Cardinal Energy Ltd (Alberta) T.CJ

RE:Happy New Year to all CJ longs

[Kherson]

Mamdouh SalamehonJanuary 02 2023said:

With annual investments of $600 bn for the next 10 years and less pressure from the environmental lobby and governmental legislations, global oil production can climb but at a lesser rate than in previous years.

There are three major oil powers in the world: Russia, OPEC and the United States. Russia is the world’s largest producer of crude oil and petroleum products. It is currently producing an estimated 11 million barrels a day (mbd) but it can produce in normal circumstance some 11.7 mbd. Russia is projected to add 1.6 mbd from its huge Arctic project Vostok by 2024/25.

OPEC is currently producing an estimated 31 mbd and exporting 25 mbd or 38% and 54% respectively of the world’s total production and exports. It can’t raise its production currently because of virtual lack of spare production capacity.

The United States whose shale production accounts for 64% of its total production is estimated to be producing currently between 9.5 and 10 mbd and not 11.7 mbd as the US Energy Information Administration (EIA) is claiming. The US can’t raise its shale production any more not because of capital discipline which is frequently given as an excuse but because shale oil is a spent force. The sweet and lucrative spots in the shale plays have already been exhausted forcing drillers to move to poorer and more costly to produce spots thus leading to a rise in production costs as a result of declining well productivity and declining production.

Prior to the pandemic US shale oil producers were encouraged by various US administrations to overproduce even at a huge loss in order to undermine OPEC’s policies of defending oil prices and also to achieve unachievable and vain targets such as US energy independence and becoming the world’s largest crude oil producer. These fantasies have been crushed forever by the pandemic in 2020.

Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert