Brazil continues to surprise: BG doubles its resource base

BG has upgraded its reserves and resources for Brazil from a range of 3 to 6bn boe to maximum of 8bn boe. The mean estimate for discovered resources is now 5.8bn boe (excluding risked exploration), which compares to previous estimates of 4.5bn boe.  The group increased the previous estimate of 3 billion barrels after analyzing data from 29 wells, 19 drill stems and 14,400 square kilometers (5,500 square miles) of 3D seismic data, according to the press release.


The company is not at this stage moving estimated production from Brazil (of 550 kboed by 2015), but this is likely to be reviewed by year end.

Total reserves and resources now stand at a mid case of 5.8bn boe (4-8bnboe, P90-P10) up from an estimate of 3bnboe the last time the company disclosed a total resource estimate in February 2010.

The reserves and resources have been driven by a number of factors including better technical data from the EWTs (better reservoir properties), enhanced recovery rates and incorporating recent discoveries (Macunaíma). BG are indicating an upside potential of 8bn boe.

Assuming an average of US$5/boe for Brazil barrels, the increase of 1.25bn boe would be an incremental US$6bn, according to Citigroup, whose previous estimate on resources of 4.5bn boe was split as follows:

Lula 1.8bn
Iracema 0.4bn
Guara 0.5bn
Lara 1bn
Other discoveries 0.7bn

Further read:

http://energyandmoney.blogspot.com/2010/08/few-thoughts-on-brazil-e-through-repsol.html

http://energyandmoney.blogspot.com/2010/01/energy-opportunities-in-brazil.html

IEA Releasing Strategic Oil Reserves Reminds Me Of When UK Sold All Its Gold.

Oil fell 5.5% on Thursday 23rd June on news that the IEA's member states are to release 60mb of their strategic stockpiles, 30mb from the US and 30mmb from elsewhere.


This could look in time as one of the dumbest decisions, in my opinion, since the day when the UK sold all its gold reserves between 1999 and 2002 at around $280/ounce... unless the IEA sees a material economic recession ahead and then the new QE of the economy is artificially lowering the price of oil.

The U.S. strategic petroleum reserve is at a historically high level with 727 millions barrels, of which 293 millions barrels (40%) are sweet and 434 millions barrels (60%) are sour. The International Energy Agency reported in April 2011 that SPR in OECD Europe and OECD Pacific totaled 186 millions barrels and 391 millions barrels, respectively.

The release of SPR crude announced today thus represents approximately 4% of U.S. reserves and 5% of SPR reserves in OECD Europe & Pacific.

This is the 3rd time in the past 50 years that IEA has released strategic reserves. The last three times, the improvement in oil prices that they looked for resulted in three subsequent super-spikes. This, I fear, will be the outcome again soon. Furthermore, this time we do not have the price-cushioning barrels of the North Sea (declining at 7% pa, as we mentioned here) or Mexico, which is falling as well. So the call on OPEC, even if demand continues to slow down, will increase to 30.1mbpd, making prices go higher.

The IEA, yet again, is panicking about the impact of the Libyan conflict. It is seeing that the war is unlikely to end soon, and sees the loss of Libyan barrels (1.5mmbpd) as  an issue after the failed OPEC meeting. But the market is well supplied. The only issue they worry about is price, which has been caused by the insane money-printing of the Fed not by demand-supply dynamics (hence the wild inflation in all dollar denominated commodities, of which oil incidentally is the third least appreciated since 2008, by the way).

Also, the US failed to pressure Saudi Arabia into discounting its crudes on world markets, which was one of the most paternalistic requests ever seen. Obviously, Saudi Arabia didn't agree, because, to start with, the reason why OPEC didn't raise quotas was because demand is weakening (as we said here), and given the 5-year high levels of inventories at Cushing, they would essentially pump oil to be added to more storage.

The IEA decision could also  come from fears of escalating tensions between Iran and Saudi Arabia, with calls from the latter to "squeeze out" Iran from the oil market. Given that Iran and Venezuela stand at the highest-end of the OPEC countries' break-even price (close to $70-80/bbl, versus peers at $45-50/bbl), the IEA might be doing Saudi Arabia a favour, but a very short term one as it can create a geopolitical issue that brings oil back right up.

But this measure is meaningless in the grand scheme of things. 60mb is about 43 days of lost Libyan barrels and, wait for this, less than 0.2% of annual global oil demand (considering 87m bpd). It will achieve only one thing: to increase the OECD dependence on OPEC by September.

Meanwhile, the drought in China is poised to drive a spike in short term diesel demand. Severe drought conditions have curtailed China's hydroelectricity generation... and electricity consumers will look to replace state electricity with their own power generation, oil. Middle distillates already account for the largest part of Chinese oil demand, so the entire IEA decision could be absorbed by the Chinese increase in diesel consumption in two months before the rain season.

So the analysis says that give that the market is well supplied and economic data in the OECD is weakening, the IEA only wants to cover the drought-driven demand spike from China, avoid oil prices from over-heating and help the debilitated OECD recovery.

The only way in which the measure will work is if, in effect, demand will weaken into 3Q and the call on OPEC does not rise. If the demand analysis is incorrect, China and India continue to grow or geopolitical supply issues get worse (13 dead in Baghdad today not helping) then the oil market will go back to price a tighter environment. Any move in demand above 88mbpd and the entire measure is absorbed.

It doesn't matter if OPEC has 4.5mmbpd of spare capacity, because this spare capacity is centred in Saudi Arabia, UAE and Kuwait, and is predominantly heavy-sour oil. And this measure will not help diplomatic relations with any of them, will be seen as desperate and in any way could be absorbed immediately.

Granted, the IEA can release more Strategic Reserve barrels, but then the weakness of the OECD and the call on OPEC rise. It's a catch-22 measure and will not be of great aid to  the OECD economies, which are not weakening due to high oil prices (oil burden is less than 5% of OECD GDP), but due to out-of-control spending, rampant deficit, printing of currencies and EU's puzzling management of the Greek-PIIG crisis.

Finally, two of my industry friends rightly highlight that "we are heading into a US election year and the political dividend from appearing to push oil prices lower is very attractive (Bill Clinton knows it well, he did it too)". "President Obama wants to appear tough on oil and keep gasoline prices low in July. But a few weeks later we will be back where we started. Lower prices only accelerate demand anyway".

Well done, IEA. another QE in disguise.

