Heading Out

Seeking the winds that help to sail on Shakespeare's tide.

Tuesday, December 28, 2004

A Present for China?

Trying to catch up on not much happening in the balance of the oil trade at the end of the year I happened upon via Energy Bulletin. It would appear that the Chinese are seeking to nibble away at one of the US suppliers, although most of the current need (about 8% of the US supply, but about half of Venezuela's exports) is tied up with long term contracts. The apparent thought, covered at some length at Vcrisis is that Venezuela is trying to get Russia and China to help with new sources of production. A quick glance at the back of Campbell's book indicates that he believes that Venezuela is actually in production decline about now - and certainly it has been producing flat out recently to try and recover from the strike.

There has been some publicity about the Saudi's just opening some new facilities, but a more realistic review seems to suggest that Saudi promises are a little ambitious, and count reserves that are of very thick oil that do not get folk excited, while perhaps beginning to recognize that the time is rapidly approaching when production will have to be switched, as it now is being, from the three largest fields in Saudi - Ghawar, Abqaiq and Safaniya to other smaller fields, such as Abu Sa'fah and Qatif which will combine according to reports to give a total of 800,000 barrels a day, 500k from the onshore Qatif and the rest from the offshore Abu Sa'fah. It was not made clear in these announcements as to how much of this is to replace declining production elsewhere.

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