by Jerome a Paris
Tue Aug 22nd, 2006 at 06:16:24 AM EST
As was pointed out by starvid a few days ago, a new front on the energy wars has been opened, with an attack on national oil companies in oil producing countries, and the socialist policies these countries dare follow, at our cost.
In addition to the Newsweek article starvid quoted, the Economist joined the parade at about the same time (wity a leading editorial and a long article), which makes one wonder who sent out the original press release/"research" on the topic...
Anyway, here's a quick debunking of the most blatant lies.
Note: I'm using alternatively the 3 above-linked sources.
Saudi Aramco's proved reserves alone could keep the world supplied for several decades. But it is only exploiting ten of its 80 or so fields, so will be able to pump at the present rate for about 70 years even if it never discovers another drop of oil.
The last sentence says that SA can supply around one tenth of world demand for the next 70 years, a direct contradiction to the first sentence. Which one is true?
And saying that it exploits only 10 of its 80 fields is definitely misleading when these are, by far, the 10 biggest ones...
Saudi Arabia has remained remarkably stable since nationalisation. The crown has changed hands only twice in the past 30 years; the same is true of the oil ministry. Political stability, in turn, has led to consistent policymaking. The government of Saudi Arabia has stuck to the same broad strategy for decades. It wants Aramco to maintain its position as the world's biggest producer and to use the resulting pricing power to ensure that the oil price stays high enough to keep the country solvent—but not so high as to turn consumers off oil altogether. That guidance has allowed Aramco to draw up long-term investment plans and to raise the capital to implement them.
Even Saudi Aramco, widely regarded as the most transparent of state-owned oil firms, is not entirely forthcoming about the size of its wells, fueling speculation about the sustainability of the world's oil supplies.
Saudi Aramco is pretty much the only NOC to have nice things written about it... Saudi Aramco.... Un-fuckin-believable. "Political stability" is the new black... er the new "institution-building", ... er, the new "democracy"...
And Saudi Aramco the most transparent? Who on earth are they kidding? More than SEC-filing PDVSA or Pemex? More than partly-floated and reserve-audited Gazprom or Rosneft? No reserves information in more than 25 years. Claims about production increases that never materialise?
You have to ask: are they really that ignorant or are they actually corrupt? (journalists, I mean)
But of course they are back in the vaguely racist bag of incompetence...
like most state-owned firms, they are prone to over-staffing, underinvestment, political interference and corruption.
Many big state oil companies are equally slow to adopt the latest technologies, designed to suck crude out of the cracks and folds of aging shafts.
So many skilled oilmen have left Iran since the 1979 revolution that President Mahmoud Ahmadinejad was hard pressed to find even one clearly acceptable candidate to become Energy minister last year.
Stupid, incompetent "savages", right? See starvid's diary for a better debunking of that point. I'd like to note that it's better to blame Iran's oil ministry shenanigans to flight from the regime rather than to the cluelessness of the President faced with an independent-minded parliament more focused on competence...
Underinvestment is the most widespread problem of all. Indonesia has become a net importer of oil, despite big reserves, thanks to the failure of state-run Pertamina to develop new fields. The fact that NOCs are sitting on the vast majority of the world's oil but pumping only about half of global output suggests a systematic failure to invest.
From the largest (Aramco) to the smallest (the Libya National Oil Co.) the Seven Sovereigns face no shareholder pressure to maximize short-term profit and are husbanding their oil—pumping 4 percent of their proven reserves each year, half as much as the big multinationals.
The most common theme of all these articles. Production declines are due only to government interference, bureaucratic incompetence and a failure to invest. The fact that resources may be nurtured or considered as strategic assets (as is done by the governments of Norway and the Netherlands, for instance) is anathema. The fact that the objective is not short term profit is anathema. The fact that the objective is not to lower prices for the Western consumer is a scandal.
And they dare spend the money on - gasp - socialist programs...
Often the Seven Sovereigns are used as cash cows to bankroll social programs, not to reinvest in oil supply. Most state oil companies are obliged to send their revenue directly to the Finance Ministry. Venezuelan President Hugo Chávez, for example, is famous for using oil money to fund his socialist agenda, but the practice is now quite common, from Iran to Russia.
Blame someone else. There is enough oil. If only these damn foreigners didn't conduct anti-short-termist, oil-withholding policies and didn't use the money for pointless socialist policies instead of letting it return to its natural home, the pockets of Western shareholders, all would be fine.