ODAC News
Monday 05 Nov
The Oil Depletion Analysis Centre
Big Oil - Production
1/ Production from oil majors struggles to keep up as oil shoots for
$100 - Energy Futures Weekly Review (Platts, Mon 05 Nov)
2/ Road-building turns a
corner (Financial Times, Fri 02 Nov)
Economy
3a/ Business comment: Le
crunch is not over by any stretch of the imagination
(The Telegraph, Sat 03 Nov)
3b/ Business Show
(Telegraph TV, Mon 05 Nov)
3c/ The Citi
Tsunami (BBC News [Robert Peston], Mon 05 Nov)
3d/ Foreclosure wave sweeps
America (BBC News, Mon 05 Nov)
Oil and Money Conference 2007
4/ Oil Output Debate
Reaches A Watershed (Energy
Intelligence [Petroleum Intelligence Weekly], Mon 05 Nov)
Geopolitics –
5/ Relations between
**********************************************************************************************************
1/ Production from oil majors struggles to keep up as oil shoots for $100 -
Energy Futures Weekly Review
(Platts, Mon 05 Nov)
http://www.platts.com/Oil/Resources/Futures/index.xml?src=energybulletin
Comment: Interesting review from
Platts including notes regarding the “Peak oil enthusiasts”. Points out that
while Shell (i.e. CEO Jeroen van der
Veer but he is not mentioned here) recently said that speculators were to blame
for the current high oil prices, Shell’s own oil
production output had fallen 9%.
Article: The wheels may be wobbling
and a few clouds may be gathering on the horizon for market bulls, but the
bandwagon that seems to be taking headline crude oil futures relentlessly towards
a watershed $100 per barrel level carried on purposefully last week.
Critically, the peak oil debate that has started to
frame the current rally in crude futures attracted new data to consider on
November 2.
A Platts survey showed third-quarter global production
of oil liquids at seven key publicly traded international majors declined 6%
from last year, with output down 664,000 b/d at a time when some officials are
calling for increased production from OPEC.
Amid that and other bullish news for oil, a
record-breaking week for crude oil ushered in fresh all-time highs for heating
oil and gasoil futures, as well as opening the door
to a quiet but significant 16% appreciation in the price of US natural gas futures…
Majors still struggling to maintain production
Peak oil enthusiasts took note of the disappointing
production results from the majors, with Charles Maxwell, the senior oil
analyst for Weeden & Company, warning that the
downturn simply underscores fundamental changes afoot that the major producers
want to ignore.
"They can't tell you why this is happening,"
said Maxwell, a noted peak oil lecturer and observer. "It's like a tennis
player who can't explain why he is losing to someone he has beaten all the
time. They haven't figured it out." He said he was surprised to see the
decline emerging in production data earlier than he had expected, and predicted
the implications include continued rising oil prices.
... Besides ExxonMobil, the Platts review focused only
on liquids production comparisons for integrated majors BP, Shell, Chevron,
ConocoPhillips, Eni and Marathon Oil. It determined those companies reported
collective liquids output of 10,338,000 b/d for the quarter ended September 30,
down from 11,002,000 b/d in the same period a year ago.
Liquids production fell at six of the seven companies
and stood flat at Chevron, leaving Barclay's Capital analyst Paul Horsnell to question the ability of the international oil
companies to respond to increasing demand and pricing.
... In a short report October 31, Horsnell
had noted a 9% decline at Shell and wrote: "To announce a 9% fall in crude
oil output and then put higher prices down not to any fundamentals but to
speculation does seem a little strange to us."
Horsnell
wrote: "After years of rising prices, the announcement by a major oil
company that field decline rates were enough to counteract all of the
accumulated supply response to higher prices and were at the heart of a large
crude oil output reduction, might be seen as a further signal that prices have
not yet been bid up enough."
The review comes just four months after a study by
analysts at Bear Sterns revealed that 2006 marked the third consecutive year in
which the major oil companies failed to fully replace production.
**********************************************************************************************************
2/ Road-building turns a corner
(Financial Times, Fri 02 Nov)
http://www.ft.com/cms/s/0/3696a4e8-8961-11dc-b52e-0000779fd2ac,s01=1,stream=FTSynd.html
Comment: Interesting review from the
FT on the reality of
Article: “For 30 years, we’ve built a lot of roads and a lot of highways,”
Jean-Louis Borloo, the French environment minister,
said at the end of a two-day summit last week. “That’s
over. Our road capacity is not going to increase further.” A draft document
released by Mr Borloo before the summit expressed the
hope that cars and planes would become “solutions of last resort” in coming
decades It has been a long time since politicians spoke this way. In general,
as western publics move closer to universal car ownership, their appetites for
highway construction tend to become insatiable. American congressional
elections are often won by the candidate who can credibly promise to pave more
farmland and countryside.
... Plans include new high-speed rail lines, a halt to
airport construction and the laying out of 1,500km of tramways in 30 cities.
At first blush, the environmental paper issued by
Yet, under close examination, the two countries’
transport policies differ less than it appears. While Britain has done plenty
of road-widening, it has neither built nor planned many major roads since 1997,
when the photogenic Daniel Hooper, the dreadlocked protester who called himself
“Swampy”, was digging tunnels to protest against a bypass in Berkshire. When
one re-examines the French highway moratorium, one finds wiggle room for all
kinds of supplementary highway capacity. The only exceptions to the no-highway
rule will be “security and congestion problems and local concerns” (such as
bypasses). But those are large exceptions and there will be large incentives to
interpret them liberally...
