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  • you could focus simply on the oil supplies and its increase and relationships between venezuela and other countries (such as China)..or consider it from a political point of view. What do you need to do? anything specific or simply an oil/energy presentation on Venezuela? The 2002 strike is very political and you will need to bring in a lot of facts concerning the circumstances and the why's of the outbreak. So depending on from what angle you want to look at it, you will see what way is best to present.
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  • First of all I love your slide show. Could you possibly give me some advice on oil/energy. I have to create a presentation in short period of time and I want to focus on Venezuela oil/energy ,I thought of talking about its oil strike in 2002 and its current oil situation. Could you recommended anything that could make my presentation simple but to the point. Thank you
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  • Presentation Draft3

    1. 1. OIL CONCERNS Major Factors Causing Oil Price Fluctuations Aminata Ka Hassana Issoufou Adam Abdullah Khan Isabell Schulz 14/11/07 International Economics
    2. 2. Why Concentrate On Oil Issues? <ul><li>Oil is a natural resource that represents our premier source of energy </li></ul><ul><li>Black gold as it is referred, this resource has been behaving with fairly volatile prices </li></ul><ul><li>And factors of change being both predictable and unpredictable </li></ul><ul><li>May 2004: The price of oil hits $40 per barrel. OPEC has raised oil production but not enough to outweigh the uncertainty created by the threat of terrorism in oil-producing countries, the high demand for oil, and the low U.S. oil inventories. The increasingly gloomy fate of Yukos in Russia, responsible for two per cent of the world's oil supply, further destabilizes markets. </li></ul><ul><li>October 2004: The price of oil hits over $50 after a general workers strike in Nigeria and low crude output in the Gulf of Mexico in the aftermath of hurricane Ivan. </li></ul><ul><li>July 2005: The price of oil hits over $60. Analysts say it's fuelled by increased demand, especially in China, and limited U.S. refining capacity. The tension over Iran's nuclear program causes more market jitters. The only OPEC country with spare production capacity is Saudi Arabia. </li></ul><ul><li>August 2005: Oil prices top $70 US a barrel after hurricane Katrina hits the eastern coast of the Gulf of Mexico. Katrina squeezes oil inventories by disrupting offshore drilling. </li></ul><ul><li>January 2006: After a drop in the fall, prices surge back to more than $65 US a barrel as tension mounts in oil producers Iran and Nigeria. The United Nations ponders sanctions against Iran for its nuclear program, while militants block Nigeria's oil supply. </li></ul><ul><li>April 2006: Oil futures rise to more than $70 US a barrel again, after reports from the U.S. that gasoline inventories are down more than expected. Unrest in Nigeria and uncertainty about the international reaction to Iran's nuclear program also affect prices. </li></ul>
    3. 3. 2006 Oil Data
    4. 4. Where are the World’s oil reserves? (Both OPEC and Non OPEC Members)‏
    5. 5. What Causes Oil Price Fluctuations? <ul><li>Basics of Supply and Demand </li></ul><ul><ul><li>Like any other market, the oil market is governed by the market demand and supply. </li></ul></ul><ul><li>For instance emerging countries such as China and India, have joined the US in the top oil consuming nations causing demand to stretch supply, sometimes exceeding it. </li></ul><ul><ul><li>The OPEC cartel on its part has been imposing production quotas in order to keep high profits in trying to control the market </li></ul></ul><ul><ul><li>Non OPEC members have minimal impacts on world oil prices </li></ul></ul>
    6. 6. Growing World Energy Demand *Data projection from 2004 to 2030
    7. 7. Example of growing oil demand
    8. 8. What causes oil price fluctuations? (Cont’d)‏ War Strikes (labor disputes)‏ Halting Transport From oil producers Bad Weather Accidents And Natural disasters Market speculations Taxes Price of Oil
    9. 9. Oil in Geopolitics <ul><li>Reasons for price fluctuations are also political </li></ul><ul><li>Many oil producing countries find themselves exposed to political risk due to instability (Ex: Sudan, Iran, Nigeria)‏ </li></ul><ul><li>Oil has been used as a mean of leverage in order to attain political or economic objectives (ex: Russia)‏ </li></ul><ul><li>It has also increased the power relations among nations </li></ul>