Link to my interview in Spanish radio, go to minute 12.30 (http://gestionaradio.com/getplayer.php?aud=16502)

Reuters video

Other posts:

http://energyandmoney.blogspot.com/2011/01/some-energy-thoughts-for-2011.html

http://energyandmoney.blogspot.com/2011/05/impact-of-chinese-slowdown-on-oil-and.html

http://energyandmoney.blogspot.com/2011/06/china-slows-down-as-saudi-arabia.html

http://energyandmoney.blogspot.com/2011/03/war-in-lybia-and-possible-algerian.html

http://energyandmoney.blogspot.com/2011/02/lybia-in-flames-and-clash-of.html

http://energyandmoney.blogspot.com/2009/11/china-exxon-and-war-for-resources.html

State Of Fear: The German Nuclear Shutdown, Who Wins and Who Loses

(This article was published in Spain in Cotizalia on June 6th 2011)

Seems Germany will approve before mid July 2011 the closure of all nuclear plants (21GW) by 2022 . Adding insult to injury, the country might not remove the tax on nuclear power that utilities already bear.

Meanwhile consumer electricity prices rise as the populations witnesses the effect of their political demands seeing the power bill rise by 45% due to a flurry of subsidies.

But the move to close the German nuclear plants will also entail a cost of about €40 billion and an additional 45 million tons of CO2 emissions a year (the German government itself expects to offset nuclear loss with lignite coal, gas and renewables). More pollution, but also a cost to the economy of €765 million to buy additional allowances. Of course, the German government says they will implement energy efficiency measures, which have been such a resounding "success" in the past 23 years.

Now Germany will import more power from France, which is generated in its majority with their fifty-eight nuclear reactors.

As Europe became more vocal against nuclear power, CO2 emissions increased by 5% in 2010, above the 2008 peak. We pollute more and generate electricity at a higher cost due to subsidies. Not just renewable premiums. Between capacity payments to gas, coal subsidies, market restrictions and other monstrosities, almost all technologies receive some type of subsidy.

Europe, which is less than 30% of global CO2 emissions, runs with 100% of the cost as the rest of the world does not pay for carbon dioxide emissions. Europe embraced the Kyoto Protocol as the ultimate sign of identity of a common political project which did not bear fruit in most other areas, from economy to defence, and is now clinging to its environmental policy, which is the only thing that unites EU countries, at any cost, preferring to pay for all the other countries before reviewing the adequacy of their commitment.

Someone in China or India should be laughing their head off. While these countries continue to grow dramatically, moving ahead with plans to install nuclear reactors (18 in the next ten years), wind, gas, coal and everything needed, Europe becomes the "bill-payer" of Kyoto and shuts down nuclear plants because of the state of fear generated by Fukushima. But who in their right mind expects 9 Richter scale earthquake followed by a Tsunami and a 24 hour blackout in Europe?. (Read more here)

The U.S. has two nuclear reactors under construction, the UAE, China and India have reaffirmed their plans for new facilities, Korea will build five reactors... I'm not saying Europe should build new nuclear plants, first because they are not needed as reserve margins remain high, but those that work should remain active.

The costs for the grid and the system are also important. And no relief for the solar industry. Even if all German nuclear power plants to be closed were replaced by solar power plants the sector would still sell less than half of the solar pannels it has installed in recent years (3.5-4GW p.a versus recent 7-8GW).

For the wind industry, the drastic decision of replacing nuclear also generates a very small positive impact. The global installed capacity has grown from 74GW in 2006 to 200GW in 2010. But the overall installations fell 7% in 2010 and another decline is expected in 2011, just as overcapacity increases. To give you an idea, even using the expectations of the sector, which expects to multiply by three the number of global wind installations by 2020, turbine manufacturers would still have a 20% overcapacity. Also note that in the two main markets for wind, Europe and the U.S. installations have fallen inexorably (50% drop in 2010 in the U.S.) due to the dry-up of public money and the impact of cheap gas (as we said here). In 2012 the U.S. is expected to install 5GW. Annual growth in China, 13-15GW, is constrained by grid bottlenecks.

The only ones benefited so far by the nuclear shut-down in Germany have been the dinosaur gas producers, who were facing a very black-and long-horizon of excess capacity and forced to re-negotiate their long term contracts. Well, surprise, surprise, the gas glut has been half-solved by the anti-nuclear policy.

But it's no party for gas generators either. Overcapacity in Europe affects the whole energy chain and in natural gas it still exists and it's quite relevant. The use of combined cycles for electricity generation has fallen to become a mere anecdote that works as "back up" to renewables and European CCGTs continue to generate very poor returns.

The German nuclear power shut-down, therefore, will do nothing but increase the consumer's electricity bill, and only replaces cheap, base-load power for costly, intermittent peak-load power, but does not solve either the high reserve margins or the efficiency of the system.

Renewables play a very relevant role and will increase significantly in the next five years. But the cost of replacing all nuclear with renewables would be prohibitive and energy dependence would increase due to the lack of domestic natural resources (Germany has lignite, Europe has shale gas, but seems more inclined to ban it than develop it) . Let's be sensible.

Other related posts:

http://energyandmoney.blogspot.com/2011/03/anti-nuclear-state-of-fear-japan-and.html

http://energyandmoney.blogspot.com/2009/05/reserve-margins-are-clearly-acceptable.html

http://energyandmoney.blogspot.com/2009/10/careful-with-german-power-prices.html

Thoughts On The European Crisis

(Extract from an interview with me published in the Spanish press on June 20th, 2011)

How do you see the situation in Europe?


Complicated. On the one hand, Europe has a powerful engine, Germany and the Nordic countries, and sometimes we forget that this engine has the same GDP as China.However, industrial demand from the rest of Europe is deteriorating, and countries have not used the crisis to reduce debt dramatically.

A strong euro, driven by the European engine does not help, and differences between countries have increased. A strong euro means that the over-indebted economies, which are also big exporters, become less competitive.

In my opinion, the estimates of GDP, especially for 2012, are still very high and the estimated deficit levels are relatively optimistic in the peripheral countries. Italy could be a negative surprise, but this crisis can also be a great opportunity to eliminate the weight of the low productivity and high debt  sectors (construction, civil works) and support high-productivity sectors (technology, energy, services) that have been behaving really well under the circumstances.

What can happen if finally Greece has to restructure its debt?

So far the European crisis has been suffered by citizens, equity investors and businesses, but not by the bondholders. This paradox is curious. Europe has an entire economic and financial system that is supported by the fallacy that sovereign debt has no risk. This affects everyone from private investors to governments (local and state) to banks, their investment criteria and their perception of risk, and has generated a disproportionate percentage of sovereign bonds in portfolios. The CDS widening has been perceived as an opportunity to buy "no-risk assets but with high return", not as a warning sign.

Going back to the Greek debt, to keep bonds as if nothing was happening, when these are already discounting a "default", only prolongs the agony of a story whose end can only be to restructure. Once the debt is restructured in a proper way, it will be the time to see the beginning of the recovery in Europe and the peripheral countries. It will likely be a tough process and austerity plans will be much more demanding than current estimates, but it will also be the beginning of the solution, because the new governments that will manage Europe between 2013-2015 will no longer have the same vision of the problem of debt which so far has been to "hold on and wait for the issue to solve itself.".

If it were in your hand ... bail-out or restructuring?

