Hugo does a deal with China?

[jmw]

I'm not sure we should believe everything in this story:

http://www.nationnews.com/story/286256114042206.php

todays prices for heavy fuel oils are around $350 a ton for 380cst and only MGO and MDO are above $600. OK, it's 2.8% sulphur but even if you add in desulphurisation costs, bunker C isn't going to reach $600 a ton, unless I've missed something (the premium is estmated to be $35-$65 a ton for marine service).
None the less, at $200 a ton, Orimulsion (

http://www.worldenergy.org/wec-geis/publications/default/tech_papers/17th_congress/2_1_06.asp)

is good and cheap, all 270 billion barrels of it.

This article suggests that China has secured exclusive access to this fuel. If that is the case, the playing field is approaching the inclination of a cliff.

This could just be a bit alarmist, but it would be a master stroke for Chavez to undermine the US economy still further to enable China to not only have a labour rate advantage but a significant fuel cost advantage also. I don't mean just supplying China, but giving exclusive access to China deprives other economies of equal access. We are talking about 270 billion barrels of proven economic reserves. Compare that to the crude oil stocks available and you'll see why this is unnecessary, unless there is a political motive and we can believe Hugo Chavez has no fondness for the USA and if it takes care of a few other economies on route, will he worry?

Basically, if this story is to be trusted, China would have access to fuel at half the cost of anyone else.

But before we all get too excited, anyone got any confirmation or clarification?

JMW

http://www.ViscoAnalyser.com

 

[SnTMan]

"not a government to government arrangement"? I find that hard to believe.

Mike

 

[GregLocock]

200 a ton is what, 15 bucks a barrel? This stuff is asphalt wannabee. No one (hardly) wants it. There's plenty of hydrocarbons around, the 'shortage' is of cheap stuff to refine cheaply into petrol.

So tell me, is The Nation a highly respected news source, or a paranoid right wing xenophobic rag, or, both?






Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[25362]

Try to connect with thread610-148245.

 

[electricpete]

I don't know the specifics of this case but I think that most will agree that Chinese is aggressively pursuing a wide range of resources, which has driven up the cost of a lot of resources. Copper is up 60% this year alone (which affects the cost to rewind a motor - near and dear to my heart).

That's not necessarily an underhanded or evil thing. In fact that is just what we call capitalism/free market / supply-and-demand. No-one in that article suggested the Chinese or Venezuelans were doing anything wrong, did they? I don't think there was any discussion about price. But it would not surprise me to learn that a large consumer may negotiate favorable terms or exclusive rights with a given supplier.

I guarantee this is not the last we will hear about the effects of Chinese activities on resource prices and availability. Better get used to it.



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[jmw]

Thanks 25362,
I should have posted the link myself.

All:
Please note Davefitz's comments there which seem to substantiate the gist of the article, or at least, lend it some credance.

Greg,
I don't have any information on orimulsion prices but the heavy fuel oil prices are daily quoted on a variety of web sites. In fact, they have dropped a bit from their previous high but no-one expects them to recover their price of a couple of years ago.

And yes, I think a lot of people do want it simply because it is cheap. A lot of work has gone into creating Orimulsion and proving it in a variety of situations. (see the thread 25362 refers to and the preceding part I thread).

In the current market everyone has reasonably equal access to fuels, we have a level playing field.
If orimulsion entered the general market it would be fine but I would expect some concern if China, or anyone else, gains a monopoly.

In terms of marine transport, fuel is around 70-80% of the operating costs; so any shipping which has access to such a fuel would have an enormous competitive advantage.

MAN B&W have done a lot of work on fuel water emulsions for their marine diesels and there are some advantages. I'm not sure just how well orimulsion would compare in reality but various reports suggest well.

JMW

http://www.ViscoAnalyser.com

 

[jmw]

This is a follow up article:

http://www.barbadosadvocate.com/NewViewNewsleft.cfm?Record=26287

JMW

http://www.ViscoAnalyser.com

 

[jmw]

Top marks to Google alerts:
A more credable news source (though not according to some):

http://business.timesonline.co.uk/article/0,,13129-2189115,00.html

JMW

http://www.ViscoAnalyser.com

 

[jmw]

And lastly this from the Chinese press:

http://english.people.com.cn/200212/20/eng20021220_108830.shtml

The joint venture will produce 6.5 million metric tons a year of orimulsion by 2004,all of which will be exported to China.

My mistake.
I thought this was new and that it could be mere rumour.
Since this has been public knowledge for at least since this article appeared in 2004 and because the various governments have been so sanguine about it, I guess we have nothing to worry about.

Except I do.
The numbers are significant.

Reserves are estimated at more than 1.2 trillion barrels (190,000,000 m³) of bitumen, an amount greater than 50% of the world's estimated oil reserves.

We are not talking about trivial amounts.

JMW

http://www.ViscoAnalyser.com

 

[Ashereng]

Sounds like where tarsands were back in the 60's?

Not so good oil source now - really good oil source 20 years from now when oil hits $350/barrel?

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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[25362]

I was given to understand that China is leading the world in the investigation, and actual exploitation, of alternative renewable sources of energy to replace the combustion of fossil fuels.

 

[moltenmetal]

25362: that wouldn't jibe with the enormous construction of coal-fired power plants still ongoing in China. I doubt that anything other than the very cheapest option for energy production will be used there. I also doubt that the planet has the carrying capacity for China's full development into a Western-style economy with its consumption patterns.

 

[25362]

Moltenmetal: you are, of course, absolutely right.
I referred to the efforts the chinese are putting in the use of bio-mass and other renewables, as well as of cleaner coal technologies.
This is one site with interesting reading material on China's energy situation:

http://china.lbl.gov/publications/up_preprint2.pdf