Bharat Rakshak

Two reasons why oil prices are going through the roof

http://oilandglory.foreignpolicy.com/posts/2011/02/24/two_reasons_why_oil_prices_are_going_through_the_roof

^^^^
Old dated article but will deeper drilling tech its possible
http://news.cnet.com/Indias-next-big-bu ... g=mncol;1n

Whats with articles from 2005! WRT to the Deccan traps the land underneath is basement rock, not sedimentary. No way for organics to get there ergo unlikely to have oil. BTW most of India is really really ancient 2 Billion year plus basement rock. Hence our lack of oil but plenty of coal.

First big strike in this area. Should be another KG...

http://online.wsj.com/article/SB1000142 ... 96034.html

Reliance Makes Discovery in Cauvery-Palar Basin

So D9 has paid off. This is a massive complex. Much larger than D6. Lets see what the final number is, fingers crossed...
Here's what I said about D9 way back when. Geologists think this is a massive offshore anticline trap.
viewtopic.php?f=2&t=3577&start=520#p964416

http://economictimes.indiatimes.com/new ... 952013.cms




Meanwhile ONGC continues to futz around. How about producing guys...

http://www.reuters.com/article/2011/06/ ... NB20110622

This is gonna be huge!

It appears I spoke too soon about ONGC. The oil PSU's appear driven to one up the private companies no matter what the truth is. They did the exact same thing after D$ with GSPC and OIL India who then went on to not produce a single foot of gas to date.

Here ONGC is less than economical with the truth. Some of it is retaliation too.

http://articles.economictimes.indiatime ... merciality

A good report on Shale gas prospects in india.
We have much more area than "israel".
http://breport.myiris.com/MOTOSW/OILOTHER_20110329.pdf

how did germany manage to power its war machine all through WWII with just coal ?

Two ways.

1) One of the first countries to be occupied in the push to the east was Romania and that was because of the Ploesti oil fields

2) The used their brains. Just like in the 1st World War, they came up with the Haber Bosch Process which ripped through the crucial British monopoly on Salt Petre (without that you cant have nitrogen in gunpowder and in fact,no nitrogen based fertilizers), which in my opinion is one of the greatest inventions of all time (war is unfortunately the greatest incubator of tech , antibiotics, jet engine, computers, radar.. without war, none of this would have happened) which allows the world to feed itself today and no mass famines, during WW-II , they came up with a brilliant Fischer Tropsch Process, which converts coal and gas to liquid fuels. In fact, South Africa, held out for long under sanctions precisely because Sasoil,used an evolved version of Fishcer Tropsch to hold out. Now everyone talks about Gas To Liquid, if that happens on a large scale, you know where the seeds of that technology came from.

And finally, the push towards Stalingrad and the Crimea were largely to get to the oil and gas at Baku and the Caspian sea area.

If that was so successful, how come we are not using it today on a large scale. India has lots of coal reserves yet we paying $100 to import oil ?

I'm wondering if the west is raising the cost of energy, food..etc. to retard development of emerging powers - more so felt by India than any of the other BRICS.

Coal to Liquid is still way more expensive than just refining from crude. You would never do it unless in a life and death situation like Germany was in WWII or South Africa under sanctions was. In case of gas , it usually is an "islanded commodity" and GTL makes it fully marketable and get the best price possible in an open market. Hence the attraction. It basically arbitrages the price difference between Nat Gas (including LNG) and liquid distillate fuel.

You mean even at $100 oil, its not profitable?

Surely $100 leaving the country is a lot more painful than spending $200 within the country.

NOT profitable.



Welcome to the world of "self reliance", "import substitution", low growth, grinding poverty and "Hindoo" growth rates and perpetual poverty if that is the kind of logic that is going to be used.

Since when does the run up huge deficits and go Greece style bankrupt make any sense?

At some price point, doing something locally even if slightly more expensive is of better value to the economy than sending all hard earned money to some foreign country. For one thing money continues its circulation in the economy. As long as the free market and private capital decides it is so (instead of govt), its a good thing.

The breakeven for CTL, GTL, anything-to-coal is USD 40 per barrel equivalent of energy. No investor would even think of investing if oil price is below USD 60 / barrel. They need to be assured that the oil prices will remain above that for the long term.

The main problem with turning any carbon source (including garbage, wood chips, etc) to liquid fuel is the amount of CO2 that is created as a by product. A solution of sorts is carbon sequestration - putting CO2 into the ground (most likely into the enptied oil fields). As long as CO2 generation is a problem, no environmental group worth its name would let this technology get off ground.

---------
I got all this from the Horse's mouth as I had done an interview with the CEO of a startup a couple of years back.

Have come to expect this sort of stuff from you..But this is precisely the sort of rubbish that went around as policy in the '60s-'80s in India...Greece is going bankrupt not because its not producing everything in GReece, but that it cannot generate enough tax revenues to pay for its expenses! And the only way a country can do so is by being efficient, which typically means buying (most, not all) stuff from wherever its cheapest and concentrating on what it does best (Ricardo - comparative advantage, remember?)....Making oil @ 200 dollars when it is available @ 100 in the world market is as stupid as it gets...I wont getting into explaining the monetary/fiscal implications - it would be too long, and anyway be lost on you...

