Author Topic: $60 / Barrel by year end  (Read 39871 times)

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Offline cupper

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Re: $60 / Barrel by year end
« Reply #25 on: January 16, 2016, 19:19:06 »
Well it is nice to pay $30 for a tank of 17 US gallons @ $177.9 in Phoenix = $43 CDN.

Beats the feeling of paying $65 in West Kelowna. Gas in WK is the lowest since moving there in Aug 08. Gas is always expensive, usually at least $1.25 to $1.45 + per liter. Gas Buddy today is $99.9 per liter.

Yeah, same here. When I was home in NS at Christmas it was $50 to fill up the car (18 USG full). Don't think I've paid more than $35 to fill up in the US since we bought it in October.
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Offline Chris Pook

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Re: $60 / Barrel by year end
« Reply #26 on: January 17, 2016, 21:45:29 »
More on the oil front:

Quote
And yet, amid current low oil prices, the notion of collectively taking barrels off the market is a seductive one. After all, there’s not a single company in Calgary’s corporate towers that isn’t starving for a bit of extra cash flow these days. But such a price shock would only prolong and worsen the underlying supply imbalance. Canada’s advantage in the global oil industry its technological savvy, not its geology or geography. Its best shot at emerging a winner is to cut costs and improve technologies faster than its competitors. The ongoing international competition to price out costly producers will certainly hurt marginal oil sands players, but a temporary price spike would only mask the oil sands’ greatest challenges: reducing its per-barrel production costs, building pipeline export capacity and achieving a “social license” to operate. Despite the pain they are causing, low oil prices are forcing Canadian heavy oil producers to face that reality. The last thing anyone needs is more volatility.

http://www.albertaoilmagazine.com/2015/12/why-opec-wont-and-shouldnt-cut-production/

About that infrastructure - pipelines is infrastructure.
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Offline Thucydides

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Re: $60 / Barrel by year end
« Reply #27 on: January 17, 2016, 22:54:02 »
One analyst is predicting much lower prices, and gives the reasons we might expect that outcome:

http://www.marketwatch.com/(S(rnrsydaynixa5x55oiibxm45))/story/fund-manager-whos-been-right-on-oil-has-a-depressing-new-prediction-2016-01-15?pagenumber=2

Quote
Fund manager who’s been right on oil has a depressing new prediction
T. Rowe Price New Era’s Shawn Driscoll says the price for a barrel of oil could drop into the teens
By Howard Gold, MarketWatch

In November 2014, Shawn Driscoll, manager of the natural-resource-focused T. Rowe Price New Era Fund, told me he expected crude oil prices, then in the $80s-per-barrel range, to fall into the $50s within 10 years.

Ten weeks later, with crude in the $50s, I interviewed him again and he predicted crude would drop into the $30s.

This week, when oil was trading in the low $30s, I caught up with him once more. And if you’re looking for a so-called tradeable bottom in energy markets soon, you’re going to be disappointed.

Although Driscoll thinks crude oil will slip into the low- to mid-$20s within six months — at around $29.50 in late-Friday-afternoon NYMEX trading, we’re not far from that now — it ultimately could go lower as we spend the next decade digging out of a secular bear market in commodities and oil.

Why? Oil’s oversupply is profound and will last for at least two years, he said, and too many industry people still are in denial.

Another take: Why oil could plunge to $20 a barrel, but probably not $10

The oversupply, of course, stems from Saudi Arabia’s efforts to keep pumping to preserve market share from U.S. shale producers and other countries like Russia and Iran, which is chomping at the bit to free itself from international sanctions so it can pump oil again — at any price.

Commodities secular bear markets go on for years, fund manager Shawn Driscoll said — the last one took about 18 — and we’re only in the early stages of this one.

Given current demand — and without new Iranian production — “our model is saying we’re still oversupplied a million barrels a day in ’16,” said the manager of the $2.7 billion New Era mutual fund PRNEX -2.31%  . “Our model for ’17 still shows oversupply with above-trend-line demand and without Iran.”

