miércoles, 14 de enero de 2015

My friend Alberto Quiros Corradi (1931-2015) By Gustavo Coronel.

In memoriam

My friend Alberto Quiros Corradi (1931-2015)
By Gustavo Coronel.

Those were different times , we were both active in the oil industry. I met him in Lagunillas , by late 1950. From then until today , the day of his death, he brought us a close friendship. It was a symmetrical friendship affection, we had a deep mutual affection , but asymmetric in talent. Alberto always saw as my superior, not only hierarchical but brainpower. I had the pleasure and privilege of sharing with him many hours of analysis of our industry, our company and our country. Always had the virtue of owning an original perspective, a fresh perspective , always mounted in their particular intellectual helicopter, from which you could see all sides of the situation. While I was scratching the surface as he walked into the depths of the problem and its ramifications. I learned a lot at his side , first with Shell, then with Maraven and Petroleos de Venezuela , where we participated in big initial decisions on Streamlining business , changing pattern Refining, the future of the Orinoco Belt plans exploration and early Conventions Technology and Marketing . Uncountable these activities but will never forget our meeting with the high command of Shell in London to negotiate the Technology Contracts and Marketing . To them we attended Alberto Jorge Zemella , Arnoldo Volkenborn and me. From an initial position of Shell 's $ 70 million per pack, we reducirl the cost to $ 42 million , aided in planning the strategy , in which they had participated in Caracas a couple of bright young people who then had extraordinary careers professionals in other fields : Moises Naim , his PhD from MIT back under his arm and Raul Arriaga.
For years I sat near Albert on the Boards of Maraven and PDVSA (where he often attended because of his position as president of subsidiary ) and always felt very identified with their views . We had a similar outlook on life , seemed to think the same even if we had not put us previously agreed . This was because of , perhaps , with similar origins , both from a modest middle class but with huge desire to progress . Alberto was very poor young but was always sure not stay long in those rows. He began loading tubes in La Concepción and ended his career at the top of their companies , president of Shell Venezuela , Maraven , Lagoven and , had it not been for the intrusion of politics , had become president of PDVSA , position for which he was eminently qualified . We will have time on another occasion to expand on what was a brilliant career. Now, under the shock of his death , I can only add some other considerations about what Alberto Quirós meant in my life.
By becoming friends we discovered some interests in common who joined us for the 60 years of close friendship. We met on Sunday to play billiards ( I earned more than I beat him ) at home or elsewhere . We were not reluctant to go to play in unsavory places near the Nuevo Circo or in Maracaibo , in unsafe places but we never did anything. We were big fans of boxing and traveling to Maracay , Maracaibo or USA, to see fight to Ramon Arias, Betulio and sinning optimistic , a link to Obelmejías in the Hagler fight . We were going to baseball frequently. Along with César Prato and Eduardo Serrano, the author of " Barloivento " you had taken music at home. There I remember alternated up with Pedro Vargas. Our friendship was , you might say , fraternal . Alberto had no brothers and somehow took me like a younger brother . Our friendship was marked by generosity and selflessness. It helped me and helped both in hard times. When I had to leave the oil industry for a confrontation with the sector minister ,, on unfair terms , Alberto brought together the presidents of subsidiaries and met with the president of PDVSA , the General Rafaél Alfonzo Ravard and got a decent treatment for my output, which had been ordered to political levels just a year of my retirement. This allowed me to make an orderly transition to other activities, since I had always been in the oil industry, even before my graduation as a geologist ( Shell Fellow at the University of Tulsa )
My life was closely linked to the life of Alberto Quiros Corradi and always admire his broad vision of life, his encyclopaedic culture and people skills . All his life to his childhood friends , Ramón Monzant , Albertico Moran, the ñato Carrillo and friends acquired during his career , as was manuvo faithful .
Alberto touched hundreds of people with their friendship and generous treatment . I always knew how to take their partners the best they could give. Many mourn his death today. I cried, I am feeling that his departure is like take away a big chunk my life.

