Putin Wins Again at Oil Chess: OPEC Is Facing An Existential Crisis

[Tom Kirkman + 8,860]

Putin outsmarts Iran, and uses OPEC infighting and a few OPEC government meltdown catastrophes to improve Russia's leverage in global oil & gas.

I found the last paragraph of the article especially spot on.  Specifically the final sentence.

OPEC Is Facing An Existential Crisis

In the coming weeks, as analysts focus on production figures, storage volumes and demand, OPEC will be focusing on defusing pressure to increase production, while at the same time the Saudi-led faction will likely confront the Tehran-Venezuela (and possibly Iraqi) axis. Iran has openly threatened to undermine OPEC’s stability if no support can be gathered before the June meeting. In several statements to the press, Iran’s oil Minister has warned that OPEC is in danger of collapse. Tehran threatens at present to take all necessary measures to block oil and gas flows from OPEC members that are supporting the U.S. sanctions regime. At the same time, Tehran has warned to take measures against countries trying to fill in the supply gap left by Iran. Zanganeh reiterated the latter during a meeting with OPEC secretary general Barkindo in Tehran. Barkindo reacted by saying that OPEC will do its utmost to depoliticize oil and gas policies of the organization. OPEC’s SG statements however look very bleak in light of the growing heat in the conflict between Iran and Saudi Arabia. Zanganeh is counting on Iraq, Libya and Venezuela to keep the pressure on Riyadh an Abu Dhabi, not to fully support U.S. sanctions. The meeting in June will be crucial. Geopolitical pressure, combined with an aggressive power projection of Iran in the Middle East (Iraq, Syria, Libya), leaves less room to maneuver for Arab countries than before. Tehran’s hope to keep Moscow on its side also seems to be backfiring as Russia openly is behind OPEC+ cuts, while backing Saudi-UAE’s efforts in Libya.

 

In many ways this appears to be a repeat of the 2018 meeting of OPEC in Vienna. The main difference will be that Tehran has lost much of its internal OPEC powers, due to the departure of Qatar and the implosion of Venezuela. Tehran doesn’t hold any real cards anymore, even the threat of military action in the Gulf or elsewhere will backfire. The cartel is heading for a rearrangement of powers, a rearrangement in which a new actor may be taking part. Moscow is still heading for an official agreement with OPEC, threatening to topple any Iranian future in the cartel for a very long time. Putin’s need for Iran is gone, new power plays are already in place, in which Riyadh, Abu Dhabi and Libya are much more prominent.

 

[Jan van Eck + 7,558]

Given the internal wars and threats, it sure looks like Qatar made the smart move by bailing out of that crowd. 

[Marina Schwarz + 1,576]

3 hours ago, Tom Kirkman said:

while backing Saudi-UAE’s efforts in Libya.

How are they backing Saudi A in Libya? Not sure about this and about the Iran conclusion. Time will tell, as usual.

[Tom Kirkman + 8,860]

31 minutes ago, Marina Schwarz said:

How are they backing Saudi A in Libya? Not sure about this and about the Iran conclusion. Time will tell, as usual.

For consideration:

Civil War in Libya: Russian Goals and Policy

and

In Libya, One of Putin’s Many Bets Is in Play

 

Also, the Iranian government seems edging closer to becoming a complete basket case, and I suspect the new sanctions by Trump will seriously turn the screws and bite them hard.

Putin seems ready to toss Iran under the bus in order to cosy up closer these days with the Saudis (i.e. Alpha MBS).  Machiavellian.  Putin recognizes a losing bet (Iran and Venezuela) when it becomes paunfully obvious, and seems ready to shift more toward the Saudis (i.e. MBS) for gaining influence in global oil & gas.

As you mention, time will tell.

I think Trump and Putin and MBS will actually get along fairly well this year and next year, despite their respective political blusterings to their own home bases, and trolling (toying with) the Mainstream Media.

[Tomasz + 1,608]

You should look not only on nominal oil production but rather on oil production per one inhabitant.

