Saturday, November 17, 2007

Candid Camera

Sort of, but not for humor's sake.

Article from the November 17, 2007 edition of the Washington Post (emphases mine):
A dispute among OPEC ministers during a closed-door session Friday spilled into the open when a camera was inadvertently left on, broadcasting into the nearby press room a quarrel over whether to stop pricing crude oil in dollars.

According to reporters who watched the broadcast for half an hour before Saudi officials pulled the plug, Iranian Foreign Minister Manouchehr Mottaki urged the group to price oil in another currency or a basket of currencies, a perennial issue that has drawn greater attention recently because of the sinking value of the dollar.

"We're backing this Iranian proposal," Venezuelan Energy Minister Rafael Ramirez said in Spanish, according to Bloomberg News.

But Saudi Foreign Minister Saud al-Faisal rejected the idea, suggesting that the group refer the question to the finance ministers from member countries of the Organization of the Petroleum Exporting Countries. But he said the group should not announce that its finance ministers would look at the issue because that might drive the dollar down even further.

"There will be journalists who will seize on this point, and we don't want the dollar to collapse instead of doing something good for OPEC," Faisal told the ministers.

The weak dollar has hurt oil exporters who use oil revenue to buy goods priced in euros or yen. That has added inflation pressures in oil exporting countries. On the other hand, many wealthy exporters, including Saudi Arabia, hold huge dollar-denominated assets.

The United States has imposed sanctions on Iran's biggest banks and pressured other banks to stop dealing with Iran. Tehran is already selling oil in euros and yen, but those transactions mostly translate the current dollar price, oil traders said.
Apparently, Saudi's protectio of its own interests could work in favor of U.S. interests. For now.

Meanwhile, next year, Saudi is planning to pump out more high-quality oil. From this article in the November 17, 2007 edition of the Washington Post (emphases mine):
...Next year, Saudi Aramco, the state oil company, plans to boost production by 250,000 barrels a day, one step in an effort to expand the kingdom's oil-production capacity to 12.5 million barrels a day from the 11.3 million barrels. The new production is part of a strategy that could ease market tension and is designed to preserve Saudi Arabia's ability to produce 1.5 million to 2 million barrels a day more than its actual output in the face of rising world oil demand, said a senior Saudi Oil Ministry official who spoke on condition of anonymity.

"Tell me of any other country that's made commitments this broad on its own," Prince Abdulaziz bin Salman, the deputy minister of petroleum and natural resources, said during preparations for this weekend's summit of the Organization of the Petroleum Exporting Countries in Riyadh, the Saudi capital. "We are the only country with a policy of maintaining excess capacity."


This week, Saudi Oil Minister Ali al-Naimi reiterated pledges that Saudi Arabia would eventually deliver 1 million barrels of oil a day to China and keep the world well supplied.

Some analysts said that could be difficult because many of Saudi Arabia's oil fields are old and in decline. The rate of natural decline in Saudi fields was slightly faster than anticipated this year, according to a Saudi strategist who spoke on condition of anonymity because he is not authorized to speak publicly on the subject. From 2005 to 2009, output from existing Saudi fields is expected to decline by 800,000 barrels a day. But Saudi Arabia's output capacity is about the same as it was 30 years ago.

If the amount of oil the Saudis can produce is open to question, the cost of production is not. Naimi estimated that it costs Saudi Arabia about $2 to produce a barrel of oil. Developing new fields is also cheap, he said, running about a quarter or less of exploration and development costs elsewhere. Asked whether Saudi Arabia would be interested in investing in Canadian tar sands, which require more than $40 per barrel in investment, Naimi said there would be no point....
Oh, goody, goody! Let's clap our hands in gratitude for the Saudis and their generous promise to pump more oil. But remember that any surplus of oil from Saudi will occur after the heating season is over here in the States.

Here's a picture of those in control:

No wonder their facial expressions are so smug!

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posted by Always On Watch @ 11/17/2007 08:06:00 AM