NOCs, Asian Demand Growth And Why America No Longer Controls Its Energy Future - SH

[hatrack]

EDIT

In general, all of the big producers are seeing their oil consumption skyrocket far above global growth, with Saudi Arabia, Russia and Norway leading the way. So while rising Asia demands a lot more oil, the biggest sources have trouble boosting production.

What can the major oil companies do about any of this? Not as much as you think. Increasingly, it's the home-team NOCs that control the bulk of reserves. Today, these state-owned firms directly manage 40 percent of the world's known supply. By 2030, that percentage will rise to roughly three-quarters, meaning Exxon Mobil, BP and others will be squeezed out of new big projects as NOCs grow rich enough to finance these on their own. Already, a significant chunk of the majors' current production is locked into sharing agreements that favor the NOCs as prices rise.

As the NOCs grab more control over future production, the majors face more restricted access to existing oil fields, pushing them toward increasingly complex ventures to discover new supplies, ventures involving tougher geology, deeper sea beds and harsher arctic environments. Those tougher conditions drive up production costs just as a worldwide shortage of rigs and workers emerges. Toss in years of under-investing by everybody -- NOCs and majors alike -- in refining capacity, and this situation won't be remedied anytime soon. Do continuing violence and threats in the Middle East add a surcharge on top of all of this? Sure, although the real problem comes in instability or "rogue regimes" keeping certain countries essentially off-line from comprehensive exploration, something the NOCs increasingly accomplish even in stable nations.

EDIT

In sum, crude prices will remain relatively high for the long run as everybody involved ekes out maximum profits across the final decades of oil's supremacy. As for what comes next, watch Asia, because America's strictly in the backseat on this tumultuous ride.

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http://www.scrippsnews.com/node/29763

[kurth]

1. Oil prices will continue to rise until China runs out of drinking water

or when they drop dead from the pollution.

[GliderGuider]

2. Somebody's been reading Jeffrey Brown

A second big driver is that many key producers are themselves becoming significant consumers, shriveling their capacity for exports. Indonesia became a net importer years ago while Mexico, a huge supplier for the United States, will head down the same path unless it soon opens up its national oil company (NOC) to foreign direct investment.

This is a reasonable estimate of what the oil end-game is going to look like for the next few years.

[hatrack]

3. ELM - NOT the 1970s British techno-rock group!

Glad to see the Oil Drum getting more traffic . . .

[The2ndWheel]

4. Ever see Thomas Barnett's power point presentation?

It's been on C-SPAN a couple times. It's about global economic, political, social, and military integration. Which could be interesting in a world described above. Hell, interesting even if we have cheap ass energy.