Restructuring always, in an orderly manner and agreed with the financial institutions. Bailouts only encourage bad government behaviour , because there is no penalty for poor managers. Citizens end up paying anyway through higher taxes and worse working conditions because, as we have seen with Greece, that received a massive bailout already two years ago, a few months later the economy is in the same same poor situation, if not worse.

And Spain, is it better than the market thinks or, as some say, the situation is worse?

The big question is the debt of the regional communities and the State's ability to join community after community to solve the debt problem and tackle unnecessary spending. Investors do not know exactly what the real indebtedness of the state is, and how much of all the enormous "receivable" items are simply bad debt and will never be paid.

Spain today is a bit better than the market thinks, and has positively surprised, because high productivity sectors of the economy have pushed in a very difficult environment, but that process can slow down or stop short if the real debt of the country is much higher, and deeper and more drastic reforms are not implemented because of a period of prolonged political uncertainty, because investment will stop.

What will we see in the markets short term?

The market discounts a very optimistic scenario for corporate earnings in Europe for the following two years, and especially a scenario of extremely optimistic cash-flow generation. EPS momentum is very weak. Consensus should review not only their earnings estimates, but target prices, because in some cases the latter ones are simply amazing.

A market correction that lowers the real PE (the revised one, not the current one) of the market to more reasonable levels will be a very attractive opportunity to buy, considering that the next cycle will probably be longer in duration (if countries do the right thing about debt) and less aggressive than the 2009-2010 one. The mistake, in my opinion is to seek refuge in index heavy weights or betting on companies that pay optical high dividends, when those are financed with debt.

Given that interest rates will not be low forever, it still makes sense to stick to well-capitalized stocks, growth companies that generate superior returns in the bottom of the cycle, and focus on high-productivity sectors.

External link: http://www.cotizalia.com/galeria/daniel-lacalle-20110620.html

Why CO2 collapsed 20% in two days

The price of CO2 emission rights in Europe has fallen 20% in two days. The move is the most drastic seen in the commodity space in a long while and can be attributed to the following dynamics:

a) Financial investors went long CO2 rights buying into the catalyst of the phase III of Kyoto, the stronger policies towards renewables announced by the EU and the infamous "Fukushima effect" (buying into renewable themes on a vague promise of policy changes and the German nuclear phase out).

b) At the same time, European industries, which were already long EUAs in 2009 and 2010, see less need to hedge because industrial demand is poor and there is excess supply.

The EU decision to make an early sale of 300mn allowances from a post-2012 reserve is also weighing down on prices.

Poland recently vetoed the proposal to toughen EU’s emission reduction program, which is also adding pressure on the price.

Also, Greece’s decision to auction off  their EUA reserves to raise funds for the government had a bad start last week, as the first auction on Wednesday saw only 4% of the available credits sold at €16.11/t. They are still selling. Panic can be partially explained also by the concern that, if Greece sells all its EUAs, what if Belgium, Portugal or others do the same?".



c) Lower demand. Deutsche Bank has cut its 2011 forecast of CO2 price by 19% to €17/t and 2012 estimate by 14% to €19/t, largely driven by expectations of slower economic growth in Europe...

d) ... Creating the perfect storm. When CO2 prices broke the support level of €15.5/t, we saw large stop losses because of the previously mentioned large options positions... and the stop-loss forced selling added to the governments selling and lack of demand has generated this slump.

At the core of the problem we have the issue that Europe's debt crisis affects CO2 markets the most because the European Union is 30% of the emissions of the world, but (hold on) 100% of the cost as no other country has adhered to emission trading schemes. Therefore, a slowdown in industrial production and a debt crisis that could delay the extremely aggressive and optimistic plans for a low carbon economy announced for 2050, added to the slow but sure slowdown in power demand is proving that a system that was artificially created (see my comment here) is causing the demise of a government-forced scheme that ultimately was only a tax, as emissions actually rose in 2010 despite all the good intentions.

As a very knowledgeable friend of mine says: "Investing in renewable themes right now is risky because everything is a donation".

Further read:
http://energyandmoney.blogspot.com/2011/01/some-energy-thoughts-for-2011.html

http://energyandmoney.blogspot.com/2009/10/careful-with-german-power-prices.html

http://energyandmoney.blogspot.com/2009/05/reserve-margins-are-clearly-acceptable.html

Energy, Markets and Money: The Debacle of Solar and 'Tariff Support' Models

Energy, Markets and Money: The Debacle of Solar and 'Tariff Support' Models: "Solar stocks are the worst performers again, despite the Fukushima hype and extremely generous tariff support. The solar sector (January to ..."

Can Norway Really Offset Oil Production Decline?

The Norwegian oil production decline is staggering. The figures are simply incredible. Total liquids production in April came at 2.10mbpd, flat from March, but down 7.1% year-on-year. Production has fallen by more than 20% (440kbpd) from 1991 levels, Problems have come in all shapes and forms. Corrosion of old infrastructures, lack of proper investments prior to the merger of Statoil and Norsk Hydro, lack of in-depth analysis of reservoir and the optimal recovery techniques, added to a less than stellar appraisal and development process.


Let's start with a fact: There is a technical and cost challenge that is evident, but given the success in exploration and the experience of similar geological structures, it is not clear that the decline is impossible to offset due to an irreversible geological problem.


Statoil has set itself to correct this issue and has in the pipeline more than 100 projects targeting 1.2mbpd. Will they be able to offset decline?.  Well, the track-record so far does not lead me to be optimistic. Since 2004 Statoil has been a story of consensus downgrades (it was supposed to deliver 16% production growth in 2006 and it ended being flat), cost overruns and delays. True, the merger with Norsk Hydro did not make things easy, but the under-delivery was simply jaw-dropping. Now things are set to change.


Statoil, at its Capital markets Day in New York, set itself with the ambitious target of growing production by 3%pa to 2020. The problem is that the road will be bumpy. 2012 growth will be strong, only to be flat in 2013 again, and project delivery gets trickier as we move into the back-end of their target period.


Capital intensity to deliver this offset of decline and subsequent growth will not be small. $16bn per annum and $90/bbl break-even (remember taxes are very high in Norway) until 2015, when the growth projects finally kick in and costs could, if delivered, start to fall.


From an investor perspective, and from a global-supply demand standpoint, the most relevant point is that Statoil intends to keep production flat as a base case from 2011-2020 implying an absolutely categorical view that  decline will be offset. Skrugard, which could add 60-90kbd (gross) by 2020, or a Train 2 at Snoehvit could be the main surprises. Also, new "fast-tracked" projects beyond the existing 10 fast-tracked projects - could add another c.70kbd by 2020.      


What can go wrong? First, such a large number of relevant but complex projects can be delayed easily. Skarv has already been delayed, resulting in a 20kbd impact at the project level in 2011. 