Its true Russia produces about 11 milion barells but has more than 150 milion people if you include also immigrants and especially illegal immigrants (about 15 milions people) because Russia is world second work destination after USA for people from poorer parts of former USSR. 

So in 2017 we had this oil rent according to World Bank where Russia is not even in top 10 most affected countries when we look on oil prices change = currently on 19th position.

 You can also find that in Russia case its oil rent is rather slowly decreasing.

https://data.worldbank.org/indicator/ny.gdp.petr.rt.zs

 

Its more complicated because Russia is also biggest natural gas exporter but for  now natural gas prices are only partially tied to oil price and partially on spot market price.

 

But I would summarize that John McCain statement that Russia is gas station masquerading as country was rather not true and insulting.

Edited May 5, 2019 by Tomasz

[Jan van Eck + 7,558]

6 hours ago, Tom Kirkman said:

I think Trump and Putin and MBS will actually get along fairly well this year and next year, despite their respective political blusterings to their own home bases, and trolling (toying with) the Mainstream Media.

You are mostly right.  Where Trump and Putin do not get along is in the matter of Ukraine and Crimea.  I suspect Trump is prepared to ignore the Crimea issue, on the fuzzy idea of Crimea being a historical part of Russia, but the matter of the Donesk and Luhansk is a bit more difficult.  Letting that one slide effectively gives the Russians a free hand to rework the map of Russia and its neighbors.  Trump has no emotional or intellectual investment in the fate of Ukraine, and if it becomes a vassal State, hey he does not care at all.  But there are problems in ignoring Ukraine, as there are migrants from Eastern Europe in the USA that voted for him, and if the issue is ignored, are likely to vote for some other candidate that will be forceful in demanding that Russia gets out. 

You see Russia toying at the edges, probing and testing to see how far he can go, when Putin sends two bombers to Venezuela for military exercises, and send two planes with "advisers" to Venezuela.  He is probing Trump.  Putin plays chess; Trump lays NFL football.  Those approaches are not designed to be consonant.  

[Tomasz + 1,608]

Well if one democratic senator this week  just said Get out from Venezuela its our sphere of infuence Russia can say the same about Georgia and Ukraine.

You should also not forget that China although quiet is many times more involved in Venezuela than Russia= more loans, more oil imports, more chinese workers

And I can assure you that this extraordinary John Bolton statement will be shown every time authroritarian regime will face revolution.

https://www.msn.com/en-us/news/politics/john-bolton-us-fully-supports-efforts-by-venezuelan-people-to-reclaim-thieir-freedom/vi-AAAKxYm

Its a little bit strange there is histeria about foreign meddling in US election and at the same time you can see this.

Edited May 5, 2019 by Tomasz

[WayneMechEng + 89]

Topic has not mentioned Canadian oil production.  Just about same production as Iran.  It will increase with new pipelines.

https://financesonline.com/top-10-oil-producing-countries-in-the-world-wheres-the-greatest-petroleum-dominion/

Dirty oil campaign has made great attempts to stop competiion from the oil sands.  Rockefellers via Tides Foundation, paid protest organizers, money to First Nations.  All under pretense of Global Warming so Trudeau could justify a Carbon Tax (which saps the Canadian economy). New Alberta premier Jason Kenney is aware of the game being played by foreign interests.  He is raising awareness to get pipelines built.

Canada's best climate path forward is to reduce consumption.  In the meantime, they can keep their fair market share so the ecomomy can support needed changes without the stiffling carbon tax.  (Canada is losing oil royalties so needs to raise taxes due to rising debt.)

Trump wants the Keystone XL for national security reasons and to maintain stable prices.  The price of gasoline has the biggest leverage on average consumers disposable income.  US and Canada are expansive countries and need less expensive fuel for commerce.

OPEC+ mission is to maximize their profit.  "He who has the gold makes the rules."  If they give lip service to support climate change initiatives to stop the oil sands, its only to increase their market share.  Targeting the oil sands keeps the price a bit higher for other producers.

