Oil & Natural Gas: News & Discussion

Theo_Fidel · Post by **Theo_Fidel** » 23 Dec 2014 22:23

Don't forget Venezuela, despite the blabber heads, USA pretty much got Cuba to capitulate..... ...there was cheering on the streets of Havana.... ...what the....

Prem · Post by **Prem** » 24 Dec 2014 04:21

http://foreignpolicy.com/2014/12/23/is- ... sRS23%2F12
Is Saudi Arabia Trying to Cripple American Fracking?

n a country that never tires of hearing itself described as “a nation of innovators,” the idea that one such innovation — the shale oil boom — has galvanized the world’s most powerful cartel, OPEC, to launch a campaign to snuff it out has obvious appeal.But like most Hollywood notions of reality, however, this one is too good to be true.Despite repetition in countless media accounts and analysts’ notes over the past few weeks, though, the idea of a “sheikhs vs. shale” battle to control global oil supplies has precious little evidence behind it. The Saudi-led decision to keep OPEC’s wells pumping is a direct strike by Riyadh on two already hobbled geopolitical rivals, Iran and Russia, whose support for the Syrian government and other geostrategic machinations are viewed as far more serious threats to the kingdom than the inconvenience of competing for market share with American frackers.
Among the world’s oil producing nations, few suffer more from the Saudi move than Tehran and Moscow. At a time when both are already saddled with economic sanctions — Russia for its actions in Ukraine and Iran for its alleged pursuit of nuclear weapons technology — the collapse of oil prices has put unprecedented pressure on these regimes. For Russia, the crisis has hit very hard, with the ruble losing 40 percent of its value to the dollar since October. This is particularly problematic since Russian state-owned oil firms have gone on a dollar-borrowing spree in recent years; now, servicing that debt looks very ominous.True, Saudi OPEC minister Ali al-Naimi insisted last month that the move was intended to target shale. But he would say that, wouldn’t he? After all, his OPEC counterparts were standing beside him — including the OPEC minister from Iran.
The fact is, Saudi Arabia has little to fear from shale. Saudi Arabia’s huge reserves of conventional oil can and probably will be produced for decades after the shale boom has run its course — which the U.S. Energy Information Administration (EIA) expects to happen by 2050 or so — and at much lower costs.The numbers indicate that Saudi Arabia’s suffering from the so-called “shale revolution” has been quite minimal. Think of current oil prices as the result of new supply sources combined with lower growth (and thus oil demand) in China, the European Union and a host of other medium-sized economies: While the U.S. surge in tight oil production has brought the country’s production to over 9 billion barrels per day (bpd), rivaling Saudi output at 9.8 bpd, the missing Chinese and European demand more than equals the additional U.S. supply. Experts differ on the tipping point for the decline in oil prices, but a strong case can be made for the October meetings of the International Monetary Fund, following a very bearish IMF quarterly update that showed emerging market growth down significantly.But the United States is importing less oil, you say, and the Saudis don’t like that. Perhaps, but it is not really hurting them much. Because U.S. refineries are geared to accept very particular grades of oil, the sudden appearance of an ocean of domestic U.S. “light crude” means that almost all the “lost” market share has fallen on African oil producers: Nigeria, Angola, and Algeria, in particular, whose own light grade crude has been displaced by oil from the U.S.-based Marcellus, Bakken, and Eagle Ford shale fields.
Another fallacy is the idea that there is a “bottom” for U.S. tight oil producers — that is, a price at which the shale revolution will grind to a halt. While it may make sense to discuss that concept with a monolith like Russia’s state oil industry or even PEMEX in Mexico, U.S. tight oil derived from shale looks more like a constellation. Industry estimates vary greatly on how low prices would have to go to shut down a significant portion of shale production, but most agree that even at $60 per barrel a majority of players will remain solvent — particularly in a world where all the other factors suggest prices will ultimately bounce back up.If China’s emerging middle class stopped buying cars, Europe never exited its recession, and emerging markets like Brazil and India stayed in the doldrums, then the Saudis might be able to undermine fracking. But that’s not the world we live in. Much more likely, this period of low oil prices will be temporary, causing a wave of buyouts and perhaps a few small bankruptcies among shale producers that ultimately produce a stronger industry. Weaker firms will be absorbed, and marginal plays outside the “sweet spots” will be mothballed — at least until prices rise again.Now consider the geopolitical case. The animosity between Saudi Arabia and Iran, longtime rivals for preeminence in the Middle East, kicked into high gear after the Iraq War. The Saudis viewed the replacement of Saddam Hussein, a reviled but largely defanged Sunni dictator, with a pro-Iranian Shiite regime in Baghdad as a strategic disaster. The outbreak of civil war in Syria, and the overt support provided by Iran and Russia for President Bashar al-Assad’s government, was the last straw. Iran’s subsequent support to the Shiite Houthi tribe as it toppled Yemen’s government was icing on the cake.The Saudi decision not to try to arrest the slide in oil prices, meanwhile, avoided a bigger strategic disaster for Riyadh. Had they made the attempt, they risked providing evidence that such an act is now beyond even the Saudis, undermining their claim of being the most important player in global energy markets. By deciding not to act, Saudi Arabia has not only inflicted severe economic pain on its rivals, but it has also deftly reinforced Riyadh’s centrality as the only oil producer truly able to influence global oil markets on its own.The Saudis likely consider this a particularly important message to deliver now, given their fears that a successful conclusion to the nuclear talks with Iran will cause Washington to cozy up to Tehran. But the idea that the conclusion of a verifiable nuclear proliferation treaty will mean the end of 40 years of pragmatic power politics between Washington and Riyadh is fanciful: Remember, even when the Shah was in power, the Saudis managed to purchase AWACS airborne radar planes and eventually F-16s, M1A1 Abrams tanks, and a lot else besides. Being the world’s main source of spare oil production capacity has its perks.
Whether or not their concerns are valid, it’s these geopolitical questions swirling around Iran and Russia that Saudi Arabia is concerned about — not launching a plot to “find the bottom” of the shale revolution. The Saudi imperative today, as it has been for decades, is to reinforce its importance as a U.S. ally and bolster its claim to leadership of the Arab world and stewardship of Sunni Islam. And it just might work: When it comes to the relationship with Washington, nothing says “we love you” like undermining the Russians. It worked in Afghanistan, and it’s working again now. If the “shale revolution” hits a bump in the road as a result, that’s an extra bonus for the world’s biggest oil producer. But it’s hardly the main point.The original calculations by the EIA were overly optimistic, lulling the United States into a false sense of long-term energy independence.

