fossilfuelopolis

Prospecting the academic grounds on global energies patterns

OPEC centrality

“Washington did not fully comprehend the changes occurring in the global market. The Bush administration had a very rigid ideological conceptualization of the market place. It was simply supply and demand, a zero-sum game; no sophistication nor understanding of the rise of NOCs, state capitalism, resource nationalism and how that affected all commodities and not just energy. There was no appreciation of the tremendous developments in Western Canada […] no understanding of the Gulf of Guinea” (PM Wihbey, 2009: 90)

Changes in OPEC in the early 21th

Transparency (over reserves) has been advocated by many key players, notably Venezuela. “It plays to the political and strategic objectives of Chavez to become the largest oil proven reserve holder in OPEC […]”

An conclusive audition process could lead the official existing reserves of Venezuela to 279 BB surpassing the 262 of Saudi Arabia. “This could result in a shift in the balance of power within OPEC, as Venezuela is allied with Iran, a leading price-hawk and regional adversary to Saudi Arabia.”

“The quantification and certification of these vast deposits is part of the shift to the new oil order.”

OPEC is a cartel which controls only 40% of the production and is not anymore dominant enough to impose the prices; it would not keep its power as price maker and would rather become price taker.

“This was evidenced at recent energy summits in Madrid and Jeddah where the Saudis committed to an additional 500000 bpd of supply, and expanding capacity to 12.5 mbpd from the current 11. The message to the market was that “there is nothing to worry about, supply is readily available”. But the revealing aspect of those moves was that the market never adjusted to those pronouncements. Prices kept moving up from 125$ to 147$ in July 2008. In the past where the Saudis pronounced, the market would react immediately and prices would moderate.”

“The inventory is really what reserves mean. The oil you have in  the ground is your collateral. If you can prove it, audit it, lenders will provide the requested credits subject to the extractive technology needed.”

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