[WayneMechEng + 89]

Venezueula's oil has the potential to supply a lot of Iranian lost production.  This history link is illuminating.

https://www.forbes.com/sites/rrapier/2019/01/29/charting-the-decline-of-venezuelas-oil-industry/#4d50e3a4ecd3

[Marina Schwarz + 1,576]

9 hours ago, Tomasz said:

But I would summarize that John McCain statement that Russia is gas station masquerading as country was rather not true and insulting.

This was certainly the case during Yeltsin's time and many outside Russia liked it, which is why... Oh, well, you know the rest.

Thanks for the links, Tom. I'm not sure Putin will be dropping anyone -- he's not known for dropping allies but rather for playing with everyone in the field (playing the long game and all that or Machiavellian as you said). Same with the Chinese, I see. Use 'em and lose 'em is more characteristic of another school of geopolitical thought.

[William Edwards + 708]

On 5/5/2019 at 1:57 PM, WayneMechEng said:

Venezueula's oil has the potential to supply a lot of Iranian lost production.  This history link is illuminating.

https://www.forbes.com/sites/rrapier/2019/01/29/charting-the-decline-of-venezuelas-oil-industry/#4d50e3a4ecd3

Twice the sulfur and twice the resid cut. Quite a challenge. I'd say US tight oil instead.

[William Edwards + 708]

On 5/5/2019 at 1:28 PM, WayneMechEng said:

Topic has not mentioned Canadian oil production.  Just about same production as Iran.  It will increase with new pipelines.

https://financesonline.com/top-10-oil-producing-countries-in-the-world-wheres-the-greatest-petroleum-dominion/

Dirty oil campaign has made great attempts to stop competiion from the oil sands.  Rockefellers via Tides Foundation, paid protest organizers, money to First Nations.  All under pretense of Global Warming so Trudeau could justify a Carbon Tax (which saps the Canadian economy). New Alberta premier Jason Kenney is aware of the game being played by foreign interests.  He is raising awareness to get pipelines built.

Canada's best climate path forward is to reduce consumption.  In the meantime, they can keep their fair market share so the ecomomy can support needed changes without the stiffling carbon tax.  (Canada is losing oil royalties so needs to raise taxes due to rising debt.)

Trump wants the Keystone XL for national security reasons and to maintain stable prices.  The price of gasoline has the biggest leverage on average consumers disposable income.  US and Canada are expansive countries and need less expensive fuel for commerce.

OPEC+ mission is to maximize their profit.  "He who has the gold makes the rules."  If they give lip service to support climate change initiatives to stop the oil sands, its only to increase their market share.  Targeting the oil sands keeps the price a bit higher for other producers.

So misguided. It is the inherent quality if the oil sands, along with the long distance to the water, not any "dirty oil campaign", that limits Canadian production. Change the quality (inexpensively) and you might change the market for bitumen.

Edited May 7, 2019 by William Edwards

[ceo_energemsier + 1,818]

On 5/5/2019 at 5:15 AM, Tom Kirkman said:

For consideration:

Civil War in Libya: Russian Goals and Policy

and

In Libya, One of Putin’s Many Bets Is in Play

 

Also, the Iranian government seems edging closer to becoming a complete basket case, and I suspect the new sanctions by Trump will seriously turn the screws and bite them hard.

Putin seems ready to toss Iran under the bus in order to cosy up closer these days with the Saudis (i.e. Alpha MBS).  Machiavellian.  Putin recognizes a losing bet (Iran and Venezuela) when it becomes paunfully obvious, and seems ready to shift more toward the Saudis (i.e. MBS) for gaining influence in global oil & gas.

As you mention, time will tell.

I think Trump and Putin and MBS will actually get along fairly well this year and next year, despite their respective political blusterings to their own home bases, and trolling (toying with) the Mainstream Media.

