The world oil overproduction is now so bad that oil-tankers are used as storage facilities and parked one the Atlantic, waiting for customers. Like 40 crude tankers with a combined cargo capacity of 28.4 million barrels waiting to anchor near Galveston.
So what’s going on?
All of the above?
[zerohedge.com] – Something Strange Is Taking Place In The Middle Of The Atlantic Ocean
[fortune.com] – Oil Prices Could Drop to $20 a Barrel Next Year
[reuters.com] – Diesel tankers make U-turn in mid-Atlantic as Europe stocks swell
Discussion about whether oil has an organic or abiotic origin. The latter theory is popular in Russian scientific circles. We are agnostic on this question, although we never understood how oil can be of organic origin and yet seems to concentrate in huge oil fields.
Perhaps the real answer is that oil can be either of organic or abiotic origin.
Perhaps the largest oil field on earth Ghawar is of abiotic where shale oil is of organic origin.
[source]Sino-Burma pipelines refers to planned oil and natural gas pipelines linking Burma’s deep-water port of Kyaukphyu (Sittwe) in the Bay of Bengal with Kunming in Yunnan province of China. The Myanmar section of the gas pipeline was completed on 12 June 2013 and gas started to flow to China on 21 October 2013. The oil pipeline was completed in Aug, 2014. The oil pipeline will have a capacity of 12 million tonnes of crude oil per year. The gas pipeline will allow delivery of natural gas from Burma’s offshore fields to China with an expected annual capacity of up to 12 bcm of natural gas.
On the 29th of January, China opened, with little fanfare, a new oil link through Myanmar… This 2,400km long pipeline runs through some of the most rugged areas on the planet, marked by jagged hills and ridges and dense jungle… The new route however, has one invaluable advantage in eyes of Chinese leaders: it bypasses the Malacca straits, whose infamous waters are infested with pirates… The pipeline shortens the distance the oil will have to travel by sea to reach China by 700 miles. It also cuts by 30% the time this liquid black gold will take to get to the Middle Kingdom… Avoiding the Malacca detour had the other, even more invaluable advantage in the eyes of the Chinese leadership. With 80% of all imported hydrocarbons to China going through the Malacca sea-route, China is vulnerable to having its overseas energy supplies blockaded by the American 6th Fleet during a Sino-U.S. geopolitical crisis… Another even bigger behemoth project is now in the works, a railway line is being discussed, which will follow the route taken by the pipelines. This project has a price tag of $20 billion dollars and would allow China to more easily import Burma’s precious wood and all sorts of other commodities, while also facilitating the flow of Chinese workers to the coast.
[en.wikipedia.org] – Sino-Myanmar pipelines
[forbes.com] – With Oil And Gas Pipelines, China Takes A Shortcut Through Myanmar
[laht.com] – Venezuela Oil Price Tumbles Further Below $40
The Latin American Herald Tribune (LAHT) is an online-only newspaper with headquarters in Caracas, Venezuela. It is aimed at English-reading people who want to be informed about Latin America. The publication identifies itself as the successor of the defunct Venezuelan newspaper The Daily Journal. Russell M. Dallen Jr. is the President and Editor-in-chief of LAHT since 2008.
[wikipedia.org] – Latin American Herald Tribune
[source] Putin and Deputy Crown Prince Muhammad bin Salman
Russian-Saudi thaw. Last year September there were rumors/conspiracy theories that the oil price crash was the work of Saudi-Arabia, that had turned the tap open full blast after
instructions consultations with US foreign minister John – where’s my bike? – Kerry. Purpose: hurt Russia with low oil prices.
Whatever the truth of that, those were the days that are no more [Alfred, Lord Tennyson]. This is 2015 and Saudi Arabia is a little bit angry with the US, that all of a sudden plays nice with Iran. And what do jealous lovers do? Right, they pick up the phone and call an old lover, the one lover Saudi-Arabia knows the US hates most: Ivan, just to rub it in.
The two new found partners inked six deals concerning oil cooperation, space cooperation, peaceful nuclear energy cooperation, and nuclear technology sharing.
Oil Minister Ali al-Naimi made an interesting remark:
“I am optimistic about the future of the market in the coming months in terms of the continuing improvement and increasing global demand for oil as well as the low level of commercial inventories.” This, the minister said, “is expected to improve the level of prices.”
“Improving oil prices” from the point of view of oil producers probably means “increasing oil prices”.
Editor: we hope and also expect that oil prices will increase soon, because peak oil is finally upon us. We need higher oil prices to ensure that sun and wind remain competitive and that the transition momentum doesn’t stall. And furthermore we want to see a Russia with a full purse, if necessary at the cost of Europe. Not because we are traitors to the European cause, we are merely traitors to the West, which we want to see blown up, to pave the way for Paris-Berlin-Moscow and the resurrection of European civilization at the end of the age of globalism and Anglo-Soviet 20th century. And old, ‘backward Russia’ all of a sudden has found new strength and has become European avant-garde.
[rt.com] – Russia and Saudi Arabia ink nuclear energy deal
[brookings.edu] – Saudi’s star prince keeps rising, visits Putin in Petersburg
[russia-insider.com] – Saudi Arabia and Russia Ink Six New Deals, Embark on New ‘Petroleum Alliance’
Includes: crude oil + shale oil + oil sands + natural gas.
[us6.campaign-archive1.com] – ASPO USA Peak Oil Review, 15 June 2015
The chairman of ASPO Kjell Aleklett reports of a recent visit to the Canadian oil sands mining operation in Fort McMurray.