    10. 10. Common Problems in Nigeria Affecting Oil <ul><ul><li>-> Leading oil exporter in Africa </li></ul></ul><ul><ul><li>-> 11th largest producer of crude oil in the world </li></ul></ul><ul><ul><li>-> 5th biggest source of U.S oil imports </li></ul></ul><ul><li>Poverty </li></ul><ul><ul><li>most people are struggling to survive on less than $1 a day </li></ul></ul><ul><li>Social, Political and Economical Instabilities </li></ul><ul><ul><li>difficult country to govern and control </li></ul></ul><ul><ul><li>300 different ethnic groups </li></ul></ul>
    11. 11. Common Problems (contd)‏ <ul><ul><li>Difference between Muslims and Christians divided into communities and trying to impose their belief into their legal system </li></ul></ul><ul><ul><li>Governed by military </li></ul></ul><ul><li>Presence of multinational oil companies also affect local economy and society </li></ul><ul><ul><li>ex: Shell </li></ul></ul>
    12. 14. Angola’s Political, Economical, Social Problems and Paradox <ul><li>Important producer, oil was protected from civil war for 30 years because most oil deposits are off shore. </li></ul><ul><li>In fact: </li></ul><ul><ul><li>-> Absence of any other viable political party </li></ul></ul><ul><ul><li>-> Government policies wanted all enterprises under state's control </li></ul></ul><ul><ul><li>-> The economy is slowing down , except for oil sector </li></ul></ul>
    13. 15. contd <ul><li>-> Oil revenue are used to subsidize consumption or invested in enterprises that become viable </li></ul><ul><li>-> Oil have been spent financing war and lining the government’s pocket </li></ul><ul><li>-> The oil installations was usually sabotaged </li></ul><ul><li>-> An independence movement has been operating in the major oil producing areas </li></ul><ul><li>-> Agriculture has been undermined by the fighting and mines </li></ul>
    14. 16. Increase of Oil <ul><li>Spring and summer 2005 </li></ul><ul><ul><li>-> $50/barrel </li></ul></ul><ul><li>Winter 2005 – 2006 increase </li></ul><ul><ul><li>-> $ 60.30/barrel </li></ul></ul><ul><ul><li>-> violence in Nigeria </li></ul></ul><ul><ul><li>-> Iran’s friction with the west </li></ul></ul><ul><li>Spring and summer 2006 increase </li></ul><ul><ul><li>-> $ 79/barrel </li></ul></ul><ul><ul><li>-> Hostilities in Nigeria alone have caused a supply disruption, only 26% was produced </li></ul></ul>
    15. 17. Increase of Oil (contd)‏ <ul><li>Last summer 2006 decreases </li></ul><ul><ul><li>-> $ 66/ barrel </li></ul></ul><ul><li>Spring / summer 2007 increases </li></ul><ul><ul><li>-> $ 73.93/ barrel </li></ul></ul><ul><ul><li>-> Based on civil unrest in Nigeria </li></ul></ul>
    16. 18. <ul><li>Proven crude oil reserves: 87.04 billion barrels </li></ul><ul><li>Fifth largest oil producer </li></ul><ul><ul><li>largest reserves of conventional oil in the western hemisphere </li></ul></ul><ul><ul><li>largest reserves of non-conventional oil in the world </li></ul></ul><ul><li>Current production: 3.1 million bbl/d </li></ul><ul><li>Crude oil exports 1.735 million bbl/d </li></ul><ul><li>Oil products -> 90% of exports (30% of GDP)‏ </li></ul>Facts Concerning Venezuelan Oil Production
    17. 19. Venezuela <ul><li>Strike in 2002/03 at PDVSA </li></ul><ul><ul><li>Immediate production dropped from 3 million bbl/d to 600,000 bbl/d </li></ul></ul><ul><ul><li>December 2002 increase by 48 cents to $28.92/bbl </li></ul></ul><ul><li>Political Situation -> unstable flow of oil </li></ul><ul><li>re-election December 2006 </li></ul><ul><ul><li>Control 60% of the multinational-dominated Orinoco enterprises </li></ul></ul><ul><ul><li>Diversification as a new strategy </li></ul></ul>
    18. 20. Venezuela – Politicisation of Oil <ul><li>Reduce dependence from abroad </li></ul><ul><li>OPEC </li></ul><ul><ul><li>promoting government-to-government ties </li></ul></ul><ul><ul><li>strengthening OPEC </li></ul></ul><ul><ul><li>First South American Energy Summit 2000 </li></ul></ul><ul><ul><ul><li>Price band: $22 - $28 per barrel </li></ul></ul></ul><ul><li>Re-nationalisation of PDVSA </li></ul><ul><li>Discount-price for Caribbean countries </li></ul><ul><li>Control of companies in Orinoco oilfields </li></ul>
