lunes, 29 de diciembre de 2008

Cheap oil places the great oil-exporting countries to a critical situation

The countries economically dependent on oil are in continual warning of its downfall. In its last meetings, the OPEC has announced drastic cuts: the oil’s barrel has slumped below 40 $ a barrel, in wintertime that it’s when there’s a higher consume.
For the great oil-exporting countries it means a critical situation; the IMF informs that countries such as Iraq will have a few problems to assume their budgets. Iraq’s programme foresee around 110 $ a barrel needed for the petroleum industry. In addition, there are Iran and Venezuela, important countries in this field, which cannot balance prices, unless they put the barrel up to 80 $ (they both are now dependent upon crude prices of $100 a barrel to balance their budgets). There’s also Argelia who’s got the prices around 60 $ a barrel and it might fall to 50 $ and then it would be a disaster, since the average should be around 100 $, something really doubtful for this next year. All this could mean a meaningful number of investor’s suspensions.
Now, they are exploring and planning to exploit new zones such as Canada and Brazil. In the case of Brazil, Petrobras (its Brazilian petroleum PLT) has problems with its investors, since they don’t trust in their capacity for exporting new oil wells, even though they’ve recently has gained some profits. However, they lately found a new great oilfield and now they’ve planned to increase the production during these next years, as they’ve increased the production of new developed technology, but this innovation in technology supposes high costs. Petrobras’ managers assure that the necessary fixed costs can be covered by the ‘cash and flow’ (profits plus amortization) of the firm.
Despite all this, investors don’t trust in it.

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