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sábado, 26 de mayo de 2012

VENEZUELA IN THE INTERNATIONAL OIL MARKET

VENEZUELA IN THE INTERNATIONAL OIL MARKET

When we analyze the numbers of barrels of production and consumption in some countries that are important to Venezuela, we note that some have lost export capacity because they have not increased their production and increased their local consumption, for Venezuela this amounts to 24%, in 2008 local consumption was  690.000 b/d and in 2011 is 980.000 b/d, indicating a strong growth probably caused by more cars, and more use of liquid hydrocarbons in power plants. At the same time the local industry have been reduced substantially. None of the projects to generate gas or oil from the orinoco iol belt have materialized yet, all are delayed,.

our neighbor, Colombia, has duplicated their production from 520.000 to almost a million b/d, since 2008, at the same time it has maintained the local consumption flat, which has permitted Colombia to export 240.000 in 2008 and 652.000 b/d in 2011, Indicating a solid economy. Here it is not included the contraband of gasoline from Venezuela, which some sources say it is around 60.000 b/d. quite a good business for smugglers.
Lets look at Canada, this country increased their production from 3.300.000 to 3.800.000 b/d in 2011, the local consumption was stable at 2.200.000 during this period, therefore their capacity to export increased from 1.100.000 to 1.600.000 b/d, Canada has a bright future for additional exports in heavy crude oils and of shale oil and shale gas, These increases will impact countries like Venezuela, as to exports to the USA, country which is considered by the Venezuelan government a political enemy, in spite of been Venezuela best costumer, so this seems like a bluff like in poker games,.

Another country which is of interest to Venezuela is Mexico. Mexico has diminished its production by 300..000b/d to 3.000.000, its local consumption has diminished to 2.078.000 , 100.000 b/d less than in 2008, and this has caused a decrease of 300.000b/d in exports from Mexico.,

The country which is the key country to Venezuela is the USA, because, in spite of the political situation, it is our best client, we sell citgo , our own refinery, 900.000 b/d which is paid in cash, also Venezuela had a part ownership in the pipelines, and owns selling stations to the public, so our oil ends in the final consumer, direct from our oil wells. this strategy was developed in the 80 and 90, to insure a home for our high sulfur, vanadium, heavy oils. these crudes are not easily sold in the international market. unless we give it away to the Chinese, where the cost of delivery is very high compared to New Orleans, the freight difference makes it much more profitable to sell it to the USA, a few days away from our terminals. The USA distributes its imports from various countries, so as not to depend on any one.

Brazil. This giant will enjoy having an increase in production from the pre salt reservoirs off the coast of rio de janeiro, of excellent quality, and large amounts, Brazil has increased their production by 400.000 b/d to 2.800.000, but it consumes it all in their local market.
China, the other giant, of Asia, they have increased their production from 3.900.000 to 4.300.000 b/d in the period of 2008 to 2011, but their consumption is soaring from7.500,000 to 9.000.000 in 2011, so they have developed an aggressive policy to obtain oil production overseas, they are practically everywhere in the world, making deals to get their own oil. so far they are succeeding in this intent, their requirements for imports have grown from  3.600.000 to 4.700.000 b/d in just two years,

Cuba. The Cubans produce 50.000b/d, and are trying to find oil in near the norther offshore areas, so far none have been found, their local consumption is 165.000 b/d, so they need to import 115,000, any volumes above this is them traded in the international markets at nice profits, The Cubans depends on Venezuelan supplies at bargain prices.

Now, in the whole world there is an increase of the use of alternatives energies, because the oil price have gone over 100 $/d, and because of the desire to find alternatives to gasoline. this price of oil makes it profitable to find alternative energies and the development of deeper production offshore. This is the reason why OPEC has set about 80$/b the desired price, because at these price a lot of alternative energies either break even, or produce losses, also the incentives to find oil at deep waters is diluted, also, remember that a lot of the alternative energies have subsidies which have an end to it.
My personal position is that the price of oil above 80$/b is an error, it is bread for today and hunger for tomorrow, and if the price of oil continues to grow there is a possible glut and drop in the price of oil causing damage to oil producing countries, also, the swings in prices have convinced countries to go ahead with their plans to replace foreign oil, anyways, to be off the swinging prices which makes industries profits unstable,  may be it is too late to do any thing to convince these countries to continue importing oil, the damage is probably permanent by now, CONFIDENCE is the key word to obtain benefits,

In the mean time Venezuela with it 'faja petrolifera', giant oil belt, has lacking behind, because some companies that own portions of the "faja", should not be there in the first place, because they have no knowledge nor financial muscle to develop those reserves. Like Cupet, and others, so  what has really happened is that these companies have only marked their areas, where they own the oil underground, and position themselves to  wait and see, counter nationalization? or privatization!

We should go back to the orimulsion, because there is so much oil there that it allows for any ideas of use of the heavy oil, Bitor, the manufacturing and trading company of orimulsion had done an excellent job at selling orimulsion to long term contracts, and improve the technology to have power generating plants free of pollutants, by the use of new technology, but on top of this we could use it ourselves for our power plants instead of using liquid hydrocarbons that can be exported to generate hard currency,

Nestor G, Ramirez
nesgram@gmail,com'
www.petroleo,allalla,com and nesgram.blogspot,com
caracas may 24, 2012
sources:
IAA, OPEC,  and private communications,