chanakyaa · Post by **chanakyaa** » 25 Dec 2014 00:47

In the meantime, the misinformation propagandu moving forward full throttle..

Oil is down "mainly due to weak demand," he explains... the anchors deny, "I am the expert, not you"

Austin · Post by **Austin** » 25 Dec 2014 13:27

krishnan wrote:Oil rout to continue? OPEC won't cut output even at $20 a barrel, says Saudi Arabia

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

IF Oil price fall at 20 USD then most operator will stop pumping oil as it would be unprofitable even within opec most members would dread such fall.

Saudi is issuing such threat because they dont want to cut production and want to non opec country to do it , Non-Opec country wont do it for loosing market share , lack of technology to cut production drastically or if the price dont fall then low revenue its like a gamble.

I will stick out my neck and say Average Oil Price for 2015 would be around $70-80 for Brent

A falling Oil price is also an indicator of lack of demand globally and signs we are moving towards recession

Austin · Post by **Austin** » 25 Dec 2014 13:34

The Arctic Reserves alone even very conservatively speaking has Oil equivalent of know Saudi Reserves of ~ 260 bbl

Russian oil major Rosneft to yield over $2.8 trillion in revenues from Arctic development

Rosneft’s aggregate revenue from the program implementation will exceed expenditures by more than seven times through the multiplier effect, the company said

MOSCOW, December 24. /TASS/. Russian oil major Rosneft will invest $400 billion in its program of Arctic shelf development over 20 years and expects to earn more than $2.8 trillion from the program’s implementation, according to materials posted on Rosneft’s website.

