Petrodollar spending spree in Middle East

OPEC revenue from oil sales reached USD650B in 2006, an increase of 600% compared to its revenue in 1998, although being offset by a nudge with the weakening of the US dollar. If the weakening continues, OPEC may consider switching to Euro. Iran and Qatar is expected to represent almost 50% of total capital expenditure for oil field facilities and structures in the region. Qatar's North field expansion, which was discovered in 1971, has a total of 30 development phases and is estimated to be the size of the whole Qatari peninsula.

Difficulties emerged when the French government had instructed Total to reduce its spending in Iran after the US sanction was in place in Nov 1979.

Kazahkstan is expected to be the second highest spender next to Iran with 20% of regional spending and estimated reserve of 14 Billion barrels of recoverable oil.

Saudi is expected to spend a cool USD 10B for Manila field with a projected 900,000 barrel-per-day production by 2011. The Gulf Karan is expected to produce 1 bcf/d (billion cubic feet per day) by 2011 also.

Exciting times ahead......but will this keep up with increasing demand?

Iranian O&G Development and Drilling in Alaska

Iran is set to drill another 160 wells by March 2009. That would translate into multi-billion dollar investments, heavy mobilization of equipment and man power and potential growth for the economy. Although Total has pulled out of that race, rest assured that many National Oil Cos will participate in this endeavor.

President of Iran has also proposed the use of a single currency to help combat the ailing US dollar affect on oil price. This is both political and economic. This was also echoed by our former Prime Minister on the use of Euro for the industry.

With Iran set to be the third biggest gas producer in the world by 2020 with an estimated production of 620 billion cubic yards, no wonder it is proposing another setup similar to OPEC but for gas producers. How will this impact the politics of gas? We have seen how former USSR countries were held hostage due to the dependence of Russian gas.

Meanwhile, the US is opening up Alaska and the Arctic National Wildlife Reserve to more development drilling activities. This is totally counter productive as the reserves will not satisfy the growing consumption of gas-guzzling SUVs and others. The US alone consumes 25 million barrels a day and produces only 1/3 of it. Senator Obama is ready to set the tone for a new energy policy if installed as the new POTUS such as the use of E85, lowering carbon emission by investing in R&D and manufacturing of fuel-efficient cars (therefore creating a sustainable competition against the Japanese auto onslaught).