And the oversupply may be even worse than traders and investors acknowledge, because hundreds of thousands of barrels a day of new production are coming online in places like Brazil and Kazakhstan over the next couple of years.

“The piece that’s most overlooked by market participants … is the long-tailed projects, deepwater projects that take three to five years to come online. Those projects are still coming,” he told me. “There were decisions made in 2013 and 2014, the echo of those projects is still coming online this year and next year. 2018 is the first year you don’t see a lot of those projects coming.”

But despite massive production cutbacks, tens of billions of dollars in reduced investment and 250,000 layoffs and counting in the global energy industry, Driscoll sees, if not complacency, then a lack of fear among energy investors and decision makers.

“Over the last few weeks, we’ve had several meetings [with producers] and there’s just no panic,” he told me. “I would have said at $30 we ought to start seeing that.”

“I can’t get over how many people, CNBC, for example, ushers before the camera to say oil’s bottoming. This is not the psychology I would expect at $30 oil. There’s an endless amount of people who want to call the bottom,” he continued. “There’s not enough fatigue — investor fatigue, management fatigue.”

Read: Shale billionaire says oil to rebound to $60 a barrel by year-end

Is it denial? “With some people, it may be denial,” he replied. “No one wants to look like a fool where they do something drastic at the bottom. I think that’s part of the psychology.”

In fact, he said, “we’ve been thinking for a while that there’s a perverse incentive to keep drilling even while prices are falling … particularly when you’re sitting on a lot of debt.”

What could cause producers to throw in the towel? A major bankruptcy or series of bankruptcies of deeply indebted energy companies, which becomes more and more likely as prices drop.

“We [think] you need to see a credit calamity and/or we need to see very low oil prices to rationalize supply. We’ve certainly seen some credit pain, but we don’t think it’s over,” he said. “I think the next three to six months are going to feel like our ’08-’09 again. I think the calamity in credit is going to be bad.”

That’s bad news for oil prices, too. While Driscoll thinks crude may fall into the $20s over the next six months — not a big drop from here — he doesn’t think that’s the ultimate bottom.

Commodities secular bear markets go on for years, he said — the last one took about 18 — and we’re only in the early stages of this one. Oil prices could drop into the teens over the next decade, he said.

What could get us there sooner? “If the high-yield market goes off the rails, we may hit our sub-$20 number then,” he told me.

But more likely than a dramatic bottom and then a big rebound, we’re facing years of churning and pain.

“It’s not fun being bearish,” Driscoll said.

No, it isn’t. But given his track record and the precarious state of the oil market, bearishness on oil may well be the reality we just can’t ignore.

Howard R. Gold is a MarketWatch columnist and founder and editor of GoldenEgg Investing, which offers exclusive market commentary and simple, low-cost, low-risk retirement investing plans. Follow him on Twitter @howardrgold.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline Chris Pook

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Re: $60 / Barrel by year end
« Reply #28 on: January 17, 2016, 23:08:37 »
Saw that article.

General tenor is "Why aren't they panicking?  They should be panicking?"

What does he expect them to do?  Their inventory is in the ground.  They turn off the taps.  Shut off the exploration.  Send everybody home.  Are they supposed to start demolishing plant?

All they can do now is to sit tight and hold on.  I am aware of people with cash that are expanding their holdings.

The only people that benefit from a panic are in the stock market - and a few governments betting on irrational acts.
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Offline Technoviking

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Re: $60 / Barrel by year end
« Reply #29 on: January 18, 2016, 17:51:46 »
I see you're in VA.  I am down the road, in MD.  I'll buy you a drink anytime!

I get paid in USD as well.  But it's my salary converted into USD :(

Shhhh!  Don't mess with the dream!  :P

So, there I was....

Offline Chris Pook

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Re: $60 / Barrel by year end
« Reply #30 on: January 24, 2016, 13:27:22 »
Further to the "Why aren't they panicking?" meme.