They were years of fraternal friendship .

Today I pay tribute to my boss, my friend , the great Alberto , who I will never forget for the remainder of my life.

viernes, 9 de enero de 2015

Angel Garcia Banchs: Venezuelan Oil Economy in Emergency.

I insist on the need to alert Venezuelans about the economic emergency facing our country. The economy is in a situation characterized by chaos, disorder, confusion and widespread panic breeding ground for social upheaval that looks increasingly harder to avoid. The reason would be the lack of courage, for making basic decisions of economic policy by the national government, decisions are not taken immediately lead, according to our estimates, the widespread disappearance of inventories (general corporate disinvestment) in the month April.

It is well known that he will not, because his hands tied mobsters and corrupt. But still it must be emphasized recommend to the national government to immediately lift exchange controls and price, if indeed you want to avoid a crash. Doing it in February and would be very late, so it is suggested to do it now. Otherwise, shortages in the country today will look like child's play compared to what could be experienced in the months of March and April. In that case, it would not be specific or particular set of goods, but widespread, massive, not only in the regions, but in the capital.

To lend attention, lifting of exchange control is recommended to be primarily via a total adjustment in the exchange rate, minimizing adjustment via the real interest rate.

Anyway, controlling change and prices will explode, because that is the only way to replenish inventories and recapitalize companies, via an abrupt decrease in aggregate (ie the consumer) demand, so as to accommodate the scant offer.

There is the possibility to prevent the emergency, the economy through intensive therapy. In plain words, there is minimal chance of avoiding a shock or social unrest. Given its refusal to act, apparently, only a timely political change could be achieved.

Ángel García Banchs, PhD.

martes, 6 de enero de 2015

Blake Clayton Analysis on US Oil Exports. (CFR)

By: Blake Clayton (Fellow for energy and national security at the Council on Foreign Relations)
Federal lawmakers should overturn the ban on exporting crude oil produced in the United States. As recently as half a decade ago, oil companies had no interest in exporting U.S. crude oil, but that has changed. Oil production has grown more in the United States over the past five years than anywhere else in the world, even as domestic oil consumption has declined. With these changes has come a widening gap among the types of oil that U.S. fields produce, the types that U.S. refiners need, the products that U.S. consumers want, and the infrastructure in place to transport the oil. Allowing companies to export U.S. crude oil as the market dictates would help solve this mismatch. Under federal law, however, it is illegal for companies to export crude oil in all but a few circumstances. Over the past year, the Department of Commerce granted licenses to several oil companies to export a small amount of U.S. crude oil. But these opaque, ad hoc exceptions are insufficient. Removing all proscriptions on crude oil exports, except in extraordinary circumstances, will strengthen the U.S. economy and promote the efficient development of the country's energy sector.

The Issue

When Congress in the 1970s made it illegal to export domestically produced crude oil without a license, the goal of the legislation was to conserve domestic oil reserves and discourage foreign imports. In reality, the export ban did not help accomplish either of these objectives. It has now become more of a hindrance than a help. The opaqueness of the export approval process discourages would-be exporters from applying for licenses. Companies see a lack of legal clarity and fear inconsistent regulation. They are hesitant to incur negative publicity on Capitol Hill when they doubt they will be granted approval.
Two important elements of the U.S. oil export equation have changed in the past few years. First, exporting U.S. crude oil has become economically attractive to the energy industry. Crude oil exports have grown from next to nothing in 2007 to around one hundred thousand barrels per day in March 2013, all of which went to Canada. Second, the United States has become one of the world's largest gross exporters of refined oil products, such as gasoline and diesel. Unlike crude oil, which is unprocessed, oil that has been refined can be exported freely under U.S. law. Roughly three million barrels per day of refined oil products were exported in December 2012, a major increase from prior decades. Until 2011, the United States had not been a consistent net exporter of oil products since 1949.
Restrictions on crude oil exports are already beginning to undermine the efficiency of the U.S. oil economy. Much of the country's rapidly growing production of light crude oil, including lease condensates (i.e., ultra-light oil), comes from either areas where refiners are not interested in or able to process it, given that many U.S. refineries are configured to run lower-quality crude oil, or in parts of the country with inadequate transportation infrastructure. With few viable domestic buyers, producers are forced to choose between leaving oil in the ground and pumping it at depressed prices. These artificially low prices slow additional U.S. crude oil production. New refineries and pipelines currently under construction will help remedy some of these market distortions over time, but a simpler, more cost-effective solution would include allowing U.S. crude to be exported. Doing so will not raise gasoline prices. Prices at the pump will continue to be determined by the global market, regardless of whether the United States exports crude oil. Were the ban overturned today, crude exports would immediately rise by several billion dollars a year, according to industry executives, likely surpassing five hundred thousand barrels per day by 2017.

