[Samirol]

http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx

Saudi Arabia walked out on OPEC yesterday, saying it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."

For awhile, people were seriously talking about alternatives, it depends what the Saudis do after this though. If Saudi Arabia continues to just do its own thing with regards to oil production, then the influence of OPEC will be greatly diminished.

 

[dante]

have to keep those oil prices lower at least until Nov 4th....

 

[X3pilot]

waiting for other shoe to drop. I don't think they would do this without some other motive.

 

[jimmydean]

http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx



For awhile, people were seriously talking about alternatives, it depends what the Saudis do after this though. If Saudi Arabia continues to just do its own thing with regards to oil production, then the oil fields will be greatly diminished.

 

[DRB]

Watch how long they stick with that stance ...

I will say this the initial rebuff from Saudi Arabia scared the ever living hell out of a couple OPEC members. They hadn't been reminded in quite sometime of exactly who is in charge at the table. It caught them severely off guard and scrambling hard to get some agreement in place. I suspect you'll see something along the lines of a little more adherence to quotas but not much else in the way of cuts.

Of more interest should be the presence of highly placed Russian officials at the meeting for more than a just a friendly visit.

 

[splat]

waiting for other shoe to drop. I don't think they would do this without some other motive.

Of course there is another Motive , Money and Power . and the Saudi's want Both ! And it appears they didn't want to have Venezuela and Russia telling them what to do.

it will be quite interesting

 

[Samirol]

Russia isn't part of OPEC though DRB, what are you referring to?

 

[Secret Squirrel]

Russia isn't part of OPEC though DRB, what are you referring to?

Exactly...


DRB to the white courtesy phone....

 

[JohnE]

The Saudis think the whole world should kiss their stinky unwashed a$$es in exchange for their petrol...screw them. I am building a windmill.

 

[DRB]

Russia isn't part of OPEC though DRB, what are you referring to?

Exactly...


DRB to the white courtesy phone....

Who said Russia was part of OPEC?

So with Russia not a member of OPEC the presence of Igor Sechin, the defacto head of Russian Energy Policy, was interesting. Even more interesting was his statements on increased cooperation with OPEC in his speech at the opening of the meeting. That cooperation was backed up with a MOU loosely defining the mechanisms for that cooperation. For years Russia has almost always done the opposite of the cartel in regards to production and pricing. So the MOU is a pretty big deal that for the most part as gone under the radar. It is unlikely that Russia would ever become a full fledged member of OPEC BUT a tighter relationship would make some changes to the petroleum economy.

Of course there is another Motive , Money and Power . and the Saudi's want Both ! And it appears they didn't want to have Venezuela and Russia telling them what to do.

it will be quite interesting

The reality is that right now and the foreseeable future the Saudis will still wave the biggest stick at the OPEC table. They hold the biggest reserves and more importantly hold the most technologically advanced infrastructure from hole to boat. While Iran and Venezuela like to make a lot of noise their infrastructures are falling apart so their power is limited in making real affect. It gives some perspective as to why Iran and Venezuela are always such price hawks beyond issues with the West.

 

[rockwool]

Who said Russia was part of OPEC?

So with Russia not a member of OPEC the presence of Igor Sechin, the defacto head of Russian Energy Policy, was interesting. Even more interesting was his statements on increased cooperation with OPEC in his speech at the opening of the meeting. That cooperation was backed up with a MOU loosely defining the mechanisms for that cooperation. For years Russia has almost always done the opposite of the cartel in regards to production and pricing. So the MOU is a pretty big deal that for the most part as gone under the radar. It is unlikely that Russia would ever become a full fledged member of OPEC BUT a tighter relationship would make some changes to the petroleum economy.



The reality is that right now and the foreseeable future the Saudis will still wave the biggest stick at the OPEC table. They hold the biggest reserves and more importantly hold the most technologically advanced infrastructure from hole to boat. While Iran and Venezuela like to make a lot of noise their infrastructures are falling apart so their power is limited in making real affect. It gives some perspective as to why Iran and Venezuela are always such price hawks beyond issues with the West.

That Russia has a guy at an OPEC meeting could mean something, but it doesn't nesseserily have to as this is a common occurance at meetings like those, NATO, EU, and such.

