FuelClub Discount

President Susilo Bambang Yudhoyono of Indonesia said Tuesday that his country was considering quitting OPEC because it was no longer a net oil exporter.

“Our wells are drying,” he said in a nationally televised speech, adding that the country needed to concentrate on increasing domestic production, which has dropped to less than a million barrels a day even as consumption rises.

The government opened talks Monday on whether it should continue to stay with the Organization of Petroleum Exporting Countries or withdraw “until we reach a point where we deserve to rejoin that organization,” Yudhoyono said.
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Chevron Corp. and Total confirmed that they are in talks with the Iraqi government to expand production at a major oil field in Basra, southern Iraq.

The negotiations will finalize a two-year deal to increase oil output at the West al-Qurna oil field in Basra, Iraq’s second-largest city.

Chevron confirmed their involvement after Total’s chief executive officer publicly discussed the proposed deal Thursday at an oil industry conference in Paris.

“We just want to be consistent with them and confirm that what they’re saying is accurate,” Glaubitz said.

West Qurna field is located about 40 miles west of Basra and is among Iraq’s 10 “super giant” fields with its reserves estimated between 15 to 21 billion barrels, according to Iraqi Oil Ministry and Energy Information Administration.
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Oil was formed in the geological past under well understood processes. In fact, the bulk of current production comes from just two epochs of extreme global warming, 90 and 150 million years ago, when algae proliferated in the warm sunlit waters, and the organic remains were preserved in the stagnant depths to be converted to oil by chemical reactions.

Natural gas was formed in a similar way save that it was derived from vegetal material. It follows that these are finite natural resources subject to depletion, which in turn means that production in any country or region starts following the initial discovery and ends when the resources are exhausted.

The peak of production is normally passed when approximately half the total has been taken, termed the midpoint of depletion.

Oil has been known since antiquity but the first wells were drilled for it in the mid 19th Century in Pennsylvania and the on the shores of the Caspian. The Industrial Revolution was already in progress being driven by the steam engine, fuelled by coal.
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Sinopec, one of China’s two largest oil companies, announced yesterday that it received a subsidy of 12.3 billion yuan ($1.7 billion) for its losses in the refinery business.

It is likely that the jaw-dropping subsidy will spark another round of public complaints. This is the third year that this oil giant has got such a handsome subsidy while reporting overall profits of tens of billions of yuan.

Many people doubt the legitimacy to pay such money to a company that is a beneficiary of the State monopoly in the oil industry.

But the authorities insist that the extra expenditure is necessary to sustain the government’s tight control over retail oil prices, which is essential to reining in rising consumer inflation.

However, the problem is that the astronomical subsidy accounts for only a part, if not a small one, of the real costs that the country is paying for the current oil pricing mechanism. The increasingly negative impact it exerts upon our efforts to improve energy efficiency justifies a thorough examination of the real costs of subsidized oil.
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PetroChina Ltd., the world’s most valuable company by market capitalization, said Wednesday profits rose by just 2.3 percent in 2007 as government controls blocked it from passing on record-high crude costs to consumers, though a Chinese auto-buying boom drove a 21 percent jump in total sales.

Earnings were 145.6 billion yuan (US$20.5 billion; €13.1 billion) on revenues of 835 billion yuan (US$118 billion; €75 billion), said state-owned PetroChina, the country’s biggest oil company.

Profits were squeezed by a 20.1 billion yuan (US$2.9 billion; €1.8 billion) loss at PetroChina’s refining unit due to a government freeze on retail gasoline and diesel prices, the company said.

“During the second half of 2007, international crude oil prices rocketed and as a result, domestic refineries incurred heavy losses in processing,” said a PetroChina statement. It said supplies of gasoline and other refined goods were “very tight.”

Sales by China’s state-owned oil industry have soared as the number of vehicles on its roads multiplied. Demand for plastics and other petroleum products is growing rapidly amid a long-running boom that propelled economic growth to 11.4 percent last year.

But oil refiners say they are losing money due to price controls.

Some have tried to avoid losses by cutting back or stopping production. That has led to fuel shortages, especially in the fast-growing southeast, where filling stations were forced to ration diesel this week, disrupting trucking as drivers waited in long lines.

Companies such as PetroChina with both drilling and refining arms have made windfall profits from oil production, which has helped to compensate for losses elsewhere.

Beijing froze gasoline and diesel prices in September in an effort to rein in a surge in inflation. It raised prices by about 10 percent in November to curb surging demand but has rejected appeals by oil companies for further increases.

PetroChina is China’s biggest oil producer and its No. 2 refiner after rival China Petroleum & Chemical Co., or Sinopec.

PetroChina said 2007 sales of gasoline, diesel and kerosene totaled 600 million barrels, while production was 500 million barrels.

The volume of fuel sold at PetroChina’s network of filling stations rose by nearly 8 percent over 2006, the company said.

PetroChina is the publicly traded unit of government-owned China National Petroleum Corp. Its market capitalization — including Beijing’s majority stake — briefly rose above US$1 trillion in November, more than double Exxon Mobil Corp.’s US$488 billion. PetroChina shares are traded in New York, Hong Kong and Shanghai.

Market cap later fell back below US$1 trillion, but PetroChina still is the world’s most valuable company. Exxon Mobil, however, is far more profitable, with total 2007 earnings of US$40.6 billion.

In 2008, PetroChina said it expects government regulation of the industry to become even “more stringent,” though it gave no details or any indication when it expects the retail price freeze to end.

The company said it will step up exploration for new oil and gas sources in China and abroad. Chinese state oil companies have invested heavily in projects in Africa, Latin America and Central Asia.

“The group will continue to place top priority on resources exploration and development and further consolidate its leading position of the upstream business in China,” it said.

Source: PetroChina

Oil prices fell yesterday, pulling back at least temporarily from record levels as investors feared that the financial crisis that forced the sale of the Bear Stearns Cos. Inc. was a sign of deep economic trouble.

Crude’s drop came even as diesel prices rose to a new record above $4 a gallon, and gasoline prices remained high.

Diesel, used to transport the vast majority of the nation’s goods, rose 1.3 cents to a national average of $4.002 a gallon, according to AAA and the Oil Price Information Service. The national average price of a gallon of gasoline, meanwhile, dipped slightly to $3.283 a gallon, but remained 73 cents higher than a year ago.

In the five-county Philadelphia area, yesterday’s average pump price was $3.22 a gallon, up four cents in the last week. In South Jersey, the average was $3.04, six cents higher than a week ago.

Oil’s steep decline - falling $4.53 to settle at $105.68 a barrel on the New York Mercantile Exchange - came hours after futures had reached a new trading high of $111.80 on the Federal Reserve’s move Sunday to lower a key interest rate a quarter of a percentage point.

In the last several months, Fed rate cuts have prompted rallies in oil prices because crude futures offer a hedge against a falling dollar. Interest-rate cuts tend to weaken the dollar further.

But the big decline yesterday could be a sign that the oil market’s momentum has turned negative, analysts said.

“People are saying, well, things are a lot worse than we thought,” said Phil Flynn, an analyst at Alaron Trading Corp., of Chicago.

Source: Associated Press