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151 comments on EU oil imports set to grow by 29% by 2012

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Papirus on October 3, 2006 - 11:18am Permalink | Subthread | Parent | Comments top
Westexas,

I've read comments from you that Russian production is reported to be increasing, while Russian export currently are declining.

Out of the blue:
Could the Russian be building up tank farms like SA? As far as my understanding goes, there is some concensus in Russia that it's unwise to flood revenues from oil into the domestic economy. So as an alternative i would think it could be natural that the Russians would wish to have an strategic reserve - or maybe not - would the world biggest oil producer spend money on maintaining a strategic reserve? I see that such idea might be plain stupid, but i appreciate comments.

Regretably i presently don't have opportunity to get the numbers (production, domestic consumption, export) which hopefully would riducule or justify such assertion. Well, the data is poor anyway.

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crafty on October 3, 2006 - 5:46pm Permalink | Subthread | Parent | Comments top
Hi Papirus, strategic oil reserve in russia -

two thoughts spring to mind -
- one is that Russia is reported to be setting up a state oil fund to invest surplus taxes. whether this has actually happened is difficult to see yet. This is logically a better
investment than tank farms
- secondly, if you are sitting on huge reserves, why would you not simply leave the oil in the ground and pump less. I'm not sure it makes sense to build a lot of storage above ground.

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GreenEngineer on October 3, 2006 - 7:28pm Permalink | Subthread | Parent | Comments top
if you are sitting on huge reserves, why would you not simply leave the oil in the ground and pump less

Strategic flexibility at some future date, perhaps?  Peak oil is about limits on the rate of production, not reserves.  If you anticipate the world entering a mode in which the oil market is driven by constraints on rate of production (including your own), then having a reserve from which you can release or withhold oil allows you to be, effectively, a swing producer.  That's a very powerful position to be in.

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Squalish on October 4, 2006 - 12:01am Permalink | Subthread | Parent | Comments top
Installing a second pump in your tank is far easier than doubling or tripling your count of mile deep wells to suck oil from tiny crevices in the rock little by little.

It makes good peacetime sense to install storage aboveground, if you're planning on using it strategically.

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crafty on October 4, 2006 - 1:23pm Permalink | Subthread | Parent | Comments top
Actually do agree that there are benefits for above ground storage - but I see these as more on the demand side than the supply side of the equation. It is extremely interesting for countries with an oil deficit to build such storage sites for security of supply reasons, but can't see it for a major exporter. Russia has also shown no tendency towards trying to influence prices downwards. To my mind therefore the ability to hugely increase export rates from a storage site at short notice might be less critical ? (this is a question).

Going the other way - ie. reducing production to manipulate the market - I stand by my view that its easier to simply produce less for a while. :) This is what opec does.

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Telumehtar on October 4, 2006 - 1:46pm Permalink | Subthread | Parent | Comments top
Ever consider that exporting countries building reserves may not be doing it to quickly work the market, but rather are storing above ground supplies in preparation for quick mobilization for their own use?

War would be an obvious reason to have those oil supplies at the ready.  Since WWI and WWII proved that rapid ramp up in industrial ability and the ability to mobilize quickly, even if the target of a first strike, is critical to getting on a winning footing, then I could easily see the Russians or other nations wanting to have an oil supply which can be used rapidly and not be dependent on geology at hand.

Not everything is about market warfare, and I think there are a lot of players getting more nervous about energy than what is let on.

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Squalish on October 6, 2006 - 2:15pm Permalink | Subthread | Parent | Comments top
In mutually offensive wars, a cubic kilometer of oil in one place is among the first targets of missile or air attacks.  Which is why I said it makes peacetime sense.
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TechGuy on October 4, 2006 - 4:45pm Permalink | Subthread | Parent | Comments top
> It is extremely interesting for countries with an oil deficit to build such storage sites for security of supply reasons, but can't see it for a major exporter

  1. Russia oil assets can be thousands of miles from population centers and ports capable of loading tankers. Should Russia experience a technical issue that prevents them from tranporting oil from its fields, the SPR can be called upon for the emergency.

  2. Exporters typically have long term contracts with customers. A distruption could be costly for them

  3. Some fields are located in northern regions. A severe cold snap could force a temporary production shutdown.
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