Mohamed Ramady Wael Mahdi. OPEC in a Shale Oil World. Where to Next? ^ Springer

Transcription

1 Mohamed Ramady Wael Mahdi OPEC in a Shale Oil World Where to Next? ^ Springer

2 Contents Part I A History of Mistrast and Struggle 1 1 A New Paradigm: Protecting Market Share? 3 Introduction 3 OPEC's 166th Meeting: A New Remedy for an Old Illness Price Crisis: Another 1986 or Another 2008? 7 A 1986-Like Event? 8 A 2008-Like Crisis? 10 A New Paradigm or a New Low-Price Cycle? 12 The "Happy Meeting" 14 No "Swing Producer" to the Rescue 17 A New "Oil Order": The Search for a New Swing Producer 21 How Did Saudi Arabia Transform OPEC? 23 Why Did Saudi Arabia Relinquish Its OPEC Role? 24 2 Oil and Geopolitics in the 1970s and 1980s: OPEC's Boom and Bust Eras 33 Introduction 33 The Rise and Fall of the Major Oil Companies 33 The OPEC Era: Gaining Market Power 37 The Pre-embargo Oil Order 40 The Post-embargo Period: The Rise and Fall of OPEC 42 The Price War of the 1980s 45 A New Era After the Price War 50 The Rebirth of the IOC's and Producer Cooperation 51 Part II OPEC and the New Reality 55 3 A False Dawn: Myths and Realities of OPEC's Power 57 OPEC's New Reality 57 Monopoly Profits and Market Power 58 XV

3 xvj Contents OPEC-Non-OPEC Cooperative Limits 60 Brazil: One More OPEC Headache 62 Quotas: Did They Ever Work? 64 OPEC's Quota Setting Formalities 66 Setting Quotas: Theory and Realities 68 Price Signaling, Compliance, and Cheating 71 Oil Market Crude Pricing 72 Not All Oil Is the Same 74 Futures, Hedgers, and Speculators 75 Equilibrium Price of Oil: In Search of the Holy Grail 76 4 Non-OPEC Producers, the Ever Fading "Peak Oil," and the Rise of the USA 79 Energy "Independence": Weaning Consumers Off OPEC 79 "Peak Oil": The End of the Oil Era? 81 "Peak Oil" on the Back Burner? 81 Was Hubbert Wrong? 82 Are International Reserves Overinflated? 84 Technology to the Rescue 85 Barriers to Renewable Energy Technology Deployment 86 What Is Unconventional Oil and Gas? 88 How Much Global Energy Resources Are Available? 90 The New Unconventional Energy "Stars" 92 The US Shale Revolution: Drill, Baby, Drill 94 The USA in the Driver's Seat: A New "North American OPEC"? 97 US Shale Revolution: Key Success Drivers 99 Success Comes at a Price 101 North American Shale "Plays": Location, Location, Location 102 A Heady Cocktail of Productivity, New Finds, and Price 103 The November 2014 Oil Price Shock: What Future for the Shale Oil Boom? 110 OPEC and the Shale Producers: Who Blinks First? 114 Shale Oil and OPEC: A Threat or a Stabilizer? 119 Enter the Dragon But Beware of the Year of the Goat 121 China's Nonconventional Gas Reserves: Large But Difficult to Exploit 123 Maintaining Producer's Market Share: Discount and More Discounts 125 The Russians Are Coming: The Bear Awakens 126 Russia and OPEC Pacing Realities: OPEC Fiscal Stress and Break-Even Pricing 131 Introduction 131 OPEC: A Phantom Menace? 131 Fiscal Challenges: Addressing Subsidies First 132 Economic Cost of Subsidies 134

4 Contents xvii Break-Even Prices: Different Pain Thresholds 135 Uneven Pain and Gain 136 What Happens to OPEC Energy Investments? 141 Who Blinks First? Environmental Obligations and Climate Change Politics 147 Introduction: Looming Challenges 147 What Future for Fossils? Oil Producers' Fears 148 The Scientific Debate 149 The Long and Winding Road from Rio to Lima (Through Kyoto): Political Pressure and Shifting Alliances 154 Does Kyoto Still Have Life? 157 US-China Breakthrough 158 India's Conversion from "Climate Agnostic" to Possible "Climate Evangelical?" 159 From Fringe to Mainstream: Enter the "Greens" 161 Global Climate Change: Who Pays? 162 Paris 2015: A Half Glass Füll Better Than None 167 OPEC and the Environmental Bandwagon 168 OPEC's Policy Challenges: Choices, Choices Charting a New OPEC Role: Avoiding the Coming Perfect Storni 179 Oil: A Blessing or a Curse? 179 OPEC: Can It Ensure a "Fair" Market Price? 180 Predicting Future Oil Price Curves 185 Future Oil Price Curves: An Alphabet Soup of V, L, W, U, and M 188 OPEC's Quandary: Dealing with the Elephants in the Room: Iraq and Iran 194 The Long and Winding Road: Iran's "Historie" Nuclear Standstill Agreement 196 Saudi Arabia and OPEC: End of the Hegemony? 199 Saudi Arabia's Policy Options 202 To Invest or Not to Invest in Spare Capacity? OPEC Reinvented: A New OPEC for the Twenty-First Century 215 Introduction 215 Let's Not Call It a Cartel 215 Consumer-Producer Cooperation and Supplier's Security to the Center Stage 220 Why Cooperate? 221 Suppliers' Energy Security: An Unattainable Goal? 223 OPEC: Holding Together? 225 OPEC Members: Some More Equal Than Others 226 OPEC's Founding Charter: A Time for a Revisit? 232 OPEC: Birth of a New Club 237

5 xviii Contents OPEC: Re-branding the Institutional Survivor 240 OPEC's "Re-branding": Some Recommendations 240 Conclusion 242 Closing Afterthought: OPEC Has Its Strategy Succeeded? 243 References 247 Index 263