Quote
Hedge funds and private equity groups armed with $60bn of ready cash are poised to snap up the assets of bankrupt US shale drillers, almost guaranteeing that America’s tight oil production will rebound as soon as prices start to recover.

Daniel Yergin, founder of IHS Cambridge Energy Research Associates, said it is impossible for OPEC to knock out the US shale industry though a war of attrition even if large numbers of frackers fall by the wayside over coming months.

Mr Yergin said groups with deep pockets such as Blackstone and Carlyle will take over the infrastructure when the distressed assets are cheap enough, and bide their time until the oil cycle turns.

“The management may change and the companies may change but the resources will still be there,” he told the Daily Telegraph.
“It takes $10bn and five to ten years to launch a deep-water project. It takes $10m and just 20 days to drill for shale,” he said, speaking at the World Economic Forum in Davos.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12118594/Saudis-will-not-destroy-the-US-shale-industry.html

And there goes the Paris Carbon plan.

As for the Oilsands

Quote
Canada’s biggest oil sands producers, which have stubbornly resisted halting output even as the price of their crude hits record lows, are planning a higher-than-normal maintenance schedule this year. The move is seen temporarily curbing supply in the second and third quarters, which should lift crude prices in the region and give producers a respite from selling their barrels below cash costs.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/hefty-maintenance-schedule-looms-for-canada-oil-sands-producers/article28347541/
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Offline Chris Pook

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Re: $60 / Barrel by year end
« Reply #31 on: January 24, 2016, 14:24:33 »
I see Trudeau wants to give us a Billion of our money back to build infrastructure.

Generous.

In 2013 private investors pumped 32.7 Billion into our economy to develop the Oil Sands.
http://www.energy.alberta.ca/oilsands/791.asp

They are/were also willing to spend 7.9 Billion on building Northern Gateway, 5.4 Billion on Transmountain, 10 Billion on the XL expansion and 15.7 Billion on Energy East.  There is 39 Billion Dollars of investment.  39 Billion Dollars of Jobs.

http://business.financialpost.com/news/energy/transcanada-corp-ups-cost-of-energy-east-pipeline-by-almost-4-billion-and-makes-700-changes-to-route?__lsa=4604-3205
http://business.financialpost.com/news/energy/keystone-xl-pipeline-transcanada-costs?__lsa=4604-3205
http://www.news1130.com/2016/01/22/state-of-play-a-look-at-the-status-of-pipeline-projects-in-canada/

No public money and at the end of the projects a revenue stream that benefits everybody currently receiving equalization payments and that worked in, or supplied the oil patch or supplied groceries to the families of the workers.
« Last Edit: January 24, 2016, 14:35:14 by Chris Pook »
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Offline jollyjacktar

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Re: $60 / Barrel by year end
« Reply #32 on: January 24, 2016, 14:33:18 »
The granola crunching, tree hugging, left wing flappers are blind to that sort of logic, I'm afraid.

Offline Brad Sallows

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Re: $60 / Barrel by year end
« Reply #33 on: January 24, 2016, 17:04:18 »
It is an ongoing problem.  Parties campaign on "we'll create jobs".  You show them a bunch of job creation opportunities.  "Those are not the jobs we're looking for."
That which does not kill me has made a grave tactical error.

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Offline ModlrMike

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Re: $60 / Barrel by year end
« Reply #34 on: January 24, 2016, 17:09:33 »
It is an ongoing problem.  Parties campaign on "we'll create jobs".  You show them a bunch of job creation opportunities.  "Those are not the jobs we're looking for."

The other side of the coin as so aptly said by Mike Rowe "...you're talking about shovel ready jobs for people who won't pick up a shovel..."
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Offline jmt18325

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Re: $60 / Barrel by year end
« Reply #35 on: January 24, 2016, 18:18:40 »
So how does Trudeau get the pipeline past aboriginal title in BC, and various protests and legal challenges by various groups across the country..oh, and the US government.  I mean, Harper didn't get it done, so....