Saudi Arabia does not have the biggest reserve, Venezuela does, although they are at the present the biggest exporter. Dunno about Iran's infrastructure but VE's is constantly being built up as Chavez has been making sure to build partnerships with about a dozen different countries, both for their know how, I guess, but probably also as a protection against a future US invasion. The latest country to sign up a deal with VE was South Africa, that did that last week. Other countries to have done so includes Russia, China, Iran, and various L.A. countries.

Iran and VE are thinking about getting paid for their countrys natural resourses, while Saudi Arabia has to take into calculation the wishes of the power that grants/keeps its rulers, the royal family, to stay in power. Needless to say, that power is since 1945 the USA. But it wouldn't surprise me if Iran and VE had another reason except getting paid for trying to rase/keep prices high.

Anyways, it would surprise me if the reason for Saudi Arabia to walk out from the meeting hadn't to to with the wishes of the US. Naturally, they like to get paid for their product as much as possible just like any other country/company.

 

[BurlyShirley]

Saudi Arabia does not have the biggest reserve, Venezuela does, although they are at the present the biggest exporter.

in order...


Country Reserves 1 Production 2 Reserve life 3
109 bbl 109 m3 106 bbl/d 103 m3/d years
Saudi Arabia 260 41 8.8 1,400 81
Canada 179 28.5 2.7 430 182
Iran 136 21.6 3.9 620 96
Iraq 115 18.3 3.7 590 85
Kuwait 99 15.7 2.5 400 108
United Arab Emirates 97 15.4 2.5 400 106
Venezuela 80 13 2.4 380 91
Russia 60 9.5 9.5 1,510 17
Libya 41.5 6.60 1.8 290 63
Nigeria 36.2 5.76 2.3 370 43
United States 21 3.3 4.9 780 11
Mexico 12 1.9 3.2 510 10
Total of top twelve reserves 1,137 180.8 48.2 7,660 65
Notes:
1 Claimed or estimated reserves in billions (109) of barrels (converted to billions of cubic metres). (Source: Oil & Gas Journal, January, 2007)
2 Production rate in millions (106) of barrels per day (converted to thousands of cubic metres per day) (Source: US Energy Information Authority, September, 2007)[16]

 

[DRB]

That Russia has a guy at an OPEC meeting could mean something, but it doesn't nesseserily have to as this is a common occurance at meetings like those, NATO, EU, and such.

Saudi Arabia does not have the biggest reserve, Venezuela does, although they are at the present the biggest exporter. Dunno about Iran's infrastructure but VE's is constantly being built up as Chavez has been making sure to build partnerships with about a dozen different countries, both for their know how, I guess, but probably also as a protection against a future US invasion. The latest country to sign up a deal with VE was South Africa, that did that last week. Other countries to have done so includes Russia, China, Iran, and various L.A. countries.

Iran and VE are thinking about getting paid for their countrys natural resourses, while Saudi Arabia has to take into calculation the wishes of the power that grants/keeps its rulers, the royal family, to stay in power. Needless to say, that power is since 1945 the USA. But it wouldn't surprise me if Iran and VE had another reason except getting paid for trying to rase/keep prices high.

Anyways, it would surprise me if the reason for Saudi Arabia to walk out from the meeting hadn't to to with the wishes of the US. Naturally, they like to get paid for their product as much as possible just like any other country/company.

Having Igor Sechin was a very big deal. The reality is that he is probably the highest ranking official from any country that is not a member of OPEC to show to this type of meeting in 20 years. Couple that with the fact that he was carrying an MOU in his hand made it an even bigger deal.

Venezuela isn't even close to the highest reserves. And as for their infrastructure, it is falling apart. They've invested about half as much as any other member of OPEC since Chavez as been in power. That lack of investment has precluded anything beyond the basic maintenance on upwards of 80% of petroleum infrastructure. Basic maintenance doesn't cut it for very long. AND to make matters worse, when they do hire in experts to help determine what needs to be done they either short pay or don't pay for their work nor do hardly ever implement any of those recommendations. They have little or no domestic know how left after 2002 when Chavez fired the majority of those that knew what they were doing. Since then the problem has gotten worse and can be evidenced by declines in production.

Having deals with other countries doesn't do boo to improve infrastructure if there is no money involved and guess what....

