EnergyInsights.net 
1: Investors - who believes the EIA forecasts? 16-04-2005 10:06 pm

EnergyInsights.net

Knowledgeable technical and business people within the oil industry are doubting the Energy Information Agency's forecast for oil production growth up until 2025. All OPEC countries except purhaps UAE and possibly Saudi Arabia are running at maximum capacity at present with fields maturing. It takes a lot of optimism to believe that countries such as Libya and Algeria can dramatically increase their production capacity in a sustained way up to 2025. Russia already shows signs of plateauing out at about 9 million barrels a day in Q1 2005 and might well go into decline in the forthcoming years as foreign investment dries up.

EIN has prepared charts of the data to give insights into which countries the EIN believes will increase capacity the most, and which will decline.

On a more positive note, investors in both the oil business and other businesses (e.g. property, banking, services) might like to consider these charts - in order to hedge against a global downturn driven by high oil prices. Investing in oil wealthy countries such as UAE, Saudi, Libya and Qatar could be of benefit, albeit over the last 50 years, these countries have underperformed most European and North American economies. Even if production does not rise significantly, oil prices are likely to in the future which will boost oil revenues in oil producing nations. Countries with small populations and large oil production benefit particularly - particularly noteworthy are:

Qatar, Brunei, UAE, Libya, Norway, Kuwait

The largest producing countries of Saudi, Iraq and Iran have rapidly expanding populations - Russia already has a large population although this is declining. 

The below chart shows Russian oil production at 16.5 million barrels a day by 2025 - frankly, the country does not and will not have sufficient reserves to sustain such rates. Saudi Arabia will struggle to achieve 22 million barrels - up from 8 million in 2002 - without huge investment in new fields and or expensive water injection projects to boost reservoir pressure. In addition, the North Sea is already very mature, and is likely to decline rapidly from the early 2000s up until 2025.

There is likely to be a big shift to LNG and pipeline gas as oil supplies run short and prices rise. There are plentiful gas reserves for conversion to LNG in Qatar - with reduced unit technical costs of shipping to far flung markets, the big energy players in Qatar will become increasingly important for satisfying the global energy requirements, as oil prices rise and start to become prohibitive. 

 

 

   

 

Powered by: csArticles - WWW.CGISCRIPT.NET, LLC