Although average breakeven for Norwegian Continental Shelf projects stands at c$50/bbl, there are also significantly higher cost projects. Costs per barrel have escalated with the production decline, but once the main technical challenges have been well understood, the infrastructure has already been in place and can be used for multiple projects, costs can rapidly fall. Now it's time to deliver. It will not be easy.


Further read:


http://energyandmoney.blogspot.com/2011/01/some-energy-thoughts-for-2011.html


http://energyandmoney.blogspot.com/2009/11/2010-warning-risk-for-non-opec-supply.html

Shale Gas, Poland... The Energy Treasure That Most Of Europe Rejects

(This is a merger of two articles I published in Spanish in Cotizalia)

Nine hundred billion euros.This is what Europe could save in its goal of reducing CO2 emissions by 80% in 2050 if, in addition to further renewable energy, the continent would develop its shale gas reserves according to this sector study. And what will Europe do? If it follows the example of France, threaten to ban hydraulic fracking.

The funniest thing is that the coal, conventional gas and solar lobbies have all joined forces in the war against shale gas. There must be something truly threatening and interesting to see such an unholy alliance.

None of the three are interested in cheap gas prices, because they have seen with horror how gas prices in the U.S. have plummeted due to the shale gas revolution, and therefore obliterated the use of coal for power generation and the grants of succulent subsidies as abundant energy reduced power prices (see my previous post about this). And for a continent obsessed on energy independence, it seems funny for Europe to deny the chance of developing domestic gas, not Russian or Nigerian or Qatari. European. And 50% cheaper if production grows as it has in the United States. What a horror. Ban It!

Europe has no fewer than 156 tcm (trillion cubic metres) of estimated shale gas reserves. That means c90 years of demand covered and saving up to €24bn p.a of subsidies for alternative technologies. Ban it!.

Fracking technology, thanks to the revolution of shale gas in the United States is tried, tested and of negligible ecological impact. However, we have seen many alarmist reports, even a movie, Gasland, which was immediately refuted by the industry, scientists and the Department of State U.S. Energy as inaccurate... But best of all in these alarmist reports is that in every one you read that "we could not confirm accurately any of (these) claims "(Cornell study, for example). When I wrote this post about the shale gas revolution many just ignored it as uneconomical.

Point by point, it is worth noting:

. Hydraulic fracturing technology is proven, is used in thousands of wells in the U.S. annually safely, and there have only been one or two cases of minor accidents. The fluids used in the fracking of the rock are composed by more than 99.98% of water (94.62%) and sand (5.24%), with a minimal amount of chemicals, highly diluted, easily stored and handled safely.

Of these chemicals, the majority (hydrochloric acid, ethanol, methanol, ethylene and sodium hydroxide) are recovered perfectly in the extraction process.No state or local department in the U.S. has found evidence of water pollution of aquifers. The industry is also using more than 5,000 tons of steel and cement to protect the groundwater, and the fracking process occurs at least a mile deep, well away from the aquifers.

This reality, Europe's available natural resources is what none of the politicians and lobbyists mentioned, fans of subsidies, want you to see. They prefer inculcating fear with tales of energy dependence and expensive subsidised technologies. Before looking for a solution to develop the continent's natural resources efficiently, in a clean and competitive manner, they prefer to ban. And then complain about the energy dependence.

Europe wants cheap energy, but does not want nuclear, and now seems unwilling to develop shale gas. Meanwhile, in the 1st quarter of 2011 energy costs, paid by businesses and consumers, are again the highest in the OECD. The EU will continue to be 100% of the cost of CO2, 70% of energy subsidies in the OECD and will further reduce its ability to compete.

While gas production in the U.S. has pushed prices for gas and electricity at highly attractive levels for industrial productivity, the policy of "not in my backyard" of the EU continues. It's easy to complain about the evil energy exporting countries when at the same time domestic production is curtailed. Instead of collaborating with the industry and with proper regulation to monitor that gas is extracted in the safest and most ecological way, they prefer to ban, with the risk of sinking the competitiveness of our economies with expensive energy as we demand that the rest of the world changes.

But Poland is different. Wood MacKenzie estimates that Poland could hold 3 trillion cubic feet of gas reserves in unconventional (tight gas and shale) spread between the North and the Midwest,which, if confirmed, would mean an increase in European gas reserves of 47%.

Poland depends on Russian imports by more than 75% (11.6 BCM / year) and the unconventional gas reserves can be a very important factor to improve its ratio of domestic production.

Given an opportunity to access new reserves in countries with no geopolitical risk, European companies are starting to wake up and rushing to the challenge. Total has just moved in. However, in Poland the main companies betting on the resource base are Chevron, ExxonMobil, Marathon, Talisman and Conoco.

The Polish government has awarded over 85 exploration licenses lately with the goal of achieving results in three to four years. Conoco (with 3 Legs) has been the first to drill near Gdansk, and the results are very solid although it is early to know the cost structure or plan development.

Besides the major U.S. oil companies in Poland there are several independent exploration companies present, 3 Legs, San Leon or Aurelian, for example.

Poland's shale gas opportunity shows the following key points, according to Tudor Pickering:

. Geologically thick, organic, brittle, with multiple targets at <10,000 ft.
. EIA ranks the Baltic Basin as 80% play success factor.
. Thermal maturity indicates abundant gas generally, but oil windows are possible.
. Lifting costs in Poland may be a quarter of the US.
. Political and public support is very high.
. Seismic is being acquired and 30+vertical wells are being planned for 2011-12.
. Low royalty and corporate tax at 19%.
. Poland gas price is more attractive than US Henry hub as it is oil linked, and priced at $8-8.5/MMbtu (versus US at $5/MMBtu).

The recent IPO by 3legs values the Baltic Basin shale acreage at ~$450/acre.

It is worth alerting the risks of being overly optimistic.That's why it seems very exaggerated what seeking Alpha said that Poland shale gas may be the end of Gazprom.

Poland has signed an agreement with Gazprom to increase its supplies by 30% in 2011 and Ukraine has increased its commitment to buy Russian gas by 11% this year ...And Ukraine has its own potential in shale gas exploration, as Chevron knows. that is why the US giant is reviewing prospects in the Polish border with Ukraine, in Zamosc.

And in the rest of Europe? It is still very difficult to see real possibilities due to lack of political support. Statoil and Chesapeake are analysing more than 15 new areas in Germany, France and the North Sea, among others. The last time I saw the CEO of Chesapeake in March he was confident of the geology but not optimistic about political support.

In my opinion, the shale gas in Europe is an excellent opportunity but also carries an operating cost of not less than $2/mmbtu given the enormous cost of water in Europe, representing nearly 60% of the cost of drilling. and water is essential to fracture the rock.

Poland is now beyond the stage of "promise" and is a country we will follow closely in this blog, because when you see such concentration of oil companies in one area, there is a reason.

