Just eight years ago Russia was the most promising oil region outside the Middle East. Its rapidly growing output helped meet soaring Chinese demand and limited sharp oil price rises.
Now, the tide has turned...
Annual supply has fallen for the first time in a decade...
But now there’s another player in town. Manraaj Singh explains why now is the perfect time to capitalise on the ‘new oil hotspot’...
There’s an air of panic about the world’s energy-guzzling nations...
Russian oil production, the world’s second biggest, has peaked. It may never return to current levels.
Leonid Fedun, 52, vice-president of Lukoil, Russia's largest independent oil company, told the FT he believed last year's Russian oil production of about 10 million barrels per day was the highest he would see "in his lifetime".
It’s fuelling concerns that the world’s biggest oil producers cannot keep up with rampant Asian demand.
China alone now imports more than 4 million barrels of crude oil every day. If Russia’s production capacity is in decline... where will China quench its thirst for crude?
Why peak oil in Russia should mean big profits in Africa
The Gulf of Guinea on the west coast of Africa is emerging as the new hotspot for the oil industry.
The United States is looking to the region to reduce its dependency on oil from the volatile Middle East. So are the Chinese. And they’re scouring the continent to secure the oil it needs to feeds its vast industrial machine.
Right now, Nigeria is sub-Saharan Africa’s biggest oil producer, and the Chinese have been so keen to gain access to its oil supplies that they’ve stumped-up $50 billion to develop the country’s infrastructure.
It’s obvious they’re desperate cement their relationship with Nigeria.
And there’s no wonder...
Yesterday’s FT reported the leaked details of an internal report prepared for Nigeria’s president, warning Nigeria’s oil production will fall by a third unless the government boosts investment.
To quote the report: "Indications are that, even if current funding levels are maintained, total oil and gas production will decline by 30 per cent from its current level by 2015."
As the FT points out:
Such a decline would see Angola overtake Nigeria as sub-Saharan Africa’s leading oil producer and give western governments, who see west African oil and gas production as essential to global energy security, pause for thought.
Heavy investment in African oil is a near certainty
So, there is no question we’re going to have to see a huge increase in investment simply to keep production at current levels.
Trouble is, even the current levels alone not going to be enough to meet soaring future demand.
And that means one thing...
If Africa’s oil industry and infrastructure is going to have any hope of meeting the world’s growing energy needs, there will need to be an astronomical amount of investment into the continent.
As I keep stressing, the biggest winners from this process are going to be those companies with a big hand in the necessary activity that will need to take place.
£5 a gallon petrol by this summer
In the short-term, the inevitable result of the recent news has been a spike in the oil price. It hit a new record of $115.07 yesterday and some analysts now forecast it reaching $120 in the next couple of months.
If that happens, we’ll be looking at £5 per gallon petrol this summer.
But it isn’t just going to hurt us in the pocket, it is also going speed-up the massive transfer of wealth to the oil-exporting countries. That is one of the major themes underlying our investment strategy here at Profit Hunter.
Take the front page of the City A.M. newspaper this morning:
"But while consumers and oil-buying nations will suffer, oil producing nations will enjoy a windfall. Buoyant revenues will add to the reserves of many sovereign wealth funds and could herald another wave of takeovers of Western assets, analysts said yesterday."
True enough. But what is still being overlooked is that the growing mountain of ‘petrodollars’ isn’t just controlled by sovereign wealth funds; a huge chunk of it is controlled by private investors and they’re also looking to profit from takeovers of assets at currently depressed prices.
But, as I have stressed repeatedly here at Profit Hunter, I believe that we are now firmly in the era of $100 oil and we will continue to look for additional ways to profit from this trend.
Regards,
Manraaj Singh
Editor Profit Hunter
Manraaj Singh is the chief editor of our ‘special situations’ investment alert service: Profit Hunter. It investigates under-the-radar opportunities barely reported in the Western media; situations that could lead to substantial profits for the investors who receive their recommendations. Click here to review their service with no obligation for 3 months!
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