tar sands becomes commercially viable; enough to bring the country's proven reserves up to 312 billion barrels."

That's a lot of oil. Too bad Venezuela is infected by a Putin wannabe dick head: Chavez gunning to strong arm media critics.

And what's this? Amy "I heart Fidel Castro" Goodman sycophantically chatting with Mr. Chavez.

Amy, your stoic, depressed face needs some endorphins. Go flock to your solidarity bros. in Cuba, Ms. Goodman. Sweat, farm, help purge the scoliosis-infected state farms and help Cuba wean itself off of the capitalistic decadents in the US of whom Cuba so desperately needs to eat.

- Brewskie

OPEC: World Will Need Less of Our Oil

OPEC believes the world will be less reliant on the group's crude oil for a while...

OPEC says the world will need less crude oil from the group in 2013 than it did last year as the lingering impact of recession crimps demand and rising biofuels supply makes up for shrinking production elsewhere.

The Organization of Petroleum Exporting Countries, whose members supply about 40 percent of the world’s oil, slashed its forecast for global oil consumption in 2013 by 5.7 million barrels to 87.9 million barrels a day. OPEC will have to produce 31 million barrels of crude daily in 2013 to satisfy demand, compared with 31.2 million barrels last year, it predicted in an annual report today.

“There is a growing perception that the economic slowdown will be U-shaped,
that is the recovery will gather momentum only gradually,” the group’s Vienna-based secretariat said in its World Oil Outlook published today. OPEC sees demand for its crude “rising slowly over the medium term, returning back to 2008 levels by around 2013.”

- Brewskie

OPEC Foresees Lower 2010 Oil Demand Than IEA

Who will win the war of the pessimists?

The Organization of Petroleum Exporting Countries expects a slower rebound in oil demand next year than the International Energy Agency, based on a weaker outlook for the global economy.

Worldwide crude-oil consumption will increase by 500,000 barrels a day, or 0.6 percent, to 84.3 million a day in 2010 as industrial production gradually picks up after this year’s recession, OPEC said in a report today. That compares with an increase of 1.4 million barrels a day, or 1.7 percent, to 85.2 million, forecast by the IEA on July 10.

[...]

Next year’s 2.3 percent increase in global gross domestic product will be driven by emerging countries, such as China and India, while economic growth among developed nations will remain “anemic,” OPEC said. The Paris-based IEA, which advises 28 consuming countries, assumes a stronger global GDP rebound of 2.5 percent.

OPEC’s 2010 projection is 300,000 barrels a day lower than the 84.6 million barrels a day estimated in the organization’s World Oil Outlook released on July 8. The monthly report is based on more timely data than the outlook, which projects through to 2013.

Demand for OPEC

OPEC, whose members account for about 40 percent of global oil supply, anticipates that demand for its own oil will shrink for a third year in 2010, by 400,000 barrels a day to 28.1 million a day.

[...]

OPEC estimated that production from outside the group will increase by 330,000 barrels a day next year to 50.96 million barrels a day, as a result of projects in Azerbaijan, Kazakhstan and Canada. Non-OPEC supply expectations for 2009 were kept nearly unchanged at 50.62 million barrels a day.

- Brewskie

OPEC: Market Fundamentals Unlikely to Ignite 2010 Price Inferno

OPEC doesn't believe market fundamentals will set 2010 oil markets ablaze:

The oil cartel said in its latest monthly oil market report released July 14 that lower projected demand for its crude would increase its surplus production capacity which, combined with increased idle refining capacity, would be enough to compensate for any sudden demand surge or supply disruption.

"Given the projected outlook, increasing OPEC spare capacity and growing idle refining capacity should be sufficient to offset any sudden surge in demand or supply disruption in either crude or products," OPEC said, without giving figures for its current or projected surplus capacity levels.

"This reduces the likelihood of fundamental factors exerting strong upward pressure on prices in 2010."

Although OPEC sees world oil demand growing by 500,000 b/d in 2010, it expects this to be satisfied by non-OPEC producers and sees demand for its own crude falling by 400,000 b/d next year on top of the 2.3 million b/d drop in demand between 2008 and 2009.

With current crude production -- estimated at 28.44 million b/d in June -- more than 300,000 b/d than the 28.1 million b/d projected 2010 call on OPEC crude, the cartel will have food for thought at its next meeting, scheduled for September 9 in Vienna.

- Brewskie

OPEC to Add 2 MBPD Condensates Production

Simmons's assertion of OPEC possessing no spare capacity was DOA; another nail in the coffin is on the way.

OPEC is expected to add 2 million barrels per day (bpd) of liquids production capacity by the end of next year due to projects to expand gas output.