Rosneft’s aggregate revenue from the program implementation will exceed expenditures by more than seven times through the multiplier effect, the company said.

Rosneft, which is the world’s largest company by output, said in its materials that the Russian Arctic would account for 20-30% of Russia’s total oil production by 2050.

According to data of Russia’s Natural Resources Minister Sergey Donskoy, initial recoverable oil reserves in the Russian Arctic amount to about 7.7 billion tons, including 500 million tons on the Arctic shelf.

By today, 594 oil and 159 gas deposits have been discovered in the Russian Arctic, as well as 2 large nickel and over 350 gold fields.

Aggregate recoverable hydrocarbon reserves in the Russian Arctic are estimated at 258 billion tons of conventional fuel or 60% of Russia’s total hydrocarbons.

At the same time, the Arctic zone’s unexplored potential equals over 90% on the shelf and 53% on the ground.

chanakyaa · Post by **chanakyaa** » 25 Dec 2014 21:51

Austin wrote:...
I will stick out my neck and say Average Oil Price for 2015 would be around $70-80 for Brent

A falling Oil price is also an indicator of lack of demand globally and signs we are moving towards recession

Austinji, very bold prediction on Brent prices..given that it currently trades at around $60. Looking at the last several years of data post crisis, it is hard to believe that it is a demand problem. Recognize that world economies are slowing but that does not justify 50% drop in prices; especially when the currency in which it is priced, continues to be debased.

http://financialpostbusiness.files.word ... _c_ab.jpeg

Following factors come to mind on potential benefits of lower price (and demand is not in it)

1. Western countries have tried all sorts of monetary shenanigans (QExx) to help highly levered banking sectors and boost demand. Benefit of further monetary assistance is expected to produce marginal benefits as shown by later stage QEs. Central banks have limited monetary tools. Lower oil prices help put more money in the pockets of consumers and businesses, thus increasing the likelihood of boosting growth, improve balance sheets and higher employment.

2. Help Ooerope whose economy continues to suffer post crisis, and especially with embargo from Rossiya. Lower oil prices helps their economy and offers much needed breathing room from Rossiya related ban on their exports.

3. Definitely put pressure on Russian Oil & Gas revenues, thus higher chances of containing Pootin. Whether it works or not is a different story.

4. Provide nice boost to world economies with lower oil prices who purchase oil in thollar.

Having said that much of the oil purchases are already hedged for couple of years at or near $90 crude. So, the lower prices may not translate into anything in the short term. As the prices drop below $60 or $50, companies will increase the hedges thus locking in lower prices for a long time thus benefitting from the oil subsidy, helping world economies (i.e. poorer oil produces and richer oil consumers). In the meantime, extracurricular activities near Eyerak will be over and Oil/gas will freely flow to Ooerope potentially ending the dependence on Rossiyan oil/gas.

Austin · Post by **Austin** » 26 Dec 2014 11:40

Low Oil Price affects investment of all big companies as conventional reserves fall down and alternate resources like Shale , Tar Sand ,Arctic needs to be explored they need an Oil Price of $100 for Brent.

Even within Opec the views are not uniform , Just because saudis can afford low oil price does not mean rest of OPEC members does , Just yesterday Iraq Oil minister said the oil price should be around $80 same goes for Iran , Venzeulla , Bharian , Kuwait .........the budget are pegged at WTI ~ $80 - 90

So beyond the big Oil Giant the low oil price is not sustainable for even major Oil producing countries for number of reasons.

Ofcourse time will tell how oil prices move , I would say for 2015 average price of Brent would be $80 lets see how close or far I am from that price.

Anand K · Post by **Anand K** » 27 Dec 2014 14:26

IMHO the proverbial pachyderm in the room is the sheer size of the crude oil futures/options/OTC market compared to the underlying crude oil physical market. They're trading nearly 1.2bn bl/d totally and the production is just around 90m bl/d and, as a result, they exert outsize influence in determining the oil price. Now if the trading thingies were deep, liquid and efficient markets speculation really was not an issue in pricing but as we have seen in 2008-2011 this is not so.
And the thing is we know who holds the maximum power in the world of finance, if she wishes to exert it. Bankers may be too big to fail but Russia is too big to succeed. The Conjpirajy Theory just might be plausible here.

