ODAC News
Wednesday 18 April
The Oil Depletion Analysis Centre
1/ Dash for green fuel pushes up price of meat in US
(The Times [
2/ Pakistan likely to face
major gas shortfall (Khaleej Times, Mon
09 Apr)
3/ Shell to raise
Nigeria oil production (Financial Times, Thu 05 Apr)
4/ UK gasoline sales up
in '06 after long slide (Oil and Gas Journal, Tue
Apr 10)
5/ Oil and Gas Reserves
Shrinking (The
6/ Oil Enforcement Agency
(Freedom From Oil, 2006)
7a/ Update from the Middle
East
(contact in the ME, Mon 16 Apr)
7b/ Does Saudi Arabia Have the
United States Over a Barrel? (The
Globalist, 29 Apr 2004)
8a/ Car Production in
Russia Up 13.7% to 289,000 in 1Q07
(FC Novosti, Wed 18 Apr)
8b/ Russian Oil Production Up
4.2%, Gas Output Up 0.3%
(FC Novosti, Wed 18 Apr)
8c/ Russia to Import Petrol
Tax Free (FC Novosti, Wed 18 Apr)
8d/ Russia to Export Floating Nuclear Thermal
Power Plants (FC
Novosti, Tue 17 Apr)
8e/ Gas Production to Begin at
Beregovoye Deposit in April (FC
Novosti, Fri 13 Apr)
9/ Oil chiefs slammed over
dwindling supplies (Adelaide Now, Tue 17 Apr)
10/ Senators Seek to Cut US
Gasoline Use, Save Energy
(
11/ Iranian LNG considered
vital for future European gas supply (MarketWatch, Thu 15
Mar)
12/ Rising costs threaten
global LNG growth –industry (Reuters UK, Wed
14 Mar)
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1/ Dash for green fuel pushes up price of meat in US
(The Times [
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article1642746.ece
Comment: We will be seeing a lot more
of the effects of
Article: The price of meat is set to
rise in
The US Department of Agriculture has said that meat
supply will fall this year because of the high cost of feed. Output of beef,
pork and chicken is expected to decline by one billion pounds as farmers react
to the soaring cost of feeding their livestock.
Typically, meat production in the
The USDA is predicting that the 2006 corn crop will
sell for an average of $3.10 a bushel at the farm gate, the highest for a
decade. Faced with extortionate feed costs, cattle and poultry farmers are
rearing fewer animals and slaughtering them early. That means a sudden reversal
in the annual meat production gain, representing a fall of 1.7lb per person.
“There is a new demand component,” Shayle
Shagam, a livestock analyst at USDA, said. “Livestock producers have to
bid against the ethanol industry to get supplies of corn.”
...
... Food prices rose by 10 per cent worldwide in 2006,
said the IMF in its World Economic Report, owing to a surge in corn, wheat and
soybean prices. The pressure on prices will increase, says the IMF. The
EU’s target of a minimum biofuel content of 10 per cent will require 18
per cent of agricultural land to be set aside for road fuel production...
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2/
Comment: There seems to be several
articles in the media at the moment suggesting that, while several countries
have gas supply problems (India and Pakistan both have severe gas shortages to
the extent that some gas-fired power stations are dormant due to lack of fuel),
the problems are going to get worse over the next few years, which probably
means from now on. Peak gas is not the issue in these cases so much as an
increasing gap between supply and demand, and falling domestic production in
some cases e.g.
Article:
Even with two gas pipeline projects and liquefied
imports expected to materialise in the second half of the next decade,
the country would still suffer more than 4,000 MMCFD of gas shortage between
2018-2025. As a result, huge foreign exchange would be required for oil imports
to avoid obstruction to economic growth.
These estimates were adopted by the government last
month based on a pre-feasibility report of the Iran-Pakistan-India (IPI)
pipeline prepared by PricewaterhouseCoopers and Hagler Bailly Pakistan.
... Considering the fact that power sector will
continue to be the largest consumer of gas, shortfalls in this area is likely
to have multiple choking impacts on the country's economic growth. Power
sector's gas demand at about 1,500 MMCFD at present is expected to cross 5,500
MMCFD in 2025. This will be followed by fertiliser sector, general industrial
sector, residential sector, cement, CNG and commercial sectors.
