US Shale oil industry will simply vanish

After many years of prosperity, the tough time has come for the US shale industry. Dramatic US oil production decline is inevitable and many shale companies face bankruptcy. Their assets can end up to larger producers, reinforcing market concentration. US energy independence can only be saved by government intervention. US government will remove exports limitation and FED September rate hike suspension is related to the unsustainable debt levels US oil industry is keeping afloat. But that is simply not enough to prevent a collapse of the US oil industry. From our research we learn that cost per barrel declined slightly but decreasing production cost is not enough to compensate for lower oil price. US oil production already declined 400K barrels per day from its April peak. We estimate an other 2 to 3 Million barrels can be wiped out the coming year.

A few months ago, when the oil price rise again before the June crush, the US oil industry seemed to be able to go through the difficult times. „It is too late for OPEC to stop the shale revolution”1, „OPEC can’t stop the shale industry”2 – roared the headlines. However, after last publications of Energy Information Administration (EIA) the OPEC and Saudi Arabia are the only one to triumph. Continue reading

Syrian-Ukrainian interests of Russia

Reports on increasing Russian activity in Syria are covered by rumors about reducing support for separatists from Donetsk and Luhansk People’s Republics. Vladimir Putin most likely will not risk the game on two fronts and will shift his military attention to the Middle-East. He does so not only due to threats related directly to Islamic State (IS) and to eventual downfall of Bashar al-Assad, but also because of the fact, that the road to a victory in Ukraine leads through Damascus and Latakia.

Since September 1st the ceasefire in the eastern Ukraine has been broadly respected by both sides of the conflict. However, reported single incidents of violation have been pointed out each other by rebels1 and Ukrainian army2. Also Contact Group failed so far to agree on the pullback of heavy weapons3. Quarrels on elections in Luhansk People’s Republic and Donetsk People’e Republic4 also show that political confusion will not be stopped.

Inconsistent statements of separatists leaders regarding local elections cast doubts, though. They are beating about the dates of elections, not knowing if October/November term would be better or February 21st 5. It could be a symptom of sliding ground from under feet, because Russia seems to leave the Ukraine conflict for now. Of course, political pressure will not be diluted – quite the reverse! Continue reading

Will the Netherlands be the first country to organize a referendum against the EU and NATO?

The Dutch government introduced a consulting referendum in 2015, the Dutch law claimed democratic improvements while in reality it was constructed to prevent a referendum from ever happening. Dutch people who want a consultative referendum are obliged to collect 300.000 paper signatures. On average it takes an hour to collect one valid signature, the Dutch authorities were absolutely convinced that no one will ever manage to collect that many signatures. Paradoxically an organisation had been created by Dutch authorities to facilitate a Dutch referendum, knowing that its principal never want to see a referendum happening.
For this reason they do not accept a Digid to be used for authentication. Digid is the Dutch digital authentication system introduced by the Dutch authorities to allow the Dutch to communicate digitally with the Dutch authorities.

Unfortunately for the Dutch lawmakers a Dutch blog figured out how to collect “real” signatures digitally by people literally drawing their “real” signature on the PC by introducing a drawing canvas on the electronic form. They were able to collect about 300.000 signatures, even with the Dutch mainstream media completely ignoring this watershed moment.

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Migration will split the EU, quotas can split the Visegrad Group

European Union ministers agreed on Tuesday for relocation of 120 000 refugees in the next year. Against were Czech Republic, Hungary, Slovakia and Romania. Three of them are members of Visegrad Group. The fourth member of V4 – Poland – agreed for seven thousands of refugees, but it will only complicate the geopolitical situation of the Middle-East Europe.

As we said before, these quotas are not relevant, because it is for now a not permament or obligatory system and many of „Polish” (also Hungarian or Czech – they announced that they conform) migrants will escape in the end to Germany or Sweden. Moreover, the problem is much bigger and deeper and this EU-decision is not a solution.

The only thing which we have to make complete according to our last publication is a division not only within the EU (culture of unanimity  has been additionaly broken), but also within the V4. Poland acted collectively to the EU, but not to the V4 and it weakens the solidarity of the Middle-East Europe for the future and also the position of Poland in the region. As the tension between Poland and Germany are inevitable in the future anyway (elections come soon), the position of the Middle-East Europe will be weaker due to lack of consensus within V4. Unless Poland with new government rejoins to its southern allies. Continue reading

Migration quota system deemed to fail, causing EU to split

The Migration Crisis has divided EU members. The inflow of newcomers will last longer and the dissonance between Germany and the Visegrad Group will increase. There are no benefits to gain from it, except for Vladimir Putin.

The issue of immigrants and refugees is kindling European nations. Politicians have lost their senses,  they are governed by their emotions. Mistakes of the past cannot be fixed and the results will be harmful for the European unity for the years ahead.

Hungary, Czech Republic, Poland and Slovakia, known as informal Visegrad Group (V4), reject refugee quotas system1 forced by Germany and France. This will complicate the relation within the European Union in the future, signs can already be seen.

Western media, particularly the German one, are leading the campaign against their eastern neighbors. Hungary is criticized and compared to Nazis2, while they are struggling to respect the Dublin Regulations3, the European law on asylum seekers. As we have learned from last financial crisis in the USA and the debt crisis in Greece; disregarding of previous determined principles are always leading to political tragedy. Continue reading

Oil-asset fire sale: political well-connected global players will cherry-pick valuable assets for a bargain

Geopolitics and finance are driven by energy strategies and the other way around. To win a war you have to destroy the energy resources of your enemy and secure your own resources. We already noticed in 2013 that oil was in a bubble, we are now entering a phase where oil prices are so low it will destroy a big chunk of the oil industry. Without government intervention the destruction in the upstream oil industry will be devastating.  Production capacity of the oil industry could end up below the level of future demand. As production capacity is below demand we expects prices rebound into a bubble again. We are definitely not in the era of cheap energy. Oil prices will rebound but investing in oil, oil futures and oil related companies, could be a very risky strategy. Holding oil futures comes with a cost, as rolling them over is not free of charge and many oil related companies will not survive the downturn.
Global operating oil companies, except for BP, seem well prepared for the ongoing oil price decline according to our estimation.

The oil market will be one of the main factors in global financial turmoil the coming months. Oil companies are under pressure of falling oil prices, they have to seek for lower costs in every area of operations. Continue reading