Wednesday, April 12, 2006

Snake Oil Salesmenship

Snake Oil Salesmanship..............

Who is better at it? The oil companies or the legislature? Conoco has its salesmen and the legislature has its own salesman named Daniel Johnston.,1413,113~7244~3286891,00.html

Here is what he has to say:

"The oil industry is scared," he told members of the House and Senate Finance committees. "I don't blame them, but they've been really rough. At times they've been a bully. The language they use is almost inflammatory. I don't think it's fair."

He went on with his sales pitch:

Johnston said the 5-percent increase to the base tax rate being considered by the Senate is fairly moderate and would increase the combined state and federal take from 58 percent to 61 percent.

BP executives have testified before lawmakers that such an increase could reduce investment activity in Alaska by 20 percent.

Johnston disputed that claim, though, arguing that other governments such as the Britain have increased their take by as much as 10 percent without affecting investment.

"They want to say how terrible this is, but you have to take that with a grain of salt," he said.,
Well what is going in the U.K.?

Steady decline

"Maybe politicians have just come to realise the situation," says Mike Wittner, global head of energy market research at Calyon Bank.

"But markets are not really surprised. UK oil production has been declining for several years."

These declines do seem to be irreversible now

Deborah White, Societe Generale

The rate of decline has ranged from 6% to 17%, year-on-year.

Experts say this is not surprising.

"It is because the way offshore fields are developed, [which is] all in one go and produced as fast as possible, for economic reasons," says Dr Michael Smith, head of research analysts EnergyFiles.

"When they start to decline, they do so fairly rapidly. All these big fields came on stream roughly at the same time so they have all tended to reach their maximum at the same time, then combining to decline."

No turning back

The UK produced an average of 2.72 million barrels a day (mbpd) in 1999, hitting a high of 3.1 mbpd in August.

But by June 2005 this had fallen to 1.7 mbpd, a drop of 34%.

"These declines do seem to be irreversible now," says Deborah White, senior energy analyst at Societe Generale.

"In my experience, even when [oil] prices are extremely high and spending [on extraction] is extremely high, it has been virtually impossible to reduce decline rates below 3%."

Experts say higher investment can stem the rate of decline

What is also interesting about the UK's declining oil output is that it has been rather consistent.

In 2000, production was down 8.1% from its 1999 high, then falling 6.8% in 2001.

The decline slowed to 0.5% in 2002, prompting calls that an output 'rebound' was on the cards.

But 2003 saw an 8.8% decline, rising to 10% in 2004.

This year has seen a similarly startling decline. In February, year-on-year levels were down 13%, rising to 17% in March.

Makes you want to know who is really telling the truth doesn't it. One thing is for sure, the high taxes paid by the oil companies in OPEC nations like Venezuela is felt at the pump.

Taxing the oil companies more, is like adding fuel to the growing fire (gas prices at the pump).

I have talked greatly about Russia and they have learned their lessons. The Russians are going to decrease tax rates to encourage investments. And as such. You will see more and more headlines like this.

Oil Tax Changes Agreed

The Economic Development and Trade Ministry and the Finance Ministry agreed on how oil-production taxes should be changed to stimulate output, Kommersant reported, citing Deputy Economic Development and Trade Minister Kirill Androsov.

And as such you will see more and more headlines like this......................

ConocoPhillips to increase stake in Russian oil giant


21/ 03/ 2006

MOSCOW, March 21 (RIA Novosti) - ConocoPhillips will invest up to $3 billion this year to increase its stake in Russia's largest privately-owned oil company, its chairman told a leading Russian newspaper Tuesday.

John Malva told Vedomosti that Conoco, which currently owns almost 17% of Lukoil shares, will invest an additional $2.5-$3 billion by yearend to bring its stake to 20%, the ceiling set by bilateral agreements with the Russian company.

Conoco and Lukoil (LKOH.RTS) are working on projects in the Timan Pechora oil and gas basin in northeastern European Russia, and also in Iraq's Western Qurna oilfield, Malva said.

ConocoPhillips is also looking to join Gazprom in developing the vast Shtokman gas field off Russia's Arctic coast, he said. The Russian natural gas monopoly, currently selecting foreign partners for its Shtokman project from a shortlist including Conoco and four other companies, said it would unveil its picks before April 15. The other companies in the running are U.S. giant Chevron, Norway's Statoil and Norsk Hydro, and France's Total.

Malva said Conoco could invest billions of dollars into the project's first phase.

The Shtokman deposit, located 650km from the Barents Sea port of Murmansk, holds an estimated 3.2 trillion cu m of natural gas and 31 million metric tons of gas condensate.

One thing is for sure in life. Death and taxes...................................

And the government will tax you to death.......................................

1 comment:

Patricia Beltran said...

JAJAJAJA,,,,,is true....