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July 01, 2005
Middle East Oil?
By: Rowan
This is a request for information. Does anyone know what the historical grade of Middle Eastern OPEC oil has been? The reason I ask is because of some interesting comments in an AAP article - Venezuela Says No Need for OPEC to Increase Oil Production. Maybe I am just reading things into the article, but look at the following statements and tell me what you think (or know).
In the article, the Venezuelan Oil Minister made a number of interesting statements. The argument from Venezuela is that increasing production will have little or no impact on oil prices. This is not a surprise, because it is what OPEC has been saying all along while it promises to increase production. However, there seems to be another "production" issue:
"There are serious problems in refining, serious problems of speculation and the countries of OPEC ... we cannot, we have a limited capacity - it's something we're getting close to," Ramirez told reporters.
The above quote seems to be saying that OPEC is at (or near) production capacity. The capacity issue therefore is not only refinery capacity.
This is stated even more plainly in a statement by President Chavez:
"OPEC is near its full production capacity, and making strong efforts to boost production ... and most of the countries, not only in OPEC but in the world, are reaching production ceilings," said Chavez.
Then add this "production capacity" issue to: "OPEC mainly produces types of heavy crude that are difficult to refine. The current production ceiling stands at 28 million barrels a day.
Has OPEC always produced a "heavy crude," or is this new? My understanding is that the heavier deposits lie lower in the field with the "sweet crude" being the easiest pumped (and refined) being at the top of the field. Does this statement mean that most of OPEC is now pumping heavy crude? If so, doesn't this indicate they are at or near peak?
Does the production capacity issue relate to the number of wells (and therefore pumping capacity), or that the heavy crude is harder to pump and that therefore impacting capacity? Or is it both?
Any insight would be appreciated.
Posted by Rowan at July 1, 2005 10:04 AM Category: Peak Oil
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