This time I’ll let you know something about Saudi Arabia. There is an area in the border with Kuwait that is not belong to anybody. They call this area as Neutral Zone and the good thing about this area, it has an oil reservoir. That was the reason why Saddam Hussain last time came up to here during the 1st Gulf War. Due to the ‘black oil’ availability here, both Saudi and Kuwait developed a joint venture company in order to explore this area. Erm, not that bad. When it come about money ….. everybody can be friend but sometimes it also can create an enemy ;).
As the demand for oil increasing and unfortunately the oil price also become more expensive, the biggest oil producer in the world, Saudi Arabia is planning to boost up the production. As far as everybody here is concern, there is a field near to this Neutral Zone, known as Manifa field. The field located in the Persian Gulf – offshore, but most of the increment project will be done from onshore. For some reason, now, I’m working under this project – Manifa project which is one of the biggest project that my company have to run under Saudi Aramco.
Got the phone call from my wife after the government declared the new petrol price. Lucky for her, my car already was in full tank mode at the time of the terrible traffic jam at the Malaysian pump station. Quite interesting to compare it with my life in upstream side of the oil industry, trying to find, drill and produce the oil in order to make money. But people over there is loosing money because of it. May God bless us always and give us the right path. Here in Saudi we are not affected that much with the new world market price of the oil as the price per liter is still below SAR 1.00. Two years ago, Saudi government under previous King increased the price, and after that, the car market in Saudi (which is dominated by American car mostly) also affected. The number of car that was sold became less and going down slowly. Saudi people started to use Japanese car or Korean car (even they brought in the famous Proton car) with small engine capacity. When King Abdullah was appointed as the new head of the Kingdom, he made a popular movement by bringing down the petrol price and because of that the car businessman can smile again ( and also not to forget our famous ‘Uncle Sam’).
Everything related to oil must also related to US dollar as this black gold is traded in US dollar. As the value of the dollar is going down, most of the people who have it (mostly the one who own the dollar) will keep it or try to speculate the price so that they will never loose anything instead of low value of the dollar. Freak economic.
Let read an interesting comment from Iranian President, Mahmoud Ahmadinejad…..
(credit to http://kickdefella.wordpress.com/)
25 06 2008
By Hashem Kalentari
ISFAHAN, Iran (Reuters) – The oil market is plentifully supplied and the rally to record high prices is “fake and imposed”, Iran’s president said on Tuesday, blaming a weak U.S. dollar which he suggested was being pushed lower on purpose.
“At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed,” Mahmoud Ahmadinejad said.
“It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims,” he said when opening a meeting of the OPEC Fund for International Development in the central city of Isfahan.
With high fuel prices sparking protests worldwide, Ahmadinejad hit out at energy taxes in consumer nations. He said there was an “unfair” difference in income between energy exporting and importing countries.
Iran, the world’s fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak dollar and geopolitical factors.
Oil steadied on Tuesday after touching a record near $140 the previous day, with traders caught between a weaker dollar and expectations that top exporter Saudi Arabia will ramp up output to its highest rate in decades.
Iran has often said it sees no need for the Organization of the Petroleum Exporting Countries (OPEC) to boost output, as the United States and other big oil consumers want.
“As you know the decrease in the dollar’s value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability,” Ahmadinejad said.
The president reiterated his view that oil should be sold in a basket of currencies rather than dollars, an idea which has failed to win over other OPEC members, except Venezuela.
“The ever-increasing decrease in the dollar’s value is one of the world’s major problems,” he said.
“A combination of the world’s valid currencies should become a basis for oil transactions or (OPEC) member countries should determine a new currency for oil transactions,” he said.
He expressed support for a proposal by Venezuela’s anti-U.S. President Hugo Chavez to create a bank constituted by OPEC members to act as a counterweight to U.S. influence in the world. He also advocated the establishment of an oil bourse.
Iran, embroiled in a standoff with the West over its nuclear programme, has for more than two years been increasing its sales of oil for currencies other than the dollar, saying the weak U.S. unit is eroding its purchasing power.
Ahmadinejad, who has called the dollar a “worthless piece of paper”, suggested a part of its decline was deliberate, without naming any country:
“The planners for some big powers are acting to decrease the dollar’s value,” he said. “For years they imposed inflation and their own economic problems on other nations by injecting the dollar without any support to the global economy.”
Foes since Iran’s 1979 Islamic revolution, Tehran and Washington are also at odds over Tehran’s disputed nuclear activities. Iran says its atomic work is peaceful.
(Reporting by Zahra Hosseinian in Tehran; Writing by Fredrik Dahl; Editing by William Hardy)