Oil prices plunge to $70!

[Al Bhatti]

Will badly hit the rentier economies(KSA,UAE,IRAN,QATAR,KUWAIT)

Dont know about Iran but KSA, UAE, Qatar and Kuwait have actually instigated the fall to take out US shale producers.

Iran since years wants the price at USD 180+

 

[Al Bhatti]

Pakistan will save $7 billion this year. Looks like Nawaz and co are about to get filthy rich.

Very unfortunate

 

[mehboobkz]

Sir, if I am not mistaking, the contract being negotiated is for 10 years period (but I am not sure about the volume per year though). Plus, in the news I read there was a mention of USAID consultants who are of the opinion that the spot price is projected to fall to ~$7 or so and stay there for 7-8 years.

Give me just one example of such a 10 year Crude Oil contract anywhere in the world.
Normally the Gov to Gov contracts are for one year.
In a rare case there was a 2 year contract (I vaguely remember so)

 

[Bilal.]

Give me just one example of such a 10 year Crude Oil contract anywhere in the world.
Normally the Gov to Gov contracts are for one year.
In a rare case there was a 2 year contract (I vaguely remember so)

Its LNG contract. Not Crude oil. In fact, 10 years is want Pakistan wants. Qataris are pushing for 15 years contract.

Qatar to Sign LNG-Supply Agreement With Pakistan, The News Says - Bloomberg

 

[mehboobkz]

Its LNG contract. Not Crude oil. In fact, 10 years is want Pakistan wants. Qataris are pushing for 15 years contract.

Qatar to Sign LNG-Supply Agreement With Pakistan, The News Says - Bloomberg

LNG is a different thingy:

Long-term LNG sale and purchase agreements tend to have fairly long terms –
generally 20 or 25 years in length – reflecting, the substantial investments required
for upstream and LNG production facilities, LNG shipping and LNG receiving
terminals.

 

[niaz]

Sir, if I am not mistaking, the contract being negotiated is for 10 years period (but I am not sure about the volume per year though). Plus, in the news I read there was a mention of USAID consultants who are of the opinion that the spot price is projected to fall to ~$7 or so and stay there for 7-8 years.

Contract may be for 10 years, but it does not say it is for "Fixed Price" without any escalation / de-escalation for 10 years? The contract signed with Iran for purchase thru IP gas pipeline was open ended but gas prices were linked to Dubai crude prices. No one can say for sure what the price would be during such a long time. If spot prices are projected to fall, it is all the more reason to have prices linked to the market price.

Geo-political situations change, suppose US attacks Iran. If you were the Seller of any commodity, would you commit for 10 years without any price re-opener? I certainly wouldn’t.

Only fixed price contract I have heard was in the 1990’s when the State of Oman started her first LNG plant. Omani gov’t formed a joint venture with Shell with Total, Koreans & Japanese holding minority shares. Japanese signed a fixed price purchase agreement. The project needed $2-billion investment, it 1994 dollars 2-billion was a very large amount and crude oil price was below $20 per bbl.

 

[Bilal.]

Contract may be for 10 years, but it does not say it is for "Fixed Price" without any escalation / de-escalation for 10 years? The contract signed with Iran for purchase thru IP gas pipeline was open ended but gas prices were linked to Dubai crude prices. No one can say for sure what the price would during such a long time. If spot prices are projected to fall, it is all the more reason to have prices linked to the market price.

Geo-political situations change, suppose US attacks Iran. If you were the Seller of any commodity, would you commit for 10 years without any price re-opener? I certainly wouldn’t.

Only fixed price contract I have heard was in the 1990’s when the State of Oman started her first LNG plant. Omani gov’t formed a joint venture with Shell with Total, Koreans & Japanese holding minority shares. Japanese signed a fixed price purchase agreement. The project needed $2-billion investment, it 1994 dollars 2-billion was a very large amount and crude oil price was below $20 per bbl.

I think I saw an interview of the finance minister which gave the impression that it would be fixed price when he was explaining the comparatively high cost ($18 at that time) Pakistan was paying. He pointed that the other side(Qatar) is also partnering in risk as in if the prices rise. But maybe I am wrong.

 

[Bilal.]

LNG is a different thingy:

Long-term LNG sale and purchase agreements tend to have fairly long terms –
generally 20 or 25 years in length – reflecting, the substantial investments required
for upstream and LNG production facilities, LNG shipping and LNG receiving
terminals.

True, I was pointing to LNG not crude in my posts.

 

[sathya]

is our strategic oil reserves ready ?

atleast started construction yet ?

 

[American Pakistani]

The oil price dropping is very good. Here in US we are getting gasoline at 2.99$ now which once was touching to 4.00$.

I must add that Pakistani govt must not decrease the price of oil. Try to take advantage and eliminate subsidy. Whoever wants oil, they must pay it from their pockets not from Pakistan's national wealth which should be used for development and other purposes.