India, sharing a ravenous thirst for oil, has joined China in an increasingly naked grab at oil and natural gas fields that has the world's two most populous nations bidding up energy prices and racing against each other and global energy companies.
...
To meet the demand, India's government, like China's, is looking to tap countries the Bush administration and the European Union have tried to isolate.
China and India, the world's second and fourth largest energy consumers, are competing for every big new energy project, everywhere in the world. This has led them to very unsavory places, like Sudan, where shareholder pressure has driven western companies out. The rest of this article from the New York Times covers recent energy projects for both countries, their rising competition, and insatiable demand.
From Venezeula
ConocoPhillips got permission to develop the Corocoro field this week, causing its stock price to rise to over $100. The deal had been on hold until they came to terms over the royalty rate -
Ramirez, who is also president of Petróleos de Venezuela, the state-controlled oil company, said in a news release the project would go forward under an adjusted royalty rate of 16.66 percent.
That's quite a change from the 1 percent they had agreed to years ago. The Houston Chronicle has further details.
LondonYank has a diary about BushCo's threats towards the Chavez administration in Venezeula.
From Turkey
After two years of construction, workers are welding and testing the last few sections of a 1,100-mile oil pipeline that runs from Azerbaijan through Georgia and Turkey.
The Caspian Sea is one of the world's last great frontiers for oil exploration. However, it is landlocked, and all the available pipelines run through Russia, so it has been a strategic priority of the USA to build an alternate export infrastructure. This pipeline, also know as the B-T-C pipeline, carries Caspian oil to the southern coast of Turkey, and it fulfills that dream. See the Houston Chronicle for a longer story of its development.
From the USA
LNG Terminal Approved
The
Houston Chronicle reports
The Royal Dutch-Shell Group of Companies won a U.S. permit Thursday to construct a liquefied natural gas terminal in the Gulf of Mexico.
...
Gulf Landing becomes the third offshore LNG project to receive U.S. federal approval. ChevronTexaco's Port Pelican project was first, in November 2003, followed by Excelerate Energy in December of that year. Excelerate's terminal is scheduled to take its first delivery next month, while ChevronTexaco earlier this week said it suspended development of the Port Pelican project.
Although demand has been rising rapidly, natural gas production has been stagnant despite increased drilling. One response has been to import Liquified Natural Gas (LNG) from overseas to make up the gap, and as a result, there has been a rush to build new import terminals. Because LNG is very, very flamable, LNG terminals have met vigorous opposition everywhere outside of the Gulf coast.
ExxonMobil surpasses GE as biggest public company
Exxon Mobil, the Irving-based behemoth of oil barrels, overtook General Electric as the biggest publicly traded company in the world, measured by the total value of its stock.
- from the Houston Chronicle.
I won't write a lot about the stock market in these diaries, but this is an historic turning point. During the 1970s and 1980s, energy companies dominated the Dow Jones index, and the energy sector as a whole contributed 30% of the total S&P 500. Now, the energy sector has shrunk to less than 10% of the S&P 500. If you believe that energy shortages will be the driving story of the next decade, this might be an opportune area for long-term investment.
Jerome a Paris has a diary on the trouble that oil majors have in replacing reserves, in spite of record profits.
From Canada
The indespencable Houston Chronicle reprints a Bloomberg article on Canadian tar sands production.
Shell Canada Ltd. Chief Executive Officer Clive Mather says oil from his Athabasca project, where tar sands are boiled to produce crude, can cost twice as much as drilling in the North Sea. And it's worth every cent, he says. "If we had access to unlimited conventional oil, I guess the interest in Athabasca would diminish quite quickly, but that isn't the case."
Lack of prospects for conventional oil exploration has forced the major oil companies to invest in unconventional production, such as tar sands in Canada, and influential investors have taken notice.
"We're damn close" to the peak in conventional oil production, Boone Pickens, who oversees more than $1 billion in energy-related investments at his Dallas hedge fund firm, said in an interview in New York last week. "I think we're there." Suncor Energy, the world's second-biggest oil-sands miner, is his largest holding.
From Qatar
Another form of unconventional oil is made by converting natural gas directly into diesel fuel. In case you missed it, Jerome a Paris has another diary on the Gas-to-Liquids industry that is being built in Qatar.
From China
Channel News Asia reports that China's two largest state-owned oil companies have increased their reserves by 25%.
One of China's top strategic concerns is to find enough energy to fuel its booming economy, which expanded 9.5 percent last year for its fastest growth rate since 1996.
Two-thirds of China's provinces had too little power at the end of last year and energy shortages have been identified as a major bottleneck for the coming months.
The article also reports on recent overseas projects, such as ...
China's largest oil company would nearly double crude processing capacity at the Dushanzi Petrochemical factory ...
The expansion would make the plant China's largest crude processing facility with most of the crude oil brought in through a 1,200-kilometre (750-mile) pipeline running from neighbouring Atasu city in Kazakhstan.
(also from Channel News Asia) This project neatly expands China's supply of crude, while avoiding both unstable Middle Eastern suppliers, and sea lanes that might be interrupted by the US Navy.
A big shout out to Soj for finding these stories. Her blog is a great site for international news, and she has the most incredible range of sources that I've ever seen.
From Iraq
Iraqi Oil Minister Thamir al-Ghadban claims that his country can boost its oil production level from its current 2.1 million b/d to 6 million b/d, aided by Iraqi, Arab, and foreign investments. But he ruled out any privatization of the "extraction sector," saying it was out of the question at the moment.
The Oil and Gas Journal covers an interview that the Iraqi Oil Minister gave to the Arabic Asharq al-Awsat newspaper. His estimate of future production is wildly optimistic, since the peak pre-war production was 2.5 million barrels per day. In any event, there is no way that Iraq can achieve any meaningful increase in production without external financing, and that won't be forthcoming until security is established.
From the World
This week, the energy world converged on Houston for Cambridge Energy Research Associates (CERA) annual conference. Speakers included not only everyone who's anyone in energy, but industry leaders such as Steve Balmer of Microsoft and Jeff Immelt of GE. Daniel Yergin, CERA's chairman, wrote "The Prize", a Pulitzer prize winning history, of the oil industry. There will be a whole diary of news from this conference in a few days, but if you just can't wait, check out their website at CERAWeek.
Here is a taste of what's coming:
ChevronTexaco CEO calls for Congress to act on energy policy
The Houston Chronicle reports on ChevronTexaco Chairman David O'Reilly's address to CERA Week -
He suggested opening up more of Alaska, the Rocky Mountains and Gulf of Mexico to natural gas drilling, a common sentiment echoed throughout the energy industry.
But he also said legislators need to bring policies on the environment, international trade and national security into alignment with U.S. energy needs.
For instance, a U.S. foreign policy priority should be to push for Mexico to open its oil and natural gas industries to outside investment. And the United States should lobby for clarity in West Africa's investment processes, he said.
In Congress, the Republican leadership of the House and Senate disagree on whether to include the most controversial provisions from last year's bill, such as the MTBE liability waver.
Conclusion
Its been another busy week in Energy. Last week's news is available from my prior diary.
