Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Falling oil prices taking its toll in more than one way  Join our daily free Newsletter

MENAFN - Arab News - 12/12/2008

No. of Ratings : 0
Add to Mixx!


(MENAFN - Arab News) Oil continued its dismal performance, despite assertions from OPEC bigwigs that an output cut — and a severe one — is just round the corner. OPEC President Chakib Khelil said earlier the week the group could announce a "severe" production cut and suggested the grouping could seek to surprise the market with the size of the reduction in a bid to bolster the weakening prices.

However, oil prices edged down Tuesday as investors continued to question whether the anticipated big production cut would be able to curb crude's stunning fall over the last five months.

And the ongoing crisis in the crude markets is definite to have both, the long term and immediate ramifications. The first and the foremost casualty of this market downturn seems to be the emphasis on producer-consumer dialogue. In the immediate aftermath of the oil market peak attained mid this year, there were continued stress on political level dialogue between the producers and the consumers, regarded as so essential to keep the globe well oiled. While Saudi Arabia convened the 'energy summit' in Jeddah to give a push to the process of dialogue, Prime Minister Gordon Brown of the UK announced to follow up on the Jeddah deliberations with an even higher level summit in London, 'sooner' rather than later. And after some initial delays, the summit was finally scheduled to be held before year end — in December to be specific.

And until a couple of months earlier, I knew that a dear friend of mine, a very senior and respected Western energy diplomat was associated with the project in one way or the other. He was keen and following up the developments on the front. However, things seem to have quietened over the last few weeks. There seems a lull now on the issue. We are already in December and one doesn't hear any noise about the scheduled meeting. Perhaps the changing market environment and the necessity and urgency to hold any such meeting has evaporated.

Texas oil tycoon T. Boone Pickens, known for making his fortunes in oil business, said this week he was "anxious" for his company's announced multibillion dollar plans to build a giant wind farm in Texas.

The company Mesa Power LLC was planning to build the world's largest wind farm in the Texas Panhandle, but financiers for the project have disappeared in the economic downturn. Mesa Power began the first phase of the project, which was expected to cost 2 billion, earlier this year when it purchased over 600 wind turbines.

Wind power and natural gas are integral parts of the "Pickens Plan," a 10-year project to wean the United States off of foreign oil imports.

The billionaire launched the plan this summer, when crude prices peaked over 147 a barrel and interest in alternative energy surged. The project now seems in doldrums — another casualty of the market weakness, it seems.

And in the meantime, the solar industry, whose future seemed so bright just a few months ago, suddenly looks like it's headed for a shakeout. Falling oil prices, supply issues and the evaporation of financing for solar projects have moved away like clouds over the industry, just as it was poised for unprecedented growth.

Even as new solar factories opened in places like Austin, Texas, and greater Atlanta in recent weeks, several big solar companies in China and Canada warned that they'll pull back on expansion plans and preserve cash, after customers cancelled projects and credit markets dried up. Shares of many publicly held solar companies have fared even worse than the overall stock market. The British energy group BP Plc is closing its Australian solar-cell factory by end-March 2009 to focus on bigger, lower-cost operations offshore, because of the changing market economics.

The growing financial crisis and plunging energy prices have forced companies to scale back spending and delay projects, with expensive ventures in the Canadian oil sands hardest hit. Many in the industry in recent months have been pointing at the Canadian oil sands as the rising star of the industry. All this appears to have changed — at least for now.

Earlier this month Norway's StatoilHydro scrapped plans for a C16 billion upgrade for its Canadian oil sands holdings. For the time being the company is going ahead with plans to produce 200,000 barrels per day of bitumen but sell it on the open market instead of turning into more valuable synthetic oil.

Meanwhile Irving Oil Ltd is slowing construction on its planned C7 billion refinery at Saint John, New Brunswick, breaking work into two C4 billion phases of 150,000 bpd each and stretching construction over as much as eight years from 2011 instead of four. Royal Dutch Shell Plc. has also decided to delay investment decision on second expansion of Athabasca oil sands project. Petro-Canada has also deferred the upgrading of its C21 billion Fort Hills oil sands project.

Canadian Natural Resources Ltd has decided to slow down spending on second phase of Horizon oil sands project for 2009 after first phase costs rose to C9.7 billion, up 42 percent from 2004 estimate. It also scrapped timelines for phase 2, which would lift output to 250,000 bpd from 110,000.

Suncor Energy Inc. has decided to delay the C20.6 billion Voyageur expansion by one year to 2013. Expansion boosts production from Suncor's oil sands operations near Fort McMurray, Alberta, to 550,000 bpd from 350,000.

Nexen Inc has also delayed the second phase of Long Lake oil sands project to 2009. Expansion would double production of synthetic crude to 120,000 bpd, while the Value Creation Group's C4 billion Heartland project near Edmonton, Alberta has reportedly been halted. First phase of the project on completion was to process 77,500 bpd of bitumen into synthetic crude.

Saudi Aramco is also continuing to review development projects in the light of the global financial crisis. It has already postponed plans for a 1.2 billion project to restart production from its historic Dammam oil field. In addition, Saudi Aramco has also chosen to delay several other projects in the wake of the global financial problems. The list includes the 400,000 bpd Yanbu Refinery, the 900,000 bpd Manifa oil field development and the 400,000 bpd refinery project at Jubail.

Diversifying away form the Middel Eastern oil, the pet objective of the politicians in the West, is still miles away. Whether one likes it or not, the world would continue to depend on Saudi Arabia and the likes for many more decades.

And when viewed in the backdrop of the above-mentioned emerging scenario, it becomes all the more apparent. Whether, the abysmally low oil price is good or bad for the world — I leave it to your ingenuity, ladies and gentlemen!


  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014Egypt's Interim President Receives Phone Call from South African President ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egypt's Interim President Adly Mansour has received a telephone call from President of the Republic of South Africa Jacob Zuma in which they discussed ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014QBA strengthens economic ties with Kenya ,MENAFN
(MENAFN) Members of the elite Qatar Businessmen's Association (QBA) stated their willingness to cooperate with their Kenyan peers, strengthening economic ties between Qatar and Kenya, The Peninsula ...

Apr 24 2014Russian Lebanese Foreign Ministers to Discuss Situation ,Qatar News Agency
(MENAFN - Qatar News Agency) scow April 24 - Russian Foreign Minister Sergei Lavrov and his Lebanese counterpart Gebran Bassil will discuss bilateral relations at a meeting in Moscow on Thursday as ...

Apr 24 2014Kuwait inflation edges up 2.96% y/y in March ,Arab Times
(MENAFN - Arab Times) Wait city april 23 (kuna): kuwait's annual record of the general index of consumer prices (inflation) rose in march by 2.96 percent compared with the same month of last year ...

(MENAFN Press) The events in Ukraine have had a limited impact on MENA markets. Despite the Dubai index sliding 1.5%, trading volumes remained healthy. Quarterly corporate earnings results released ...


Click to Apply



Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help