As prices drop below 80 USD banks may not finance new oil and gas development (in Russia mainly), smaller production fields will be forced to close and will force the hand of those suddenly cut out from finance access AFTER making large initial investments. The Saudis might enjoy this: let the price fall and force high-cost producers and future threats out of business - it can tolerate low price floors for a long time, with it's huge capital reserves [IMO they won't cut it till it goes to 15$ given their production cost of < 6$. At that point the fiscal pressure will be unbearable]. In the long term the supply WILL tighten, causing prices to rise and KSA is back to regular programming. It might be certain sectors of DC that's pushing this with subtle nudges on the finance side - and not KSA itself or global weakening demand. Shale Oil could be expendable - does everyone in D.C. really want a world where disruptive newcomers pump 5+ m bl/day shale oil alone domestically and cheaply?

Anyway until the effects of speculation and economic warfare through modern high finance are understood, the talk of fundamentals [actual demand and supply of oil] could lead to wrong conclusions maybe? Like the last time?

Jm2c

geeth · Post by **geeth** » 27 Dec 2014 17:20

Also, IMO two important tech contributed to lower/stagnant consumption are solar & LED

SaiK · Post by **SaiK** » 04 Jan 2015 07:25

http://www.newscientist.com/future-of-g ... LOBAL-hoot

Underground revolution
The topics in this series were developed by New Scientist in conjunction with the Australian Petroleum Production & Exploration Association.

In the second of a four-part series on the future of gas exploration in Australia, New Scientist examines the continent’s huge reserves of “unconventional” gas – and the challenge of how to extract them

The potential for fracking to cause earthquakes is another prickly issue. The US Geological Survey is currently investigating an increase in the number of small earthquakes in parts of the US, which the process may have caused. But geologist Murray Hitzman at the Colorado School of Mines in Golden claims that the US has some 35,000 hydraulically fractured shale gas wells and that only at one of these wells is fracking a suspect in an increase in seismic activity.

Chinmayanand · Post by **Chinmayanand** » 04 Jan 2015 14:45

Just few years back when Crude was nearing $150/barrel , all the world media was running around town shouting PEAK OIL and the same Saudis were hell bent on seeing crude above $85 their breakeven point. Now when crude has come down too fast , suddenly the idiots are running around town again explaining TOO MUCH OIL bla-bla. Market movements precede fundamentals or in other words , whatever the market has done , it's always justified after the fact.
I say , when crude hits $30 , one should start working on new oilfields and plants and by the time they will be ready , oil will be back above $100 with new set of fundamentals such as DEMAND has outpaced SUPPLY

member_28911 · Post by **member_28911** » 05 Jan 2015 17:44

Brent Oil Falls Below $55 a Barrel for First Time in 5 1/2 Years

SaiK · Post by **SaiK** » 05 Jan 2015 22:46

once oil hits below $30 a barrel, India should buy massive amounts of oil for reserves. put a limit purchase deal!

build gia-mongous under ground storage facilities, under the mountains, sea or land and preserve them.

Suraj · Post by **Suraj** » 05 Jan 2015 22:49

WTI crude just fell below $50 .

Prem · Post by **Prem** » 06 Jan 2015 04:15

Projections by professionals claiming smooth ride till 17. Hope Shale guys improve
technology to cut down their cost by half in next few years.Either way chances for energy security/independence for India bright up. Good Muhurat for Modi money management maintaining momentum in Modinomics and Make In India movement.

Austin · Post by **Austin** » 06 Jan 2015 09:22

The Real Cause Of Low Oil Prices: Interview With Arthur Berman

rsingh · Post by **rsingh** » 07 Jan 2015 18:29

Jhujar wrote:Projections by professionals claiming smooth ride till 17. Hope Shale guys improve
technology to cut down their cost by half in next few years.Either way chances for energy security/independence for India bright up. Good Muhurat for Modi money management maintaining momentum in Modinomics and Make In India movement.