U.S. Law Governing Crude Oil Exports

The primary laws prohibiting crude exports are the Mineral Leasing Act of 1920, the Energy Policy and Conservation Act of 1975, and the Export Administration Act of 1979. The so-called short supply controls in the Export Administration Regulations (EAR) of the Bureau of Industry and Security (BIS), an agency of the Department of Commerce, spell out these restrictions.
A few obscure types of crude oil automatically qualify for export licenses under EAR. These types include crude oil produced in Alaska's Cook Inlet or exported to Canada, as long as it is consumed there; and small amounts of heavy (or viscous) crude oil produced in California. Other niche cases do not require licenses. Crude oil transported via the Trans-Alaska Pipeline System or produced overseas and stored in the U.S. Strategic Petroleum Reserve may be exported.
Some U.S. crude oil can be exported with a presidential finding. This includes crude oil of U.S. origin transported on federal right-of-way pipelines, crude oil produced from the outer continental shelf, and crude oil produced from naval petroleum reserves that were once set apart for use by the military but that are now almost entirely commercialized.
In nearly all other cases, U.S. crude oil can only be exported if the BIS finds that proposed exports are "consistent with the national interest and the purposes of the Energy Policy and Conservation Act." The agency has the right to accept or reject applications for an export license according to its own unarticulated definition of the "national interest." The only specific case the EAR mentions as meeting these strict criteria is when the exported crude is exchanged for more or better refined oil imports, under a contract that can be terminated if U.S. oil supplies are "interrupted or seriously threatened," and could not have "reasonably [been] marketed" in the United States.

A Better Approach

A better approach would be to allow companies to freely export oil as the market dictates, eliminating the requirement that companies obtain a license for each crude oil export transaction. The only exception to this policy should be when the president determines there is a national emergency. To make this change, Congress should repeal EAR's short-supply controls that apply to crude oil exports.

