[copious.abundance]

http://en.rian.ru/russia/20090315/120566449.html
Interesting developments, kiss goodbye to low prices...

Kewel, I look forward to the Tuscaloosa Marine Shale play taking off. And the rig counts in North Dakota going back up. And those oil sands projects being put back on the front burner.

[eXpat]

this again......I'll believe it when I see, Russia is completely dependent on Oil exports to run their economy.

Russians drink Vodka, not Kool-Aid. Russians still remember well the crisis in the 90´s. they know we are entering a global depression. The game is not to sustain our current life style anymore. Russian economy is not going to be hurt by this, Russian economy IS already in a lot of pain (hell, it shrinked more than 8% this year alone). Is damage control now. It doesn´t help your country to sell cheap a non renewable resource, does it?

Igor Sechin is noted for his hard-line views on foreign policy and is hostile to the West. Like Vladimir Putin, and like many of his fellow countrymen, he wants Russia to be more powerful and respected around the world.

http://www.hiidunia.org/2008/08/russias-mr-big-profile-of-igor-sechin.html
I would say that the priorities of Mr Sechin lay first with Russia, and his country would be best served by making sure they have more oil in a world of dwindling resources. They have been playing with the idea of an oil reserve for a long time, which would enable them to both satisfy their internal demand and sell when the market price is high.
http://www.stratfor.com/analysis/20081022_russia_building_oil_reserve
That shit is called Peak Oil by the way, it means that you have less oil that yesterday but more than tomorrow, since things are like that, you want to keep what you have, so you can use it.

[copious.abundance]

>>> Rigzone <<<

Russia Can Raise Output if Oil above $50
by Vladimir Soldatkin (Reuters) AFX News Limited Monday, March 23, 2009

Russia can sustain and even raise oil output if prices stay above $50 per barrel, Russia's energy minister said, adding he believed it would make no sense to merge oil majors Rosneft and Surgut during the crisis.

Sergei Shmatko said Russia and China were close to finalising a $25 billion loan to Rosneft and oil pipeline firm Transneft and said gas giant Gazprom was ready to raise natural gas supplies to Poland to compensate for lower supplies.

"Today, when the price of oil is approaching $50 per barrel, the eyes of oil firms are beginning to light up again," Shmatko told reporters.

"If it stays at above these levels, I'm sure they will ramp up production."

[...]

[TheAntiDoomer]

Russians drink Vodka, not Kool-Aid.

True, which makes you wonder if thats exactly what this Russian offical was doing when he made these comment.

[lowem]

Russia can sustain and even raise oil output if prices stay above $50 per barrel, Russia's energy minister said, adding he believed it would make no sense to merge oil majors Rosneft and Surgut during the crisis

Well, it's now above $50 per barrel ...

[DantesPeak]

It's been a year but the answer to the question - has Russia peaked? - appears to have been answered.

Exports are already falling fast.

Russia 'pledges' to try to maintain production, but only if there are "investments in geological exploration".
So far it doesn't look like the necessary 'investments' are being made,

Official: Russia doesn’t plan to cut oil exports in near future

UNECHA, Bryansk Region, Jun 10 (Prime-Tass) -- Russia does not plan to cut its oil exports in the near future, Deputy Prime Minister Igor Sechin said at a news conference on Wednesday.

“I think it is economically impractical to make a decision to cut oil exports (now),” Sechin said.

In December 2008, Sechin said that Russia could cut its oil exports by 16 million tonnes, or 320,000 barrels a day, in 2009 if the oil price remained at late-2008 levels.

Russia does not expect its oil output to decrease within the next three years, Sechin said. However, the country’s oil output could decrease after that period due to an absence of investments in geological exploration, he added.

In 2008, Russia's oil output dropped 0.7% on the year to 488.105 million tonnes, according to TsDU-TEK, which provides data and analysis to the Energy Ministry. Russia’s oil exports decreased 6.65% on the year to 237.783 million tonnes in 2008, according to TsDU-TEK.

End10.06.2009 14:42

PRIME-TASS

http://www.prime-tass.com/news/show.asp?topicid=0&id=458675

Meanwhile the US has stealthily and steadily increased oil imports from Russia:



If that were not worrisome enough for the US to rely on Russia, Russia plans to start up its own refineries too:

Platts Oilgram News
May 6, 2009

Section: EUROPE, MIDDLE EAST & AFRICA

Russia sees December start for crude exports from Pacific Coast Kozmino terminal
Amanda Rayborn

Moscow

Russia expects to start in December crude exports from the Kozmino oil terminal on the Pacific Coast, the Primorsky Region Governor's press service said May 5.