At this stage, The "Putin-ator" feels that the way to go is with KSA AKA MBS and MBS's NO BS anti lot of internal issues with the extremism and matters related it, while Iran to the Putinator, feels much riskier with the Mullahs going off the charts. And the Putinator will have no second thoughts of not just throwing under the bus but also drive the bus over them back and forth a few times. The other driving force and motivation for the Putinator is MBS's ambitious plans for getting beyond oil production and refining and get into petchem and more advanced tertiary petro-products. He can form JVS with them to expand the Russian downstream specialized petchem products.

[Bobby P + 88]

On 5/7/2019 at 4:47 AM, William Edwards said:

So misguided. It is the inherent quality if the oil sands, along with the long distance to the water, not any "dirty oil campaign", that limits Canadian production. Change the quality (inexpensively) and you might change the market for bitumen.

I don't think Canadian producers ship "Bitumen". Bitumen is what is used as feedstock to an upgrader and which is upgraded to "Synthetic Crude", I believe. Not all of the product Canada ships is strictly bitumen, 50% is synthetic crude. 

Dirty Oil campaign has had more of an affect to the oil sands than people believe. It seems the past Provincial govt and current federal govt wanted to please these so called "environmentalists" who want to increase regulations and taxes (See Bill C-69 and C-48) which will make it almost uneconomically to produce any oil. Their ultimate goal is to shut down Oil sands production while they never protest OPEC or Russian Oil. 

[canadas canadas + 136]

On 5/7/2019 at 7:44 AM, William Edwards said:

Twice the sulfur and twice the resid cut. Quite a challenge. I'd say US tight oil instead.

AKA TAR OIL

[ahmad gh + 7]

On 5/5/2019 at 3:45 PM, Tom Kirkman said:

For consideration:

Civil War in Libya: Russian Goals and Policy

and

In Libya, One of Putin’s Many Bets Is in Play

 

Also, the Iranian government seems edging closer to becoming a complete basket case, and I suspect the new sanctions by Trump will seriously turn the screws and bite them hard.

Putin seems ready to toss Iran under the bus in order to cosy up closer these days with the Saudis (i.e. Alpha MBS).  Machiavellian.  Putin recognizes a losing bet (Iran and Venezuela) when it becomes paunfully obvious, and seems ready to shift more toward the Saudis (i.e. MBS) for gaining influence in global oil & gas.

As you mention, time will tell.

I think Trump and Putin and MBS will actually get along fairly well this year and next year, despite their respective political blusterings to their own home bases, and trolling (toying with) the Mainstream Media.

Situation is going to be very well for Trump and Putin but not for MBS. For many years Saudis have been governed the country very costy. Religious men in Saudi Arabia always are trouble for royal family like 1979 uprising in Mecca. They also have Wahhabi opinions that is very close to ISIL.. The answer for this problem always is money but additionally the number of Saudi royal member is increasing highly and all of them want a high rank job . This problem is solving by paying money too. Unlike Iran Saudi Arabia is completely dependent to foreign industries especially in weapon . Not U.S not Europe and not Russia they don't sell goods ( weapons, car,...) to saudi cheap and they don't sell strategic weapons  for this reason the saudi military budget is very high but in comparison with Iran it is weaker , so they need more wepons also Iran has ideological warriors in Iraq Yemen Lebanon Syria Afghanistan and Pakistan .These warriors are fighting for Iran in very small income. The new sanctions by Trump and sending air craft to Persian Gulf is just a assurance for Arab nations that U.S protect you only if you buy U.S weapons and give cheap oil. Russia and U.S have been started a game to dominance in energy market especially in EU. If Iran could export its oil  freely EU wont buy oil and from Saudi U.S or Russia . Also the population of Iran is high more than sum of population of Saudi and Iraq and UAE and Qatar. This means Iran sell oil and buy essential goods not weapons. 

[Enthalpic + 1,496]

On 5/7/2019 at 5:47 AM, William Edwards said:

So misguided. It is the inherent quality if the oil sands, along with the long distance to the water, not any "dirty oil campaign", that limits Canadian production. Change the quality (inexpensively) and you might change the market for bitumen.

True - but the two are related.  The environmental risks (and perceptions thereof) is what is preventing the pipelines from being built.

