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Russia and Africa Have Massive Production/Israel and Egypt Develop Major Gas Fields, Business and Industry Trends Analysis

Although the U.S. surpassed Saudi Arabia and Russia in oil production in 2014 (due to massive output from shale), Russia’s crude output reached a record 10.83 million barrels daily in 2014, up from 10.78 million barrels in 2013, according to BP (following a downturn in 2008 during which output fell for the first time in a decade). Russia has become a powerhouse in crude production, behind the U.S. (with 11.64 million barrels of production in 2014) and Saudi Arabia (with 11.51 million). Production costs remain relatively low in many Russian fields.
Russia holds among the world’s largest reserves of conventional oil and natural gas. Geographically speaking, Russia is perfectly located to feed the increasing demand in China for oil and gas and quite capable of supplying Japan, which has no major petroleum sources of its own. Meanwhile, Russia is a vital supplier of natural gas to European nations via an extensive network of pipelines. At one time, Western companies were clamoring to cooperate with their Russian peers in exploration and in constructing vast new pipelines to deliver Russian oil and gas to thirsty markets. However, in 2006, the Russian government became much less accommodating to the investment interests of foreign oil firms, and forced some companies out of their positions in major Russian projects.
Africa is another of the world’s fastest growing petroleum producers. Wells offshore Nigeria and Angola are already spouting immense quantities of oil and gas. There is very substantial activity in offshore Senegal, the Ivory Coast, Equatorial Guinea, Ghana, Gabon and Namibia. Deepwater wells are also being drilled off South Africa. Deepwater tracts offshore of Africa now account for a significant portion of the world’s oil production, primarily in Libya, Nigeria, Algeria and Angola. Recent finds in Kenya by Tullow Oil of the UK and Africa Oil of Canada could be the first to tap as much as 10 billion barrels in the Great Rift Valley. This can be good news for the United States and Europe for two reasons. First, major American and European oil firms have been able to invest in African exploration and production in a big way. Second, that production is finding its way to American and EU consumers, reducing the need to rely on OPEC.
By 2014, Nigeria was producing 2.36 million barrels daily, up slightly from 2.30 million in 2013 but down slightly from 2.4 million barrels in 2012. Its output is highly desirable light crude that is low in sulfur content. Unfortunately, Nigeria’s politics are in a volatile state, with rebel troops often fighting the government for control. Nigeria was the biggest oil producer in Africa in 2014, followed by Angola at 1.71 million, Algeria at 1.53 million and Libya at 498 million (although Libya’s explosive political problems caused a drop in oil production by 49.8% from 2013 to 2014).
Off the African coast, companies like ExxonMobil, Royal Dutch/Shell and Chevron are drilling deep, technologically-advanced wells. Total depth of new wells is frequently in the 12,000- to 15,000-foot range, including 4,000 to 6,000 feet of water. Oil corporation Total has signed important agreements to operate offshore of Nigeria.
Seismic surveys of the Leviathan prospect, located about 84 miles offshore of the northern coast of Israel, show that this field may hold 16 trillion cubic feet of natural gas, making it one of the world’s most promising offshore fields. This may position Israel as a major exporter of natural gas, in addition to supplying the country’s domestic needs for 100 years. Noble Energy, Inc. of Texas is leading the drilling activity there. Leviathan lies next to the Tamar, a field discovered in 2009 which has the potential of holding 8 trillion cubic feet of gas. Noble Energy announced another significant discovery in late 2011, offshore of Cyprus, with gross mean resources of 7 trillion cubic feet, while in 2012, it expanded its activity in the Tanin field.
In August 2015, Italian energy company Eni announced a 39 square-mile area off the coast of Egypt that could hold as much as 30 trillion cubic feet of natural gas or 5.5 billion barrels of oil equivalent. The field is at a depth of about 4,757 feet. Eni signed an energy exploration agreement with Egypt’s oil ministry worth approximately $2 billion that allows the firm to explore in the Sinai, the Gulf of Suez, the Mediterranean and parts of the Nile Delta.
 


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