Sign in to follow this  
Followers 0
SK

Saudi and UAE pressure to get US support for Oil quotas is reportedly on..

Recommended Posts

(edited)

The Lobbying Firms and Think Tanks are contracted and paid for.  They say Saudis are #1 K Street benefactor. 

NOTE: Saudi oil minister Khalid al-Falih met with Energy Secretary Perry last week.  The related Saudi press release stated focus was on cooperation to "stabilize" prices. There is that key Saudi code word "stabilize". Is that the price to be paid for Sunni cooperation for Israeli peace deal ?

UAE and Saudis are getting cozy with China and in the case of UAE also Iran. They were seriously disappointed when Trump didn't attack Iran. UAE has jumped in with both feet.  Saudis going along somewhat reluctantly. Looks like UEA and Saudis plan to play China against U.S.  They better be careful.  That can be a very dangerous game to play. 

Only other OPEC option is start a Mideast conflict. As al-Falih said, " We will do whatever necessary " This option probably off the table now that they realize Trump is not going to fight their wars for them anymore.

By September OPEC+ meeting in Dubai the US CACTUS II will be pumping at over 50% capacity ~ 400k/day.  EPIC should also be flowing .  By first half of next year Cactus II, Epic and Grey Oaks all at full capacity.  

Plus, Exxon/Phillips 1 mm bbls/day Permian to Corpus Christi pipeline construction will be underway. 

Magellan has commenced open season for an additional proposed pipeline from Cushing to Corpus Christi looking for firm commitments.  More important Magellan will make a decision on an crude export terminal on Corpus Christi harbor island that will handle VLCC Tankers.  Looks like Carlyle terminal will have some company on harbor island.

How long can Saudis handle Brent in the $50s ?

NOTE: On Monday ARAMCO conference call ARAMCO SAID THAT FIRST HALF 2019 PRODUCTION  . . .  10 mm bbls/day crude oil (same as 2018) and 13.2 mm boe/day.

NO PRODUCTION CUTS MADE COMPARED TO 2018 ACCORDING TO ARAMCO.

ARAMCO ALSO SAID THEY AE SEEING FIRM DEMAND IN ALL REGIONS. Huh ?

THIS CONTRADICTS THE OIL ANALYST.

Edited by SKEP

Share this post


Link to post
Share on other sites

(edited)

14 minutes ago, SKEP said:

The Lobbying Firms and Think Tanks are contracted and paid for.  They say Saudis are #1 K Street benefactor. 

Saudi oil minister Khalid al-Falih met with Energy Secretary Perry last week.  The Saudi press release focus on cooperation to "stabilize" prices.  Is that the price to be paid for Sunni cooperation for Israeli peace deal ?

Only other OPEC option is start a Mideast conflict. As al-Falih said, " We will do whatever necessary " 

How long can Saudis handle Brent in the $50s ?

 

 KSA can handle a price drop to $30Bbl and Saudi Arabia would still be able to finance the gap between its export and imports "from their foreign exchange savings for the next decade.

Yes it would cause pressure but they have the ability to produce at a break even on $10Bbl, does the USA have this luxury?

Regarding starting a war, well that comment is ludicrous and flippant why would they start a war? And with whom Iran, that would be a great idea.

In short they can handle 50 a lot longer than USA, but it will go lower as the USA saturates the market with expensively cheap oil.

💸💸💸💸💸💸💸💸💸💸

Edited by James Regan
  • Upvote 1

Share this post


Link to post
Share on other sites

(edited)

On 8/12/2019 at 5:57 PM, James Regan said:

 KSA can handle a price drop to $30Bbl and Saudi Arabia would still be able to finance the gap between its export and imports "from their foreign exchange savings for the next decade.

Yes it would cause pressure but they have the ability to produce at a break even on $10Bbl, does the USA have this luxury?

Regarding starting a war, well that comment is ludicrous and flippant why would they start a war? And with whom Iran, that would be a great idea.

In short they can handle 50 a lot longer than USA, but it will go lower as the USA saturates the market with expensively cheap oil.

💸💸💸💸💸💸💸💸💸💸

I beg to differ . ARAMCO can survive at $10 Brent . . .  But I doubt the House of Saud can.  

There was an attempted coup last year with avg oil price of $57.  When Brent avg $50 how does KSA handle 18,000 pissed off princes that never worked a day in their life, when they have their stipend cut in half.  You know those $500,000 sports cars eat up a lot of gas.  

Saudi Social Program: A chicken in every pot .  .  .  A Lamborghini for every Prince.