Further read:

http://www.thegwpf.org/press-releases/2938-new-report-shale-gas-shock-challenges-climate-and-energy-policies.html

World shale resources: 

http://www.eia.gov/analysis/studies/worldshalegas/

http://www.aei.org/article/103815

http://energyandmoney.blogspot.com/2010/01/revolution-of-shale-gas.html

http://energyandmoney.blogspot.com/2010/11/shale-oil-600-years-of-supply.html

http://energyandmoney.blogspot.com/2009/11/china-exxon-and-war-for-resources.html

Peak Oil Defenders' Most Overlooked Myth: EROEI

“So long as oil is used as a source of energy, when the energy cost of recovering a barrel of oil becomes greater than the energy content of the oil, production will cease no matter what the monetary price may be."- M. King Hubbert

Yes, friends, if EROEIs of unconventional and new oil production were as low as some defend, the industry would simply abandon those resources.

Peak Oil defenders continue to make new claims. While inventories reach the highest levels of the past five years, OPEC fights to keep quotas and for a third consecutive year reserve replacement remains strong, in a world that has not seen a single day of disruption in oil supply, the defenders claim that the problem is EROEI (energy returned on energy invested) and that therefore, it doesn't matter if supply is abundant, because it is still negative.

I had the pleasure of talking with industry leaders and this is their response.

a) The concept of EROEI has to be clearly attached to profitability. Peak oil crash defenders scream at 4:1 levels as unsustainable. This is funny. An "alleged" low EROEI is not necessarily a negative in itself, given that low cost of capital and high technology developments have helped to have readily available and abundant energy all over the energy complex (not only in non-conventional, but in conventional resources), and there has been no issue with supply in any environment despite a few geopolitical bumps. Furthermore, that EROEI rises as efficiency and productivity help reduce power use and increase output.

b) The concept of EROEI is static, it uses an estimate of energy consumption that starts at an intensive point and that just stays or rises afterwards, and this has proven to be wrong (energy used per unit produced falls dramatically in virtually all industry projects, see Shell's analysis of oil sands extraction).

c) If EROEI estimates published by peak oil defenders were correct, given the gigantic increase in E&P and non-conventional spending we have had, power usage, and electricity prices and gas prices would have rocketed... But they have fallen. Co-generation is barely considered by EROEI doomsters either.

More importantly, in projects as energy intensive as PNG LNG, cost of energy used has fallen by 34%.

In Oil sands we have seen drops of 25% per unit of production. In shale oil as dramatic as 34%. The graph below shows the EROEI estimates of the Department of Energy in 2006 (link here). This was in 2006. Since then the efficiency and lower use of power and energy in hydraulic fracking and oil sands extraction has significantly increased the EROEI.

d) EROEI is an excuse of peak oil defenders to justify that they have been wrong about supply, turning the debate to the alleged unsustainability of that same supply as a justification.

Finally, any of the peak oil defenders needs to explain how the development cost of the industry has fallen, the energy intensity of the industry has gone down dramatically (they don't read companies sustainability reports?) yet reserves and production have improved 2006-2010, fundamentally in unconventional.

The EROEI theory takes an individual projection (and this is typical for peak oil), leaves the negative elements untouched and stable (as if techonology and resource development did not improve) and then expands it to the entire base.

This, obviously, leads to a massive generalization and a leap of faith that can be easily denied just looking at 20-F filings, detailed analysis per project, which are available to all shareholders in strategy presentations and Fact Books, and in the brutal fact that oil sector's electricity and gas consumption has been falling while productivity, particularly in non-conventionals, has soared.

Never bet against human ingenuity.

Further read. The Oil Drum (link here):

On EROEI of oil sands

"EROI depends mostly upon the direct energy used and which alone suggests an EROI of about 5.8. Including indirect energy decreases the EROI to about 5.2", "adding in labor and environmental costs have little effect". "Nevertheless it appears that tar sands mining yields a significantly positive EROI".



On shale oil "Reported EROIs (energy return on investments) are generally in the range of 1.5:1 to 4:1, with a few extreme values between 7:1 and 13:1". "Tar sands and oil shales seem to be in the same EROI ballpark”.


Note from Daniel Lacalle: Worth noting that the assumption of energy consumption in the article for shale oil is now widely seen as excessive, so real EROEI is currently close to the latter part of the analysis (7x to 13x)

Further read:

http://energyandmoney.blogspot.com/2009/11/peak-oil-realities-myth-and-risk.html

China Slows Down... as Saudi Arabia Accelerates?

(This article was published in Cotizalia on Thursday, 16th June 2011)

The Oil & Gas sector, the world's most profitable and less indebted one, will invest in 2011 for the first time in its history more than $500 billion in exploration and production alone. The level of value creation and development that these investments generate can not be compared to any other industry or sector in the world, and if we include gas and refining they will reach a total of $790 billion.

Saudi Arabia announced this week an increase in production, showing the frustration they have after being one of the few OPEC countries to comply with the quotas. Imagine, if they presented themselves later this year at the next meeting and see that OPEC produces 26.2 million barrels/day (when the quota is 24.9) and found that the output gap between them and others had widened. Iran, for example, has increased production by 45,000 barrels/day (to 4.24 million barrels a day) despite a 35% drop in oil investments since the beginning of the embargo.

Saudi Arabia will not appear at the next OPEC meeting as the only good boy in the class with homework done. Because if quotas are revised up, then everyone has to start from the same base, and there is no evidence that the other OPEC countries will decide to reduce their current output.



Anyway, it's a good decision which, together with increases in other countries over the quota, partially mitigates the effect of the lost Libyan barrels. Partially because Libyan barrels are of exceptional quality and the oil that is to replace them is heavier, making it difficult to replace, for example, in the Italian refineries.

In the last three weeks I have seen over twenty-five executives from oil companies, including all the big oil companies and if there's a comment that is repeated each time over and over it's this: Almost no one believes the sustainability of demand in China. And watch out for the estimates of the IEA, EIA etc., which use "diplomatic" data, especially in their demand models, where the estimates depend on GDP projections which are generated by the governments, which have a nasty habit of being wrong (as a fun exercise, look at the growth estimates published in 2006 for 2009).

As John Watson, CEO of Chevron, says, if the industry had listened to these agencies in the past twenty years, or whomever recommended them to "improve" their cost of capital by re-gearing, the sector would all be in bankruptcy.

I already commented briefly on the Chinese slowdown here. To follow up on those comments, hese are the arguments from the industry, and from my own analysts in Hong Kong to question China's demand sustainability:

a) Sales of cars do not match with demand for gasoline and diesel. Apparent consumption of gasoline remains at 6.1 million tonnes and 13.86 million tons of diesel. These figures are much lower than the sales of cars and trucks would indicate (with 1,382,770 vehicles sold in May).

