Sunday, October 07, 2012

Big Money Investments In Oil Production Infrastructure

From MENA to Russia to South America and more, up to a trillion dollars or more are due to be spent on oil production infrastructure. These new expenditures are a good indication that oil producers expect the current high prices for oil to last for at least a decade.
Saudi Arabia tops the list with committed investments of $165 billion, mostly generated by Saudi Arabian Oil Co. and Saudi Basic Industries Corp. (SABIC), followed by the U.A.E. that plans to invest $107 billion in the period, the lender known as Apicorp said in an e-mailed report.

Algeria overtook Qatar and Iran as the third-biggest investor, with $71 billion of potential spending, largely the result of catch-up investment. Iran’s energy spending program has been put at $68 billion. _Bloomberg

Russia's Soviet-era infrastructure is badly in need of upgrading.
Russia's state oil company Rosneft plans to spend $18 billion on its refinery infrastructure over the next three years, a report said Saturday after the company's chief met with investors.

The oil company unveiled a $25 billion programme to modernise its Soviet-era refineries, Interfax news agency reported, quoting data given by Rosneft president Igor Sechin to investors in London. _ET
This will not be nearly enough spending to bring Russian oil production into the 21st century. Sooner or later, Russia will have to invite international oil companies and oil services companies into the country. And Russia will have to provide guarantees that this time it will not steal (nationalise) the internationl companies' assets, once the oil starts flowing.

Venezuela elections are taking place, and both presidential candidates are promising to ramp up spending on the nation's oil production infrastructure.
Chávez has said Venezuela should look to the country's Faja oil belt and promised to invest $130bn in the region to double national oil production to six billion barrels a day, pushing Venezuela past Iran as the world's second-biggest producer. The money is needed to upgrade wells, processing plants, refineries, docks, roads and housing. Dire maintenance has plagued the industry, most recently with a huge fire at the Amuay refinery. _Guardian
Cynical voters might ask Chavez what kept him from making those investments before the election, but then they would probably disappear shortly thereafter.

Argentina and Colombia are moving ahead to expand unconventional petroleum production. Brazil is continuing to develop its huge offshore deposits, despite a number of setbacks.

In North America, spending is ramping up for unconventional oil & gas production and transportation infrastructure. New pipelines, new LNG terminals, and other new facilities are likely to allow continued increases in North American oil & gas production.

Spending on Asian infrastructure is also likely to pick up, as the Chinese begin to climb the technology curve for production of oil in the China Seas, and unconventional gas onshore. Several other Asian countries are beginning to explore and develop significant unconventional oil & gas deposits, as well.

Sooner or later, a number of European nations will reject green energy starvationism, and strike paydirt in their quest for homegrown petroleum deposits. Until they do, they will be forced to pay more than they should for Russian gas and for crude oil.

Oil prices are currently higher than they should be, but given the state of global oil markets, dollar devaluation, and petro-politics, there is no guarantee that oil prices can sustainably drop more than roughly $10 a barrel below current prices -- without triggering subsequent market shortages.

Other sources of petrochemicals and hydrocarbon fuels which will compete with oil & gas producers, include coal to liquids, gas to liquids, biomass to liquids, and microbial fuels.

We have been inundated with peak oil doom theories for at least 150 years, and as long as doom grifters can make money from the gullible, we will continue to see such scams -- such as Canada's own Jeff Rubin.

But the Earth's complement of energy has barely been tapped. Doing so successfully is a matter of human ingenuity. Doomers and their true believers do not hold human ingenuity in high esteem or expectation.

More realistic folks should probably allow for the unexpected.

More: Some analysts estimate global oil & gas investments to total near $500 billion:
The oil and gas sector is extending its lead over renewables by investing about $490-billion this year globally and another US$491-billion in 2013, the highest on record, according to Wood Mackenzie data. _The Province
The two year investment total of 2012 and 2013 comes quite close to the $1 trillion mark. International and national oil companies are not sinking that amount of money into the future of their enterprises for no reason. They are clearly planning to be involved in the global energy scene for decades to come.



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