Paolo Scaroni, the chief executive of the Italian oil giant ENI, stopped by the Post this week and chatted about the state of the oil world. ENI's revenues place it among the world's biggest 25 companies of any kind. The company operates in 70 countries, with exploration and production operations from the Gulf of Mexico to Nigeria to Kazakhstan. Much of Europe's natural gas imports flow through its pipelines, and it retails gasoline under the AGIP brand.
Here are some of the things he said.
On U.S. energy security: "If Americans used the same cars as we do in Europe, they would save four million barrels a day, exactly the same as the production of Iran...The dependence on oil imports is based on waste, not on needs."
He noted that the average American uses 26 barrels a year, the average European uses 12, the average Chinese uses two and the average Indian only one. "Generally speaking, the energy consciousness of Americans is very low. Energy has always been cheap here."
On future oil prices: "Personally, I expect oil prices will go further down. The limit is the cost of the most expensive barrel of oil, which is the Canadian tar sands, which cost $65 to $70 a barrel. This seems to me the bottom. Otherwise those supplies will not be coming."
As for ENI, "we live pretty well with this oil price," he said.
On whether "speculation" is to blame for high prices: Scaroni said speculation "amplifies" market trends and fundamentals. "When price goes up, it probably goes up faster," he said. "When it goes the other way, it probably works that way too."
On Iraq's oil production potential: "It could go to six to seven million barrels a day," he said. He said ENI hopes to be able to return to the same field it worked in many years ago because it is familiar with the field.
On working in Iran: "We cannot leave the country," he said, citing two contracts from 2001. "We would lose $2 billion to $3 billion. We are not signing new contracts and the U.S. administration and others accept that."
On Russia, where it has partnerships and from where it imports natural gas: "We are the biggest importer of Russian gas to Europe. We send every year 7 billion to 8 billion euros for the gas we buy. It's a big number." He said ENI was investing in exploration in the Yamal peninsula. "You don't find oil in Switzerland," he said.
On Europe's heavy reliance on imports of Russian gas: "It's a little bit too late to raise this issue." Scaroni said that Europe made its decision to rely on Russian gas in the late 1970s and that the Kyoto protocol meant that there would be less coal and more natural gas used in Europe. He noted that "there is not a drop of gas" in Spain, France and Germany.
On the prospects of building a Kazakhstan pipeline that would skirt Russia: "If you want to build a pipeline, you must cross the Caspian. International law says that it is not a sea but a lake and every country facing the lake must agree. Russia hasn't agreed. To be fair, there is not much interest. Russia has been paying a good price to the Ukraine."
On U.S. offshore drilling: "These are areas that have not been drilling at all. There is certainly some potential. But to me the biggest potential in America that is not exploited is energy savings. There is such an immense opportunity."
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Comments (2)
Our country is going to **** in a hand basket. The high cost of fuel has driven up the production and shipping cost of everything. Consumers have nothing left over after filling the tank and paying more for the necessities of life to spend on extras, save or invest. We need to get ourselves out from under our dependency on foreign oil. Our economy is in a sorry state of affairs directly related to the high cost of fuel. We have become so dependant on foreign oil that we have neglected to fully utilize such natural sources of energy such wind power & solar power. Along with modern technology such as plug in cars, hybrid cars, v2g technology ,and regenerative braking, technology we still seem to be floundering as a nation as to devising the best plan utilize all that is available to us and lift ourselves out of this mess we are in. We need to take our closest look at which candidates put our economy and energy crisis at the forefront of their agenda. There is a new book coming out soon called...The Manhattan Project of 2009 by Jeff Wilson . It looks like it's going to be an eye opener!
September 19, 2008 6:38 AM | Report Offensive Comment
Posted on September 19, 2008 06:38
Even if America reduced its oil consumption by 4 million barrels per day, it would still be the world's largest oil importer. U.S. production is less than 6 million barrels per day, and consumption is about 20 million barrels per day. And, as long as a country is a net oil importer, its economy is vulnerable to upward swings of the oil price, no matter where it obtains the oil from.
It is true that Americans could use a lot less oil per capita - more fuel efficient cars are a good idea. Here in Europe cars are, on average, much more fuel-efficient. However, another issue is miles (or kilometers) driven per year. The structure of many American cities with their sprawl and zoning of residential areas away from commercial areas (so that walking to do shopping is impossible) will ensure that fuel consumption for transport per capita is higher in America than Europe even with equivalent fuel efficiency averages in the vehicle fleets. Also, some American cities have poor public transportation systems - this needs attention in order to reduce consumption.
Scaroni opines that the Caspian is a lake and that all littoral states must agree to infrastructure crossing any part of it, but this is not a settled question by any means, and his taking of the Russian side on this question is, I think, indicative of his sympathies for the Russian position on more than just this issue. Scaroni, on South Stream, for example, is willing to put Eni's interests above the interests of the EU as a whole and he does not care about undermining EU solidarity. Be wary of this fellow.
September 19, 2008 6:23 AM | Report Offensive Comment
Posted on September 19, 2008 06:23