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26 December 2015

Press review 26-12-2015 - The year petroleum peaked?

The EIA published this week their petroleum extraction figures for September, presenting a world wide reduction of 0.5 Mb/d from August. This inversion into decline during the summer is now present in all publicly available datasets; the cries of "Peak Oil" grow louder. As usual I prefer a cautious tone, Iran, Iraq and Libya sum together several Mb/d of unrealised potential at this point; eventually it may invert the extraction profile once again. However, regarding where prices and stocks are presently, one can not possibly rule out 2015 as the terminal year for petroleum.

In spite of these data, in my view the Sunni-Shiite war in Iraq and Syria remained the major story of 2015. With dozens of countries involved in one way or another, this war is building into a focus of tension unprecedented since the Iranian revolution. The past few years I have tried in this reviewed to answer a simple question: is Europe on the right side in this war? But is it even clear on which side are we? The article that opens this last review of 2015 dives deep into this war, showing that things are not at all straightforward and that perhaps Europe is really wrong footed, embroiled into a trap of its own making.

An hiatus to the press review is likely to follow; details are at the end of this note.

19 December 2015

Press review 19-12-2015 - Sour Christmas

Declining numbers of visits to this weblog tell me a lot folk are getting busy with Christmas, either travelling, shopping or both. However, this will be a bitter Christmas for many families that are one way or another dependent on the energy industry, petroleum and gas in particular. The US Federal Reserve flagged a major turning point this week with a return to interest rate hikes. Currencies and commodities sank against the dollar across the board, confirming that the current market is here to stay a while longer. Of the more than 300 000 folk that lost their jobs in this industry since 2014 few will ever make it back; search for a new a career they must.

I feel the best word to describe what is going on in middle management, administrative boards and petroleum ministries is panic. The market is out of control and no one - really no one - is safe at 37 $/b. From small to large companies, from multinationals to governments, everyone is bracing to what will be the deepest contraction of the petroleum (and gas) industry at least since 1985.

Here in Europe consumers are now paying the lowest prices in a decade for petrol and diesel. Enjoy it while you can. Petroleum will eventually come back in vengeance.

12 December 2015

Press review 12-12-2015 - Under 40 hangover

This week felt somewhat like an hangover from the hectic events of the previous week. The chaos in which the OPEC meeting of the 4th ended only produced its full effect this Monday, with another collapse in petroleum prices. The Brent index resisted for a few days, but would eventually break under 40 $/b, to close the week at 37 $/b. The media warns in unison of an impeding financial disaster with the energy industry; but so far banks keep feeding money to a large numbers of companies that are essentially dead. How will this all unfold is hard to tell at this moment, but some sort of bailout is more than likely - possibly through the banks themselves.

Meanwhile, the whole "peak is here" talk is back once again in the wake of a small decline in the global production of liquid agricultural products. In what fossil liquids - petroleums - are concerned, extraction is still growing strong; even though hard data for the last quarter is not yet there, preliminary assessments point to something very close to 81 Mb/d by now. From the summer of 2014 until now world petroleum extraction grew 5 Mb/d, more than it grew the whole decade before that.

However, I recognise 37 $/b will leave their mark. The petroleum industry is essentially shutting down, and even with Iraq and Iran replacing the coming extraction collapse in North America, the decline will eventually set in. It might become already visible in late 2016, but will be certainly marked in 2017 and 2018. Will that be the much dread "peak oil"? Far too early to tell.

05 December 2015

Press review 05-12-2015 - Eruption

Once in a while an old meme pops up in the media claiming the war in Syria was caused by CO2. One may certainly wonder what sort of gases are making into the brains of some world leaders, but one thing is certain, regardless of how it started, the war in Syria and Iraq is being fuelled by petroleum. Far from surprising to regular readers, fresh claims from Iraq and Russia that Turkey is trading in crude from Daesh provide an important update: back in August the caliphate was selling over 200 kb/d.

The western media remains largely reluctant in reporting this aspect of Turkey's involvement in this war, and even goes as far as claiming that Daesh is actually selling petroleum to its Shiite foe in Syria... Even the claims on CO2 are more credible.

There has not been a week like this in quite a while, with relevant developments on almost every front. The world seems erupting and energy plays a central role, as always. Most remarkable this time is the rise in geo-political tension meeting a deeply depressed energy market.