Benefits Versus Costs

Exporting energy is good for the economy. Crude oil exports could generate upward of $15 billion a year in revenue by 2017 at today's prices, according to industry estimates. Those gains would be partially offset by displacing some refined product exports, however. Today's export restrictions run the risk of dampening U.S. crude oil production over time by forcing down prices at the wellhead in some parts of the country. Letting drillers reap extra profits from selling crude oil overseas, if the market dictates, would provide greater incentives for drilling, stimulating new supply. It would also encourage investment in oil and gas production in the United States rather than abroad. In oil-producing regions, more workers would be hired for oil exploration and production, as well as for local service industries. Greater policy certainty regarding exports would also catalyze the expansion of U.S. energy infrastructure.
As it stands, the primary beneficiaries of the export ban are a few fortunate oil refineries in the central United States—not U.S. consumers—that are able to buy crude oil at depressed prices before selling it at prevailing market rates. Current law arbitrarily works to the benefit of these companies. In several years, a wider range of refineries will benefit from the ban as pipeline capacity constraints are alleviated and more light oil flows to the U.S. Gulf Coast. These pipelines will help reduce the discount that some producers face in the domestic market, but they would be more effective at bringing domestic oil prices in line with global ones if U.S. crude oil could be freely exported and other restraints on shipping were removed.
Allowing crude oil exports will not affect U.S. energy security. Proponents of the export ban might argue that it increases national security by slowing the depletion of U.S. oil fields. Yet the ban also slows production growth, increasing the country's reliance on imported energy. Insofar as oil self-sufficiency would be economically and militarily useful in a time of crisis, removing the ban would increase U.S. security by catalyzing oil production. Were an international emergency to arise, exports could be temporarily suspended, providing extra oil for domestic needs, though such extreme measures would likely hurt U.S. trade relationships.
Liberalizing the crude oil export regime would advance U.S. foreign policy. It would demonstrate Washington's commitment to free and fair trade, even in a politically sensitive sector, bolstering its negotiating position on other trade issues. It would also avoid putting Washington at odds with allies that would like to source their oil from the United States. If the United States were to become a major crude exporter, its leverage as an oil trade partner would grow significantly.
To the extent that exports mean greater domestic production of tight oil from hydraulic fracturing, or "fracking," allowing exports could bring environmental risks such as water contamination and local pollution. These risks, however, are manageable through prudent regulation. Continuing to ban crude oil exports is not an effective means of preventing harm to the environment. Environmental regulators will need to manage the risks of oil production regardless of whether the United States exports more crude oil.


Without compelling reasons for continuing to restrict crude exports, and given the potential benefits, Congress should liberalize the crude oil export regime. Republicans and Democrats alike, including President Obama, express support for boosting U.S. exports in general. Crude oil should be no exception. Some observers might object to exports on the grounds that U.S. oil production could fall short of today's optimistic forecasts or that exports will cause gasoline prices to rise. These should not be major concerns. U.S. crude exports are self-limiting: if the supply gains expected do not materialize, the market will induce producers to keep the oil at home rather than to send it abroad. Though the companies that benefit from today's export restrictions might oppose any change in the status quo, the broader gains available to the United States from allowing crude exports make it the far better choice.

Mr. Blake Clayton is fellow for energy and national security at the Council on Foreign Relations.

lunes, 22 de diciembre de 2014

Jose Guerra - Venezuelan Dutch Disease. No savings. Its Oil-Based economic model is falling down.

The international reserves of the Central Bank of Venezuela Center are on the threshold that should have a central bank. At the time I am writing this (December 2014) the reserves are US $ 21,300 million, of which gold are US $ 17,000 million and liquid funds are about $ 800 million and the rest are in different assets. We can have an idea of how critical the situation is: in 2012 Venezuela imports carried by 1 billion of dollars per week.

What policymakers have made Venezuela has no name. After receiving higher oil revenues in the country's history in the period ranging from 1999 to 2014, estimated at US $ 850,000 million, today Venezuela is giving pity. 

The country owe it to everyone, its total public debt is approaching $ 200,000 million and also spared a penny of that torrent of money received. This situation is due to the failure of an economic model that would make the state, instead of Venezuelans, the center of economic activity. This led to the expropriation of a group of companies that were profitable and in government hands have become a drag on public finances and also are a source of corruption.

The lack of dollars has popped a dysfunctional exchange system, which is based on the absurdity of having four exchange rates, a cheap overly Bs 6.30 per dollar and other excessively expensive, parallel to Bs 180 per dollar. That gap get the best and most profitable business in the world: those dollars buy cheap and then sell expensive. And so a group connected to power has made fortunes at the speed of sound. 

But the absence of dollars has created a serious problem for the functioning of the economy in the absence of essential raw materials for production and finished goods necessarily be imported and are now in shortage in stores.

Falling oil prices stripped a reality: the extreme vulnerability of a Venezuelan economy literally monkey producer that does not export anything but oil and therefore is exposed to fluctuations in the price of this product in world markets. 