The terminal is a key element of the strategic East Siberia-Pacific Ocean crude ex-port pipeline, which will enable oil produced in the remote eastern region to reach international markets.

The governor's press office said the first phase of a planned refinery near the terminal would be completed in 2013, indicating a slight delay in the previous plans to launch the refinery in 2012.

The refinery will produce propane and butane, as well as gasoline, diesel and kero-sene, in the first stage, it said.

Russia's biggest oil producer Rosneft is planning the construction of the refinery and possibly a petrochemical complex with total throughput capacity of 20 million mt/year (400,000 b/d). The plant is to be built in two stages of 200,000 b/d each.

Rosneft previously said it expected to start construction of the refinery in the second half of 2009, with the front-end engineering and design to be completed in the first half of this year.

[no link]

[copious.abundance]

I posted some more info here:
http://peakoil.com/current-events/bmi-r ... 52745.html

[Pholostan]

According to the oilwatch monthly Russia peaked production in 2007. The Export land model would probably apply as domestic conspumption rises.

Edit:
I've been trying to dig up some on car sales. Seems sales boomed in 2007 and 2008, but have tanked seriously the first five months of 2009. -58% year-on-year according to this article:
http://uk.biz.yahoo.com/08062009/323/rp ... uture.html

[bratticus]

Talakan Oil Flows into the Pacific The long-awaited launch of the first stage of the Eastern Siberia – Pacific Ocean (VSTO) oil pipeline took place on Dec. 28 (link)
The idea of building a pipeline that would link Russia’s Siberian oilfields with the Pacific Ocean coast existed even in the Soviet days. However, it took more than three decades from dotting the future trunkline’s route on a project map to loading first oil onto a tanker in the Kozmino Bay.
OilAndGasEurasia.com
Jan 2010
By Elena Zhuk

Meanwhile, the Soviet Union ceased to exist and the fast-paced development of southeast Asia tremendously spurred oil demand in the region. The emergence of Asia as one of the global leaders in oil consumption justified the implementation of a project often compared in scale with the construction of the Baikal-Amur railway.

In late December, the first tanker carrying East Siberian crude sailed out of the special-purpose marine port of Kozmino in Russia’s Far Eastern Primorsky Territory. The project’s first stage envisages transportation of oil from Taishet in the Irkutsk region, via a 2,700-kilometer-long pipeline, to Skovorodino railway station in the Amur region, where the crude is loaded into tank cars and carried by train to its final destination, the Kozmino port. The scope of the project is impressive – according to Transneft President Nikolai Tokarev, the first stage of construction cost approximately 420 billion rubles ($9.54 billion). Of those, some 350 billion rubles were spent to build the Taishet-Skovorodino section, 60 billion rubles – to construct the Kozmino marine port, and 6 billion rubles – to erect an oil-loading terminal in Skovorodino, Tokarev told Kommersant.

... skip ...

In the not so distant future East Siberian oil will reach foreign markets not only by sea, but by land, too. According to an intergovernmental agreement signed by Moscow and Beijing, Russia will start shipping crude across the Chinese border in early 2011. The deliveries will be made via a VSTO spur, jointly built by Transneft and CNPC. In February, China’s China Development Bank agreed to provide $25 billion in loans to Rosneft and Transneft. Of those, the Russian oil producer will receive $15 billion against the pledge to ship 15 million tons of crude each year over a 20-year period, while the oil transport monopoly will spend its $10-billion share to complete the VSTO project.

[Tanada]

I am surprised nobody has commented on this, or speculated on the implications. Looks to me as if it just got a lot cheaper for the PRC to import fossil energy and a lot more profitable for Russia to ship things East instead of to Western Europe. Any seller benefits from having more buyers, and the easier it is to supply those buyers the more competition there is between them for the goods.

the PRC has a lot of US currency in reserve and they have been actively seeking to buy commodities the last few years, what will this do to the world supply and balance equation going forward?

[TheDude]

Hmmm. 7.33 barrels per ton of oil. 30 million tons per year = 602 kb/d. When they upgrade to 80 million tons it'll be at 1.6 mb/d. That's a lot of oil, but the Chinese have piled on an average 392 kb/d extra consumption every year of this decade, and this just displaces their imports from the Middle East etc. anyway; if anything it will drag out their ability to subsidize fuel and give consumers more incentive to drive. Also the geopolitical possibilities involving the world's #2 and #4 nuclear powers isn't very comforting. We've seen how Putin likes to use pipelines to play hardball.

[Ferretlover]

Good find, Brat. Just how much things will change, in that part of the world, will be interesting to watch.