Neshant,

That is not an invalid suspicion. In the 60s and early 70s, when the developing world was expected to achieve prosperity, the 1973 war quadrupled prices overnight. And all the surplus money flowed into the booming Western financial markets.

Somnath,

The reason Greece is not generating enough taxes is because its most productive industry (shipping) does not pay any or much taxes - because most of it is offshored into tax havens.

And yes, Greece does have a comparative advantage in shipping because they have been doing it since before Socrates - shipping is the identity of Greece.

So, the theories you mention have all been practiced by the Greeks, but still its economy collapsed. Ever wondered why? - Precisely because there were a bunch of theoritical busybodies who did not understand that the economy is a subset of the society, not a superset.

---------
There are advantages of producing at home, even if it is somewhat costlier than outside, the profit marging keeps circulating within the economy. So there is a natural benefit of local production which cannot be captured/understood by price levels alone.

Is a repeat of the same coming? $200 dollar oil anyone? Sure would explain why US & Europe are trying to grab places like Iraq, Libya, Venesuela and install stooges in other petro countries.

Wow, so if Greece decided to "manufacture" oil @ 200 dollars at home, suddenly all Greeks would have decided to start paying taxes?!

Has it occured to you that if a raw material or intermdiate is costlier, the end product will also be costlier, hence less competitive in the global economy, and generally act as a tax on consumer income?

BTW, shipping is about 6-7% of Greek GDP..

You need to deprogram yourself from textbook economics crap which you've been reading. None of the fools writing economics textbooks predicted the 2008 collapse which gives us an idea of how little they know. They are as clueless as you & Bernanke who pretend to know what ails the economy.

Its not as straight forward as a savings of $100. There is a world of difference between $100 leaving an economy altogether to a foreign country and $200 dollars spent within an economy to produce the same outcome. A multiplier effect is felt when $1 enters an economy and so too exists a multiplier effect when that $200 stays in the economy. As long as the decision to spend that amount of money is MADE BY THE FREE MARKET, no dumb ass oracle economists sitting up top can claim to be any wiser.

If Reliance decides to spend $200 on sourcing oil from its oil fields, refiining it at its refineries, selling it at its retail outlets with its companies absorbing profits along the way, that is a FAR BETTER outcome than sending $100 overseas for the Indian economy so long as it has rough profit parity to its importing competitors.

Secondly there is benefit to strategic autonomy which I won't even go into.

For now, Greece is better off sourcing its needs locally in a local currency than spending in euros that it has difficulty paying back. Its not an advanced economy that needs high tech imports. Most of its needs are basic and there's no reason it can't meet a lot of its needs locally. In fact it WILL now that it is bankrupt and that is the best thing yet for the country than importing crap on debt and doing what it does best (which at the moment is nothing!).

Since you used the word "Free Market" , Reliance would be wiped out by oil @ $100 flooding in from abroad! This kind of thing can only work if you put in barriers to imports.. oops.. there goes the "Free Market" and in reality you are forcing customers to cough up $100 worth of value .. so a tax of $100, so that you could allow Reliance to stay in Business. How different is that from Air India?

There are many ways the govt can enable Indian businesses to compete against foreign competitors that don't involve trade barriers or subsidies against the competitor. Its among the things the govt is by its nature involved in - port & landing facilities, power infrastructure, transportation & distribution network, taxation & beaurocracy, trade agreements with foreign countries, defence (against piracy), financing, an educated workforce.. etc.

For example, The Three Gorges dam in China was in part built not just for electricity but to allow inland penetration of large shipping freighters. Transportation costs into China is high and this helped reduce it. A whole bunch of businesses became profitable as a result.

The $200 to $100 difference is a stark one. Let us assume it is $100 to $99.

Is it still a good idea to drain $100 from the economy and send it abroad to save $1?

Textbook economic theory would suggest its a great idea.

This is such a ridiculuous statement that it does not even bear refuting.



Most of Greek shipping per se is outside Greece. They country provides a lot of facilities such as manpower to the industry. That fact you quoted above does not prove anything.

Somnath. the Greek maritime fleet is the largest in the world at 18% of the world's total maritime fleet.

Now when they say shipping industry, is it the fleet that the Greeks own (ships and other capital assets) or is it just the coolies operating in the steer to keep the ship running that make up the Greek shipping industry.

I`ve heard a lot of Filipinos and increasingly Indians are hired for that kind of grunt work. I`ve not heard of Greeks being used for that purpose since they would have to be paid a high wage.

Shipping share is by ownership, but I suspect that Greece probably allows generous low/no taxation to their shipping firms. So the success of the shipping industry does not translate into higher tax revenues for taxes.

Greeks also provide a lot of manpower to the global shipping industry, but so does India.

Vina ji:

Just curious. Can you please explain how Reliance would be wiped out by oil at $100 / barrel? I always thought we (India as a whole) imported about 70% of our oil. Doesn't it mean it is always better to get it cheap?

I can understand if somebody dumped refined products into India below Reliance's cost then Reliance will be hit.

Devraj ji, Reliance refinery is an export oriented refinery.More than 90% of reliance production is straightaway exported.Hence they are not concerned about the domestic market.Because of APM they anyway cannot compete in the domestic market.