[Google Maps] – Fort McMurray
[aleklett.wordpress.com] – A visit to the heart of Canada’s oil sands industry – Fort McMurray
The road Fort McMurray to Fort McKay passes the heart of the Canadian oil sands industry.
I travelled from Fort McMurray to Fort McKay, a distance of 58 km. Along that route I passed near part of the heart of Canada’s oil sands industry including Suncore Mine, Syncrude Mine and Shell Mine.
Before I arrived in Fort McMurray I had no real understanding of the size of the area from which oil sands are mined. If one draws a circle of 50 km radius then that will encompass the heart of the mining activity. A little less than I had imagined… Places where industrial activity is ongoing, especially where mining activity is occurring, are not pretty to look at. The oil sand mining along Highway 63 is a clear example of this. But they show also that it is possible to rehabilitate these areas.
The oil production rate is currently 1.9 million barrels per day (Mb/d). The current lower oil price makes it uncertain whether this production rate will increase. In our 2007 publication we predicted maximal possible production from the oil sands in 2015 at 3.5 Mb/d so it is clear that current production is not following our “crash programme scenario”. According to Canada’s prognoses production in 2025 will be 4.5 Mb/d, a rate that seems far from possible…. In the OSCA text on the oil sands they give Canada’s producible oil reserves as 173 billion barrels, of which the oil sands represent 168 billion. If the production rate increases to 2.7 Mb/d then sufficient oil sands exist for over 150 years of oil production.
Editor: report confirms that from an energy perspective, Canada is probably the country one needs to worry about least. Low population density, lots of hydro-power, lots of space with large wind power potential.
[youtube.com] – Fort McMurray
The West believes that oil has an organic origin.
Russia believes that oil originates from the core of the earth and migrates to the earth’s surface under pressure until it is halted by a granite ‘roof’.
Engdahl believes that the Russians are right and that under the right circumstances oilfields could replenish.
Editor: without taking sides in this issue, it is interesting that oil accumulates in oil fields and that oil is not universally present, where in contrast life is.
Why the rapid drop in oil prices?
Here is another explanation:
high oil prices were the result of FED policy of quantitative easing.
Now that the FED has announced it will stop that practice, oil prices are back to normal again.
Easy money had kept oil prices artificially high for much longer than fundamentals warranted, as Chinese demand and oil supply had started to turn back in 2011, and oil prices have now merely returned to their long-term average
Although we are not willing to accept this theory head over heels, it is interesting nevertheless. Especially the following quote from the article resonates:
Sharma rightly points out, though, that supply and demand haven’t changed enough to create a 50% plunge in prices.
[time.com] – The Real (and Troubling) Reason Behind Lower Oil Prices
Brent oil price increased with 6% yesterday to $62, recovering from a minimum of $50 on January 20, 2015. June last year: $110
Editor: if the oil price can be more than halved in six months, it can also double in six months. Low oil prices encourage economic growth, which increases demand for oil, which increases prices. On top of that, a lot of North-American production facilities with high operational costs are being driven out of business due to the low oil price. It could take some time to get them started again. Perhaps Vlad’s purse will be full again next year.
[telegraaf.nl] – Olieprijs loopt stevig op
The Pieter Schelte can carry up to 48,000 ton and is intended to transport complete oil platforms. The ship was build in South-Korea on behalf of the Dutch offshore company Allseas and is now underway to Rotterdam to be completed. Price tag: more than one billion euro.
[nieuwsbladtransport.nl] – ‘Pieter Schelte’ verliest grote klus
Setback for the Pieter Schelte: the Russian government decided to cancel South Stream, a project carried out by the Pieter Schelte.
Oilprice development over the last 2 year
What is happening here? Two hypotheses:
William Engdahl and others assume that Saudi-Arabia has increased oil production on request of global embarrassment USA in order to attack Russia, lower Russian income and hope for regime change in Moscow so they can loot the joint again, like during the Jeltsin & oligarch years.
Our educated guess is that it is mainly the first factor. Consumer behavior doesn’t change that fast. But we tend to think that this price dip will be short-lived, because likely victim #1 will be the US and its fracking business, wiping out production there in no-time, although Russia also will be severely hit. The winners of course are the consumers, to begin with in Europe:
[spiegel.de] – Ifo-Ökonomen heben Wachstumsprognose kräftig an
Very upbeat expectations for Germany. 1.5% growth in 2015 expected and record low unemployment of 6.6%.
[telegraaf.nl] – CPB: export én consumptie trekken aan
Netherlands, same story. 1.5% growth, reduced unemployment
Meanwhile, Iran is not amused:
[myfoxny.com] – Iran: Fall in oil prices is ‘treachery’
TEHRAN, Iran (AP) – Iran’s President Hassan Rouhani said Wednesday that the sharp fall in global oil prices is the result of “treachery,” in an apparent reference to regional rival Saudi Arabia, which opposed production cuts.
[telegraph.co.uk] – Saudi Prince says Riyadh won’t cut oil unless others follow
Saudi-Arabia admits that it could decrease production to give a boost to oil prices, but that it won’t:
“The kingdom is not going to give up market share at this time to anybody and allow – whether it is Russia, Nigeria, or Iran or other places – to sell oil to Saudi customer,” said Prince Turki, who has also held Saudi Arabia top overseas diplomatic post as the kingdom’s ambassador to the US.