Do you get paid to defend KSA ? You have any Saudi blood ?

The mismanaged over leveraged shale companies that operated based on $100 oil forever and negotiated unrealistic royalty agreements can't survive . . . but the majors are breakeven in the $20s . Hess (Bakken basin) reported 55% return at $50 WTI. 

The majors have analyzed the market for 18 months.  Their target lists are ready and waiting.  They're biting at the bit , waiting for the opportunity to load up on acquisitions.  They aren't going to overpay.  Patience is a virtue.

Im getting tired of explaining basic economics.  Let's just wait and watch.  Nobody wants to invest in oil companies today. This compounds the problems for over leveraged  shale indies with crappy Balance Sheets and with Income Statements  showing lower oil prices, excessive royalty expense and uncontained debt service. Oil is for trading only at this time.

The time to invest will only come after the shake out and bottom. We're not even close.

Edited by SKEP
  • Like 1
  • Great Response! 1

Share this post


Link to post
Share on other sites

(edited)

2 hours ago, SKEP said:

I beg to differ . ARAMCO can survive at $10 Brent . . .  But I doubt the House of Saud can.  

There was coup last year with avg oil price of $57.  When Brent avg $50 how does KSA handle 18,000 pissed off princes that never worked a day in their life and have their stipend cut in half.  You know those sports cars eat up a lot of gas.  

Do you get paid to defend KSA ? You have any Saudi blood ?

The mismanaged shale companies that operated based on $100 oil and negotiated unrealistic royalty agreements can't survive . . . but the majors are breakeven in the $20s . Hess (Bakken basin) reported 55% return at $50 WTI. 

The majors have analyzed the market for 28 months.  Their target lists are ready and waiting.  They're biting at the bit , waiting for the opportunity to load up on acquisitions.  They aren't going to overpay.  Patience is a virtue.

Im getting tired of explaining basic economics. Let's just wait and watch.  Nobody wants to invest in oil companies.  Oil is for trading only at this time.

The time to invest will come after the shake out and bottom. We're not even close.

Do I have any Saudi Blood you asked, I grew up in the Middle East and speak fluent Arabic and my great uncle was T.E. Lawrence, which is my middle name.

So I may be a little sympathetic and well versed in Arab Culture and politics, spent my whole life in the oil fields as a kid.

 

Edited by James Regan

Share this post


Link to post
Share on other sites

(edited)

2 hours ago, James Regan said:

Do I have any Saudi Blood you asked, I grew up in the Middle East and speak fluent Arabic and my great uncle was T.E. Lawrence, which is my middle name.

So I may be a little sympathetic and well versed in Arab Culture and politics, spent my whole life in the oil fields as a kid.

 

I'M impressed. Always helps to understand where a person is coming from.  Thanks. 

Edited by SKEP

Share this post


Link to post
Share on other sites

7 minutes ago, SKEP said:

I'M impressed. Always helps to understand where a person is coming from.  Thanks. 

What is your opinion of the Saudi Justice System  A little barbaric ? 

That really has nothing to do with oil and the pricing of it.

  • Upvote 1

Share this post


Link to post
Share on other sites

You would think that an oil blog from an oil website filled with oil traders and experts would have noticed that drilled but uncompleted wells dropped for the first time in years. Shame shame. Not only that but completions took a big 22 unit jump signaling a jump in near term production. 

The Permian is still adding a few DUCT’s but other plays are fracking away at a higher rate. Your welcome from just a causal energy fan who just knows where to look once a month for 10 min. 

  • Upvote 1

Share this post


Link to post
Share on other sites

3 hours ago, Boat said:

You would think that an oil blog from an oil website filled with oil traders and experts would have noticed that drilled but uncompleted wells dropped for the first time in years. Shame shame. Not only that but completions took a big 22 unit jump signaling a jump in near term production. 

The Permian is still adding a few DUCT’s but other plays are fracking away at a higher rate. Your welcome from just a causal energy fan who just knows where to look once a month for 10 min. 

Boat

Your point is what ? Increased production ?

Share this post


Link to post
Share on other sites

(edited)

Errrr tipo, my bad

Edited by James Regan

Share this post


Link to post
Share on other sites

11 hours ago, James Regan said:

 KSA can handle a price drop to $30Bbl and Saudi Arabia would still be able to finance the gap between its export and imports "from their foreign exchange savings for the next decade.

Yes it would cause pressure but they have the ability to produce at a break even on $10Bbl, does the USA have this luxury?

Regarding starting a war, well that comment is ludicrous and flippant why would they start a war? And with whom Iran, that would be a great idea.