Oil is a capital intensive enterprise. Not thoroughly re-investing in it is a bad idea. And this gets worse as the oil gets harder to extract.

Lord knows where Iran's money goes. They don't seem to ever spend it on anything.

This is an industry that I have more than passing knowledge about.

 

[rockwool]

in order...


Country Reserves 1 Production 2 Reserve life 3
109 bbl 109 m3 106 bbl/d 103 m3/d years
Saudi Arabia 260 41 8.8 1,400 81
Canada 179 28.5 2.7 430 182
Iran 136 21.6 3.9 620 96
Iraq 115 18.3 3.7 590 85
Kuwait 99 15.7 2.5 400 108
United Arab Emirates 97 15.4 2.5 400 106
Venezuela 80 13 2.4 380 91
Russia 60 9.5 9.5 1,510 17
Libya 41.5 6.60 1.8 290 63
Nigeria 36.2 5.76 2.3 370 43
United States 21 3.3 4.9 780 11
Mexico 12 1.9 3.2 510 10
Total of top twelve reserves 1,137 180.8 48.2 7,660 65
Notes:
1 Claimed or estimated reserves in billions (109) of barrels (converted to billions of cubic metres). (Source: Oil & Gas Journal, January, 2007)
2 Production rate in millions (106) of barrels per day (converted to thousands of cubic metres per day) (Source: US Energy Information Authority, September, 2007)[16]

My mistake, could it be that I have confused total reserves with that VE has the highest reserves of heavy crude?

Having Igor Sechin was a very big deal. The reality is that he is probably the highest ranking official from any country that is not a member of OPEC to show to this type of meeting in 20 years. Couple that with the fact that he was carrying an MOU in his hand made it an even bigger deal.

You seem to know this,, not questioning you, I was only stating that in NATO and EU meetings, etc, it is common with non member observers.
What is an MOU? Is Russia aspiring to become an OPEC member?

Venezuela isn't even close to the highest reserves. And as for their infrastructure, it is falling apart. They've invested about half as much as any other member of OPEC since Chavez as been in power. That lack of investment has precluded anything beyond the basic maintenance on upwards of 80% of petroleum infrastructure. Basic maintenance doesn't cut it for very long. AND to make matters worse, when they do hire in experts to help determine what needs to be done they either short pay or don't pay for their work nor do hardly ever implement any of those recommendations. They have little or no domestic know how left after 2002 when Chavez fired the majority of those that knew what they were doing. Since then the problem has gotten worse and can be evidenced by declines in production.

Having deals with other countries doesn't do boo to improve infrastructure if there is no money involved and guess what....

Oil is a capital intensive enterprise. Not thoroughly re-investing in it is a bad idea. And this gets worse as the oil gets harder to extract.

Lord knows where Iran's money goes. They don't seem to ever spend it on anything.

This is an industry that I have more than passing knowledge about.

Iran I don't know anything about so I won't speak about them. As for VE I have in other threads proved a lot of claims comming from their internal opposition and abroad to be false, so I can't take what you say about them as new lies are constantly comming from its enemies. Even an organization like the IMF has been trying to discredit VE, and affect foreign investment there, by constantly giving purpusfully false very negative predictions of their economic growth.

Chavez did indeed fire all the highest and many of the medium level bosses at PDVSA after the three month lock out in the winter of 2002-2003, but obviously he had no choise. These bosses actions were not with the best of VE in mind, infact they were undemocratic and proven to be coordinated by the good admin of the US (through the USAID and IRI).

Among the countries that VE signed business accords with at least Russia, Iran and Brasil have good experianses in the oil industry that will come to PDVSA's gain. Those business accords include minority (40%) stakes for oil companies from those countries, including Gazprom of Russia for development of natural gas extraction in the Orinoco belt. 40% stakes equals 40% investment.

Actions to improve VE's know-how in many fields, oil, food and industry production are constantly being taken by the Chavez gvmnt. They are delaing with ALL their problems for the first time in their history, and now they have the financial means to make it possible. Money that before went in the pockets of the oligarchs.

Why would the Chavez government, especially in these days when they are flooded with +100 dollar/barrel prices, only keep maintenance at a minimum and not thoroughly re-invest? Things don't add up. Unless we remember all other previous examples of how the opposition propaganda lies work..