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CHINA OIL Replies |
rffrydr
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 Posted: Tue Oct 13, 2009 7:11 am Post subject: |
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The oil/dollar equation spelled out: what is the price of negative returns?
Sino-US oil competition
Published: October 12 2009 14:59 | Last updated: October 12 2009 18:56
Oilman John Paul Getty’s quip that “the meek shall inherit the Earth, but not its mineral rights” clearly translates well into Mandarin. While China’s outsized thirst for global energy resources is nothing new, it had largely trolled waters off limits to US supermajors since China National Offshore Oil Corporation was rebuffed in a politically charged bid for Unocal in 2005 in favour of Chevron. The recession appears to have changed that.
The latest flashpoint is in Ghana, where ExxonMobil signed a $4bn deal to buy a stake in a massive offshore field. CNOOC may try to top the bid and, while Exxon is no weakling, it cannot compete with a buyer that is implicitly backed by $2,000bn in foreign reserves. More importantly, Exxon will not compete on the basis of geopolitical concerns, only financial return. The same goes for an even more audacious Chinese plan, worth up to 10 times as much, to buy minority stakes in several offshore blocks in Nigeria.
Tallying Chinese oil reserves must go well beyond the books of its already large oil companies. More than $40bn in loans to Brazil, Russia and Venezuela in exchange for future supplies, direct state purchases of other producers and pledges of infrastructure to countries such as Angola give China a claim to billions of barrels of future production. Add to that huge sums spent or pledged in pariah states such as Iran and Sudan, where US companies cannot compete, and China’s political edge in securing supplies is clear.
Now it has an economic one too. The more China’s leaders perceive their pile of greenbacks to be a wasting asset the more it makes sense to pledge or spend them today. Overpaying is in the eye of the beholder if such dollar anxieties are vindicated. Like a giddy M&A banker during the boom, aggressive assumptions can justify nosebleed prices, but the sums add up differently in Dallas or New York.
No matter how optimistic a US oil major’s financial assumptions might be, it is a safe bet they will never arrive at a negative cost of capital.
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rffrydr
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rffrydr
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| Posted: Thu Jul 09, 2009 9:52 am Post subject: |
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Saudi Aramco cut its supply of Arab heavy and medium oil grades to Asia for August delivery. Could be down as much as 20% from contractual volumes. Down about 15% in July.
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rffrydr
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rffrydr
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| Posted: Wed Jun 03, 2009 9:38 am Post subject: |
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The restocking is over: China said it would not buy more oil for stockpiling until additional storage tanks are built. Oil tanks, in use, are full.
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HenryTo
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| Posted: Sun May 17, 2009 11:53 am Post subject: |
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China's commercial crude oil inventory up 30% from last year:
http://en.sxcoal.com/NewsDetail.aspx?cateID=187&id=21005
| Quote: | China's domestic crude oil inventories surged by nearly a third last year to the equivalent of 34 days of forward demand, showed data of a publication run by state news agency Xinhua.
China's crude oil inventories jumped 30 percent over the past year to stand at 37.20 million tonnes, or near 272 million barrels, by the end of January, data published by China Oil,Gas and Petrochemicals, a biweekly Xinhua publication showed.
Chinese oil demand runs at about 8 million barrels per day (bpd).
While the data appeared to refer only to inventories held by oil companies, with no specific mention of strategic stocks held in the government's newly built 100-million-barrel reserve tanks, it offered rare evidence of long-suspected stockbuilding.
Data on inventories of diesel and gasoline have become more accessible in recent months, but figures for crude stocks --even commercial ones -- are rarely reported in China. In countries such as Japan and the United States, it is reported weekly.
OGP gave no further information or breakdown for the figures, but in the same article sourced information on domestic demand to calculations by experts at CNPC, the state oil company.
Combined with fuel stocks, China's inventories appear to cover the equivalent of about 44 days' worth of demand, approximately half the stocks that members of the International Energy Agency (IEA) are required to hold. |
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rffrydr
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| Posted: Wed May 13, 2009 11:08 pm Post subject: |
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China National Petroleum says it sees a sizable increase in overseas output by 2015.
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rffrydr
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| Posted: Wed May 13, 2009 10:02 am Post subject: |
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rffrydr
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| Posted: Wed Mar 25, 2009 8:39 am Post subject: |
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China has raised fuel prices by as much as 5% starting today. Justified by the rise in oil prices this year. Government working to protect refiner margins and the move should also ease demand.
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rffrydr
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| Posted: Tue Mar 24, 2009 10:34 pm Post subject: |
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The marginal buyer:
I'll post it...only to break with it.....later.
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rffrydr
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diesel
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| Posted: Tue Feb 24, 2009 1:42 am Post subject: |
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All depends on the long term price of oil.... I think this is China positive....
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rffrydr
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| Posted: Mon Feb 23, 2009 4:53 pm Post subject: |
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I'm surprised they weren't able to get a better deal--definitely Russia positive:
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The mandarins in Zhongnanhai have made a strategic decision that now is the time to lock in long-term oil supplies at favorable prices. Long-running and agonizing negotiations with Russia finally bore fruit last week as China Development Bank extended a US$25 bn loan facility to oil distributors Rosneft and Transneft, collateralized by guaranteed oil deliveries of about 290,000 bpd in 2011-2030. Despite a variety of erroneous press reports, pricing for the oil has yet to be finalized; Gavekal energy analyst Ahmad Abdallah tentatively reckons the net effective price could be around US$60 a barrel, US$13 below the highest current forward price (Dec 2017). |
--GK
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HenryTo
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| Posted: Sat Jan 24, 2009 7:22 pm Post subject: |
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Forgot to post this earlier: Chinese auto sales stalls.
http://www.theglobeandmail.com/servlet/story/LAC.20090113.IBCHINA13/TPStory/Business
| Quote: | Automobile sales in China grew by just 6.7 per cent in 2008, the official Xinhua news agency reports. That is still much better than the precipitous drops recorded by auto makers in the North American market. But after three years of growth exceeding 20 per cent, it is a disappointment for car makers such as General Motors Corp. and Ford Motor Co. that have invested billions in China in hopes of unstoppable sales acceleration.
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The scope for further growth seemed limitless. China still has just 30 cars per 1,000 people, compared with 900 in the United States. An ambitious construction program has laced the country with broad new highways begging to be driven.
But in the middle of last year, sales began to soften when higher fuel prices and new emissions standards for commercial vehicles kicked in. China's economic situation has worsened considerably since then as demand for its exports, the engine of it economy, slackened with a slowing world economy.
IHS Global Insight is forecasting sales growth for vehicles of just 4.8 per cent this year. GM's Nick Reilly, the company's Asia-Pacific boss, said industry-wide sales could fall as much as 10 per cent in the first half of this year before continuing "robust growth." He told an industry event in Detroit yesterday that he still expects sales in China to grow slightly this year to about 9.5 million vehicles. |
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rffrydr
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| Posted: Thu Jan 15, 2009 9:03 am Post subject: |
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And don't forget the supply side: China has increased diesel exports to their highest level in 9 months. Exports of diesel rose to 200,000 metric tons in December. Imports were 80,000 tons. Oil, in the end, is a product. An old lesson from corn.
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