To give you an idea, using the model of China's own state expected evolution of consumption by type of vehicle, demand for diesel and diesel is suspiciously 12% less than it should be. The theory advocated by many investors that many of these vehicles remain parked without use is at least plausible.

b) The apparent oil demand in China remains around the 39 million ton figure for months. With seasonal changes, of course, but total demand has not exceeded 40 million tons since September. If we add that industrial production began to show signs of weakness (falling from 14.2% in 2010 to 13.3%), growth was generated primarily by fixed capital expenditures... just as the Chinese government begins to take measures to cool the economy .

c) This demand has been maintained but inflation has continued to grow (mainly because of food, +11.7% in May) despite the government's containment measures. If the government sets as a priority to curb inflation (+5% now compared to target of 4%), the impact on oil demand can be significant.

d) The estimates of per capita consumption growth are inflated . China consumes 6.2 barrels per day of oil per thousand people (EU consumes 27). That number seems small, but we must not forget that Hong Kong consumes more than 43 already, and the largest cities of China consume up to 24.6 barrels per day of oil per thousand people. So the upside is exaggerated.

The risk for analysts who think China will grow exponentially is that they assume that demand will be the same as in the cities in rural areas, and look at Russia and Brazil. Patterns are very different. In addition, China already consumes almost 10% of the oil in the world with a GDP of $6 trillion (versus $14 trn in EU), as we mentioned last week .

I still think that the short-term risk of a significant correction is not small. As in 2008, the ingredients are there: massive increase in investment in oil, excess crude inventories that are still too high (at highs of five year levels), increased OPEC production, which still has 4.5 million barrels/day spare capacity ... just as demand slows in China, and a general environment in which estimates of OECD GDP appear too high, at least by 0.2-0.3%.

I can be wrong, but at least I think it is good to see that the oil sector takes the data from China with caution. That is why it's the world's most profitable sector. If the data are true, the group ROCE will exceed the historical 23%, and if they are wrong the sector will remain comfortably safe thanks to a very low debt (aggregate and individually).

Iran grows output despite embargo driving a 35% fall in oil investments

According to BP's latest report, the Statistical Review of World Energy, Iran's daily oil production climbed 45,000 barrels compared to the 2009 figure. This increase comes despite the embargo having impacted oil and gas investments by 35%. if investments had remained at the level of 2005-2006, Iran could have posted the highest production growth of all OPEC countries (ex-quota changes).

According to a friend at NIOC, lack of investment stands at the heart of the challenging environment for Iran oil output, not the quality of the reserves. In fact, according to Shell and ENI, Iran is a "dream" in terms of recoverable reserves, with low costs and high productivity. The only problem, as Total's CEO pointed out as well, is the embargo, which could turn rapidly if the current regime changes.

Despite the positive 2010 figures, Iran could face a sharp drop in crude oil production due to sanctions and the lack of foreign investment. The Oil Ministry has determined that Iran would see a 30 percent decline in oil output given the 35% (average) drop in investments, unless the government attracts major foreign investment to the energy sector. The Teheran regime has set a requirement for $150 billion in investment for the period 2010-2015 (which would be in line with normal estimates and bringing the average capex back to historical pre-embargo levels).

"If the investments are not realized, the country's oil output will drop to 2.7 million barrels per day," Iranian Deputy Oil Minister Mohsen Khojasteh-Mehr said.

Under the ministry plan, Iran's output capacity would increase from the current four million to 4.7 million barrels per day by 2015. Natural gas capacity, the focus of $75 billion in investments, would rise from 600 million to 1.47 billion cubic meters per day.

Average Iran's crude production in 2010 stood at 4.245 million barrels per day, and the country's natural gas production posted a 5.6 percent increase to settle at 138.5 billion cubic meters in 2010, the report said.

According to the BP report, Iran produced 5.2 percent of the global oil output, and 4.3 percent of the total natural gas production of the world.

Iran ranked fourth in the world in terms of crude production after Russia, Saudi Arabia and the United States. The Islamic Republic is also fourth in gas production after the US, Russia, and Canada, has the world's second-largest crude reserves after Saudi Arabia and the second largest gas reserves after Russia.

Moreover, BP also stated that Iran has proven oil reserves that would last for the next 88 years, the second longest-lasting oil source in the world.

On a different note, and based on the reserves-to-production ratio index, UAE will be the prominent source of oil for the world with oil reserves that would last for the next 94 years.

The Debacle of Solar and 'Tariff Support' Models

(This article was published in Spanish in Cotizalia on June 23rd 2011)

Solar stocks are the worst performers again, despite the Fukushima hype and extremely generous tariff support. The solar sector (January to June) is down 10% versus the renewables sector down 5.8%, and some of the most abrupt moves in solar are in Q-Cells -33%, REC -41.5%, Phoenix Solar -26%,  Renesola -49%, E-ton Solar -50%, China Sunergy -56%.

The reason why the sector continues to collapse like a falling knife is that it has not proven how they can make any money unless there is dreamtime-like expansion.

We tend to believe that tariffs that support volume growth but cut prices more rapidly will benefit the industry (and equities) as a whole more, but hurt higher cost participants sooner. It is wrong. Because the sector starts from overcapacity and excessive cost and even with costs falling 39%, and subsidies that guarantee on average €180/MWh they still lose money.

Developers in regional markets in some cases would prefer capacity caps with higher tariffs, thus enjoying the spoils of overcapacity-driven solar ASP (average selling price) pressures from their suppliers. The Asian manufacturers have zero discipline in capex or growth, they need only a 3-month price signal and they further expand, which virtuously keeps driving down the cost. Something like 10GW of new manufacturing capacity (40%) is coming online during 2011, while demand (global) is expected to rise about 15% at best.

The big 'if' is if Italy imposes an annual 2-GW/yr cap on installations; if they do, most of the marginal players in Asia will have nowhere to put their last 20% of production and we have a rapid fall in prices, margins and profits which then will lead to the proverbial 'boom/bust'. But before then, we would expect margins to compress by 50% or more in some cases in the food chain, as we saw in wind--could see stocks fall 20-40% over the summer.

If the industry were logical and wanted to lower the cost of solar – what should it do? If you assume 1600 kWh/kW capacity factor, €35c/kWh FiT (Italy), and assume that the installations are made from 2012-2016, the €6bb/year economic burden by 2016 translates to ~2.1GW/year from 2012-16.

If the industry instead accepted a €25c/kWh FiT (~30% cut), the industry could support a 3GW/year cap at the same economic burden. If the industry accepted a €20c/kWh FiT (~40-45% cut), the industry could support 3.75GW/year. If the industry accepted €15c/kW FiT (55-60% FiT cut), the industry could support 5GW/year. If the industry accepted a 55-60% FIT cut and used that as a basis to support a higher economic burden of €6.9bb/year, it could support a 5.8GW/year limit for PV.

Will they?. I doubt it. The Chinese companies have 50GW of capacity for a 20GW market. Companies are unable to achieve IRRs of 10% with subsidies of $140/MWh (US), €230/MWh (Germany) or, brace yourselves, €400/MWh (Spain), all PV solar. This is, on average between 4 to 10x the average price of power in any of those contries... and companies still are unable to make more than 10-12% IRR despite a fall in costs of 38-40%!!

