Posted on 04/26/2008 7:49:46 AM PDT by tatown
Mumbai: The oil boom is on its last leg and may last a few months before a clutch of new refineries start operations amid slackening economic growth across the world, consultancy firm and investment bank Lehman Brothers has predicted in a report.
The report said supply is in fact outpacing demand growth even as inventories have been building up for quite some time now. This announcement must surely come as a huge relief for consumers reeling under high oil prices for some time now.
Tellingly, this news comes only two days after Thomas Boone Pickens, an American billionaire who made a fortune in oil speculation, predicted that oil could reach the $150 mark soon. Justifying his stance, he had said that the current global oil supply of 85 mbpd was well short of the requirement of 87 mbpd. "When you have 85 billion to cover 87 billion, the price has to go up," he said.
''Inventories have been building since the beginning of the year. We have pretty significant projects starting soon in Saudi Arabia, and large off-shore fields in Nigeria,'' said Michael Waldron, the US bank's oil analyst.
Saudi Arabia has started production at its 500,000 barrels per day Khursaniya field while the new 1.2 million barrels per day (mbpd) Khurais field will start next year, the report pointed out.
Saudi Arabia plans to spend $90 billion in oil exploration and production over the next five years, lifting capacity to 12.5 mbpd by the end of 2009 while a clutch of new refineries will add almost eight mbpd of new capacity by 2010, the report pointed out..
Reliance Petroleum's 600,000 bpd refinery at Jamnagar in India also featured in the report. The facility is to be tested by trial runs in July and expected to be commissioned in September.(See: Reliance plans trial runs at Jamnagar refinery in July)
However, the report makes no mention of the planned capacity addition which will double the amount of oil refined per day, from 0.6 mbpd to 1.2 mbpd. This would effectively catapult it from the estimated third position to the top of the oil refining stakes. This was asserted by H R Meswani, executive director of Reliance Industries Ltd (RIL), back in 2006, when the company was scouting for funds for the project.(See: Reliance Petro may borrow up to $2 billion for refinery expansion)
The build-up in supply comes at a time of cooling world demand. Recession in the US is expected to curb consumption by 300,000 bpd this year.
hese predictions were not without reason and found echo earlier this week. Oil prices had eased on Wednesday from a record high of nearly $120 a barrel in the previous session, after crude oil stocks rose more than expected last week in the world's top energy consumer the United States.
US crude for June was down 47 cents at $117.60 a barrel at 1506 GMT. The May contract expired on Tuesday at $119.37, after briefly hitting an all-time peak of $119.90. London Brent crude was down 25 cents at $115.70, after touching a record high of $116.75 the previous session.
At that point of time, Waldron had commented, "A lot of the movement up to $120 can be explained with financial demand. We don't feel $120 is justifiable in terms of underlying fundamentals."
Lehman also trimmed its forecast for global growth from 1.5 mbpd to 1.1 mbpd, predicting a slide in prices to $83 next year and $70 to $80 in 2010 . This was very much in contrast to the five-fold increase in prices that oil has seen over the last half a decade.
Drilling costs have even started to fall with the levelling of oilfield machinery and maintenance costs. These are all time-honoured signs that the cycle may have topped, it pointed out.
The report blamed the price spike on a $40 billion inflow into commodity index funds this year, much of it from Middle East sovereign wealth funds - the petro-investors may have second thoughts about gaining ''double exposure'' to commodity prices.
''Financial flows have been the marginal driver of prices since the onset of the credit crunch. Investors are using oil as a hedge against inflation and a falling dollar,'' the report said.
The index effect has lifted prices by $20 to $30 a barrel. This could reverse sharply once the dollar starts to stabilise against the euro, since the euro/dollar exchange has become the proxy watched by oil traders for signals, it said.
The latest spike was driven by terrorists' hit at a Nigerian pipeline and fears that the 'Forties Pipeline' from the North Sea might be closed as a knock-on effect from threatened strike action at Scotland's Grangemouth oil refinery.
Pipeline attacks in OPEC member Nigeria last week shut 169,000 bpd of Bonny Light production, forcing Royal Dutch Shell to declare force majeure on exports.
Britain's Grangemouth oil refinery is proceeding with a gradual shutdown ahead of a planned strike at the weekend. Management and union members are in talks to try to avert the strike which could disrupt fuel supplies in the UK.
I’m pretty dubious on this stuff.
If it worked that well, the demand would be immense given current fuel prices.
Somebody would be setting up a garage on every street corner installing them, no?
I don’t know what you are talking about...the hydrogen gas is fed directly into the air intake tube which increases the hp and decreases the need for regular gas. The 02 sensor needs to be pulled slightly out of the exhaust stream to maximize the better and cleaner combustion...that is easily done with their oxyisollater. There are zero negatives to this system and it and many similar hydrogen systems are being used all over the world. It won’t be so unknown as gas continues to rise in price.
buuuuuuuuummmmmp !!!!
Hydrogen embrittlement - Google Search
http://www.google.com/search?hl=en&ie=ISO-8859-1&q=Hydrogen+embrittlement&btnG=Google+Search
Any idea of your EGT (Exhaust Gas Temperature)?
My guess is that you moved the o² sensor from the stream to avoid a monitor meltdown.
What happens when the water in your tank freezes?
First things first, some good ol'boy would paint one up to look like a windshield washer reservoir and give himself a shot of hydrogen as needed!
ahh yes, a doubting Thomas...the 02 sensor is moved out to avoid it picking up the exrta 02 from the complete hydrogen combustion and thereby avoiding the computer from adding extra fuel. It thinks the extra 02 is from too lean a mixture. Also, I am not certain of the details of their finished product, but higher engine heat from the hydrogen gas is easily nullified by adding a bit of water vapor to the mixture. Also, a small amount of alcohol will keep the distilled water from freezing. Why don’t you verify this by writing them at protium? They are the experts.
I’d be interested in your take on this article.
Unless Iran attacks and closes the Strait of Hormuz war is not coming. It is simply Peak Oil.
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