[Tanada]

When you couple the Russian oil pipeline cited above with the Natural Gas pipeline extending from Turkmenistan all the way to the PRC which was reported by the New York Time NYT HERE you get a potent low cost energy influx into the PRC compared to the USA.

If the Turkmenistan pipeline gets extended to Iran, which has a lot of stranded Natural Gas they would like to sell, the situation becomes more secure for all those involved directly and even less secure for the rest of us.

The players are picking teams and lining up for the Big Game, and the Eastern Europe-Middle East-Asia team has a large resource base and internal lines of communication.

[Ferretlover]

Russia to Free Oil Magnate’s Former Lawyer
By MICHAEL SCHWIRTZ, Published: April 21, 2009:
MOSCOW — A Moscow court granted early parole on Tuesday to a former lawyer for the Yukos Oil company, jailed as part of the government-backed prosecution of the company’s former owner, Mikhail B. Khodorkovsky.
Svetlana Bakhmina, the lawyer and a mother of three, was halfway through a six-and-a-half-year prison sentence for embezzlement and tax evasion as deputy head of Yukos’s legal department, and spent most of the last three years in a prison camp in the former Soviet Gulag town of Mordovia, 400 miles from Moscow. –snip—
On Tuesday, Mr. Khodorkovsky and his former business partner, Platon Lebedev, who is also on trial, pleaded not guilty to laundering more than $20 billion and embezzling hundreds of millions of tons of oil, charges both defendants have called absurd.

NYTimes

[OilGasEurasia]

I notices recently that more and more Russians in the oil industry are talking about Russian production falling. The latest is LUKOIL's VP Leonid Fedun.

He says that LUKOIL is starting to look towards West Africa because he sees Russian production dropping off in 2015 - 2016. In fact, he said during a Moscow forum recently that West Africa may soon overtake West Siberia in terms of production.

So my question is - how is production really doing in Africa? Does anyone here think it is reasonable to believe West Africa will be producing more than West Siberia in five to seven years?

[Arthur75]

Some countries in west Africa are also clearly past peak, such as Gabon and Cameroon for instance, but for Nigeria, Angola, Algeria still increasing, overall for Africa :



Not sure if the decrease since 2007 is conjonctural or the peak for the region.


Gabon production :



Cameroon :



Taken from :
http://www.manicore.com/documentation/p ... trole.html

[wisconsin_cur]

There is also the topic of political stability. What is geologically possible is not always politically likely. Russia, for all its diversity and problems is nothing like the problems faced by West Africa.

But even if it is politically possible, the new oil is going to be harder and harder to extract (just like every where else):

Does anyone here think it is reasonable to believe West Africa will be producing more than West Siberia in five to seven years?

This isn't exactly my forte but I will take a stab at a reasonable answer.



West Siberia:


If we start with the chart above (I confess it is dated) and say that region of Africa will be producing 6.5 mbd

Today West Siberia is already producing less than 6 mbd. It peaked at 8mbd before the collapse of the Soviet Union and has recovered but is only estimated to remain at constant production for a few years before geological decline sets in (Swedish thesis in English see page 34)

In that case I would say they are already roughly the same and any decrease in W. Siberia or increase in W. Africa would result in more production in W. Africa.

Perhaps you meant Russia as a whole @ ~9.5 - 10 mbd (depending on whose numbers you use)?



So Russian oil production would ned to drop a total of 35% between now and your 5-7 year window... so someone who is better than math than I could find more exact numbers but if the scribbles on my hand are right that would require a ~6% annual depletion starting now.

Given the parameters of the thought experiment (5-7 years; total russian production) I would say probably not since depletion would need to start now and go forward at a fairly good (but not impossible) clip.

I hope that was helpful. I will wait for the more technically competent to come along and corret me .

[OilGasEurasia]

thanks for that info, that sheds a lot of light on it for me.

Fedun was comparing West Africa to West Siberia as you can see on the Oil&gas Eurasia site http://www.oilandgaseurasia.com/news/p/0/news/8629

(Pardon the self post, but I've not seen this anywhere else in English yet.)

Something in the back of my mind is telling me LUKOIL really wants to diversify abroad because no matter the political instability of Africa, any plays there will at least not have the shadow of Russian nationalization looming over it.

LUKOIL is Russia's largest private oil company and they have faced some discrimination at home by a government that favours its own state companies, Gazprom neft and Rosneft.

[Tanada]

The West is struggling to set an oil price cap that hurts Russia

Allies of Ukraine want to put a price limit on Russian oil. But there’s a problem: They can’t agree on a number that would actually pile pressure on the Kremlin.

The West’s biggest economies agreed earlier this year to cap the price of Russia’s most valuable export and vowed to hash out the details by early December. The move is aimed at reducing inflows to President Vladimir Putin’s war chest without adding to stress on the global economy by further reducing the supply of energy.