That is 8M

SaiK · Post by **SaiK** » 12 Jan 2015 19:07

SaiK wrote:once oil hits below $30 a barrel, India should buy massive amounts of oil for reserves. put a limit purchase deal!

build gia-mongous under ground storage facilities, under the mountains, sea or land and preserve them.

Goldman Sachs says oil prices could fall to $30s

Theo_Fidel · Post by **Theo_Fidel** » 13 Jan 2015 11:45

The future is hard to predict but Oil is one of those fungible commodities. Below is a chart that in a nutshell shows the current situation. As you can see demand has flattened to 93 Million barrels per day and production has perked up to 94 million barrels a day. This is the entire mismatch that has caused the prices to swoon. Until 2010 production was about 88 million barrels a day and producers were struggling to increase. Then the USA shale boom hit, production increase by 4 million barrels a day (2/3 of production increase) and Voila we have a surplus. You can also see that even the smallest spike in demand on production of 1 million barrels per day and prices will perk up again. This is the story of oil, booms and busts over small mismatches..... ...Personally I doubt $30 oil if breached can stay there for long. Demand increase of 1%-2% is enough to imbalance the supply once more. When that happens, your guess is as good as mine...

vishvak · Post by **vishvak** » 13 Jan 2015 17:10

Oil reserves in Venezuela (approximate, not realized due to lack of investment):
link
Probably as much as Saudi, if not more.
Venezuela is selling oil to some other South American countries at a discount, and to the Chinese directly.

Qatar Helps Venezuela Weather Oil Crisis
enezuela Will Receive ‘Several Billion Dollars’ in Financing From Qatari banks, President Nicolás Maduro said, as Opposition Members Criticized the Leader’s Economic Stewardship.
Jan. 12, 2015
Read the comments too.

pankajs · Post by **pankajs** » 14 Jan 2015 11:21

http://www.moneycontrol.com/news/commod ... 73555.html

OPEC wont back down, UAE minister says as oil plunges

OPEC will not cut its oil output to support prices but expects higher-cost producers to do so, the United Arab Emirates energy minister insisted on Tuesday as oil plunged near six-year lows.

Taken at face value their aim is to take down the marginal oil producers i.e Shale oil, etc. Not to say that they do not have any political objective.

Aditya_V · Post by **Aditya_V** » 14 Jan 2015 15:26

Today I have just realised that we are one of the fewcountries with reserves of Barytes, a key requirement for Oil Drilling which we export in large quantities.

Why the hell didnt we use this as a bargaining chip with oil producers. We and China have significant reserves of this. Why cant we get together against oil producers and state- give us cheap Oil and Gas or we don't export this to you?

http://ibm.gov.in/IMYB%202011_Barytes.pdf

panduranghari · Post by **panduranghari** » 14 Jan 2015 21:41

panduranghari · Post by **panduranghari** » 14 Jan 2015 22:20

Both images from arpinvestments.com

Uttam · Post by **Uttam** » 15 Jan 2015 20:55

Aren't they suppose to announce new Petrol, Diesel, LPG, etc. prices on 14th and the end of each month? I didn't hear anything today.

Suraj · Post by **Suraj** » 15 Jan 2015 22:49

There's a proposal from Gadkari to Jaitley in the latest budget, to impose a Rs.1-2 cess on petrol and diesel to fund aggressive road-building plans. They may impose this cess the quiet way, by keeping prices flat, rather than announcing a price cut and then a cess on top of it.

SaiK · Post by **SaiK** » 15 Jan 2015 23:19

what if the price shoots up? it is not a complete price deregulated product. make hay while sun shine will fade when the gas again hits the dark roof

Vamsee · Post by **Vamsee** » 15 Jan 2015 23:42

SaiK wrote:what if the price shoots up? it is not a complete price deregulated product. make hay while sun shine will fade when the gas again hits the dark roof

There are some seriously good arguments on why Shale has put an upper limit on how high the oil prices may go

So..probably for next 2-3 years we may see sub-$80 price for oil.

pankajs · Post by **pankajs** » 15 Jan 2015 23:48

I did hear somewhere that oil is trading at its historic averages around 50-55 $/b adjusted for inflation.

panduranghari · Post by **panduranghari** » 16 Jan 2015 00:47

Oil is eventually going to go above 100$. Its too precious a commodity to sell low for too long. But before we see 100$ we could see 26$ or below.