In the first quarter of 2011, the average selling price (ASP) of solar modules fell again like a rock. ASPs fell c45% globally while costs fell a slower ~37% pace. So in essence, prices fall more than costs and, as overcapacity grows, the downward trend is exacerbated by working capital requirements. A race to zero? probably, unless capacity retirements really start and companies streamline their debt. But capacity cannot be slashed when the main competitors in all parts of the chain, Chinese in particular, but Germans too, have a capital allocation policy based on growth at any cost.

At the heart of this we have an over-leveraged industry: 80-85% at project level is already unsustainable, but the companies are leveraged also at the holding level, making total gearing to the tune of 5-6x Net Debt to EBITDA. Overcapacity in all parts of the value chain, from wafers to poly-sylicon and development stands at more than 50-60% on average, and competitors (not just Chinese, Germans too) show low capital discipline and imperialistic market share aspirations. So at the minimum price signal (a tariff announcement, a government renewable plan confirmation), capacity grows way above demand. And despite the fall in costs, it is astonishing to see the companies unable to get their head above water. Working capital requirements eat any equity IRRs and debt obliterates the profitability. Add to this overcapacity and no wonder you ave seen 40-50% falls in stock prices in solar.

The Asian build more and more capacity, however some part of the production chain are much easier (from a technology and timing stand point) and cheaper to add than others. To simplify, the lower in the value, the easier/cheaper it is to add capacity. As a result, the value chain today would look like an inverse pyramid with more capacity downstream than upstream:

From upstream to downstream the value chain is:
- Polysilicon
- Wafer
- Cell
- Module

As cell capacity grew larger than wafer, demand for wafer was tight and wafer ASP shot up, squeezing cell margins. Then with this positive price signal at the wafer level, Asians have added wafer capacity. As a results, there were more wafer capacity than polysilicon available. Wafer guys margin got squeezed and polysilicon guys reaped all the profit. In Q1 11, the CAPEX for polysilicon for Asian companies could be recouped within one year as spot price for polysilicon was so high (gross margin >50%). Now overcapacity looms, gross margin collapsed and we are at the tipping point where polysilicon companies still need to lower their margins otherwise the whole industry will come to a halt. Presently, wafer and cells producers are barely earning a gross profit.

If you wanted to be cynical, you could say that the Germans and Spaniards actually tricked the Chinese by sending positive price signals for a few years, enticing the Asian the build, build and build, and now that there is massive overcapacity, cost of PV is likely to be close to grid parity. But companies are in dire straits and making poor returns, so any cut in tariffs obliterates them.

As the ability of governments to keep those supernormal subsidies dies (85% of subsidies for solar are in Europe, mostly Germany), the industry is condemned to a massive re-structuring.

Solar returns are collapsing DUE to the big subsidies. Subsidies created this industry and are now part of its demise. They created artificial signals for demand and then ultimately supply. Now, supply is in trouble due to overbuilding/expansions. Is it temporary? Maybe, and if "temporary" means 5 years it will be death for many, but margin compression is not.

Solar energy is not a problem as a concept. Greed fuelled by government-led price signals, that fade as quickly as they come, added to unsustainable debt and undisciplined capital allocation is the problem.

Related posts:

http://energyandmoney.blogspot.com/2011/03/anti-nuclear-state-of-fear-japan-and.html

http://energyandmoney.blogspot.com/2011/01/some-energy-thoughts-for-2011.html

A few notes on Africa E&P... Unexplored and unmissable

Notes on Africa (this is a follow up to my previous post from Dec 2010)

East Africa deepwater...

Big expectations in oil and gas from deepwater Mozambique and Tanzania after Anadarko’s Windjammer gas discovery confirmed the Rovuma basin as an emerging gas province.

With gas in nearby markets selling for $2-3/mcf, the lack of nearby infrastructure means that threshold commercial volumes will likely be high.

Much will be dependent on recovery rates per well (which can range from 50 bcf/d to 450 bcf/d offshore) but two subsequent gas finds (Barquentine and Lagosta) have already led to talk of there being enough gas to underpin an LNG development.

An even bigger prize is finding commercial oil after the Ironclad well penetrated a 38 metre column of oil and gas-saturated sands in one of two fan lobes of cretaceous sediments.

The ultimate prize would be the opening up of not only the Rovuma basin but also the other eight basins contained in the Mozambique channel which runs from Southern Tanzania to Madagascar.

Companies: (Mozambique) Anadarko, Tullow, Mitsui, BPRL, Videocon, Cove Energy, Eni, Statoil (Tanzania) Exxon, Statoil, BG, Tullow, Dominion, Aminex, Beach Energy, Orca Exploration, Artumas, Maurel and Prom.

Guyana basin – joined up stratigraphic? ...

The Equatorial Atlantic Margin play has its origins when Africa and South America drifted apart. Following success in Ghana and subsequently Sierra Leone (with the Venus well), the industry is now turning its attention across the Atlantic to the stratigraphic potential of the Guyana basin, which stretches across Guyana, Suriname and French Guiana. The main challenge is to define prospective traps along the migration path from mature source rocks. Much of the multi billion barrel potential is thought to exist in stratigraphic traps in tertiary turbidite sandstones and deeper cretaceous fan systems similar to the Jubilee play.

This is real frontier exploration with promise.

Companies: Exxon, Shell, Total, Repsol, Tullow, Noble Energy, Murphy Oil, Inpex, Petro-Hunt, CGX Energy, Staatsolie (state energy company of Suriname)

West African pre-salt – Gondwana again

Many companies think that West Africa’s pre-salt geology mirrors that of Brazil.

The theory here is that the pre-rift geology below the sealing thick salt layer remained the same even after Gondwana separated to form Africa and South America. 3D basin modelling and geochemistry suggests a close match between West African and South Amercian margin basins in terms of pre-salt depositional sequences. This holds out the possibility of large pre-salt oil deposits in Angola, Namibia, Gabon and Congo.

Possibly the biggest proponent of this is Marcio Mello, CEO of HRT, who thinks that giant deposits in the pre-salt in Angola is “a certainty, not a possibility” with objectives in the Upper Cretaceous turbidite sandstones and syn-rift carbonates and sandstones identified that are analogous to the Tupi and Jupiter fields in Brazil. Sonangol and Petrobras recently started a joint preliminary study into the Angolan pre-salt and Sonangol has stated that it intends to drill one or two pre-salt wells by 2012. Petrobras and Cobalt hold African pre-salt acreage in Angola and Gabon whilst Repsol and Chevron are showing a strong interest through public statements they have made. It is early days yet but it does look like the risk capital will come.

Companies: Petrobras, Sonangol, Cobalt, Chevron

Finally, I have screened the entire sector of quoted E&Ps to look for companies with the largest acreage and drilling, still with no production, or development. These are the largest ones, which go from $98m market cap to $665m, a median of $100m equity.

