The Devil’s Excrement and OPEC

On October 16th, Oil prices plummeted below $70 for the first time in 16 months, loosing half its value since hitting a record high of $147.27, prompting the oil cartel OPEC to call an emergency meeting.

OPEC cut production by 1.5 million barrels a day starting November after their emergency meeting on October 24th one month ahead of their scheduled meeting.

Although their next meeting was not scheduled until December 17th, the OPEC cartel will meet again this coming November 29th in Cairo, most likely to make another cut in production. In this global financial turmoil, they run the risk of taking things too far as demands for energy increase during the winter months.

The drop in prices has already created problems for oil producers, who have become accustomed to high prices. Iran needs oil prices at $95 a barrel to balance the budget, Russia needs $70, Venezuela needs $60 and Saudi Arabia needs $55 a barrel, according to Deutsche Bank estimates. Cartel representatives have hinted at the idea of fixing a price high and low, which they call “ideal” ranging between $70 and $90 a¬†barrel.

Juan Pablo Perez Alfonzo was a Venezuelan minister of energy that popularized the phrase “oil: the devil’s excrement” and the minister said that the oil corrupts the power.

Gasoline: The fall in world oil prices since July has pushed gasoline in the United States, the world’s largest oil consumer, from a high of $4.114 a gallon on average to $1.91 a gallon Monday, according to motorist group AAA.



Crude Improvement – Cerro Negro Upgrader Project

Cerro Negro is a strategic association formed by the state oil company of Venezuela, PDVSA (42 percent), ExxonMobil (42 percent) and Veba Oel of Germany (16 percent). Operadora Cerro Negro S.A., an ExxonMobil subsidiary, operates the project.

The complex can process 120,000 barrels of heavy crude oil a day, which it converts to 108,000 barrels of upgraded crude.

Initially produced in the Cerro Negro field as 8.6-degree API extra-heavy crude, the oil is diluted with naptha and transported by pipeline 190 miles to the port of Jose. The upgrader complex then converts the mixture into a 16-degree API crude oil.

[slickr-flickr tag=”cerro negro” id=”61116089@N00″ group=”n”]

Description of the process:

The Cerro Negro Upgrader complex consists of new facilities destined to improve the quality of crude initially produced in the Cerro Negro field as 8.3-degree API extra-heavy crude, in Synthetic Crude Oil (SCO) of approximately 16-degree API. In order to improve the quality of crude the Cerro Negro complex uses the technology of “Delayed Coking” and the “hydrofining of naphth” originating from the coker. The plant is designed to produce around 18495 tons per day of Synthetic Crude Oil (SCO), from the heavy Cerro Negro crude of 8.3-degree API. In production wells, the heavy crude must be diluted with naphtha, with the purpose of reducing its viscosity and to easily transport it through the pipe line towards the improvement plant. The upgrader complex consists of several units of process required to turn Diluted Crude Oil (DCO) into Synthetic Crude Oil (SCO). In addition to the units of processes required for the crude improvement of the heavy oil, there are other units or facilities such as: industrial services (steam, water cooling, etc.), storage of raw material and products, and 190 miles of pipeline in order to deliver to the port of Jose, which are necessary for the total integration of the upgrader complex in the production of the Cerro Negro crude.

General Diagram of the Process is described:

List of crude oil products

UPDATED: 11/30/2010 Credit to Oilman.


Imminent War

A little over three years ago I wrote about possible world conflicts on the horizon including Israel-Iran, US-North Korea and Venezuela and the price of oil. I predicted the barrel of oil above the $100 mark and after war breaking, reaching near $200 a barrel.

I also mentioned that the United States would not consider any military actions against North Korea, who was seeking nuclear weapons at the time. I saw one of two options in this case: Either this would be solved diplomatically or countries (South Korea, Japan) in the region would set off an arms race.

Regarding Venezuela, many people held the idea at that time (when Saddam Hussein Fell) that the United States had too much interest in Venezuela to let Hugo Chavez continue promoting his agenda and would overthrow the democratically elected president. My views at the time were that the United States had little interest in Latin America, which was mistake in my view but its foreign policy.

With the public threats and rhetoric that Iran’s Akmadinajad, I held the firm position that Israel would strike Iran in order to prevent its own demise.

Three years have passed and things have gotten a little more complicated.

Socialism and totalitarianism has continued to spread within Latin America expanding from Venezuela and Brazil to Ecuador, Nicaragua, Bolivia and Argentina.

The United States pursuit of a missile defense system in eastern Europe and the support of previous Soviet Union block nations joining NATO, had gotten Russia all roweled up. Even though Mikhail Gorbachev is revered in the western world for playing a key role in end the cold war, the Russian people did not appreciate their once held great nation, being broken up into parts bringing with it very tough times.

Russia decided to take an active role against what they see as an American threat in their pursuit of re-uniting the USSR by invading Georgia, continuing to sell weapons to Iran and Venezuela and now sending a fleet of warships led by the nuclear powered missile cruiser Peter the Great for military exercises in the western hemisphere. The first of these actions after the end of the cold war.

Additionally Russia has pledged to help Venezuela with nuclear initiatives for “peaceful” purposes.

On another front, North Korea’s Kim Jong-Il had accepted to and began to dismantle their nuclear program but recently decided to back out of the deal made within the 6-party framework. Israel also accused North Korea of covertly supplying weapons to at least six middle eastern nations.

Last but not least Iran’s defiance of the international community and pursuit for nuclear power. Despite increasing U.N. sanctions placed on Iran, Akmadinajad remains resolute on the acquisition of nuclear power for “peaceful” purposes while at the same time announcing a world without Zionism and America.

French Foreign Minister has urged Israel not to launch a military strike against Iran, and to continue¬† to support Western-backed sanctions and dialogue to press Iran to halt its atomic project, while at the same time Moscow refuses to discuss further U.N. sanctions aimed at curbing Iran’s nuclear program.

I believe that the presidential election in the United States plays a factor in the Israeli decision making process on when to attack Iran. It seems apparent that a democratic president would be less supportive of an Israeli strike on Iran’s nuclear installations, than a republican would be and with Senator Barack Obama up in the polls recently largely due to the economic crisis, I believe Israel will launch such a campaign before the end of the year.