Vamsee wrote:There are some seriously good arguments on why Shale has put an upper limit on how high the oil prices may go
So..probably for next 2-3 years we may see sub-$80 price for oil.

And what argument is that? Shale is tight oil. And tight oil at sub 80$ does not even break even.

Vamsee · Post by **Vamsee** » 16 Jan 2015 01:15

panduranghari wrote:Oil is eventually going to go above 100$. Its too precious a commodity to sell low for too long. But before we see 100$ we could see 26$ or below.

Vamsee wrote:There are some seriously good arguments on why Shale has put an upper limit on how high the oil prices may go
So..probably for next 2-3 years we may see sub-$80 price for oil.

And what argument is that? Shale is tight oil. And tight oil at sub 80$ does not even break even.

1) I should have saved the piece which gave break even points for various shale locations. But basic point is there are places where ~$50 is also break even.
2) Some times people will have to produce even when price is below cost of production (in order to reduce losses & hoping for better days etc)
3) Do not underestimate technology. Extracting shale will get cheaper & more nations may start extracting to reduce their dependence.
4) If people sense that price is going up more money will be poured again which will act as an upper limit for price of oil.

nawabs · Post by **nawabs** » 16 Jan 2015 07:50

Petroleum ministry asks for money to fill strategic oil reserve

http://www.business-standard.com/articl ... 134_1.html

Taking advantage of falling global oil prices, India plans to start filling its strategic crude reserve. It will shortly make a provision for financing such purchases in the coming Budget, said Petroleum Minister Dharmendra Pradhan.

“Construction of reserves for five mt is underway, which will be ready by February-end,” he announced at the Business Standard Infrastructure Summit. It is building facilities of 5.3 mt at three locations – Visakhapatnam (1.33 mt), Mangaluru (1.5 mt) and Padur, near Chennai (2.5 mt) -- in the first phase. This capacity would be sufficient to cover 13 days of demand in case of supply disruption.

These are being set up by India Strategic Petroleum Reserves Ltd (ISPRL), a special purpose vehicle owned by the Oil Industry Development Board under the petroleum ministry. According to ISPRL, the first under-ground storage facility at Vizag is ready for commissioning, pending a final go-ahead by the government. The other two are also likely to be commissioned this year.

The government had earlier estimated that to create reserves to provide a cover of 90 days on net oil imports, the country would require storage of 13.32 mt by 2020, in addition to the crude oil and product storages with oil companies. To further increase the strategic storage capacity, ISPRL has conducted a detailed study for construction of 12.5 mt storage in the second phase at four locations — Padur, Bikaner in Rajasthan, Rajkot in Gujarat and Chandikhol in Odisha.

panduranghari · Post by **panduranghari** » 16 Jan 2015 16:25

Vamsee wrote:
1) I should have saved the piece which gave break even points for various shale locations. But basic point is there are places where ~$50 is also break even.
2) Some times people will have to produce even when price is below cost of production (in order to reduce losses & hoping for better days etc)
3) Do not underestimate technology. Extracting shale will get cheaper & more nations may start extracting to reduce their dependence.
4) If people sense that price is going up more money will be poured again which will act as an upper limit for price of oil.

http://forums.bharat-rakshak.com/viewto ... 3#p1767713

Average the numbers and still its above 80$. Eagle Ford and Bakken are already past peak shale. This is according to the financial press.

Theo_Fidel · Post by **Theo_Fidel** » 16 Jan 2015 20:55

Vamsee,

What do you think is the likelihood of shale being able to pump 94 million barrels per day or a sizable fraction there off?
Conventional production continues to decline and I’m dubious if Shale can replace that sort of pumping rate.

