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Saudi Oil, OPEC's Ire

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Steve

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Saudi King Abdullah wants to bring prices down to ensure long-term demand, but other OPEC ministers disagree

It happens almost like clockwork. A few days before the end of every month, marketing executives from Saudi Aramco, Saudi Arabia's national oil company, ring up the likes of ExxonMobil (XOM) and Royal Dutch Shell (RDS), sounding them out about the oil they need and the price they would be willing to pay. The Saudis crunch the numbers, set a price, then call the global customers back to see how much they'd be willing to buy. By the 10th of the following month, customers—there are about 80 in all—are told how much crude they'll actually get.

It's all part of an elaborate dance that goes on continually at OPEC's biggest producer. While the cartel may set production quotas for each member, the Saudis and a few other top suppliers frequently exceed those limits in order to meet world demand. And these days, the dance looks more like a tug-of-war, as the Saudis and their allies in the organization seek to contain crude prices while Iran and others want to keep them as high as possible.

OPEC hardliners such as Iran and Venezuela, by contrast, have less oil in the ground and are running short on cash, so they're more interested in maximizing revenues today. Friction within OPEC has been growing because Saudi Arabia has been pumping almost 10% more than its OPEC quota of 8.9 million barrels per day. The Saudis and other Persian Gulf states believe a price of $90 per barrel is about right, while the hardliners don't want to see anything less than $100 per barrel. "The current market is not balanced; it is oversupplied," Iranian OPEC representative Mohammad Ali Khatibi told Reuters.

The Saudis aren't about to abandon OPEC.

the only difference between '08 and now.. is a few bucks.. and the Iranians/Venezuelans are selling more to China.
 

Steve

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23 May 2010 Given the easily accessible geology and the still-plentiful supplies, Saudi oil clocks in at just four to six dollars per barrel, with similar costs for other sources of Middle Eastern oil like Iran and Iraq. With relatively mature fields, Venezuelan oil costs about $20.

Even when you throw in transportation costs of about two dollars a barrel to get oil from the Persian Gulf to the United States
 

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The operating cost (stripping out capital expenditure) of
extracting a barrel in Saudi Arabia has been estimated to be
around $1-$2, and the total cost (including capital expenditure)
$4-$6 a barrel.

Extraction of Iraqi oil is in theory also very cheap,
although there are political and security challenges.

Industry analysts estimated total costs at between $4-6,
although they said some fields could be more expensive.

In the United Arab Emirates, operating and capital costs
combined were estimated to be around $7 a barrel.

In Nigeria, production in ultra-deep water fields can reach
$30 a barrel compared with onshore costs of around $15,
according to analysts.

In offshore Angola, it costs around $40 to produce one
barrel of oil (operating and capital costs), traders told
Reuters.


Operating and capital costs in Algeria, Iran, Libya, Oman
and Qatar were all estimated to be around $10-15 a barrel.


In Kazakhstan, where reserves are big and largely
unexploited, the cost to produce a barrel for medium-sized
producers, such as Kazakh state oil company KazMunaiGas [KMG.UL]
is around $15-18, and for Kazakhstan's largest operator
Tengizchevroil, it is about $10-12, the Kazakh-British Chamber
of Commerce said.

In Venezuela, where fields tend to be mature and small and
it is difficult to make new discoveries, production costs were
generally estimated at $20 a barrel (operating and capital
costs).

Those figures do not include the more expensive Orinoco oil
from the country's sand deposits.

One analyst said the extraction of one barrel of Orinoco was
around $30 (operating and capital costs).



Ecuador, where fields are also small and the distance to
ports add to costs, analysts pegged extraction costs at $20 a
barrel.



In the mature British North Sea, where the remaining oil is
difficult to access, the industry body Oil & Gas UK said the
break-even cost was around $50 a barrel. One analyst said
operating and capital costs were $30-40 a barrel.

place the anger where it is due...
 

TSR

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So it seems, at least to me, that $70 a barrel figure given by the analysts on Dobbs had to include most, if not all, expenses on average, of all oil placed on the world market. Yes, No,Maybe?????
 

Steve

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TSR said:
So it seems, at least to me, that $70 a barrel figure given by the analysts on Dobbs had to include most, if not all, expenses on average, of all oil placed on the world market. Yes, No,Maybe?????

hardly any oil being recovered now is over $70 a barrel..

OPEC sets the price.. we pay..

blaming Exxon is pointless.. taxing Exxon will only raise our cost per barrel..
 

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Steve said:
TSR said:
So it seems, at least to me, that $70 a barrel figure given by the analysts on Dobbs had to include most, if not all, expenses on average, of all oil placed on the world market. Yes, No,Maybe?????

hardly any oil being recovered now is over $70 a barrel..

OPEC sets the price.. we pay..

blaming Exxon is pointless.. taxing Exxon will only raise our cost per barrel..

Exxon purchases oil from OPEC. they have to pay the taxes/royalties for that priviledge in OPEC countries. If they were able to drill in the US, they would be contributing more to the Treasury.

What part of this do Libs.. not understand?
 

Steve

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here is simple math..

Saudis Iran/opec produce oil at $2 to $6 a barrel..

they demand over $90, and when the price is met supply the oil

if the price is not met they hold back some to drive up the demand...

then they fund radical operations..

at best we could produce oil between $20 and $65 a barrel

even at $65 a barrel oil will be looked for and costly expenses will be taken to get the crude..

below $65 some will not assume the risk.. (others smaller corporations will )..

if we stopped buying for the strategic petroleum reserve above $85 and bought every surplus amount priced below $65 more oil will be brought to the market...

Because domestic producers could plan for long-term production..

if drilling was encouraged more companies would enter the market..

then the saudi /iran/opec behemoths would not have a price setting edge.. as they do now..

our current energy policies and treats of taxing our companies only benefit the opec nations.. and cut our own throat..

want to screw them.. put a $63 tariff on imported middle-east/opec oil..
 

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