Offline Brad Sallows

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Re: $60 / Barrel by year end
« Reply #36 on: January 24, 2016, 18:28:43 »
Money fixes nearly all domestic objections.  Once the deals over turf are cut, the environmentalists - the only real purists in the mix - will be invited to shut up and mind their own business by the muscle belonging to the same people who currently are part of the "popular front", but just angling for their slices of the pie.

After Obama departs, his successor may not be particularly seized with obstructing a border-crossing pipeline.
That which does not kill me has made a grave tactical error.

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"It is a damned heavy blow; but whining don't help."

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Offline jmt18325

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Re: $60 / Barrel by year end
« Reply #37 on: January 24, 2016, 18:35:14 »
Money fixes nearly all domestic objections. 

I don't think you understand the change that has happened in the aboriginal community of late, especially with the decision in BC in 2014, pertaining to aboriginal title in non treaty areas.  You need aboriginal consent.  Trans Mountain can probably and will probably happen simply because a parallel line already exists (though I can see it failing as well).  Northern gateway was always dead as a result of aboriginal title.  Energy East is a wild card.  It may or may not happen.  KXL is probably dead, but who knows?

Offline PuckChaser

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Re: $60 / Barrel by year end
« Reply #38 on: January 24, 2016, 18:45:32 »
I don't think you understand the change that has happened in the aboriginal community of late, especially with the decision in BC in 2014, pertaining to aboriginal title in non treaty areas.  You need aboriginal consent.

Here's the problem with our courts. They're creating laws, not clarifying on legal basis. If its non-treaty land, First Nations should get 0 say as to what happens. They don't want us telling them how to spend their money, they don't get to run the country unless they get together and get MPs elected.

Offline jmt18325

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Re: $60 / Barrel by year end
« Reply #39 on: January 24, 2016, 19:00:05 »
Here's the problem with our courts. They're creating laws, not clarifying on legal basis.

The Supreme Court is charged with interpreting the Constitution.  Their interpretation is far more meaningful than yours, and far more binding.

Quote
If its non-treaty land, First Nations should get 0 say as to what happens.

Non treaty land is land that was never surrendered by Indigenous people.  Technically, non aboriginal people are not even supposed to be there.  Of course, the courts are more realistic than that, recognizing the long inhabitance by non indigenous people.  Canadian and provincial law applies to non treaty land, but aboriginal consent, as of 2014, must be obtained for most projects through the region.

Quote
They don't want us telling them how to spend their money, they don't get to run the country unless they get together and get MPs elected.

Like I said, I don't think you understand the actual duty of the Crown, agreed to in 1763.

Offline PuckChaser

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Re: $60 / Barrel by year end
« Reply #40 on: January 24, 2016, 19:41:17 »
Non-treaty is an excuse to claim things now, that were forgotten about/not important. There are plenty of First Nations that are thriving in a modern economy, all while keeping their roots. Then there's the majority that want all the things that come with a modern urban center, delivered in random, austere locations. When they don't like something, they block a railroad, or a highway to get what they want. If I do that, I'll get arrested. They could ensure they get some well-paying jobs to work on those pipelines, but instead have been used by the anti-fossil fuel lobby to block any and all development. They are not bargaining in good faith.

This whole treaty garbage needs to be tossed out, and a new, relevant agreement needs to happen to replace the Indian Act. Until then, I'll tune out the majority who are entitled to their entitlements.


Offline jmt18325

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Re: $60 / Barrel by year end
« Reply #41 on: January 24, 2016, 19:44:25 »
Non-treaty is an excuse to claim things now, that were forgotten about/not important.

Almost none of BC was subject to treaty negotiations.  At the time, it was thought of as unimportant.  Now, with the benefit of hind sight, it turns out it was more important than we thought.

Offline Brad Sallows

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Re: $60 / Barrel by year end
« Reply #42 on: January 24, 2016, 20:44:51 »
>Northern gateway was always dead as a result of aboriginal title.

All aboriginal title does is identify some of the people in line to be paid.