Unfortunately in 2015 the situation will not be better than in 2014, due to the fact they will receive lower oil revenues. Foreign debt payments are over US $ 11,000 million in 2015. 

When dollars are scarce, the result is obvious: the Bolivar (Venezuelan currency) is suffering a devaluation never seen before. 

Jose Guerra is a Venezuelan Associated Professor and former Director of Economics School at Central University, Caracas. 

Can be reached at:

lunes, 29 de septiembre de 2014

Momentarily break. No country for no ethical people.

I will put the blog in pause for a time. I am moving, therefore new endeavors require all my attention. Gustavo Coronel's words are perfect to this blog break. 

No Country for no ethical people.
By Gustavo Coronel (former PDVSA's board of directors member, 1976)

There are cases of rapid evolution and admiration. A young Japanese could have seen the ships of Admiral Perry into Tokyo Bay and towards the end of his life, could have seen the act of surrender of the Imperial Army General Douglas McArthur, aboard the USS Missouri. Perry's visit took place in 1854 and opened the doors of Japan to Western influences. The surrender of Japan in 1945, led him to integrate the modern block, similar to the western world countries. In those ninety years Japan became feudal state into a modern, industrialized country. He abolished the shogunate and restored the Meiji dynasty, about the same time when warlords prevailed in Venezuela Monagas brothers and the cruel Venezuelan Federal War (1859-1863) was in the horizon. In that same 90 years, Venezuela progressed slowly and only in 1935, entered modernity due the government of Eleazar López Contreras and sanitarians and physicians as Tejera, Gabaldon, Baldo and Garcia Maldonado, who defeated the plagues and epidemics that characterize backward peoples.

A whole country, Japan had changed dramatically for the better, in the course of a long human life. A whole country, Venezuela, has been destroyed in just 15 years by a gang of thugs ignorant and inept. And the involution unfortunately takes place much faster than the way evolution. Build is a painful and long process, destroy a brief act of folly and wickedness.

I reflect on this and I think the act of building requires leadership and vision persevering in time while the act of destruction is usually carried out by a massive populated guided by the lower desires. In the case of Venezuela 1999-2014, the extreme rapidity of destruction and unprecedented magnitude required a bankruptcy of the Venezuelan collective ethics as never have thought possible. In the process of national destruction have been involved: (1) members called Chavez-Castro, a group of fanatics determined to go back to the nineteenth century in the XXI century; (2) a large mass of poor people, eager to get out of poverty quickly and ready to give allegiance to whoever makes a promise, not thinking that there is no way out of poverty than by way of education and work ; (3), a business and banking class of known names but rotten body and soul has been filled the pockets of oil money at the expense of the welfare of the nation; (4), the Armed Forces, which has been prostituted with an amazing facility, including the massive inroads in drug trafficking, turning the system into a narco-state; and, (5), a bureaucracy that has taken the ineptitude and complicity of the group of fanatics in power to loot the treasury with impunity, demolishing institutions and violating constitution and laws.

I think it's up statistically documented this great mass of accomplices, premeditated one another beset by the desire to quit taking shortcuts down, sometime constituted the majority in the country. Otherwise it can not explain the speed with which it has carried out the disaster. But rigged to this mass, we had large groups of Venezuelans who, without agreeing with the methods of the regime, have let the disaster take place for many reasons: indifference, laziness or desire to continue acting against theft of white gloves, as if we were under a democratic system. The truth is that Venezuelans who have defended democracy and freedom with vigor and determination, attached to the ethics learned in their homes and their teachers have been harassed by enemies and "neutrals", making it very difficult for the nation find its way to recovery.

We think of ethics as a compass, a guide to action: do not steal, do no harm, to add to the collective good, carefully manage the public purse, to be good citizens. Those who take up the banner ethics are a minority in Venezuela and it is necessary to face the terrifying reality. We can not keep paying him homage to the virtues of poverty, we can not keep excluding those who wanted progress for the sake of those who remain in the most terrible backwardness. The street children are not children of the fatherland and the victims are dignified. They are our people that needs to move from category to category of dispossessed citizens. Poverty is a disease, not a virtue. Ignorance is not a nice feature of our short cut, it is a terrible affliction that causes hunger, disease and crime.