In short they can handle 50 a lot longer than USA, but it will go lower as the USA saturates the market with expensively cheap oil.

💸💸💸💸💸💸💸💸💸💸

Doesn't this overlook the fact that Aramco is also the House of Saud's department of social security, healthcare, pensions, bungs and bribes and not forgetting defence financier?

Add in that overhead and picture is somewhat different.

  • Upvote 4

Share this post


Link to post
Share on other sites

46 minutes ago, NickW said:

Doesn't this overlook the fact that Aramco is also the House of Saud's department of social security, healthcare, pensions, bungs and bribes and not forgetting defence financier?

Add in that overhead and picture is somewhat different.

Many Countries have National Oil Corps but nothing as big as Aramco, six times bigger than Exxon, they are releasing 5% of a two trillion dollar company a meager 100billion.

Statoil-Norsk Hydro-Equinor what’s the difference? Statoil one of the most protectionist companies pro Norway.

I don’t get the beef?

  • Upvote 1

Share this post


Link to post
Share on other sites

3 minutes ago, James Regan said:

Many Countries have National Oil Corps but nothing as big as Aramco, six times bigger than Exxon, they are releasing 5% of a two trillion dollar company a meager 100billion.

Statoil-Norsk Hydro-Equinor what’s the difference? Statoil one of the most protectionist companies pro Norway.

I don’t get the beef?

James,

$2 trillion is a pipe dream.  

NOTE VERY IMPORTANT:. When (if ) an IPO is floated the reserves will NOT be part of the offering.  No $2 Trillion valuation.

IPO a lot different than $12 Billion note that you didn't need and just completed to make it look like your a "normal" company and to payoff the US Investment Banks.

Like Nick posted their is no demarcation btw House of Saud, Wealth Fund, ARAMCO.  

Can't wait to short it.

Share this post


Link to post
Share on other sites

23 minutes ago, SKEP said:

James,

$2 trillion is a pipe dream.  

NOTE VERY IMPORTANT:. When (if ) an IPO is floated the reserves will NOT be part of the offering.  No $2 Trillion valuation.

IPO a lot different than $12 Billion note that you didn't need and just completed to make it look like your a "normal" company and to payoff the US Investment Banks.

Like Nick posted their is no demarcation btw House of Saud, Wealth Fund, ARAMCO.  

Can't wait to short it.

Ok forget the numbers, let’s see what happens, but they will float 5% no doubts.

Whats the problem here? Why the antagonistic rhetoric?

So they are diversifying to bolster their economy! Are we worried about the Kingdoms “antics”?

Are we going to get into Kashoggi etc? If so do your homework on his family!

The KSA has a very rich culture which is easily confused from the outside!!!

Share this post


Link to post
Share on other sites

(edited)

7 minutes ago, James Regan said:

Ok forget the numbers, let’s see what happens, but they will float 5% no doubts.

Whats the problem here? Why the antagonistic rhetoric?

So they are diversifying to bolster their economy! Are we worried about the Kingdoms “antics”?

Are we going to get into Kashoggi etc? If so do your homework on his family!

The KSA has a very rich culture which is easily confused from the outside!!!

Are you saying Khashoggi's affiliation with Muslim Brotherhood when he was in college or he met Osama once is reason to butcher him while he went to pick up marriage authorization ?

Like MBS said , "You don't understand our Judicial system".

There's an understatement for ya.

It's reported that 138 dissidents had their heads lopped of in public square this year. A high ranking Princess had her head taken off in front of her family because she fell in love with a married man while away at college in Lebenon 

Tell MBS I understand his Judicial system.  It's 7th century barbaric justice.

No " antagonistic" , No " rhetoric" 

I prefer to discuss oil industry and pricing. This blog is a debate . Just giving my opinion.  

Like I said , let's wait and watch.

Don't believe me. Brent is in $50s , under $60.  IEA say glut is coming 2020.  

Edited by SKEP
  • Like 1

Share this post


Link to post
Share on other sites

(edited)

15 minutes ago, SKEP said:

Are you saying Khashoggi's affiliation with Muslim Brotherhood when he was in college or he met Osama once is reason to butcher him while he went to pick up marriage authorization ?

Like MBS said , "You don't understand our Judicial system".

There's an understatement for ya. It's reported 138 dissidents had their heads lopped of in public square this year. A high ranking Princess had her head taken off in front of her family because she fell in love with a married man while away at college. 

Tell MBS I understand his Judicial system.  It's 7th century barbaric justice.

