quicksand wrote:poundfoolish wrote:quicksand wrote:Obi 1 Kanobi wrote:Alba wrote:With the price of oil plummetting, viability becomes an issue. I see that Saudi Arabia cost per barrel is only $2 per barrel. So they literally dont care.
However shale oil in the US and Canada costs about $65 per barrel. At this rate the US oil boom could soon end.
Does anyone know what the average cost per barrel at Turkana will be? And what about Uganda?
Its lunacy that something that costs less than Usd 20 on average should sell for over usd 100 at final consumption.
Kenya's and Uganda's oil are likely to cost less than Usd 20 as they are onshore. I am assuming thats coz many onshore extractions cost less than that.
There is an interesting twist to this story that I read in one of the international news sites....Saudi Arabia and some other OPEC countries want the prices to remain low so that small and medium American producers who produce shale oil and gas by fracking would run out of business by the high costs of shale oil production.
So it appears this phenomenon will correct itself. But I think its better for America to source more of its oil internally rather than engage in global geopolitical skulduggery to access cheap oil.
If i were the Americans, then i would 'halt' the shales and buy now from OPEC, when prices go up I again dig mine to stabilise or bring down the prices as it is happening now.
Till the last man standing!
But if Saudis are okey with current trend, then i would imagine they are happy to debilitate the Iranians and Russians
But then these prices are just cycles. The previous one was expensive, which prompted investors to think it must be cheaper to invest and develop new fields rather than import. But mid cycle the tide turned, there is a glut and prices fell. Those who sunk money in will want their money back, at least the principals. Investments cannot wait for a good market outlook, human resources will shift, equipment depreciate (whats that term for idle assets?), futures, contracts and the like shift wildly; the best they can do is hold on tight and hope they don't get shaven or-increase the efficiencies and reduce the costs of shale oil production.
Now this is going to be one of the most interesting high stakes poker games ever. @Quicksand, as you are saying, the Saudi Arabians are happy to keep the international prices low so as to drive capital away from US shale investments, including research.
Saudi has enough cheap production and can afford the steep price cuts, plus most of their oil revenues go into sovereign funds.
Other Opec countries like Nigeria, Venezuela and Angola have very expensive deep sea wells and generally consume all their oil revenue, so they are facing huge budget deficits, their problems are compunded by the fact that they cannot increase production due to a supply glut.
Where does this leave Russia, their oil production also happens to be very expensive but they have huge supplies. They are likewise loosing.
For the new oil frontiers like Kenya, TZ and Mozambique, its a mixed bag. I think for Kenya, the gava is very committed to seeing production plus our finds are onshore and easily accessible. For Mozambique and TZ, those huge gas deposits are in real deep waters and may hav eto be placed on ice until the market settles.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins