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Mexico And Brazil Oil Auction Failures Are Further Proof Of Peak Oil At Current Prices

Summary Mexico’s first attempt to open up its oil industry to foreign companies was a failure. Its auction only attracted $2.6 billion in potential investments, compared to $17 billion maximum potential. Brazil had a similar failure more recently, with only 10% of its blocks being auctioned receiving viable bids. These latest failed auctions, coupled with other facts point to a permanent peak in oil production at current prices, which is unfolding presently, which will only reverse once prices rise. By far the most spectacular and talked about trend since the oil price collapsed more than a year ago, is the dramatic decline in drilling that occurred in the United States since the beginning of this year. For many months, we have been hearing about the resiliency of the shale industry, fueled by the delay in reaction of the industry in response to declining prices. At first, there was a […]

Posted On : Published By : Tom Whipple
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Exiled opposition leader returns to Venezuela, is arrested

AP Photo/Gregorio Marrero CARACAS, Venezuela (AP) — A Venezuelan opposition leader who had been living in self-imposed exile was arrested Thursday after returning to the socialist South American country. Former Gov. Manuel Rosales flew into Venezuela on Thursday after six years as a fugitive. Intelligence police met him at the airport and took him into custody. He was expected to appear in a Caracas court later in the day. Before his arrest, Rosales vowed to continue fighting the country’s 16-year-old socialist administration and urged Venezuelans to vote in Dec. 6 legislative elections. Authorities had warned him days earlier that he would be detained if he came back. Rosales was governor of the western state of Zulia, where he returned Thursday. He ran for president in 2006 and lost to Hugo Chavez. He went into exile in 2009, fleeing to Peru and then Panama after prosecutors accused him of stealing […]

Posted On : Published By : Tom Whipple
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Cuban Oil: Black Gold or Black Hole?

Cuba has oil and gas. That is certain, say geologists. The big question is just how much. Chris Schenk, Geologist at the U.S. Geological Survey, was one of the first to assess the island’s natural resources. By Schenk’s estimate Cuba has at least 4.6 billion barrels of undiscovered oil and 9.8 trillion cubic feet of undiscovered natural gas. Both are considered significant enough to pique the interest of any major energy company in the world. “People are always interested in where the oil is,” Schenk told FOXBusiness.com. The challenge is finding and tapping those resources, which are said to be primarily in the North Cuba Basin on the northwestern part of the island. Source: USGS U.S. President Barack Obama and Cuban President Raul Castro sat down at the United Nations in late September as part of the ongoing efforts to thaw relations that began earlier this year. Even before […]

Posted On : Published By : Tom Whipple
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A $70 oil floor? Fat chance, but OPEC price plan may be first step

An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015. The safe money for oil traders is betting that Venezuela’s plan to resurrect OPEC’s old price band mechanism, attempting to set a $70 floor for the battered market, will be doomed from the start. Saudi Arabia, the group’s de facto leader, has shown zero interest in returning to a strategy of supporting prices; big producers outside the Organization of Petroleum Exporting Countries, namely Russia, have essentially ruled out cuts. And most analysts say attempting to set a price range is futile, or that the $70 price is unsustainably high, or both. Yet a handful of experts and observers say the proposal – articulated by former oil minister Rafael Ramirez in an interview with Reuters – may be a catalyst for moving away from OPEC’s laissez faire approach to collapsing oil prices, […]

Posted On : Published By : Tom Whipple
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Venezuela calls on OPEC to control output, seeks $70 floor price: Ramirez

Rafael Ramirez waves during his meeting with Colombia’s Foreign Minister Maria Angela Holguin in Caracas November 19, 2014. Venezuela this month will unveil a bold new strategy for rescuing ailing oil prices, one lifted from the OPEC’s history books – a price band that would build an automatic floor for prices at $70 a barrel. In an exclusive interview with Reuters, Venezuela’s long-time oil minister and current United Nations ambassador Rafael Ramirez said the proposal – to be presented to a meeting of OPEC technical advisors on Oct. 21 – would reapply the old mechanism of progressive production cuts to control prices, with a "first floor" of $70 per barrel and a later target of $100 per barrel. "We will try to progressively recover the price," he said. The proposal offers the first detailed public insight into Venezuela’s months-long global effort to drum up support for measures to revive […]

Posted On : Published By : Tom Whipple
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Historic Failure For Brazilian Oil Auction

Brazil just held an oil and gas auction, and judging by the results, few companies are interested in developing the country’s oil and gas reserves right now. The state-owned oil company Petrobras, which is still reeling from the corruption scandal, did not participate in the auction. The unusual absence was due to the company’s massive pile of debt. Petrobras has limited resources to throw around these days, and it can ill-afford to take on new projects that would require large capital expenditures upfront, with payoff somewhere down the road. However, there was scant interest from international oil companies as well. Brazil’s oil auction failed to attract any oil majors, including Royal Dutch Shell, Total, Statoil, ExxonMobil, or BP, all of which either have a presence in Brazil or were registered to bid in auction. Out of the 266 onshore and offshore blocks that were put up for bid, only […]

Posted On : Published By : Tom Whipple
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Petrobras a No Show at Brazil’s First Oil Auction in 2 Years

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, sat out an oil licensing round in Brazil for the first time on Wednesday as it struggles to reduce the oil industry’s biggest debt load. Brazil’s National Petroluem Agency sold only 37 of the 266 onshore and offshore blocks it offered in the worst turnout at a Brazil auction in years. International majors who operate in Brazil, including Statoil ASA, Royal Dutch Shell Plc., and Total SA, didn’t submit any bids. Winning bidders include QGEP Participacoes SA and Parnaiba Gas Natural, both based in Rio de Janeiro. The auction took place amid a slump in crude prices, a national political crisis and with Petrobras, the country’s dominant producer, suffering cash constraints. While small and mid-sized producers prefer to join Petrobras as minority partners to limit risk, the company is balking at new financial commitments, according to Jotavio Gomes, an oil consultant and […]

Posted On : Published By : Tom Whipple
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Brazil’s first oil auction in two years seen as referendum on nation

A worker fills a car with gasoline at a Brazilian Oil Company Petrobras gas station in Rio de Janeiro, Brazil, September 30, 2015. As Brazil prepares for its first sale of oil exploration rights in nearly two years on Wednesday, the auction is shaping up to be a mini-referendum on the willingness of investors to bet on the future of an industry under pressure and a Brazilian economy in turmoil. Not only has the price of oil fallen more than 50 percent since the last auction, slashing sector revenue and potential profit, Brazil’s principal oil company, state-run Petroleo Brasileiro SA, is mired in a giant price-fixing, bribery and political kickback scandal. And with $130 billion in debt and a backlog of existing projects, Petrobras, as the company is known, has not said if it will bid. In all previous auctions Petrobras, alone or as a member of a group, […]

Posted On : Published By : Tom Whipple
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Brazil’s Petrobras Cuts Investments, Expenses View Through 2016

SÃO PAULO—Brazil’s state run oil company Petróleo Brasileiro SA, PBR 5.52 % or Petrobras, cut its investments and expenses outlook through 2016 following a drop in oil prices and sharp depreciation of the Brazilian real. The company said it now expects to invest $25 billion in its operations this year, down from its previous view of $28 billion, and $19 billion in 2016 instead of its previous view of $27 billion. Petrobras said it expects manageable operating expenses of $29 billion this year, down from $30 billion, and $21 billion in 2016, compared with its previous view of $27 billion. The company it expects the cuts “to preserve its fundamental goals of deleveraging the company and creating value for shareholders.” In June, when Petrobras announced its business and management plan for the 2015-2019 period, it was based on a crude oil Brent price average of $60 per barrel this […]

Posted On : Published By : Tom Whipple
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Ecuador Enters Recession as China Loans Fail to Offset Oil

Ecuador’s economy slipped into recession in the second quarter for the first time since 2009 as the government struggles to borrow enough money to offset the global oil slump. Gross domestic product shrank 0.3 percent from the previous three months, after contracting a revised 0.1 percent in the first quarter, central bank General Manager Diego Martinez said Wednesday to reporters in Quito. From the year earlier, the economy expanded 1 percent. Ecuador is running out of money. Its use of the U.S. dollar as its official currency means increased dependence on foreign loans as the slump in oil prices cuts the value of exports. The local money supply has shrunk by about a quarter this year, while the trade deficit has swelled to a record. To make matters worse, expected loans from China, the nation’s biggest foreign creditor, haven’t come through as fast as forecast, forcing the government further […]

Posted On : Published By : Tom Whipple