Shale oil and oil prices, the Iraqi general budget
Shale oil and oil prices, the Iraqi general budget
February 29th, 2016
The second session
Fouad Qassem Prince:
After the signing of the first session of the licenses it was possible to postpone the signing of licenses and other courses, to get the best conditions and the best instruments to be fully under the control of oil in the state. But those who continued signed licensing contracts, which do not doubt patriotism and dedication and integrity is worried that future governments may have signed PSAs fields remaining, and this is what is happening now, it is going to talk about the signing of new contracts of production sharing !! decades model. Were also believes that in the interest of Iraq and Saudi Arabia could become a second; and here was a big mistake.
In addition, the participation contracts originally, is «risky risk contract decades». This means that oil companies spend their money in the search for oil in areas that have not been where research geological or Giovaxiaoah or excavation, and in the absence of oil, corporate money spent by losing; if oil found, they take a share of it, and the record of this share in the «assets» computational companies, if it becomes the property of her. That is why they are considered risky money to meet the company's share of the oil. But the fields that we're talking about, all installed and carved with wells and a resident of the fields, there is no risk of failure probability of the presence of oil in them.
Al Mada published an article on 11.25.2015 under the title: «Government proposes to conclude Abadi (partnership contracts) with oil companies within the anticipated reform package» (70). She says it: «intends to Prime Minister al-Abadi launch of a new beginning December reformist paper, including commercial banks with funds to support the revitalization of investment and export in an effort to address the economic crisis facing the country» !!.
The paper quotes the Attorney Messenger Abu Hasna, a member of a coalition of state law, «These new reformist paper, include contracts with international oil companies are not as licensing round but will be sharing contracts», indicating that «the government's move comes in order to increase the production and export of crude oil rates to overcome the crisis of low prices »(70) !!.
If this news is true, and I hope to not be the case, since I did not find anywhere else, what is shown is not «reformist step», but «subversive destructive step» in every sense of the word, and raises many doubts !!.
A variety of views have raised in last May and June for «intention» Oil Minister converting a section of technical service contracts to contracts for post production, Mr. and denied the minister that, stressing his support for the decades of technical service in the current circumstances, and we had at the time to answer and explain the harmful effects of PSAs In addition to illegitimacy (1). And now we are talking about «new contracts» resolve «the economic problem» through «increased production», signed a «post production» !! decades, an unsuccessful and harmful economic equation and unconstitutional !!. We have noticed in the previous pages of this study in this book, that the financial returns less than the greater oil production in the world, increased «satiety», and that prices are falling and increasing degradation and continue whenever pumped into the global market in larger quantities. That the amount of oil available to us and ready for export is very high, and can not be marketed only by offering high discounts.
Reuters agency wrote in a report on 11.19.2015 under the title: «Iraq's oil is sold at a price of 30 dollars per barrel», which says: «The oil traders in Europe declared to Reuters that Basrah Light sold in the European market at a price of 30 dollars a barrel, Saudi Arabia and Iraq prosecuted in the European markets. » The report added: «The OPEC announced that there are no plans to reduce production, which means bad news, especially since Iran due global oil market», and continues by saying: «Iraq said 2015 global oil market is equivalent to half a million new barrels a day, and this makes it a state the world's first increase in export growth. »
We have talked enough about supply and demand and the »glut» in the oil market, and we have stated that the proposed budget price in 2016 of $ 45 dollars per Brmel-, is a number that is too high should be reduced to 40 dollars per barrel at best. As shown, the price is deteriorating further, as it arrived in October to (39.55) dollars per barrel, and to (36.4) per barrel in November.
To illustrate the above, the Basra oil (ratio, which is the only source for the Iraqi budget), was about 40 dollars per barrel in the past four months. This represents an average light oil when it was mixed with heavy oil at export or when they are separated when exporting two months before. After researching the subject turned out to be heavy Basrah (21-22API) found a good market in the United States and Europe and became a competitor to Saudi Arabia and the oil-price sale (30) dollars per barrel. The rest of the light oil up to 39 dollars per barrel, and sold it at a price deals (36-37) dollars per barrel, while the price has been going to deteriorate even for Basrah Light. That is why the Basra oil export price for the month of November average (36.42) dollars per barrel, with the highest export reached Iraq at a rate of (3,365) million barrels per day of oil from the south only (73).
Now, there are those who think the signing of participation agreements to increase exports, noting that the production of the field will be after at least two years !!.
I believe that many parties want the federal government to sign a contract if one of the participation contracts, to give «legitimacy» for decades Kurdistan, which is sharing contracts illegal !!.
Third: to continue to talk about the technical service contracts, and to see what are the things that have taken them:
Started in late 2011: «I am convinced that it is pushing oil strategy to expand to reach 13 million barrels a day through numerous licensing courses not Bmentf materially, at the same time I am on too sure, that this strategy if they had carried out a full and as before it will harm Iraq irreparable damage, and must take the steps required to repair the damage before it is too late. At the same time I'm trying to understand the causes of traffic this policy I did not find something convincing yet »(56), that is, until the time of the study in 25/11/2011.
All the indicators and analyzes of international oil organizations show us that OPEC's share of global oil demand will not exceed (6.7) million barrels per day in 2025 to reach 36 million barrels per day, from the year 2010 when it was produced (29.3 ) million barrels a day, while in the year 2020, its share would be about (33.2) million barrels per day. And assuming the continuation of moderate oil prices up (80-95) dollars per barrel.
Iraq's production in 2010 amounted to the equivalent of (2,340) million barrels a day, and it was issued (1,883) million barrels a day. This would have given OPEC all the increase in global market share of Iraq for the years 2020 and 2025 (and this is supposedly highly unlikely), because Iraq was able to issue more than 8 million barrels per day in 2025, and have been able to issue more than (6 ) million barrels a day in 2020. If the export volumes more than that, the result will be disastrous as there will be a glut on the world market and prices fall.