3.4.4 The Global Management of Oil and Gas Flashcards
• Managing the imbalance between the supply of and demand for oil and gas through transfers, storage and pricing • Management of oil and gas exploration and production by MNCs and national governments • Management of oil supplies by OPEC and national governments (59 cards)
1
Q
What is the imbalance between oil producing ad oil consuming countries?
A
Surplus
- Saudi Arabia produces 10% but consumes 3%
- Russia produces 11.5% but consumes 3%
- Middle East produces 19.5% but consumes 5%
Deficit:
- USA produces 12.5% but consumes 22%
- China produces 3.9% but consumes 10%
2
Q
Which countries export the most?
A
- Middle East 15 million barrels
- Russia 7.4 million barrels
3
Q
Which countries import the most?
A
- USA 8.5 million barrels
- Europe 9.6 million barrels
- China 11.3 million barrels
4
Q
What does OPEC stand for?
A
Organisation of Petroleum Exporting Countries
5
Q
How much oil does OPEC control?
A
- Has 81.5% of the world’s reserves
- Produces only 33% of supply
6
Q
Why is OPEC holding back supply?
A
- To keep the price of oil artificially high
- To hold geopolitical power over consumer countries
- To be in a dominant position to supply oil or raise prices when USA, Russia, China and Canada use up their oil
7
Q
What are non-OPEC countries trying to do to prevent the dominance of OPEC in the oil market?
A
- Moving to renewables and nuclear
- Producing new technologies to extract oil unconventionally (e.g. fracking, tar sands)
8
Q
How did OPEC use oil exports as a weapon during the 1973 Arab-Israeli war?
A
- West had supplied Israel with weapons
- So OPEC/Arab countries placed an embargo on the West, stopping oil exports
- OPEC wanted the West t agree to stop supplying weapon
- There was oil rationing (e.g. in Britain)
9
Q
Who are the Houthi rebels backed by?
A
- Act as a proxy for Iran
- Iran supplies funding and drones/missiles
10
Q
What are Houthi rebels doing in the Red Sea in 2024?
A
- Sinking Western ship in the Gulf of Aiden
- To put pressure on Western governments to stop supporting Israel
- Cost of oil has increased 3% since the start of the attacks
11
Q
What are the US and UK doing to prevent the attacks on oil tankers?
A
- Involved in a bombing campaign of Yemen
- To protect shipping lanes
12
Q
How do MNCs control the price of oil?
A
- Own drilling rights, refineries and storage capacity
- Can decide how much oil products to sell at any one time
- In a monopoly position
E.g. BP, Shell
13
Q
How do national governments control the price of oil?
A
- Can join together to form a cartel
- To control the price and limit much they sell
E.g. Venezuela
14
Q
How do new players control the price of oil?
A
- Developing new unconventional techniques to produce more oil
E.g. USA
15
Q
What is economic colonialism in China?
A
- Bought the exclusive drilling rights of Angola
- In return they are providing roads/infrastructure projects
16
Q
What are the USA’s new unconventional methods to extract oil?
A
- Fracking
- Horizontal drilling
- Undermined OPEC’s ability to control oil price
17
Q
What are the concerns with tar sands in Canada?
A
- Energy intensive
- Produces greenhouse gases
- High water consumption
- Lots of waste, toxic wastewater and destruction left behind
18
Q
Why is oil stored?
A
- By America and other Western countries
- In case there is a disruption to supply
19
Q
Why does the USA have the largest strategic reserve of oil?
A
- To supply the US military for 3 months
- If there is another oil embargo, America can flood the world markets with oil to replace lost supply
20
Q
What is Israel’s oil-sharing agreement?
A
- USA and Israel have a treaty where the USA will supply oil for 5 years
- In case OPEC cuts off supply to Israel
21
Q
What are key facts about BP?
