What is Peak oil?
"The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion."
Submitted by Kjell Aleklett on Sun, 2014-11-09 08:07.
Katarina Lagervall DN called me last Friday and we had a long and interesting conversation about oil and the global economy. A summary of our conversation is now available at dn.se [in Swedish] under "Russian primary industry cannot withstand this roller coaster." (I have added some clarifications with parentheses)
(Published 2014-11-07 13:17)
Falling oil prices on the world market are hard on the Russian economy. But those who should be most worried about these developments are the oil-dependent nations of the EU. So says oil analyst Kjell Aleklett.
- Our energy costs will be expensive in the long run because we do not have any of our own fossil natural resources. Russia has oil in the ground and if they do not produce it now, they can do so later, he said.
Submitted by Kjell Aleklett on Fri, 2014-11-07 06:26.
Last Monday, Statoil made a statement to the press about the oil field Johan Sverdrup. The fact that The Wall Street Journal highlighted this news meant that it was spread around the world. The title of their article was "Statoil Forecasts New North Sea Oil Bonanza". From the WSJ article itself we learn that the expected production profits from the field are about $200 billion over the next 50 years (1.350 billion NOK, NKR). The fact that the state is expected to seize 670 billion NKR of this means they will be taking 50% of the production value. One could easily get the impression that the rest of the income would accrue to Statoil, but the fact is that the producer only owns a part of the production rights.
Later in the article the WSJ discusses Norway's oil production, noting that it was 1.46 million barrels a day in 2013 and that this is less than half of Norway’s maximal production that occurred in 2001.
Submitted by Kjell Aleklett on Sat, 2014-10-25 07:08.
My article on the strategically important of the Baltic Sea for the Russian oil exports, is now published in Aftonbladet, a Swedish tabloid and one of the larger daily newspapers in the Nordic countries. Read the article in Swedish on aftonbladet.se, ”Östersjön får allt större betydelse för Ryssland”.
The Baltic Sea is of increasing importance for Russia
The submarine hunt in Stockholm's archipelago is over and yet again we can state that there were only indications of underwater activity. At the same time we have heard from, among others, Finland that Russia has recently increased its military activities. Analysts tell us that the Cold War has returned and comparisons are made with the Soviet era. Many people in various branches of the media will now analyze the increasing tensions between Sweden and Russia.
Submitted by Kjell Aleklett on Fri, 2014-10-24 13:25.
(This is the final replay in the discussion on "The falling oil price may presage a future recession.")
In a reply to my previous contribution, “The falling oil price may presage a future recession”, Civil Economist Magnus Grill (19 October in Swedish) says that I assert, “that Peak Oil does not mean that oil will run out rather than that demand for oil will disappear. Thus it is no longer a question of Peak Oil from a production standpoint rather than now it is from a demand standpoint. This means that Aleklett has completely altered his early reasoning.” I must disappoint Magnus Grill. Peak Oil is still related to production of oil from oilfields.
When we discuss Peak Oil we do this based on the fact that oil production in an area or group of areas reaches a maximum and then declines.
Submitted by Kjell Aleklett on Fri, 2014-10-17 22:44.
This is the English translation of my article in the Swedish newspaper Svenska Dagbladet, Fallande oljepris ett tecken på recession)
Since July the price of Brent crude oil has fallen from $113 per barrel to $85.62 (on October 14). Historically we saw a similarly rapid fall in the in the oil price in late 2008 followed by the start of the global recession the year after. In 2008 the fall from July to December was from $140 down to $40 per barrel. At the moment we see no slowing of the price decline and we do not know how low the price will fall.
The fact that increased global energy consumption is a measure of economic growth means that these recent trends are pointing to an economic contraction.
Submitted by Kjell Aleklett on Mon, 2014-09-29 09:57.
News is spreading around the world that Rosneft and ExxonMobil have been successful in their joint effort to find oil in the Kara Sea up in the Arctic. Personally, I am doubtful that we should produce this oil but now that the oil appears to exist there we must place it in our global energy system. From the headlines spreading around the world one can get the impression that the discovery will change the future of oil production.
Submitted by Kjell Aleklett on Tue, 2014-09-02 09:43.
If one studies the world’s oil resources and oil production then the Arabian Peninsula is of central interest. The remaining monarchies of the region have established the Gulf Cooperation Council (GCC). This was formed in 1981 as a response to the Iranian Revolution and Iraq’s attack on Iran. The GCC is comprised of Saudi Arabia, Kuwait, Bahrain, Qatar, The United Arab Emirates and Oman. Within the GCC exist enormous oil resources. According to the BP Statistical Review of World Energy 40% of the world’s remaining conventional oil reservs exists within the GCC.
The world’s largest conventional oil field is Ghawar in Saudi Arabia and there are also many other gigantic oilfields in the region. Since the 1950s it is mainly oil from the Arabian Peninsula that has been decisive for the economic growth of the global economy.
Submitted by Kjell Aleklett on Mon, 2014-08-18 14:43.
On 11 June OPEC held its 165th meeting in Vienna and the organisation’s 12 members decided to maintain its production volume of 30 millon barrels of oil per day (Mb/d). The meeting is reported in the OPEC Bulletin 6/14. They also decided to extend Abdalla Salem El-Badri’s term as general secretary of OPEC until the end of the year. After the meeting a press conference was held during which General Secretary El-Badri stated, “Right now we have a very comfortable crude oil price, the market is stable and OPEC is producing 30 Mb/d of crude, more or less. The consumers are getting their supplies and the producers a good price. Everybody is Happy.”
On the question of whether shale oil production in the USA was a threat to OPEC the answer was that it was not because the USA would not be an oil exporter. With regard to future investments El-Badri considered that OPEC had a good plan for investments and stated they would study the balance between demand and production. In conclusion he said that “OPEC will continue to play its part in supplying the world with enough crude oil”.
In the OPEC Bulletin some of the external guests to the meeting were also interviewed.
Submitted by Kjell Aleklett on Mon, 2014-06-16 22:32.
On 4 June I participated with Patrik Jotun, (a researcher and analyst at the Ministry for Foreign Affairs), in a symposium organised by the Green Liberals with the theme, “Environmental and Climate Policy in the Shadow of Developments in Russia – on environment, climate, security and energy supply”. The delegates were allowed into the Folk Party’s premises at Mynttorget under strict security control. My presentation was somewhat similar to that I gave at The Economist’s recent symposium in Stockholm and so I will direct you to my earlier blog on that event for details (European Energy Horizons 2014). I found Patrik Jotun’s presentation very interesting and it gave me new perspective on the tensions that we see today between the EU and Russia.
Submitted by Kjell Aleklett on Tue, 2014-02-25 14:00.
The Oil & Gas Journal has published an article with the headline, "Chesapeake mulls spinoff, sale of oil field services division". The article is especially interesting since Chesapeake is one of the largest companies in fracking. On Chesapeake Energy Corporation’s website one can read that they are the second largest producer of natural gas and the eleventh largest company for production of oil and NGL in the USA. Further, one can read that, “The company’s operations are focused on discovering and developing its large and geographically diverse resource base of unconventional natural gas and oil assets onshore in the U.S. The company also owns substantial marketing, compression and oilfield services businesses.” On 11 February 2014 the company submitted an “Investor presentation” and they explained that they were required to make such “forward-looking statements” by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.