The estimates suggest that gas demand would maintain a
steady pace of increase every year to touch 6,763 MMCFD in 2015 but supplies
would start slowing down. After reaching a peak of 4,313 MMCFD, the gas
supplies would come down to 3,670 MMCFD in 2015. This would mean that almost 50
per cent demand would remain unmet and the overall shortfall would reach 3,089
MMCFD in 2015.
... The government is targeting to materialise the
first phase of import of liquefied natural gas (LNG) in 2011 to deliver about
526 MMCFD of gas but shortages would still persist to the tune to about 500
MMCFD. The second phase of LNG import is projected to be completed by 2013 to
deliver another 526 MMCFD of gas but the shortfall would remain the same
because of simultaneous increase in demand.
The government anticipates that first gas pipeline
import project (IPI) would be completed by 2015 to deliver about 2,230 MMCFD of
gas. This would be followed by another pipeline — most probably from
The estimates suggest that if the country achieved an
economic growth rate of 7.5 per cent, the supplies would never be able to meet
demand and shortages would cross 13,500 MMCFD in 2025. Even in case of a 5.5
per cent economic growth rate, the gas shortfalls would remain and peak at
10,900 MMCFD in 2025.
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3/ Shell to raise
Article: Royal Dutch
The total represents roughly half of Shell’s oil
production from
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4/
Comment: According to the IEA and EIA,
the
Article: Gasoline sales in the
In line with a well-established European pattern,
diesel sales increased by much more than gasoline.
Total motor-fuel sales increased by 5.8% to a record
40.5 million tonnes in 2006 as registered
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5/ Oil and Gas Reserves Shrinking
(The
http://www.themoscowtimes.com/stories/2007/04/09/041.html
Article: The country's oil reserves
shrank by 7.3 billion barrels from 1994 to 2005 as the country failed to
replace dwindling West Siberian reserves with new discoveries in
"The proportion of reserves that can be extracted
has fallen from 42 percent at the start of the 1990s to 27 percent,"
Sergei Fyodorov, head of subsoil policy at the Natural Resources Ministry, told
a conference.
"At the current rate of growth in oil production,
there won't be enough reserves to keep up," Fyodorov said.
Gas reserves were down by 2.4 trillion cubic meters
over the same period, he said. BP figures put
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6/ Oil Enforcement Agency (Freedom From Oil, 2006)
http://oea.freedomfromoil.org/the_video/
Comment: A humorous look at a serious
issue. The website states: “OEA is the theatrical wing of the Freedom
From Oil Campaign.”
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7a/ Update from the Middle East
(contact in the ME, Mon 16 Apr)
Comment: News from a
Article: I had a long meeting with a
local media person who, though he had never before heard of "
He subsequently did his own "Due Diligence"
on the subject and I received the following mail from him today:
“I think you are right.
Unfortunately I can't report that (It has to be all sweetness and light in the
media here or what you write won't get published).”
I believe "Food Security" will soon become
more important than the current concern over "Energy Security" and
the impact on this part of world would be catastrophic, as effectively several Arabian
Peninsula countries like
Large
irrigated agricultural developments during the 1980s in
Since then, these have had to be greatly curtailed as levels of groundwater have declined. For instance Saudi barley growing has been curtailed from 2.2 million metric tons to 100,000 metric tons. Growing animal forage (Alfalfa) for the livestock industry has similarly been curtailed, http://www.fas.usda.gov/gainfiles/200211/145784677.pdf
They claim "Self
Sufficiency" in Eggs, Milk & Chickens - forgetting almost all animal
feed is imported.
Came across
interesting Lester Brown article on price of wheat and oil - I wonder if or
when they will get back to parity where 1 bushel of wheat is same cost
as barrel of oil as in early 70's ?
7b/
Does
Saudi Arabia Have the
Comment: This article was published
almost exactly three years ago. Lester Brown compares the value of a barrel of
oil to a bushel of wheat, they used to be equal, and discusses peak oil.
Article: The two countries most
affected by the dramatically shifting terms of trade between grain and oil are
the
The United States — the world's largest importer
of oil and its largest exporter of grain — is paying for this shift in
the wheat-oil exchange rate with higher gasoline prices.
