the supposed oil n gas slowdown

personally im expecting many similar stories to this over the coming weeks/months. i believe one major point they fail to make clear - all the countries mentioned in this report having potential problems have 'state run' oil industries, not allowing competitive global players like in the US, UK and Australia and most of asia, where NMS and many others practice their trades. i dont expect to see any downturn in exploration and maintenance in these areas.

http://www.rigzone.com/news/article.asp?a_id=67725

Oil's Drop Squeezes Producers
by Neil King Jr. & Spencer Swartz Dow Jones Newswires Friday, October 10, 2008


NEW YORK (The Wall Street Journal via Dow Jones Newswires), October 10, 2008

Big oil-producing countries are showing signs of distress as the global credit crunch and falling crude prices begin to squeeze government budgets and delay projects.

Fears that the boom days are fading appear strongest in Iran and Venezuela, whose governments have come to rely on oil prices to prop up otherwise shaky economies. Both countries this week led a chorus within the Organization of Petroleum Exporting Countries calling for an emergency meeting of the cartel, now set for Nov. 18, to weigh a production cut.



The global economic crisis is eating into oil demand, particularly in the U.S. and Europe, and helping to drive down crude prices. Some forecasters said that despite a strong thirst for oil in Asia and the Middle East, global oil consumption could flatten out next year, potentially ending nearly a decade of steady demand growth.

Benchmark crude for November delivery fell $2.36, or 2.7%, to settle at $86.59 Thursday on the New York Mercantile Exchange. Crude has plunged around $60 a barrel from its July high, and analysts said signs of a deep recession among industrialized countries could move prices down further.

Oil exporters racked up cash surpluses as prices soared to historic highs. Saudi Arabia, the world's largest exporter, is expected to record $138 billion this year, up from $95 billion in 2007.

But government spending also soared within OPEC and other big producers such as Russia, based in part on the expectation that oil prices would remain high.

Standard & Poor's said last week that Venezuela's budget balance "could deteriorate quickly" if crude prices fall sharply. The nationalization of a number of industrial companies is expected to cost the government around $6 billion, or about 2% of gross domestic product, in 2008, according to S&P.

PFC Energy, a Washington consultancy, estimates that Venezuela needs an oil price of nearly $95 a barrel to ensure macroeconomic stability, three times what it needed in 2000. By contrast, Saudi Arabia requires an oil price of $55 a barrel, more than double the figure from eight years ago, PFC estimates.

PFC believes Iran's price threshold is similar to Saudi Arabia's. But the International Monetary Fund warned recently that Iran will have to cut state subsidies and shave government spending if oil prices stay below $90 a barrel.

For much of this year, the oil-driven economies of the Persian Gulf have been largely buffered from the financial turmoil in the U.S. and Europe. But that appears to be changing.

Consultants at Medley Global Advisors said big Middle East power and water projects, vital to meeting the region's electricity demand, are facing financing delays and rising capital costs. Some petrochemical projects, which provide raw materials to make plastics and fertilizers, also are under pressure.

"The global credit crunch has seen the number of international banks lending to the power and water sector decline," said Medley energy director Bill Farren-Price.

OPEC is likely to reduce production to defend prices from falling below $80 a barrel. But some analysts said that heightened costs elsewhere in the oil patch may keep prices from falling much further anyway.

A study released by Bernstein Research of New York this week argues that oil prices will remain linked to the cost of producing supplies from difficult but crucial fields deep offshore and elsewhere, a cost the research firm puts at between $75 and $80 a barrel. By 2012, the firm said, that cost likely will have jumped to $105 a barrel.