But as the deadline approaches, countries are still haggling over where the cap should be set.

Media reports this week from a gathering of European diplomats indicated that Russian oil could be capped at between $65 and $70 per barrel. Yet this range is controversial, since it’s close to the current market price of Russian crude. That would mean limited disruption to supply, but also limited pain for Russia.

“At this price point, it’s about inflation reduction instead of Russian revenue reduction,” said Helima Croft, head of commodity strategy at RBC Capital Markets.

At the beginning of the month, a barrel of Russia’s Urals crude cost just over $70, about $24 below Brent, the international benchmark.

Setting the price lower, meanwhile, could exacerbate the global energy crisis — particularly if Russia retaliates. If it were to slash production by more than expected, it would drive up fuel prices just as countries like the United States, Germany and Japan are eager to get inflation under control.

Putin said Thursday that Western plans to introduce oil price caps would have “grave consequences” for energy markets.
Is the price right?

European Commission President Ursula Von der Leyen said Thursday that she was “confident that we will very soon approve a global price cap on Russian oil with the G7 and other major partners.” US President Joe Biden said oil price cap talks are “in play.”

But debate over the policy is dragging on, highlighting the complexity of the effort.

Countries want to reach an agreement ahead of December 5, when Europe’s embargo on Russian crude traveling by sea takes effect. That’s because the EU sanctions package also includes a ban on providing insurance and other services to ships carrying Russian crude.

This would make it harder for Russian customers like China and India to continue importing millions of barrels per day. Most insurers that cover crude transport are based in Europe or the United Kingdom, which is cooperating with Brussels.

The oil price cap aims to amend that policy. Shipping services and insurance could be provided to tankers transporting Russian oil — so long as it’s purchased at or below the price cap established by Western nations.

“This will help to further reduce Russia’s revenues, while keeping global energy markets stable through continued supplies,” the European Commission has explained. “It will thus also help address inflation and keep energy costs stable at a time when high costs — particularly elevated fuel prices — are a great concern.”

Yet actually setting a price has proved tricky. Poland and other eastern European countries want a lower cap, noting that it costs Russia much less than $65 to $70 to pump each barrel of oil. A cap between those prices would therefore allow Moscow to continue to reap profits from its crude sales.

The consultancy Rystad Energy estimates that the cost of production for Russia is between $20 a barrel and $50, depending on how the numbers are crunched.

Plus, Russia’s budget includes a forecast that oil will be exported at an average price of about $70 per barrel in 2023. If it can get that price in the market, it could continue spending mostly as planned.

Ukraine’s President Volodymyr Zelensky said Friday that the cap should be set at $30 instead.

“We hear about [proposals to set the cap per barrel at] $60 or $70. Such words sound more like a concession [to Russia],” he said via a video link at a conference in Lithuania.

If the price is too low, however, Russia could lash out and curtail its production. That could rattle markets, given that Russia’s 2022 exports stand at an estimated 9.7 million barrels per day, according to the International Energy Agency. That’s higher than in 2021.
Disruption inevitable

The price level isn’t the only issue at hand. Setting a static range for the price cap — as opposed to establishing a floating discount for Russian crude pegged to where Brent is trading — could pose logistical problems, since it would need to be frequently adjusted.

There’s also skepticism among oil traders that the measure can be enforced, according to Giovanni Staunovo, an analyst at UBS. He expects parties to transactions will simply hunt for loopholes.

“There is a strong desire to do something,” he said. “But reality will be different.”

Some analysts think the price cap will ultimately be less important than Europe’s oil embargo. The bloc has been buying about 2.4 million barrels per day of Russian crude, and Moscow will soon be forced to hunt for new customers.

To limit spare barrels, it’s likely to reduce output. That could push oil prices higher no matter what.

“Due to the EU oil embargo and the planned price cap on oil from Russia, oil production there is likely to be significantly curtailed,” Commerzbank said in a note to clients. “This should cause the price of Brent oil to rise in the coming weeks.”

– KRDO

[Newfie]

The cap is in place, not very tight at the moment, but it can be changed. The cap is $60 but Russian crude is trading at $52. It seems to be a mechanism by which the West can incrementally punish or reward Putin.

Turkeys play is interesting. They are now requiring ALL vessles to show more proof of adequate insurance, hence there is a backlog of Russian AND OTHER tankers. The West is hollering about delays.

Not sure what Turkey is up to, maybe just making their presence and power known to all sides?

About a month ago we took about 100 gallons in St Thomas, at $6/. Bad timing. Significanly cheaper now.