 

[Enthalpic + 1,496]

6 hours ago, Bobby P said:

 

Dirty Oil campaign has had more of an affect to the oil sands than people believe. It seems the past Provincial govt and current federal govt wanted to please these so called "environmentalists" who want to increase regulations and taxes (See Bill C-69 and C-48) which will make it almost uneconomically to produce any oil. Their ultimate goal is to shut down Oil sands production while they never protest OPEC or Russian Oil. 

The NDP were pro-oil despite what Randy says. 

If you don't please the environmentalists and natives in BC (and/or QC) no pipeline will ever be built - so pleasing them is not a foolish endeavor. 

Shipping more south is kind of stupid as it still leaves us with pretty much only one customer.

[ceo_energemsier + 1,818]

24 minutes ago, Enthalpic said:

The NDP were pro-oil despite what Randy says. 

If you don't please the environmentalists and natives in BC (and/or QC) no pipeline will ever be built - so pleasing them is not a foolish endeavor. 

Shipping more south is kind of stupid as it still leaves us with pretty much only one customer.

If you can establish more buyers for export of the Canadian barrels, beyond US refiners, you can use the US as an export point and sell the Canadian barrels to  India, China, Mexico, EU, Singapore etc, if the pipelines are not going to get built in Canada.

I have done that before, export the Canadian barrels coming down to the US via rail and pipeline and exported them to any one of those  buyers, at one point exporting 150,000bpd+ under term contracts and tens of dozens of spot cargoes.

Edited May 8, 2019 by ceo_energemsier

[ceo_energemsier + 1,818]

1 hour ago, Enthalpic said:

The NDP were pro-oil despite what Randy says. 

If you don't please the environmentalists and natives in BC (and/or QC) no pipeline will ever be built - so pleasing them is not a foolish endeavor. 

Shipping more south is kind of stupid as it still leaves us with pretty much only one customer.

If this goes through, you will have two options then.

If and When its done, I will have my VLCCs waiting to load up and sail away, and will watch them from the beach and beautiful deck with a bottle of 🍾 in Vancouver.

_______________________________________________

 

(Bloomberg) -- The Canadian government is likely to proceed with expansion of the Trans Mountain oil pipeline when it announces its final decision on the conduit next month, officials familiar with the matter say.

The government has made no secret about its interest in finding a way to expand the line, but has tiptoed around the matter to avoid opening any decision up to legal challenges that have already delayed the project -- and things remain fluid as consultations continue. However, with a June 18 decision approaching, the government is likely to proceed with the expansion, the officials said, speaking on condition of anonymity because the they’re not authorized to speak publicly.

Prime Minister Justin Trudeau has begun signaling his interest. “The only way to do it is to do it responsibly, and that’s what we’re doing. The need for it, and the national interest, is clear,” he said on April 30. However, to rush ahead without appropriate consultation “would be a guarantee you would continually be bogged down in the courts for the years to come.”

The construction of the expansion, which would add 590,000 barrels of daily shipping capacity, would be a boon for Canadian oil drillers that have suffered from a lack of pipeline space that has weighed on local crude prices. That pipeline pinch sent Western Canadian Select crude to a record low of $13.46 a barrel last year, spurring Alberta’s government to order an unprecedented province-wide oil-production cut. Prices have since recovered to around $50.

Companies Benefit

The Trans Mountain expansion would be especially helpful to companies that are focused on production -- like Cenovus Energy Inc., MEG Energy Corp., and Athabasca Oil Corp. -- and have little to no refining capacity to cushion the blow from lower oil prices. Those companies would either get increased market access through the line or benefit from the higher prices that the project could spur. Cenovus Energy Inc. and Exxon Mobil Corp.’s Imperial Oil Ltd. are among the producers that have committed to ship on the expanded line.

While the government will likely move forward, it’s possible but unlikely it could again extend the deadline to allow for more consultation, the officials said. The government almost certainly won’t flat-out abandon the expansion that day, the officials said. Trudeau’s cabinet will meet the morning of June 18 and is expected to make its decision then.