**********************************************************************************************************
3a/ Business comment: Le crunch is not over by any stretch of the
imagination (The Telegraph, Sat 03 Nov)
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/02/ccom102.xml&DCMP=EMC-mcn_02112007
Comment: From Damian Reece, City
Editor.
Article: We can now say with certainty
that the economy is slowing. Yes, the official figures may have shown that
output grew by more than expected in the third quarter; yes, Nationwide said
house prices rose unexpectedly last month; yes, it is still unclear whether the
credit crunch is having any effect on actual consumer behaviour. But don't let
any of these fool you. We are looking at a slowdown, with households cutting
back on their spending following a period of sustained interest rate rises.
This is not to say that the slowdown might not become
sharper, more painful and more complicated in the coming months. There are two
compelling reasons to suggest it might. Firstly, the relative resilience of the
consumer over the past year or so is illusory.
The CBI's survey on retail sales may still remain in
positive territory, but it has slumped dramatically in recent months and, more
importantly, it measures the number of goods sold by shops – not the value.
The high street has remained afloat only because of
some drastic price-cutting. This has been fine so long as the cost of goods
imported from
But in recent months, import prices have shot up, since
the cost of doing business in
Secondly, the market has still not rediscovered gravity
following the credit crisis. Le crunch is not over by any stretch of the
imagination, but you would hardly guess it from the way the stock market has
behaved since September.
Yesterday's fall in equity prices, fuelled by worries
about Citigroup's balance sheet, is only the start of the story.
3b/ Business Show
(Telegraph TV, Mon 05 Nov)
http://link.brightcove.com/services/link/bcpid1155270086/bclid1171884836/bctid1291940247
Comment: 5m 12s long. Interesting
interview with Damian Reece, the Telegraph’s City
Editor, discussing the credit crunch in the
3c/ The Citi Tsunami
(BBC News [Robert Peston], Mon 05 Nov)
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/11/the_citi_tsunami.html
Comment: Robert Peston, BBC's business
editor, comments on the announced huge losses from Citigroup, apparently the world’s largest bank.
Article: Citigroup’s
frighteningly large new losses were triggered by two events: a further downturn
in the US housing market this autumn; and downgrades of sub-prime US
mortgage-related assets by rating agencies.
... I’ll translate that for
you. It means Citi is suffering humungous losses on
the reprocessed and repackaged bits of sub-prime – or exposure to US homebuyers
with a poor credit history – that were supposed to be top quality, not far off
the quality of top corporate bonds or government debt.
... Citi estimates that
since September 30 (the end of its previous accounting quarter) the decline in
the value of its sub-prime exposure will reduce reported revenues by between
$8bn and $11bn.
That would be enough to bankrupt many a good size
bank. But then many a good size bank isn’t big enough
to accumulate exposure to sub-prime on the scale of what Citi
did, or some $55bn as of September 30.
And don’t forget that these
losses relate to just one portion of Citi’s business.
This is a bank which grew its assets – primarily its lending – by an
astonishing $769bn or 48 per cent over the past 21 months.
... That said, Citi’s hit
from sub-prime is spectacular. And it will cause widespread concern that other
banks will be forced to disclose increased losses from their respective
holdings of sub-prime, CDOs and the rest of the
gilded rubbish, probably exacerbating a downturn in bank shares that acquired
momentum last week.
3d/ Foreclosure wave sweeps
http://news.bbc.co.uk/1/hi/business/7070935.stm
Comment: Lengthy article (for the BBC)
on the subprime crisis in the
Article: A wave of foreclosures and
evictions is about to sweep the
This could destabilise the
It is the sub-prime capital of the
**********************************************************************************************************
4/ Oil Output Debate Reaches A Watershed
(Energy Intelligence [Petroleum Intelligence Weekly], Mon 05 Nov)
No link, from newsletter.
Comment: Energy Intelligence reports
that Peak Oil took centre stage this year’s Oil and
Money conference, which it sponsors.
Article: Limits on growth have rarely
been the dominant theme in the 28-year history of Energy Intelligence's Oil
& Money conference, but this year talk of peak -- or perhaps more
accurately "plateau" -- oil shifted from the fringes to center stage. A global oil production watershed of 100
million b/d "in my view is now the optimistic case," Total CEO
Christophe de Margerie told last week's
**********************************************************************************************************
5/ Relations between
No link, from newsletter.
Comment: From the commentary section, ‘World
Watch -- Comment & Interpretation on Today's News’, of the daily
newsletter. Energy Intelligence commenting on the difficulties
Article: Relations between Moscow and
London will be further strained by reports this week that oil tycoon Mikhail Gutseriev has fled from charges of tax evasion and illegal
entrepreneurship in Russia and is seeking political asylum in the UK. Ties are
already cool over
**********************************************************************************************************
The Oil Depletion Analysis Centre (ODAC)
Tel: +44 (0)1224 631 697
E-mail:
mailto:info@odac-info.org
Website: http://www.odac-info.org
The
Oil Depletion Analysis Centre (ODAC) is an independent UK-registered
educational charity working to raise international public awareness and promote
better understanding of the world's oil-depletion problem.