Vamsee · Post by **Vamsee** » 16 Jan 2015 23:06

Theo_Fidel wrote:Vamsee,

What do you think is the likelihood of shale being able to pump 94 million barrels per day or a sizable fraction there off?
Conventional production continues to decline and I’m dubious if Shale can replace that sort of pumping rate.

1) I do not think Shale/unconventional oil need to pump that much to have impact. If they can fill the gap between demand and supply, they will effectively put a cap on prices

2) Technology will keep evolving and will make extraction cheaper and cheaper as time goes by. Who knows? If Japanese master the art of extracting gas from methane clathrates from the sea economically, it can again decimate the prices

3) If India urbanizes rapidly and builds Metro/Train based transport systems, that will reduce the overall demand

4) If we focus on replacing diesel based water pumps for agri, it will also have impact

5) Even if prices rise, If India repairs its economy, in 2-3 years we will be in a better position to handle higher energy prices. We are targeting 1.5 Billion tons of coal extraction by 2019 (3 times today's volume). I desperately hope for large scale nuke power (copy France model) to insulate from energy imports. ("Energy independence is true independence")

The basic point is I personally do not believe in betting against technology & fall into the camp of "future is very bright" rather than "we are all doomed" camp

==============
One more point added later

Electric cars & Hybrid if they catch up big time in US will have massive impact on oil

Prem · Post by **Prem** » 16 Jan 2015 23:17

Theo_Fidel wrote:Vamsee,What do you think is the likelihood of shale being able to pump 94 million barrels per day or a sizable fraction there off?Conventional production continues to decline and I’m dubious if Shale can replace that sort of pumping rate.

They need not pump so much from Shale as long as production can have impact on supply side. India too should not stop its own shale revolution as back up and now since Japanese are coming to invest in
India ,wait for Methane hydrate harvesting come on line by becoming commercially viable. Fact remains that oil have lost its strategic value by half.

Theo_Fidel · Post by **Theo_Fidel** » 17 Jan 2015 03:22

Vamsee Jhujar,
That makes sense.

Thank you.

Vamsee · Post by **Vamsee** » 17 Jan 2015 05:03

Welcome to ‘normal’ crude oil price, trading at 100-year average

Many people think the oil price has crashed, but it has just gone back to its long-term historical trend, according to Ruchir Sharma at Morgan Stanley Investment Management Inc. That makes a barrel of oil at around $50 just about right based on a 100-year average, said Sharma, who manages $25 billion as head of emerging markets. “The price of oil is returning to normal in its long-term 100-year history,” Sharma said in an interview from New York. “We tend to have a short memory and we tend to forget that the price of oil breached the $50 a barrel level only a decade ago.”

Sharma went further back with his commodity price tracking—200 years—and said the trend is for prices to rise for a decade then fall for two decades. The reason: something new comes along that attempts to substitute a commodity or find a new way to meet demand. “Commodity prices over time don’t go up. Even in the case of oil, where prices have gone up somewhat over time, there’s a lid on price because there’s always something that caps prices,” he said. Surging prices in the 1970s led to the development of the North Sea and Alaska oil fields. Then they crashed in the mid-1980s when Saudi Arabia flooded the market. It took five years for prices to regain lost ground. “These are all cycles—high prices sow the seeds for lower prices and lower prices sow the seeds for high prices,” Sharma said. “That’s the cycle that commodities follow

vina · Post by **vina** » 17 Jan 2015 05:08

Don't know right now, but as of earlier this week, oil was in Contango and a fairly steep one. That is usually a bearish indicator. Spot price of oil will be in normal backwardation or a mild contango at best most times.

In that kind of situation, if you have a large storage capacity and a very cheap carrying cost, you can do arbitrage. That explains why the Chinese imported record amounts of oil last month. They have built huge storage and their financing cost via the govt must be next to nothing for the oil companies. They would have imported an ocean of oil.

member_28921 · Post by **member_28921** » 21 Jan 2015 19:03

http://www.gatewayhouse.in/should-ongc-buy-rosneft/

An article on the fall in oil prices, and what it could mean for India - some of the smaller oil & gas companies have seen stock prices tank by up to 70% and can be picked up for their reserves.