We're stuck with the Royal Proclamation as the basis of continuing apartheid and feudalism (one class of hereditary rent-collectors, and one class of hereditary rent-payers) for now, but at some point it will become too absurd to sustain.  So, work within its constraints - make an offer.

Pity so few realize that a lift from the stone age into the modern age is worth more than all the land in the Americas.
That which does not kill me has made a grave tactical error.

Omnia praesidia vestra capta sunt nobis.

"It is a damned heavy blow; but whining don't help."

"Yet another in a long line of books about how libertarians are plotting to enslave you by devolving power to the individual and leaving you alone" - Warren Meyer, author of Coyote Blog

Offline jmt18325

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Re: $60 / Barrel by year end
« Reply #43 on: January 24, 2016, 20:50:41 »
>Northern gateway was always dead as a result of aboriginal title.

All aboriginal title does is identify some of the people in line to be paid.

We're stuck with the Royal Proclamation as the basis of continuing apartheid and feudalism (one class of hereditary rent-collectors, and one class of hereditary rent-payers) for now, but at some point it will become too absurd to sustain.  So, work within its constraints - make an offer.

Pity so few realize that a lift from the stone age into the modern age is worth more than all the land in the Americas.

Payment isn't enough.  In these new cases, the bands have to agree.  It seems that money is no longer enough in all cases.

Look, I hate the status quo, and regularly argue against it in public fora.  Aboriginal people should be equal under the law.  Nothing less, and nothing more.  That doesn't mean that I don't recognize reality.  We all have to deal with it after all.

Offline Old Sweat

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Re: $60 / Barrel by year end
« Reply #44 on: January 24, 2016, 21:19:01 »
And Donald Trump has his hand out too, as reported in this story in the Toronto Star reproduced under the Fair Dealing provisions of the Copyright Act.

Donald Trump demands ‘big chunk’ of Keystone XL profits for the U.S.

The Republican presidential front-runner declared that he is “not in love with the idea of taking Canadian oil.”




By: Daniel Dale Washington Bureau, Published on Sun Jan 24 2016

WASHINGTON, D.C.—Republican presidential front-runner Donald Trump says he would reject the Keystone XL pipeline if TransCanada Corp. didn’t give the U.S. a “big, big chunk of the profits, or even ownership rights.”
All of Trump’s Republican rivals say they would immediately approve the pipeline from the Alberta oil sands, which President Barack Obama rejected in November. Trump, who bills himself as a master negotiator, now says he would require TransCanada to fork over billions.
“I want 25 per cent of the deal for the United States. They’re going to make a fortune,” he declared in Muscatine, Iowa on Sunday. On Saturday, he said he would ask for “25 per cent of the profits forever.”
Trump, campaigning as an economic nationalist, said he wants the pipeline approved. But he said TransCanada should not be allowed to send Canadian oil through American land—“through farmland and through cities and wherever the hell they’re going” — without paying a hefty price.
“When they do this pipeline, it’s going to be a very profitable thing and it’s really Canada oil coming down — so it’s not — I like Canada, I want these people to be happy, but I want the developers of the pipeline to give the United States a big, big chunk of the profits or even ownership rights, like I do in business. That’s what I do,” he said.
“I want a big piece of the deal. Otherwise I’m not going to approve it. They will give us a lot.”
Trump also declared that he is “not in love with the idea of taking Canadian oil.” He added, “I love Canada, by the way.”
Trump once favoured rapid Keystone approval. He appears to be launching an effort to use the project as fuel for his attempt to challenge the patriotism and the eligibility of top competitor Ted Cruz, the Texas senator who was born in Calgary and held dual citizenship until 2014.
“Ted Cruz will approve the Keystone pipeline because it benefits Canada!” he said.
Trump did not explain how a profit-sharing deal might work. A TransCanada spokesman could not be reached on Sunday.
Trump’s Keystone remarks capped another weekend of bizarre and outlandish statements. On Saturday, he declared, “I could stand in the middle of 5th Ave. and shoot somebody and I wouldn’t lose any voters.”
On Sunday, he asked if a protester in a red turban was wearing “one of those hats.” It wasn’t clear if he thought the man might have been wearing a red Trump baseball cap.