No " antagonistic" , No " rhetoric" 

I prefer to discuss oil industry and pricing. This blog is a debate . Just giving my opinion.  

Like I said , let's wait and watch.

Don't believe me. Brent is in $50s , under $60.  IEA say glut is coming 2020.  

SKIP I somewhat agree but it’s an oil Industry and Geopolitical forum its all relevant. I am obviously not an oil trader and if I was I wouldn’t have time to spend it on here.

No doubts the price of oil will fall, but OPEC should be treated as a friend not an enemy, will the US cut production, if it did shut in wells the shale patch would struggle to start up again.

OPEC IS YOUR FRIEND!

On a final note check out the link and take the time to read and understand it, it’s interesting how things morph over time.

https://en.m.wikipedia.org/wiki/Adnan_Khashoggi

 

Respectfully James

Edited by James Regan

Share this post


Link to post
Share on other sites

(edited)

How is Saudi Arabia a friend, considering they export terrorists? There's also the minor point that Iran is on OPEC, too.  

Edited by Zhong Lu

Share this post


Link to post
Share on other sites

1 hour ago, James Regan said:

Many Countries have National Oil Corps but nothing as big as Aramco, six times bigger than Exxon, they are releasing 5% of a two trillion dollar company a meager 100billion.

Statoil-Norsk Hydro-Equinor what’s the difference? Statoil one of the most protectionist companies pro Norway.

I don’t get the beef?

I worked for Aramco so I know it from the inside and I know first hand how much dead wood it carries.

I haven't got a beef but the difference between Aramco and say the USA Shale Sector is that the US sector is not carrying the welfare provisions for the entire USA. They operate, they pay royalties on  production and taxes on profits if they occur . If not no profit to tax. The taxation base in the USA is wide and not reliant on oil and gas. If you completely removed the US oil production industry from the US there is still a major industrial base to support the USA.

I know Aramco can produce at under $10 a barrel but that isn't the question - any thing above that is dividend for KSA which is the overwhelming source of KSA public funds. . The crux of this is how much does KSA need to balance the books minus production costs - $30, $40, $50 dollars?

  • Upvote 2

Share this post


Link to post
Share on other sites

3 minutes ago, NickW said:

I worked for Aramco so I know it from the inside and I know first hand how much dead wood it carries.

I haven't got a beef but the difference between Aramco and say the USA Shale Sector is that the US sector is not carrying the welfare provisions for the entire USA. They operate, they pay royalties on  production and taxes on profits if they occur . If not no profit to tax. The taxation base in the USA is wide and not reliant on oil and gas. If you completely removed the US oil production industry from the US there is still a major industrial base to support the USA.

I know Aramco can produce at under $10 a barrel but that isn't the question - any thing above that is dividend for KSA which is the overwhelming source of KSA public funds. . The crux of this is how much does KSA need to balance the books minus production costs - $30, $40, $50 dollars?

Nik no doubts KSA is looking for diversity let’s say based on a UAE model.

Im not going to pretend I know the KSAs current fiscal situation in depth but one thing for sure is that the break even is far lower than anywhere else in the world.

Being an oil state they cannot be blamed for diversification, the shale patch has spooked them but they maybe the catalyst to sustain a suitable oil price for US Shale.

30 they would feel it but it would end the shale patch.

Respectfully James

Share this post


Link to post
Share on other sites

1 hour ago, James Regan said:

Many Countries have National Oil Corps but nothing as big as Aramco, six times bigger than Exxon, they are releasing 5% of a two trillion dollar company a meager 100billion.

Statoil-Norsk Hydro-Equinor what’s the difference? Statoil one of the most protectionist companies pro Norway.

I don’t get the beef?

Norway is not really comparable.

Statoil - as protectionist as it is doesn't have a culture of carrying its entire indigenous workforce as freeloaders. I dare say you find a pocket of deadwood here and there (like in any large company) but generally you have to work. Infact I believe Norway has very high labour productivity even by European standards.

It has a large land base and small population

It has loads of water

It has minerals which are easier to exploit if you have water (a problem for Saudis diversification)

Its Europes biggest (by a country mile) commercial fishery in terms of catches and aquaculture

It has the worlds biggest sovereign wealth fund at over $1 trillion

It has shed loads of Hydro and potential Pump storage sites - it sees itself as Europes future Battery. It already does this with Denmark backing up their wind farms.

With wind turbine costs falling it has a huge potential to develop onshore, offshore and floating wind.

It probably has some good tidal resources

If wave tech gets going huge potential there.

Deep Fjords offer major potential for energy storage (compressed air systems.