Ethics must raise the flag held high in Venezuela, if we want to salvage the remains of this country and begin the long road to its reconstruction.

Gustavo Coronel.

sábado, 19 de julio de 2014

The Future of Fracking in Germany.


Modern environmentalism is sometimes likened to a medieval religion, in which articles of faith remain binding on believers even when contradicted by reason and evidence. A case in point is an astounding German proposal to ban fracking at just the moment when the need to diversify Europe's gas supplies has never been greater.
"There will be no fracking for economic purposes in Germany in the near future," German Environment Minister Barbara Hendricks announced at a press conference on Friday. Under her proposal, developed jointly with fellow Social Democrat and Economics Minister Sigmar Gabriel, most forms of hydraulic fracking—the process of extracting gas by injecting water and sand mixed with a small amount of chemical additives into rocks deep underground—will be prohibited until 2021.
Germany currently imports 90% of its gas supply. Yet the country has up to 2.3 trillion cubic meters of domestic shale gas, according to the Federal Institute for Geosciences and Natural Resources. "The size of these non-conventional deposits therefore exceeds Germany's conventional natural gas reserves," according to German natural-gas producer Wintershall. "And they could continue supplying Germany for up to 100 years with gas assuming the import rate stays the same."
Environmentalists and citizens protest against fracking with a banner reading 'Hands off our ground water' in Saal, Germany in May 2014. European Pressphoto Agency
Germany already possesses much of the infrastructure needed to efficiently produce and distribute shale gas. The country's 438,000 kilometers of pipelines cover much of Europe, according to a report by the global law firm Vinson & Elkins, which specializes in energy matters. And Germans are fracking pioneers, having used fracking technology to extract tight gas in sand and silt areas since the 1960s.
The proposed move comes in response to widespread green hysteria over claims that fracking poisons groundwater with methane gas. Yet as the U.S. has developed its fracking industry, it has become clear that most groundwater pollution is caused by faulty wells, regardless of drilling method. And even the Obama Administration's activist Environmental Protection Agency has downwardly revised its estimates of fracking-related methane emissions.
German Chancellor Angela Merkel and her Christian Democrats have yet to weigh in on the proposed ban. If enacted, it would leave Germany at the mercy of Vladimir Putin, who has repeatedly used Europe's energy dependence on Russia to the Kremlin's geopolitical advantage. Remind us again how increasing Europe's dependence on a petro-despot helps the environment?

lunes, 23 de junio de 2014

"Easy Oil Reserves" by Christopher Helman

This month Iraq will finalize contracts with the likes of ExxonMobil , Royal Dutch Shell and BP to develop some of its biggest oil fields. These giants are among the world’s last remaining pockets of so-called “easy oil.” They don’t require ultradeep drilling or innovative production techniques, just the application of Big Oil know-how. No wonder the oil companies agreed to develop Iraq’s fields without even getting an ownership stake in the fields and collecting as little as $1.15 per barrel recovered.