Offline jollyjacktar

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Re: $60 / Barrel by year end
« Reply #45 on: January 24, 2016, 21:20:49 »
Payment isn't enough.  In these new cases, the bands have to agree.  It seems that money is no longer enough in all cases.

Look, I hate the status quo, and regularly argue against it in public fora.  Aboriginal people should be equal under the law.  Nothing less, and nothing more.  That doesn't mean that I don't recognize reality.  We all have to deal with it after all.
Sure, then they can pay taxes like the rest of us.

Offline PuckChaser

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Re: $60 / Barrel by year end
« Reply #46 on: January 24, 2016, 21:27:01 »
They can have 25% of the profits, as long as we get 25% of the profits from the refined product his refineries will sell afterwards.

Offline Ostrozac

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Re: $60 / Barrel by year end
« Reply #47 on: January 24, 2016, 21:40:42 »
Arguing over the distribution network for oil that is currently almost worthless strikes me as a bit of a "bald men fighting over comb" situation. Eventually, oil prices will be high again, and then, and only then, will there be enough cabbage to spread around to deal with all the stakeholders.

No one is interested in building pipelines to ship oil so long as prices are this low. The profits aren't worth the costs, either the actual construction costs or the political costs. The oil may as well sit in the ground until prices are back at $100 a barrel. The oil's not going anywhere, and the world will probably need it in the 22nd century.

Offline Chris Pook

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Re: $60 / Barrel by year end
« Reply #48 on: January 24, 2016, 22:00:32 »
http://business.financialpost.com/fp-comment/aboriginal-land-will-be-expropriated

There is a reason we elect dictators pro tem.

There is a reason that the federal government has control over inter-provincial trade.

There is a reason why governments can expropriate land.

The limitation is strictly the next election.

And, if the upthread articles are to be believed oil won't stay this low for long.
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Offline daftandbarmy

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Re: $60 / Barrel by year end
« Reply #49 on: January 24, 2016, 22:33:29 »
Meanwhile, in Russia:

Russian Oil: Output Grows as Prospects Shrink

Plummeting prices and U.S.-led sanctions raise questions about Russian oil’s capacity to continue underwriting Putin’s global ambitions

IMILOR OIL FIELD, Russia—In the frosty swamplands of West Siberia, the drilling rigs of oil giant  OAO Lukoil  are helping raise Russia’s oil output to its highest levels since the breakup of the Soviet Union a quarter century ago.

But falling crude prices, U.S.-led sanctions and diminished oil exploration threaten Russia’s oil industry and raise questions about its capacity to continue underwriting President  Vladimir Putin’s ambitions at home and abroad.

While recent increases in Russian oil output have helped cushion the sharp price fall, Mr. Putin is so squeezed for cash, his government postponed a planned reduction in oil-export duties this year. Executives say they fear the postponement could be extended, diverting money to Moscow that could be invested in new drilling and exploration to supplement aging oil fields.

“We will have to limit our spending and that will lead to a fall in production,” Lukoil Chief Executive Vagit Alekperov said in an interview at the Russian company’s international headquarters in Vienna.

Russian officials acknowledged that the higher-than-planned taxes could lead to a decrease in investment and production, but said they were needed for the budget.

U.S. and European sanctions over the past 18 months also weigh on Russia’s future prospects by choking Western financing for exploring potential finds in the Arctic Ocean and for tapping Siberian shale formations.

Oil and natural gas revenues make up about half of Russia’s federal government revenue, and exports account for one-third of national output. Energy revenues are central to Mr. Putin’s power as he faces off with the West over Ukraine and the 2014 annexation of Crimea. He has deployed military forces in Syria’s war to back President  Bashar al-Assad.

Oil money extends Mr. Putin’s reach, allowing him the financial resources to issue cheap loans to favored leaders and pay for military adventures abroad.

http://www.wsj.com/articles/russian-oil-output-grows-as-prospects-shrink-1453685744

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