From fuel fix we learned that the outlook is grim for Venezuela’s oil industry. Former President Hugo Chavez’s use of its state run oil company, Petroleos de Venezuela S.A. (PDVSA) for social engineering purposes has impoverished the country.  Venezuela had obtained 96% of its export earnings from PDVSA but now that cash cow has dwindled as the money was used to subsidize cheap domestic gasoline prices, send cut-rate oil to members of the 18-nation Petrocaribe alliance, and for social spending in the country. Inside Venezuela, gasoline is almost free. What the money has not done is fix a deteriorating oil industry including a 50 year old refinery badly in need of renovation and up-to-date-technology.  And it appears the new leader, Nicolas Maduro, is not interested in changing the situation. As a result the country faces declining crude oil production, is billions of dollars in debt, and has infrastructure deficiencies that caused major accidents including a blaze that killed at least 42 people at the largest oil refinery last year. Now there are shortages of basic food stuffs like flour, sugar, butter and cooking oil. Indeed, even toilet paper as the country has run out of dollars to purchase imported goods.

Venezuela has the world’s largest oil reserves but PDVSA’s production, earnings and income all appear to be on a downward slide and its debts to suppliers rose 35 percent. Its debt to the Central Bank of Venezuela reached $26.19 billion last year, a nearly eight-fold increase in two years….PDVSA is badly mismanaged and outside experts say that even a radical overhaul would take years to show results.

On the country’s shortages see BBC, Venezuela Catholic Church ‘running out of wine’, EL UNIVERSAL, Venezuela sends ships to bring food from Nicaragua, and Time, Bathroom Blues: Venezuela’s Toilet-Paper Crisis. Meanwhile, PDVSA has to hunt for money wherever it can including setting up a $1 billion line of credit with oil services company Schlumberger.

Oil sands production in Canada’s province of Alberta is likely to double by 2022 said the National Post. Alberta’s Energy Resources Conservation Board said it expects oil sands production to hit 3.8 million barrels per day in nine years, up from 1.9 million bpd in 2012. Canada’s oil sands are the world’s third-largest crude reserves, behind Saudi Arabia and Venezuela, and the biggest open to investment by private oil companies. See also The Globe and Mail, Oil sands production to surge amid North American ‘supply shock’: IEA. In a forecast through 2018, the International Energy Agency (IEA) warns that oil sands production will be greater than current pipeline capacity can handle in the medium term, and that the discount on western Canadian oil will probably delay “incremental volumes” if it keeps up. The discount on Western Canadian crude oil to West Texas Intermediate and Brent is caused by the US. shale oil and natural gas boom and the pipeline constraints.

BBC posted about how the US shale boom is shifting the global balance of power. Over the next five years, the US will account for a third of new oil supplies according to the International Energy Agency (IEA). During that time the US will change from the world’s leading importer of oil to a net exporter and demand for Middle East and OPEC crude oil will decline. See also Bloomberg, Oil Shockwaves From U.S. Shale Boom Seen by IEA Ousting OPEC, National Public Radio, Huge Boost In U.S. Oil Output Set To Transform Global Market, and The Japan Times, U.S. shale gas alters Japan’s energy plans.

gulfnews wrote about how the Gulf states in the Middle East are responding to the challenge of the US shale oil and gas revolution. With revenues from crude oil expected to decline over the next quarter century, the countries of Kuwait, Oman, and Qatar will need to look to alternative revenue sources and renewable energy investments to support a growing population.

The global oil boom is forcing Saudi Arabia to cut back its oil production to keep the $100 per barrel price said fuel fix. Saudi Arabia is reacting to the growing supply of US shale oil as well as increased ;production from Brazil and Iraq. For the Saudi thoughts on the threat from US shale oil see DAWN, Revolution in energy world

We are living in an era of energy abundance argued Forbes. “What will it take for us to realise that the doom-mongers and peak-oil theorists are wrong, and that we live in an era of energy abundance?” The authors argue that increasing crude oil production from conventional and unconventional sources, the sudden emerge of shale natural gas around the world, rapid technological progress for both fossil fuels and renewable energy sources, and the global transfer of technology have combined to radically alter our views of a potential world of oil scarcity. Rather than worry about running out of oil, we must face up to three new energy challenges.

… there are three major challenges which the industry and policymakers must confront. The first is our need for new technologies for storing wind and solar power so as to smooth out the load variability that results when the wind dies down or the sun hides behind a cloud.

The second challenge is how to win the argument for a low-carbon future…. We need instead to decide in what order and with what speed we want to consume our abundant energy resources in order to preserve the environment for future generations.

The final challenge is how do we develop and employ our resources in line with the wishes of local communities?

Seeking Alpha forewarned us of The Coming Price War Between Crude Oil And Natural Gas in the US. The vast amount of natural gas in the US is about to extend beyond electricity generation (where it competes with coal, wind and solar) to the heart of crude oil’s territory – heating residential homes and businesses and the transportation market.  The latter will require the build up of a large supply infrastructure to compete with gasoline and diesel.

Energy Trends Insider noted that coal will overtake crude oil in fuel use in 2022.  This is the forecast of the International Energy Agency in its latest report.

The boost in coal use is due to extreme growth in emerging markets like China and India, countries that require cheap fuel sources for electricity production in order to support their quickly growing infrastructures and populations...Ending its report with the tagline “China is coal, coal is China,” the IEA sees that country as determining the course of the global coal market over the next five years.

The Global Warming Policy Foundation hints at coming changes in European energy policy. At a summit in Brussels last week, European Union (EU) leaders discussed diversifying energy supply with natural gas having a larger part of the mix.  “The emphasis on the competitiveness and price of energy is an indication that environmental and climate concerns are falling down the EU’s list of priorities.” Reacting to the global shale revolution, European Council President Herman van Rompuy expressed concern that Europe could soon be the only continent dependent on energy imports.

The European Commission has given its approval to the planned Trans Adriatic natural gas pipeline reported UPI Energy Resources. The TAP pipeline is being built to bring natural gas from Azerbaijan to European consumers. Key owners of the pipeline include Norwegian state oil company Statoil,  Swiss energy company Axpo and Germany energy firm E.ON. TAP is competing with the Nabucco West pipeline, which is designed to carry Azeri gas from the Turkish border to southern European consumers. TAP would cross through parts of the Adriatic Sea on its way to European markets. The winning pipeline is expected to be chosen in June.














Tags: , , , , , , , , , , , , , ,