The nine-fold shift is also driving the largest
In contrast,
During the early 1970s, before the oil price hikes by
OPEC, the
While the exchange rate between grain and oil was
deteriorating,
The shift in terms of trade between the price of wheat
— a surrogate for grain prices, and that of oil — is both dramatic
and ongoing. From 1950 to 1973, the prices of wheat and of oil were remarkably
stable, as was the relationship between the two.
At any time during the 23-year span, a bushel of wheat
could be traded for a barrel of oil in the world market.
... From that year until 1999, it took on average five
bushels of wheat to buy a barrel of oil. During 2000-2003, it took seven
bushels of wheat to buy a barrel of oil. And now, in early 2004, it takes nine
bushels.
No one knows for sure what will happen to the
wheat-oil exchange rate in the years ahead. In contrast to grain production,
which can continue indefinitely, oil production is going to peak and decline at
some point — probably within the next five to 15 years.
Exactly when it peaks depends on the depletion
strategies adopted by the major oil companies and oil exporting countries.
... The
The
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8a/ Car Production in
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3352
Article: In January-March 2007,
8b/ Russian Oil Production Up 4.2%, Gas Output Up 0.3%
(FC Novosti, Wed 18 Apr)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment:
Article: The production of crude oil
and gas condensate in
Primary oil refining reached 56.2 mln metric tons in
the specified period, an increase of 6.5% against January-March 2006.
8c/
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment: It looks as though the
Russian refineries have reached their limit, for the moment – there are
plans to upgrade existing refineries, build new ones, but it will take years
rather than months. Russian oil exports could start rising again while net
exports continue falling i.e. they import more refined products than export
oil.
Article: The Russian government has
opened the local market to foreign-made car fuel by cancelling the import duty.
However, this decision will hardly change the fuel
market situation, according to
8d/
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Article: Russian-made floating nuclear
thermal power plants are likely to enjoy demand in many countries, according to
Yuri Zaitsev, an advisor with the
“Floating power plants can also be used for sea
water desalination. In addition to Russia’s own remote regions, which
would be happy to have them, other countries have shown interest, including
Indonesia, South Korea, Vietnam, as well as several countries in northern
Africa and the Gulf,” Zaitsev said, adding that the demand might grow
once first facilities go on stream in Russia.
The construction of the first floating
power-production unit has started at Sevmash a few days ago. The first facility
will be ready by 2010, while six more are to be built by 2015.
8e/ Gas Production to Begin at Beregovoye Deposit in April (FC
Novosti, Fri 13 Apr)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment: The first major deposit to be
put on stream in
Article: Independent gas producer
Itera and state-run gas monopoly Gazprom are to begin commercial production at
the Beregovoye deposit located in the Yamalo-Nenets Autonomous Area in
The first major deposit to be put on stream in
The recoverable reserves of Beregovoye amount to 324
bln cu m of gas, 9 mln metric tons of oil and 1 mln metric tons of gas
condensate. It is the first major project to be put on stream since 2002, when
Gazprom started working at the Zapolyarnoye deposit, whose design capacity is
100 bln cu m of gas annually. Production at Beregovoye should amount to 1.3 bln
cu m in April-June
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9/ Oil chiefs slammed over dwindling supplies
(Adelaide Now, Tue 17 Apr)
http://www.news.com.au/adelaidenow/story/0,22606,21571863-5006301,00.html
Comment: From ODAC News
subscriber: “Also mentions Oil Depletion Protocol. Probably first
time I have seen this mentioned in mainline media.”
ASPO Australia did a great job of getting Peak Oil in
the mainstream media last year.
Article: THE Australian Democrats have
criticised oil industry executives meeting in
The party's Senate candidate in
Peak oil is the point at which global oil production
starts to decline.
Ms Russell said at that point petrol prices would rise
dramatically, pushing up transport costs and growth prices.
"It is outrageous that the annual Australian
Petroleum Production and Exploration Association conference, being held in
Ms Russell said state and federal governments also were
ignoring the issue and should develop a petrol crisis plan.
"State and federal governments must make sure
people can still get to work and our shops, schools and hospitals don't grind
to a halt if petrol prices skyrocket," she said.
"We also need to reduce our petroleum addiction
by expanding public transport, increasing the use of alternative fuels like
compressed natural gas and legislate for fuel-efficient cars."
South Australian Greens MP Mark Parnell has called on
the South Australian government to commit to the oil depletion protocol to
start to reduce the state's dependence on oil.