The forecast rise in the amount of condensate and other liquids to be pumped from gas deposits would be equivalent to adding another oil exporter to the group nearly the size of Kuwait, and bigger than either Libya or Angola.

Condensate is almost identical to premium quality light crude oil, and can be processed in petroleum refineries to yield products such as petrol. But it is excluded from OPEC quotas because it is a by-product of gas production. According to the International Energy Agency, which included the new projection for OPEC liquids output in its latest monthly oil market report, the Middle East oil producers Saudi Arabia, Qatar, Iran and the UAE would provide 90 per cent of the additional olumes, with Nigeria accounting for the remaining 10 per cent.

[...]

Almost all the gas developments in OPEC countries that are now due for start-up over the next 18 months were previously delayed by technical complications related to construction and engineering, and by a shortage of skilled labour.

They are proceeding towards completion now that costs have fallen, and supplies of materials, equipment and people needed to build the projects have loosened up. Especially in the Middle East, a chronic shortage of gas to meet rising domestic demand from power stations, water desalination plants and heavy industry ensured that gas projects were not cancelled, and that “expansion plans stay the course”, the IEA said.

Saudi Arabia, the biggest Persian Gulf oil producer, plans 660,000 bpd of new liquids production from its Hawiyah gasfield and from a plant being built to process gas from the Khursaniyah oilfield, which is slated to start production in October. More condensate could come from gas associated with the huge Khurais oil development that was launched last month.

According to the IEA, Qatar is “on track” to ramp up gas liquids output from six gas projects associated with its giant North Field by a total of 545,000 bpd.

The UAE plans to add 340,000 bpd of gas liquids capacity by the end of next year, largely from processing facilities associated with its Habshan oil and gas evelopment.

Iran, which has the world’s second biggest gas reserves after Russia, is expected to boost gas and condensates production from three phases of its big South Pars gas project in the Persian Gulf, in order to supply gas to an enhanced oil recovery project at its onshore Aghajari oilfield. The gas expansion would yield 245,000 bpd of new liquids output from South Pars.

Nigeria plans to start a gas and condensates project in partnership with France’s Total, to include 175,000 bpd of liquids output.

- Brewskie

Guess What OPEC's Been Doing? (Suprised?)

OPEC has stated repeatedly it prefers a target oil price of $70-80 per barrel, and has committed produciton cuts to reach that aim. Since oil's been higher the past several months, guess what OPEC is having a problem with? Historical non-compliance:

OPEC nominally still has big oil-production cuts in place, but cartel members such as Iran and Angloa—both suffering from the recession—are looking for revenue in extra barrels of crude. Compliance among OPEC’s 11 quota-bound members was down to 68% in June, after reaching 80% earlier this year, according to the International Energy Agency.

That compliance rate is par for the course, historically. But it means that since April, OPEC increased production by about 330,000 barrels a day. And additional oil has hit the market from other sources, the IEA says. Since demand is still fairly week and inventories are still bulging, that extra crude is simply feeding oil bears.

Is that a good idea to pursue when there's a already a global glut?

- Brewskie

Mr. Simmons's Mental Capacity Goes Up in Smoke

This ultimately will be a somewhat quick debunker post on the man (a trademark, "heart attack brick burger-like meat stack" is in the pipeline for him=)). I was reading a vaguely noticeable article on "why gas won't go to $4 a gallon this summer (as if anybody couldn't see that)," when this bit was eyeballed (link):

Houston consultant Matthew Simmons sees higher prices ahead as well. OPEC's supply capacity is strained, he said, and the recession has halted refinery expansions, pipeline improvements and offshore-drilling projects. "There's no extra crude in OPEC's pocket," he said. "We have no cushion."

There you have it, folks: "we're screwed;" all coming from the mouth of the man who driveled last winter "we don't have any evidences of a glut," or who's messianic certainty of natural gas Armageddon prevented him from forecasting shale gas's significance, or the gas glut we have now.

Of course for normal people - those who don't flake out their brains from "phalanxing" insidious chemicals from layers of makeup plastered onto one's face (like Wacko Jacko) - who have been paying attention to the news, they have gained clarity of a situation a 1st grader could comprehend: you're wrong, old fart.

Here's the real money shot:

And we fist-pounders demandingly ask: "Where's the beef?"

I hate to run rehashed material into the ground - yah gotta run idiots' heads into roughshod soil like wheel barrels to perk any activity in their frontal lobes! - but Saudi Arabia is or will be adding spare capacity(here, here... poke here), plus has exhibited avarice avity for its vaunted offshore potential; Iran's not shabby with "Great Lakes" oil discoveries (same can't be said for political freedom), then or now; and Iraq, if it can hold its shit together, has a Kobe Bryant-like oil future, with plenty more oil to be found.

