... because banks never finance exploration! It's too risky to be financed by lenders and is always done by the oil companies at their own cost, as suceess is not guaranteed (and you bankers only lend when they are sure you can pay back...)
Lukoil in Egypt is not earth shattering. The Russian companies have been trying to diversify from their purely Russian asset base and to internationalise. Egypt is a relatively friendly country for Russia, not too far away, not too much competition (its oil industry is declining, the big story for the Western majors there is gas now - very deep offshore where the Russians don't have the know how).
I haven't read enough on the Venez-Columbia pipeline to comment meaningfully. It will cetainly be difficult to finance (two tough countries always makes it difficult), but that does not always nean that it does not make sense! At least, here, you are talking about oil, so there is a market for it. If I understood correctly, the idea is to go to the pacific to get oil on bigger boats to China and Asia. This makes economic sense as long trips are cheaper on big boats than on small ones, so the savings could be enough to pay for the necessary pipeline tariff over a normal period of time (say 10 or even 20 years). You'd need to be certain to have someone committing to take your oil though, because you cannot sell it for more on one side or the other, and you need to be sure that you ca nsell the full volume needed to repay the pipe.
Strategically, I dont see the big deal. China already can buy Venezuelan oil with the appropriate transport cost factored in (with smaller, Panama compatible boats). Long term, I cannot imagine any situation of crisis or even war where Venezuelan oil does not go to the US if the US really want that oil. It's practically home for them, militarily speaking. And as for Venezuela wanting diversification in their customers, it's pretty much meaningless in a liquid market (they have no other customers because it's cheaper to deliver the oil close by than more far away) but they could sell to Europe if they really wanted to.
I can understand China supporting the project (and maybe even financing it) if it gives them access to what is overall a cheaper supply of oil (because the transport costs are less for them that way, especially if they have a stake in the pipe).
In any case, don't be impressed for numbers for individual projects - they are always in billion dollars. That's because of the scale of the industry. Remember, daily production - EVERY DAY - is about 80 million barrels, i.e. 4+ billion dollars per day - and that's just oil, it does not include oil tankers, refineries, and all the gas business (close to a billion $/d again) |