A
- Operates in 80 countries
- Employs 100,000 people
- $240 billion revenue
- Extracts 9% of total world oil production
- Transport 5% and refines 11% of all oil
- Supplies 12% of all petrochemicals
22
Q
How do TNCs make oil reserves accessible to use?
A
- Produce and distribute the oil in countries that cannot extract it themselves
- Pay a percentage to the state
- Enriches poorer countries that cannot afford the primary investment required to produce their own energy
23
Q
How BP’s future been jeopardised?
A
- Invested in deep water drilling
- Gone badly wrong since 2010 Deep Water Horizon explosion
- Cost the company $61 billion
- Impacted pension funds in the UK
- Cheap oil prices make this expensive extraction less profitable
24
Q
What does the price of oil depend on ultimately?
A
- OPEC
- Consumers
- Governments (e.g. Iran terrorism, America strategic storage, China economic colonialism)
- MNCs
- New technology
25
What are the economic reasons for the UK government wanting to reduce its reliance on oil?
- UK uses more oil that it produces so has to import an expensive commodity
- Price volatility means it is hard to plan for the future
- Oil is finite
26
What are the political reasons for the UK government wanting to reduce its reliance on oil?
- UK doesn't want to depend on volatile geopolitical regions and hostile states for energy security
- Money goes to hostile regimes
- UK signed up to net zero by 2050
27
What are the environmental reasons for the UK government wanting to reduce its reliance on oil?
- Burning oil contributes to CO2 emissions and climate change
- Extraction and transportation will lead to oil spills that contaminate water and land
- Particulate material from diesel linked to asthma and cancer
28
How important was the EU/Russia oil trade before 2021?
- Worth $104 billion
- Provided the EU with 25-30% of its oil
29
Why has the EU reduced Russian oil imports?
- Put political/economic pressure on Russia
- EU is independent and not influenced by the Russian government
- US wants the trade to stop
30
Why is gas a popular fuel in the 2020s?
- Cheaper per kg than oil
- Clean burning with fewer impurities
- Reserves are distributed more widely across the world
31
What is Gazprom?
- State owned
- Controls/accounts for 92% of Russia's gas
- Provided 25% of Europe's gas
- 80% of Gazprom's gas went through Ukraine which was a transit state
- Was the sole gas supplier for 8 European countries
- 1 of the top 5 corporations int he world
32
What did Ukraine do that angered Russia?
- Had the orange revolution
- Elected a pro-EU/pro-NATO president
- Signed an EU free trade agreement
33
How did Russia try to keep Ukraine under their control by using gas?
- Gave a 1/3 discount on gas and a generous loan
- Threatened to aim nuclear weapons at them if they joined NATO
- In 2006 and 2009, Russia cut off gas supply until they paid back the 1/3 discount
34
How dependent is Germany on Russia gas?
- 1/2 of Germany's gas is from Russia
- Pay £220 million per day
- In the 1969 Ostpolitik, Germany paid for pipes from Russian gas fields, locking Germany into fixed infrastructure
35
Why is the EU and USA concerned about the control Russia has over Germany and some EU countries?
- £220 million per day paying for the war
- Germany and other EU countries are reluctant to put sanctions on Russia
36
What new pipelines and supplies are planned between Germany and the EU?
- Nord Stream 2 built to supply Germany and the EU with gas without going through Ukraine
- Can cut off Ukraine without affecting trade
- Went through the Baltic Sea
37
Why did Russia and the EU want Nord Stream 2?
- Continued trade with the EU while at war with and cutting off Ukraine
- Provided an alternative pipeline
38
Why were the USA and UK against Nord Stream 2?
- Concerned this would enable Russia to cut off and attack Ukraine
- Would make Germany even more dependent on Russian gas and reluctant to stand up to Russia with sanctions
39
What is the controversy around the destruction of Nord Stream 2?
- Many claim this was the US (or Ukraine as a proxy)
- Not officially admitted
- Made the EU less reliant on Russia
- Reduced revenues for Russia's war
- Made the Eu buy more LNG from the US
- Germany entered an economic recession due to increased energy costs
40
What was GECF?