Given the size of Iraq’s undeveloped giants there are no technical reasons why within 10 years the country can’t supplant both Iran and Russia to become the world’s No. 2 oil producer after Saudi Arabia. No wonder Iraq holds three of the top 10 fields of the future.
The world gets its daily ration of 85 million barrels of oil from more than 4,000 fields. Most of these are small, less than 20,000 barrels per day. Giants, producing more than 100,000 bpd, account for just 3%. Then there’s the megafields that gush out 1 million bpd. These are the most important sources of energy in the world–fields worth fighting over. In figuring the top 10 fields of the future, we’re not interested in most of the giants of yesteryear, and not necessarily even the giants of today. Just the giants of tomorrow–those fields that might not even be producing yet, but will likely be doing better than 1 million bpd a decade from now.
The once and future king of the world’s oil fields, Ghawar, in Saudi Arabia, ranks first on our list. It is thought to have had more than 100 billion barrels of recoverable oil in place. At 160 miles long and 16 miles wide it confounds even the most experienced geologists. With something on the order of 60 billion produced over the past 60 years, you’d be excused for thinking that Ghawar was sliding into its twilight years. Yet the Saudis insist that Ghawar is still going strong, producing 4.5 million bpd from six main producing areas with the ability to do 5 million bpd if called upon.
The secret to Ghawar’s longevity is water injection. Starting in the 1960s Saudi Aramco began injecting water underneath the oil around the outer borders of the field. Today the water flood is up to millions of barrels a day, with the oil floating up to the top of the reservoir on sea of water. In conversations with Forbes in 2008 Aramco executives insisted that by continuing to treat Ghawar with kid gloves they’ll be able to coax 4 million bpd out of her for many years to come.
Coming in second is West Qurna, in Iraq, home to an expected 21 billion barrels of oil. This month a joint venture between ExxonMobil and Royal Dutch Shell was awarded the contract to develop the 9 billion barrel first phase of the West Qurna oil field. They will aim to raise output from 300,000 bpd to 2.3 million bpd. It’s tough to make the case that the two biggest oil companies from the countries that invaded Iraq in 2003 are getting a sweetheart deal. The contract calls for the government of Iraq to retain ownership of the field and the oil. Exxon and Shell, as contractors, are to be paid just $1.90 for each a barrel they produce.
Third is Majnoon, also in Iraq. At 13 billion barrels, these massive reserves are in a relatively small area near the Euphrates River in southern Iraq. The field’s abundance was so mind-boggling that it was named Majnoon, Arabic for “crazy.” This easy oil hasn’t been developed in part because of its location so close to the Iranian border. In the 1980s, during the Iran-Iraq war, managers reportedly buried the wells, concerned that they might be targeted by Iranian forces. The field produces just 50,000 bpd now, but has the potential to do 1.8 million bpd.
The Rumaila field in Iraq, with 17 billion barrels, is the fourth-largest field. In November, British giant BP and China National Petroleum Corp. won the first oil contract of the post-Saddam era to redevelop Rumaila. Located on the border with Kuwait, the field is already producing 1 million bpd, half of Iraq’s total production. The partners intend to spend some $15 billion to treble that to 2.85 million bpd. That output would be enough to put Rumaila in second place worldwide after Saudi Arabia’s Ghawar.
So what won’t you see on this list? Mexico’s Cantarell is nowhere to be seen. It used to be the second-biggest producer in the world, giving more than 2 million bpd; it’s now in terminal decline, slipping below 400,000 bpd. Likewise Russia’s Samotlor. It was the monster field of the Soviet Union, with production peaking at 3.5 million bpd in the 1970s. Today it’s doing more like 350,000 bpd. No respect for China’s biggest field Daging either; it still produces roughly 800,000 bpd but is in serious decline.
As for Canada’s heralded oil sands region–sure it’s a massive resource, but easy oil it ain’t. Oil sands require monstrous amounts of water and natural gas to recover and process. A barrel of oil sands oil costs roughly 20 times more to produce than one from Iraq. And environmentalists think it’s dirty.
Lots of oil provinces didn’t quite make the cut. West Africa could see the biggest growth of all across Nigeria, Angola and Ghana–but so far no individual fields look big enough on their own. Same for Siberia, which has most of Russia’s production, but from mature fields.
Saudi Arabia could have been better represented. Its 750,000 bpd Shaybah field was a runner-up. Iraq too. The government didn’t receive any bids to redevelop the 8 billion barrel East Baghdad field because much of it lies under residential neighborhoods. And Kirkuk, in northern Iraq, has something like 8 billion barrels remaining, but it was damaged by overproduction in the latter years of Saddam’s rule and won’t likely regain its peak of 700,000 bpd. But it could.