 

 

  • Upvote 1

Share this post


Link to post
Share on other sites

2 hours ago, SKEP said:

James,

$2 trillion is a pipe dream.  

NOTE VERY IMPORTANT:. When (if ) an IPO is floated the reserves will NOT be part of the offering.  No $2 Trillion valuation.

IPO a lot different than $12 Billion note that you didn't need and just completed to make it look like your a "normal" company and to payoff the US Investment Banks.

Like Nick posted their is no demarcation btw House of Saud, Wealth Fund, ARAMCO.  

Can't wait to short it.

When I was there in 2010-12 there was a quiet panic going on in Exploration as they really weren't finding anything of note. Some moderate gas finds but nothing to sustain the largess that is KSA.

I hear from my former colleagues nothing much has changed. Most drilling activity is sticking pins in the same old tired fields. In 2012 they were getting very excited about EOR using CO2.

Share this post


Link to post
Share on other sites

15 minutes ago, NickW said:

When I was there in 2010-12 there was a quiet panic going on in Exploration as they really weren't finding anything of note. Some moderate gas finds but nothing to sustain the largess that is KSA.

I hear from my former colleagues nothing much has changed. Most drilling activity is sticking pins in the same old tired fields. In 2012 they were getting very excited about EOR using CO2.

A recent article by a visiting UK professor said by his estimates 55 Billion reserves, not 270 Billion. 

  • Like 2

Share this post


Link to post
Share on other sites

3 minutes ago, SKEP said:

A recent article by a visiting UK professor said by his estimates 55 Billion reserves, not 270 Billion. 

I bet he won't get invited back

  • Like 1
  • Haha 2

Share this post


Link to post
Share on other sites

1 minute ago, NickW said:

I bet he won't get invited back

It's really a guessing game with KSA on what their actual proven reserves are. They say 270bb but i am guessing after 50 years of hammering the crap outta the fields it's bound to drop. 55bb seems more realistic and until they go public which i doubt, no-one will know as they trying to prop up their wealth. 

  • Like 2

Share this post


Link to post
Share on other sites

1 hour ago, NickW said:

Norway is not really comparable.

Statoil - as protectionist as it is doesn't have a culture of carrying its entire indigenous workforce as freeloaders. I dare say you find a pocket of deadwood here and there (like in any large company) but generally you have to work. Infact I believe Norway has very high labour productivity even by European standards.

It has a large land base and small population

It has loads of water

It has minerals which are easier to exploit if you have water (a problem for Saudis diversification)

Its Europes biggest (by a country mile) commercial fishery in terms of catches and aquaculture

It has the worlds biggest sovereign wealth fund at over $1 trillion

It has shed loads of Hydro and potential Pump storage sites - it sees itself as Europes future Battery. It already does this with Denmark backing up their wind farms.

With wind turbine costs falling it has a huge potential to develop onshore, offshore and floating wind.

It probably has some good tidal resources

If wave tech gets going huge potential there.

Deep Fjords offer major potential for energy storage (compressed air systems.

 

 

Nik I have worked in Norway many times and believe me you are not welcome in the oil patch.

For Nationals mainly:

2 Weeks on 4 weeks off

2 weeks on 6 Weeks off

Whos funding that and regarding dead wood how can you know your rig if you only work part time?

Sure loads of reserves etc but loads of dead wood, if you have ever worked with NOV, MH etc you will understand.

Maybe KSA and Norway not a good comparison but a comparison non the less.

  • Like 1

Share this post


Link to post
Share on other sites

1 hour ago, James Regan said:

Nik I have worked in Norway many times and believe me you are not welcome in the oil patch.

For Nationals mainly:

2 Weeks on 4 weeks off

2 weeks on 6 Weeks off

Whos funding that and regarding dead wood how can you know your rig if you only work part time?

Sure loads of reserves etc but loads of dead wood, if you have ever worked with NOV, MH etc you will understand.

Maybe KSA and Norway not a good comparison but a comparison non the less.

I thought that was a fairly typical shift pattern for the North Sea where you have to share a room with a Jock (or Norge equiv) who snores like a ship foghorn. 

I understood that shift rota includes all annual leave. 

2 weeks on / off - if working 12 hour days 7 days a week is equivalent to a 2184 hour work year

2 on / 4 off 1456 hours

2 on / 6 off 1092 hours. 

If a land lubber on 8-5 then assuming 5 weeks holiday and 2 weeks public holidays is 1800 hours if working a 40 hour week. 

 

  • Like 1
  • Haha 1

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  
Followers 0