- Gas Exporting Countries Forum
- 15 countries
- Cartel similar to OPEC
41
Why was GECF unsuccessful?
- More countries have gas reserves and produce gas than oil as reserves are less concentrated
- Unconventional new technology (e.g. tight extraction from under sea bed, fracking, LNG)
- Many alternatives for electricity if gas prices became too high
42
How does fracking work?
- Water, chemicals and sand is pumped into shale rocks at high pressure
- Gas floats to the surface and is collected
- Once the gas is collected, the well is sealed and waste water is left underground
43
What are the economic benefits of fracking?
- Local communities can get a percentage of profits from gas extracted in their territories
44
What are the environmental concerns about fracking?
- 3% of gas is lost
- Ch4 is 26x more potent than CO2
- Wastewater is very toxic as it contains 700 chemicals that companies do not disclose
- Wastewater may contaminate drinking water in the future
- Energy intensive
- 80 million litres of water used per well
45
What are the environmental benefits of fracking?
- Wells are only in use for a few weeks so there is minimal disruption to locals
- Much cleaner than coal
- 4 to 6 weeks only
- Emissions much safer/lower than 20 years ago
46
How many fracking wells are in the USA?
100,000
47
What are the economic benefits of fracking in the USA/Texas?
- US is now almost self-sufficient for energy
- Some profits go to the local community
- Locals own mineral rights
48
What are the environmental concerns of fracking in the USA/Texas?
- Air quality in Denton is half the legal limit
- Benzene and methane leakages
- Fracking within 60m of homes
- Local vote to ban fracking in Denton
- Concerns that waste water will reach aquifers
49
How does Lancashire compare to Texas for fracking?
- Has 4x the population density of Texas
- Fracking didn't go ahead
50
What are the economic benefits of fracking in the UK/Lancashire?
- Jobs, hotels and restaurant will have fracking workers stay there while working
- Blackpool Hotel Association in favour
51
What are the economic concerns about fracking in the UK/Lancashire?
- Could damage tourism in Lancashire
- Farming could be undermined and contaminated so people may not want to buy produce
- All mineral rights belong to the Crown, not land owners
52
What are the environmental concerns of fracking in the UK?
- Regulations done by Quadrilla not government, so not impartial
53
How is government important in the US fracking industry?
- Helped fund research into horizontal drilling technologies
- Gave tax credits worth $10 billion in 1980
54
How have TNCs been important in the fracking industry?
- Halliburton were the first company to carry out a fracturing operation in 1949
- Schlumberger is the largest oilfield services company in the world
- Both are at the forefront of technological advances
- Baker Hughes focus on enhancing efficiencies and technologies though the Pressure Pumping Technology Centre (PPTC) and reducing non-productive time
- FTS International in a joitn venture with Sinopec to transfer fracking technology to China
55
How does LNG technology enable the transportation of gas over large distances?
- Cools gas to -162°C
- Occupies 600x less space as LNG
- Possible to transport gas across oceans where pipelines are not economically feasible
- ReqWuires large upfront capital investments
56
What is the LNG process?
Exploration and production -> liquefaction -> shipping -> storage and regasification -> end users
57
Which countries benefit from this geopolitically and economically?
- Qatar is the worlds biggest producer, making 1/4 of global LNG
- USA exports it
- Growing Asian economies import LNG (e.g. Japan as no nuclear energy as Fukushima)
- Japan consumes 37% of total LNG (biggest consumer)
58
How did the US government support the LNG industry?
- Funded research and development
- Invested in infrastructure for LNG
- Allowed LNG exports to non-FTA countries
59
How does ExxonMobil drive the LNG industry?
- Operates and funds LNG facilities across the world
- Largest operated facility is in Papua New Guinea (production capacity og 8.3 million tonnes)
- One of the largest LNG producers, involved in the production of 74mtpa
- Controls multiple phases of LNG production