Mr. Simmons is a colossal businessman who started his company from scratch; yet he banked an ego the size of his fortune on oil and gas Armageddon. This man has gotten practically nothing right this decade with his dooms day scenario forecast; yet his "fleet" of peak oil Lassie clones slobber their rough collie smiles to every phonon he emits. "Oh no, OPEC has no cushion. We're soo fucked!!"

Mr. Simmons never-the-less persists into his wintry charge of peak oil doom like ravenous Napoleon charged pig-head first into Russia. With such callous disregard to facts, it's no wonder Mr. Simmons played an influencing part with another indefatigable turd:

- Brewskie

Increased Non-OPEC Production May Frustrate OPEC's Efforts

OPEC's dreams of $80 a barrel of oil may not be coming around for a while...

Total oil supply, excluding OPEC, will stand at almost double the oil group's supply in 2009, according to a new report.

Releasing the data to coincide with yesterday's formal 152nd meeting of its members, OPEC said the non-Opec producers, including Russia, the US, Vietnam, Brazil, Australia, New Zealand and India, will meet much of the supplies shaved off by OPEC cuts

In what may serve as another blow to oil prices, OPEC said around 40 very large crude carriers (VLCCs) full of oil are currently floating in the seas. Analysts say this will ensure that a million-barrel-a-day cut may take two months to make an impact on prices.

The data presented by the organisation showed that the total crude supplies into the global oil markets, other than the OPEC crude to which the cut is applicable, will stand at 55.54 million barrels per day. Demand for OPEC crude is to average at 29.1 million barrels a day, the report said.

While OPEC more than 40 per cent of the global oil demand, it would meet 34 per cent this year, data showed.

[...]

Robin Mills, a Dubai-based oil economist, said Russia has become a key contributor to the still-strong non-Opec supply. "They have always shown their willingness to co-operate with OPEC but have later opted only for token cuts," he said. Russia is the world's largest producer of oil. OPEC estimated Russian oil production in 2009 will average at 9.65 mbpd.

The cartel expressed apprehension the country will increase oil supply this year. "The uncertainty over Russian oil supply remains high as various reports suggest a possibility of a tax cut which may partially support operators' spending and ultimately improve production," OPEC said.

[...]

OPEC said the US supply will grow by 200,000 barrels a day this year. Besides the US, countries like Canada and Mexico may increase production, OPEC said. Supply from Canada is expected to increase by 70,000 barrels a day this year.

[...]

Brazil will be another major contributor to non-OPEC supply this year. "Brazil's supply is to increase 160,000bpd in 2009," the report said. Oil supply from Latin America is projected to average 4.28mbpd in 2009, an increase of 0.2mbpd from a year earlier.

[...]

The estimates still put the number of VLCCs being tied up in storage in February at about 35 to 40 vessels, making up seven to eight per cent of the global VLCC fleet. Mills said this would ensure that any announcement by OPEC to further shave crude supply will take at least two months to make an impact.

"Each VLCC has a storage capacity of two million barrels of crude. Forty tankers would mean 80 million barrels. That's almost a day's consumption of oil. A million barrel a day cut should therefore take 80 days to have an impact on prices," he said.

- Brewskie

Black Goo Still Oversupplied by 1.5-1.6 mbpd: Venezuela

This from Rigzone on the oil glut:

OPEC members need to fully comply with the group's existing oil production cuts, as the world oil market is oversupplied by between 1.5 million and 1.6 million barrels a day, Venezuelan Oil Minister Rafael Ramirez said Friday.

Onshore oil inventories are reaching peak levels, while floating oil inventories also are building up, Ramirez said.

The Venezuelan oil minister made his remarks to reporters as he arrived in Vienna Friday. Members of the Organization of Petroleum Exporting Countries will meet here Sunday to review the group's production policy and determine whether another output cut is necessary.

"Evidently there is still a lot of production in the market, and we will meet to discuss how to drain this," Ramirez said.

OPEC announced three production cuts in late 2008 totaling 4.2 million barrels a day. Many analysts estimate the group's compliance with those reductions at around 80%.

Asked whether Venezuela would propose further cuts in OPEC's production, Ramirez said his country will insist at Sunday's meeting on strict compliance of production quotas.

"At the moment, we don't have full compliance," he said

To remove excess oil from the market, OPEC will need to strive for 100% compliance, and "then evaluate the destruction of demand and see whether additional measures are needed," Ramirez said.

- Brewskie