The protocol commits countries and organisations to
reduce oil consumption by the world oil depletion rate.
Mr Parnell said that equated to a reduction of about
three per cent each year.
"The years of cheap, plentiful and easily
accessible oil is coming to an end and
"By committing to the oil depletion protocol,
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10/ Senators Seek to Cut US Gasoline Use, Save Energy
(
http://www.planetark.com/dailynewsstory.cfm/newsid/41436/story.htm
Comment: Looks like a serious plan to
reduce
Article: A bipartisan group of US
senators introduced legislation on Tuesday to cut
The bill is the broadest energy proposal yet to come
from the new Democratic-controlled Congress that aims to reduce
... The legislation targets gasoline demand, which
accounts for the biggest part of US petroleum use. Under the bill, the Energy
Department would have to come up with a plan to slash gasoline consumption by
20 percent by 2017, 35 percent by 2025 and 45 percent by 2030.
... Other provisions in the bill would:
* Require the federal government to increase its
purchases of renewable electricity to 10 percent of total supply by 2010 and 15
percent by 2015.
* Reduce energy consumption in existing federal
buildings by 30 percent by 2015.
* Create appliance energy efficiency standards for
dishwashers, clothes washers, refrigerators and dehumidifiers, saving consumers
US$12 billion annually in energy costs.
* Add US$750 million in government funds to help
weatherize low-income family homes with insulation and storm windows…
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11/ Iranian LNG considered vital for future European gas supply
(MarketWatch, Thu 15 Mar)
Comment: A sign of the (desperate)
times when German gas supplier E.ON Ruhrgas is looking to
There are
just three suppliers close to Europe who can deliver additional volumes [by
pipeline], he said -
"Long-term
contracts are a key element for making investment possible," and will
continue to be the backbone of security of supply for
Article: Securing supplies of
liquefied natural gas from
"There are a lot of other producers (in the
In this context
However, he added, "there is a difficult
political situation between
Pfaff said
... There are just three suppliers close to Europe who
can deliver additional volumes, he said -
"There is a very tight supply market for those
who want to get LNG supply for 2010 onwards," he said, hence the
importance of largely untapped suppliers like
... "You see
... Pfaff said ensuring stable relationships between
gas producers and import dependent countries is important, adding the
cornerstone of this is the long-term contract.
"Long-term contracts are a key element for making
investment possible," and will continue to be the backbone of security of
supply for
The European Commission has highlighted long-term gas
delivery contracts as an obstacle to competition in
E.ON is planning to build an LNG receiving terminal at
the German
He added that even after such terminals are built, it
cannot be taken for granted
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12/ Rising costs threaten global LNG growth –industry
(Reuters UK, Wed 14 Mar)
Article: The rising costs of turning
gas into liquid and increasing demand in producing countries are the main
constraints on the growth of the global liquefied natural gas market, a BP
(BP.L: Quote, Profile , Research) gas executive said on Wednesday.
Until recently, a lack of facilities to turn LNG back
into gas in consuming countries was seen as the chief impediment to growth.
But industry executives at the Flame conference in
Amsterdam said the spiralling cost of liquefying gas -- which some put as high
as $1,000 per tonne -- was now the biggest problem as stretched resources like
skilled labour and equipment push up costs across the energy sector.
"This has led to a complete reversal in the
previous downward trend in LNG costs from 1989 to 2002," Herbert Vogel,
the managing director of BP's European gas business told delegates.
"Within the importing countries, regasification
terminals are no longer a bottleneck to market access," Vogel said.
"Regasification access will not constrain the drive towards, and growth,
in the globalisation of LNG."
Vogel said liquefaction costs for new plants had
rebounded from a low of about $200 per tonne in 2000 to over $600, while Gaz de
France's LNG vice president Didier Holleaux said costs were nearing $1,000 per
tonne.
"It's getting pretty horrendous," Royal
Dutch Shell's vice president of global LNG supply, David Wells, told delegates,
adding that he had heard some project costs reaching $600 per tonne.
NEW GAS GUZZLERS
Although he said there should be twice as much LNG
capacity in the world by 2010 than there was as recently as 2005, BP's Vogel
said the amount of gas being exported in future is likely to be limited by
growing demand within the producing countries.
"Clearly this limits the amount that is
potentially exportable."
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