A spokesman for Natural Resources Minister Amarjeet Sohi said only it was the government’s goal to make a decision by June 18. “We have been clear that a decision on the proposed Trans Mountain Expansion Project will only be made once we are satisfied that we have met our duty to consult and accommodate indigenous groups, where appropriate,” spokesman Alexandre Deslongchamps said in an email. “We know how important this process is to Canadians. We are working each day to get it right.”

Approval Framework

The government bought the pipeline last year from Kinder Morgan Inc. in a bid to save its expansion, only to see a court strike down the permit. That ruling set out a framework for an approval that would pass legal muster: added regulatory review, which has since been completed, and more consultation with indigenous communities. The government extended the deadline to June 18 to allow those talks to continue.

The political implications for Trudeau are complicated -- the pipeline is popular in Alberta, where he has little hope of any gains in this year’s election, while it’s decidedly more controversial in British Columbia, a key electoral region. Building the pipeline may burnish Trudeau’s economic record but could also potentially alienate voters, particularly as polls show him bleeding support to the Green Party.

Jason Kenney, the premier of oil-producing Alberta and an advocate for the project, said last week he expects it to move ahead. “After all, the federal government owns it now, so they’d better. Having said that, we don’t just need one coastal pipeline,” he said in a BNN Bloomberg interview. Kenney, elected last month, has vowed to strike a more combative, pro-oil tone as premier.

The Trans Mountain expansion would nearly triple the capacity of a line that runs from Alberta to the Vancouver region. The country’s budget watchdog has estimated the expansion’s cost at C$9.3 billion ($6.9 billion), on top of the purchase cost, which was about C$4.2 billion after capital gains taxes paid back to the government on its purchase.

[Enthalpic + 1,496]

1 hour ago, ceo_energemsier said:

If this goes through, you will have two options then.

If and When its done, I will have my VLCCs waiting to load up and sail away, and will watch them from the beach and beautiful deck with a bottle of 🍾 in Vancouver.

 

I think I'll buy some MEG and BTE shares shortly before the announcement - it's a risk but could pay off nicely.

The island is better than Van city - go to Victoria

Edited May 9, 2019 by Enthalpic

[ceo_energemsier + 1,818]

1 hour ago, Enthalpic said:

I think I'll buy some MEG and BTE shares shortly before the announcement - it's a risk but could pay off nicely.

The island is better than Van city - go to Victoria

Those could turn out to be good payoffs for the long term.

Northern Vancouver Waterfront

[kusje + 1]

2 hours ago, ceo_energemsier said:

If this goes through, you will have two options then.

If and When its done, I will have my VLCCs waiting to load up and sail away, and will watch them from the beach and beautiful deck with a bottle of 🍾 in Vancouver.

__________________________________

I don't think so. Vancouver cannot berth VLCCs.

[ceo_energemsier + 1,818]

31 minutes ago, kusje said:

I don't think so. Vancouver cannot berth VLCCs.

They can handle 120,000 T vessels for oil tankers a SUEZMAX.

VLCC's can be loaded offshore , if the business picks up, lightering companies will pop up.

[Bobby P + 88]

16 hours ago, Enthalpic said:

The NDP were pro-oil despite what Randy says. 

If you don't please the environmentalists and natives in BC (and/or QC) no pipeline will ever be built - so pleasing them is not a foolish endeavor. 

Shipping more south is kind of stupid as it still leaves us with pretty much only one customer.

Yeah. I am sure you seen how well "pleasing" environmentalist's has worked out right? Not an inch of pipe has been laid since the past three years. There is no way to please them, how many times does the TMX pipeline have to be "approved"? Even after the June 18th 2019 tentative approval from the fed government, I am willing to bet these so called "environmentalists" will be back creating havoc impeding construction. So yes, to me it is a failed endeavor and there is no way to please them. 

It's not stupid if Alberta has no other option. 

Edited May 9, 2019 by Bobby P