    19. 21. China's Increasing Demand for Oil <ul><li>Second largest oil consumer </li></ul><ul><li>8% economic growth rate for next 5 years </li></ul><ul><li>Fixed exchange rate against USD </li></ul><ul><ul><li>2003 </li></ul></ul><ul><ul><ul><li>40% of world oil demand growth over past 4 years </li></ul></ul></ul><ul><ul><ul><li>Consumption 5.6 million bbl/d </li></ul></ul></ul><ul><ul><li>2025 </li></ul></ul><ul><ul><ul><li>Consumption of 12.8 million bbl/d </li></ul></ul></ul><ul><ul><ul><li>Net imports of 9.4 million bbl/d </li></ul></ul></ul>
    20. 22. China's Increasing Demand for Oil <ul><li>Supply/demand imbalance </li></ul><ul><ul><li>M ↑ </li></ul></ul><ul><li>Global Campaign </li></ul><ul><ul><li>Co-operations with foreign oil producers </li></ul></ul><ul><ul><ul><li>African countries (10% of world oil production)‏ </li></ul></ul></ul><ul><li>Increasing dependence on Middle Eastern oil </li></ul>
    21. 23. Venezuela – China Agreement <ul><li>Supply to China </li></ul><ul><ul><li>1 million bbl/d by 2012 </li></ul></ul><ul><ul><ul><li>15% of China's present consumption of oil </li></ul></ul></ul><ul><ul><ul><li>One third of Venezuela's current oil production </li></ul></ul></ul><ul><li>Future </li></ul><ul><ul><li>CNPC activities increasing in Orinoco Strip </li></ul></ul><ul><ul><li>Build refineries in China </li></ul></ul><ul><ul><li>Joint enterprise </li></ul></ul>
    22. 24. Oil as a Political Weapon: Russia <ul><li>World’s largest non-OPEC producer </li></ul><ul><ul><li>2 nd largest oil exporter </li></ul></ul><ul><li>Russia-Belarus Dispute </li></ul><ul><ul><li>Oil price increase to $57,17/bbl (from $55/bbl)‏ </li></ul></ul><ul><ul><li>Outcome </li></ul></ul><ul><ul><ul><li>$100 per 1000 m³ of gas </li></ul></ul></ul><ul><ul><ul><li>Sell Gazprom 50% of national gas supplier Beltransgaz </li></ul></ul></ul><ul><ul><ul><li>Gradual increase market price by 2011 </li></ul></ul></ul><ul><ul><ul><li>Transit fees increase by around 70% </li></ul></ul></ul>
    23. 25. Oil Price Increase of 2005-2007
    24. 26. 2007 at a Glance <ul><li>Pipeline Disruptions </li></ul><ul><li>Tensions in Turkey </li></ul><ul><li>No Oil Productions & Exporting Cartels Act </li></ul><ul><li>OPEC decreases production </li></ul>
    25. 27. Effects <ul><li>Expected recession of the early 80s </li></ul><ul><li>Apache and Conoco-Phillips rose sharply </li></ul><ul><li>Dollar value, exchange rates and metals </li></ul><ul><li>Europe, prices of transport fuels are made up of the price of the refined product, plus a substantial tax element </li></ul><ul><li>Oil shortage in Asia prior to Hurricane Katrina </li></ul>
    26. 28. Effects (contd)‏ <ul><li>Oil prices & Developing Countries </li></ul><ul><li>Zimbabwe, Eritrea and Tanzania with higher prices </li></ul><ul><li>Hugo Chávez Strategy </li></ul><ul><li>Boom in Persian Gulf States and Eurasian Arab-Islamic regions </li></ul>
    27. 29. What Would $120/barrel Mean? <ul><li>Demand Effects </li></ul><ul><ul><ul><li>Spending Power would fall </li></ul></ul></ul><ul><li>Supply Effects </li></ul><ul><ul><ul><li>Company Profit Margin fall </li></ul></ul></ul><ul><li>Policy Effects </li></ul><ul><ul><ul><li>Price wage spiral </li></ul></ul></ul><ul><li>Effects on Confidence & Financial MKT Psychology </li></ul><ul><ul><ul><li>Higher prices hurt consumer confidence & investor confidence </li></ul></ul></ul>
    28. 30. Are We Looking Into Alternatives For Oil? <ul><li>Other sources of energy include: </li></ul><ul><li>Hydro-electric power </li></ul><ul><li>Wind and wave power </li></ul><ul><li>Solar power </li></ul><ul><li>Biofuels (ethanol: made from corn, sugar cane, switchgrass and other crops )‏ </li></ul><ul><ul><ul><li>Biomass </li></ul></ul></ul><ul><ul><ul><li>Biogas </li></ul></ul></ul><ul><ul><ul><li>Biodiesel </li></ul></ul></ul>Share of renewable energies in primary energy consumption of European Union countries in 2005 (in %)‏
    29. 31. Thank You for Your Attention!
    30. 32. Back-Up Slides
    31. 34. Factors Disturbing Oil <ul><li>Turbulance in Middle East </li></ul><ul><li>Instability in Venezuela & West Africa </li></ul><ul><li>Terrorists & Insurgent groups adding a premium </li></ul><ul><li>Natural Calamaties </li></ul><ul><li>Speculation on Oil </li></ul><ul><li>Sources of light sweet crude almost exhausted </li></ul><ul><li>OPEC control & oligopoly of major oil companies </li></ul>
    32. 35. OPEC Members *founder Members South America 1960 Venezuela* Middle East 1967 United Arab Emirates Middle East 1960 Saudi Arabia* Middle East 1961 Qatar Africa 1971 Nigeria Africa 1962 SP Libyan AJ Middle East 1960 Kuwait* Middle East 1960 Iraq* Middle East 1960 IR Iran* Asia 1962 Indonesia Africa 2007 Angola Africa 1969 Algeria Location Joined OPEC Country
    33. 36. Effect of taxes comparing France, UK, US