A) None of them has any debt

B) All of them have cash to undertake 18 months of drilling commitments

C) None of them has pipeline projects.

D) Most own 100% of licenses and are operators, with rigs already committed.
E) All of them hold very large acreage with enormous prospectivity (and risk).

. Chariot Oil (Namibia). $640m equity value. Acreage 30,000 sq km. 100% operator. Cash for 20 months of drilling.

. Dominion (East Africa). $150m equity. Acreage more than 20,000 sq kms. Tanzania, Uganda, Congo (with Soco). Cash for 16 months of drilling.

. Tower (Namibia and Namibia). $98m equity value. 18,000 sq kms. Cash in balance sheet.

See: http://energyandmoney.blogspot.com/2010/12/africa-most-promising-frontier-area-for.html

Mis recomendaciones al movimiento Spanish Revolution

(Articulo publicado en El Confidencial el 27/5/2011) 


He pasado casi una semana intercambiando tuits con integrantes y simpatizantes del movimiento Democracia Real Ya. Debo reconocer que ha sido una experiencia muy enriquecedora y de la que he aprendido mucho. Empecé, como tantos, con grandes sospechas, entre mensajes de nacionalización de la banca, anarquía y algún que otro insulto.

Debo confesar que lo que me llevó a comenzar el diálogo hasta bien entrada la madrugada de los últimos días fue la duda de la imparcialidad del movimiento, ya que cuando gobierna la izquierda los protestantes atacan al “sistema”, ente difuso e impersonal, y cuando gobierna la derecha las protestas van dirigidas específicamente a personas con nombre, apellidos y carnet de identidad. Ese punto de “solidaridad en la desgracia” hacia gobiernos de un lado y otro a los que los suyos y sus simpatizantes les presuponen siempre buena intención y superioridad moral. Tuvieron mala suerte, qué se le va a hacer. La culpa es del “sistema”. Vaya por Dios.

Pues bien, a medida que intercambiaba ideas con los twiteros se estableció un diálogo francamente interesante y revelador. Gente muy preparada, frustrada pero cabal y con espíritu constructivo. El verdadero germen de lo que puede ser el futuro. Allá van mis recomendaciones, con humildad. Tómenlas como una simple aportación desde mi respeto y mi cariño:

.- Si preocupa la dictadura de los mercados, no a la deuda. Reclamar más subsidios y más gasto solo va a generar más dependencia de los mercados, que tienen la mala costumbre de exigir que se les repague su préstamo y que se le remunere un interés adecuado. Una economía endeudada solo genera dependencia. Si todas las empresas y tecnologías que defienden viven de subsidio, no florecen, sobreviven, y el beneficio que generan para sí mismas es directamente proporcional a la pérdida que usted percibe en su bolsillo. Los subsidios excesivos crean pereza, y por muy bienintencionados que sean son un fondo perdido, que genera gasto, más deuda, y mayor empobrecimiento.

.- Menos impuestos, más derechos. Menos impuestos para las rentas bajas y medias. Financiar al Estado pagando impuestos en exceso en las nóminas para luego “devolver” la renta es regalar dinero. Hagan que el Estado no tenga la tentación de gastar insosteniblemente. Den más renta disponible a las familias, que han demostrado ser capaces de gestionar la crisis mucho mejor que cualquier gobierno, capitalista o comunista. Creen riqueza para que la Seguridad Social se capitalice, no incrementar el agujero y taparlo con parches de gasto.

.- Contra los supuestos excesos de las grandes corporaciones, crear empresas. Creen cooperativas. Monten empresas. Salgan del círculo del subsidio, que les hace más dependientes. Usen el talento para crear su propio futuro. No es imposible.

.- El fracaso no existe. No le tengan miedo. Vean la crisis como una oportunidad. El Estado les ha convencido de que no pueden tener éxito si no son funcionarios, o empleados de una enorme corporación. El miedo al fracaso les ha llevado a la esclavitud del sistema que critican. En España el 80% del sistema bancario es estatal, manejado por sindicatos y políticos. En el año 2007, cuando se le echaba la culpa al capitalismo feroz de la crisis, más del 74% del sistema bancario mundial estaba controlado por los Estados. El Estado acaparando un 57% de la economía ha  generado esta situación. Más Estado no les va sacar de ella.

.- Tomen el reto de hacer un movimiento realista y verdaderamente apolítico. Curioso ver que lo primero que ha hecho el movimiento es juntarse en asambleas populares. Algo que gente tan despreciable e inteligente en su maldad como Castro, Videla o Chávez vendían como “democracia”. Juntar a un grupo, separarlo en mini-grupos, debatir, volver a separarlo y cuando han decidido lo que acuerda el grupo más pequeño, liderado por un “moderador”-comisario, gritar a una “el pueblo ha decidido”. ¿Les suena a algo? ¿Juntas bolivarianas tal vez?

.- Colectivismo, ¿para qué? Si es cierto, como dicen, que los modelos del pasado hay que cercenarlos porque no funcionan, recuerden que el modelo que ha demostrado fracasar de manera más clara y con peores consecuencias para el pueblo en los últimos cien años es el del colectivismo y estatalismo. Aprendan del pasado para no repetirlo, ni el de los últimos diez años ni el de los últimos cien.

.- Centren su movimiento en el individuo. La persona. Gente llena de talento, de capacidad, de ilusión, asustada y frustrada, es cierto, a la que le dicen que nunca van a poder conseguir nada. Esas personas pueden y deben demostrar que son líderes. Creen líderes económicos, tecnológicos, que revolucionen el país. Si no crean lideres, se rodearan de jefes de negociado.

.- Salgan fuera. El 70% de la población activa trabaja a menos de 30kms de donde nació. Tomen riesgo, como hicieron nuestros abuelos y bisabuelos, que crearon riqueza y empleo. El futuro es la tecnología y el valor de la capacidad intelectual. Desarróllenlo. Conviértanse en líderes globales. ¿Por qué puede un señor en un garaje de Iowa o en Israel crear una empresa líder que ayude a mejorar el mundo y ustedes no? Claro que pueden.

.- No hay derechos adquiridos. El modelo del avestruz de evitar mirar al mundo y asumir que tenemos unos derechos adquiridos que les negamos a los trabajadores de Asia, África o América solo crea miedo y error. Busquen su ventaja competitiva, que la tienen, su activo intelectual y su capacidad de adaptación a un mundo complejo, y aprovéchenlo. Los sindicatos no están para crear trabajo, sino para mantener el de sus afiliados, aunque sea a costa de los demás. Sospechen de quien les ofrece el futuro mirando al siglo XIX.

Y ante todo mucha suerte. Un abrazo.

*Daniel Lacalle es gestor de Hedge Funds

http://www.elconfidencial.com/tribuna/2011/recomendaciones-movimiento-spanish-revolution-20110526-7448.html