#SaudiArabia threatens to ditch #Dollar #Oil trades to stop '#NOPEC' bill #OOTT

"The Saudis know they have the dollar as the nuclear option" 

"The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart"

Reuters reports:

WHAT IF?

Saudi Arabia controls a 10th of global oil production, roughly on par with its main rivals - the United States and Russia. Its oil firm Saudi Aramco holds the crown of the world's biggest oil exporter with sales of $356 billion last year.

Depending on prices, oil is estimated to represent 2 percent to 3 percent of global gross domestic product. At the current price of $70 per barrel, the annual value of global oil output is $2.5 trillion.

Not all of those oil volumes are traded in the U.S. currency but at least 60 percent is traded via tankers and international pipelines with the majority of those deals done in dollars.

See the whole article from Reuters here:https://www.reuters.com/article/us-saudi-usa-oil-exclusive-idUSKCN1RH008

Can The #Oil Industry Save #Venezuela- Or Is It Too Late?

@CSIS, the Center for Strategic and International Studies, looks at whether Oil can save Venezuela...

The Oil Industry Won’t Save Venezuela

March 28, 2019

Venezuelan oil production plummeted by over 50 percent from 2.3 million barrels per day (b/d) in January 2016 to 1.1 million b/d in January of this year. Production continues to collapse and is now well below the 1 million b/d mark following the implementation of U.S. sanctions on PDVSA, and more recently in the aftermath of widespread electrical blackouts. 

...

Until recently, most of the production losses in Venezuela came from Maracaibo and Maturin, while Orinoco output remained relatively flat until 2017. In addition, most declines centered at PDVSA-operated assets. As a result, at the beginning of 2019, Orinoco mixed company production accounted for more than 40 percent of total output. That picture continues to evolve, however, and under the current political situation, Orinoco production is beginning to collapse as well.

Problems range from shortages in diluent used to make the heavy oil exportable, operational issues at upgraders and processing facilities (exacerbated by recent power outages), and a once again disrupted export picture, impacted by the latest round of sanctions. Absent of major investment  and operational improvements (all tied to political change), things will likely deteriorate further.

Read the whole report here: The Oil Industry Won’t Save Venezuela

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As #Saudi Arabia #Aramco's largest #Oil field, #Ghawar's surprisingly low production capacity figure is the stand-out of the report

The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

By Javier Blas

7-8 minutes

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It was a state secret and the source of a kingdom's riches. It was so important that U.S. military planners once debated how to seize it by force. For oil traders, it was a source of endless speculation.

Now the market finally knows: Ghawar in Saudi Arabia, the world's largest conventional oil field, can produce a lot less than almost anyone believed.

When Saudi Aramco on Monday published its first ever profit figures since its nationalization nearly 40 years ago, it also lifted the veil of secrecy around its mega oil fields. The company's bond prospectus revealed that Ghawar is able to pump a maximum of 3.8 million barrels a day -- well below the more than 5 million that had become conventional wisdom in the market.

"As Saudi's largest field, a surprisingly low production capacity figure from Ghawar is the stand-out of the report," said Virendra Chauhan, head of upstream at consultant Energy Aspects Ltd. in Singapore.

King of Oil

The Energy Information Administration, a U.S. government body that provides statistical information and often is used as a benchmark by the oil market, listed Ghawar's production capacity at 5.8 million barrels a day in 2017. Aramco, in a presentation in Washington in 2004 when it tried to debunk the "peak oil" supply theories of the late U.S. oil banker Matt Simmons, also said the field was pumping more than 5 million barrels a day, and had been doing so since at least the previous decade.

...

The prospectus offered no information about why Ghawar can produce today a quarter less than 15 years ago -- a significant reduction for any oil field. The report also didn't say whether capacity would continue to decline at a similar rate in the future.

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The 470-page bond prospectus confirms that Saudi Aramco is able to pump a maximum of 12 million barrels a day -- as Riyadh has said for several years. The kingdom has access to another 500,000 barrels a day of output capacity in the so-called neutral zone shared with Kuwait. That area isn't producing anything now due a political dispute with its neighbor.

While the prospectus confirmed the overall maximum production capacity, the split among fields is different to what the market had assumed. As a policy, Saudi Arabia keeps about 1 million to 2 million barrels a day of its capacity in reserve, using it only during wars, disruptions elsewhere or unusually strong demand. Saudi Arabia briefly pumped a record of more than 11 million barrels a day in late 2018.

...

Costly Strategy

For Aramco, that's a significant cost, as it has invested billions of dollars into facilities that aren't regularly used. However, the company said the ability to tap its spare capacity also allows it to profit handsomely at times of market tightness, providing an extra $35.5 billion in revenue from 2013 to 2018. Last year, Saudi Energy Minister Khalid Al-Falih said maintaining this supply buffer costs about $2 billion a year.

Aramco also disclosed reserves at its top-five fields, revealing that some of them have shorter lifespans than previously thought. Ghawar, for example, has 48.2 billion barrels of oil left, which would last another 34 years at the maximum rate of production. Nonetheless, companies are often able to boost the reserves over time by deploying new techniques or technology.

In total, the kingdom has 226 billion barrels of reserves, enough for another 52 years of production at the maximum capacity of 12 million barrels a day.

The Saudis also told the world that their fields are aging better than expected, with "low depletion rates of 1 percent to 2 percent per year," slower than the 5 percent decline some analysts suspected.

Read the whole article here:  The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

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