Opportunities in oil and natural gas have rarely been so bountiful. New finds and technological advances and fresh access to some countries are pushing exploration and production into areas once considered peripheral.Some of the most promising new fields are in deep water off the coast of Brazil. Experts say they could yield as much oil as the North Sea. There have been significant strikes off the coast of French Guiana, north of Brazil, and off Ghana in West Africa.Iraq is opening up after years of sanctions and war. It could be a second Saudi Arabia.Russia is increasing production in its Arctic regions, while Canada is steadily producing more oil from its abundant tar sands.In the United States, the vast deposits of natural gas found in shale rock could transform the country into a major energy exporter.Those prospects "will certainly have significant impacts on the energy map," said Maria van der Hoeven, the newly appointed Executive Director of the International Energy Agency, which advises member-countries, including Germany, Japan and the United States, on energy policy.The prospects are coming into view as revolution and instability threaten new investments in resource-rich countries like Libya and Iraq and after a nuclear disaster at the Fukushima Daiichi power plant in Japan that prompted Germany to declare it would phase out nuclear technology.Fewer reactors should drastically increase demand for electricity from natural gas, while lower-than-expected growth in energy exports from the Middle East and North Africa could "radically alter the global energy balance," Ms. van der Hoeven said.Yet, the new opportunities also present companies and investors with a dizzying array of risks - including the high cost of development and exploitation and the possibility that energy prices could fall, especially if the global economy slows drastically and energy demand slackens."Quite a few bets are off, if prices drop too far," said Herman T. Franssen, a Senior Director at Energy Intelligence, a research company that organises the annual Oil & Money conference with the International Herald Tribune.Franssen said oil and natural gas prices would need to remain at relatively high levels to pay for exploration and production in increasingly demanding environments, which produce their own technological risks.Petrobras, the state-run company leading the deepwater venture in Brazil, is "adding a major challenge on top of a major challenge" by drilling through two kilometres, or 1.2 miles, of salt to gain access to oil, said Mark Moody-Stuart, a former Chairman of Royal Dutch Shell."Salt moves, dissolves and shears away, and it's highly corrosive," Moody-Stuart said. "That kind of drilling worried me in the past, and it worries me now as we head ever deeper."Those factors make wells more time-consuming and expensive to complete, but they are no more likely to lead to accidents than conditions at other deepwater drilling sites, Moody-Stuart said.Of course, since a well blowout destroyed a rig operated by BP last year, spilling huge amounts of crude oil into the Gulf of Mexico, concerns have grown about whether companies take enough precautions in increasingly extreme conditions.It was months before BP devised a way to stanch the leak, and the ability of the U.S. Government to manage its oil industry was questioned."How do we consider similar scenarios, as operators push increasingly complex projects in West Africa, Brazil and the Arctic'" asked Paul Sheng, the Director for Oil and Natural Gas at McKinsey, a consulting firm, referring to the Gulf of Mexico accident.By comparison, he said, the "resources and technology were available readily in the U.S. to respond."Stricter safety controls and higher caps on liability making it harder to obtain insurance could drive smaller companies out of the market. But large international oil companies would be affected too.An increasing proportion of their portfolio comes from unconventional sources and deepwater drilling since national oil companies began taking far greater control of the most accessible and productive oil fields at the end of the 1970s - a trend that has continued.The squeeze on international oil companies has been conspicuous in Russia, where Royal Dutch Shell was forced to sell half of its $20 billion Sakhalin II oil and natural gas deepwater development to the state natural gas company, Gazprom, in 2007.Last month, the offices of BP's Russian venture were raided as part of a long-running feud with powerful Russian shareholders.Even so, foreign investors are becoming increasingly savvy at navigating the treacherous Russian business environment, bankers said. Exxon Mobil structured its recent deal in the Russian Arctic - which appears to supersede an earlier deal involving BP - in ways that avoided earlier pitfalls, they said.Much of the bullishness about future demand for additional resources is based on the growth of China.Most Saudi-exported oil already goes to East Asia - a boon for Saudi Aramco, which still manages some of the world's largest crude oil reserves, at a time when the state-owned Saudi company's traditional Western customers aspire to greater self-sufficiency.But in a rapidly and drastically shifting geopolitical and economic order, reliance on China presents risks too."Question No. 1 is, What happens if China ends up helping Iran confront the West by helping develop its oil fields'" said Ghassan Salam, Dean of the Paris School of International Affairs at Sciences Po."The new function of Middle Eastern oil will almost certainly be as a major bargaining chip in the relationship between the United States and China," he said.For now, strong economic growth has given the Chinese "tremendous ability to invest in new supplies, both at home and abroad, so they are helping supplies to keep pace with demand, which aids market stability," said Vvan der Hoeven of the I.E.A.She also lauded the "continued building of strategic oil stocks" by China as "a significant contribution to the global capacity to respond to supply emergencies."Another reason for stable prices is that demand from emerging economies may offset any prolonged slowdown in the West, said Fereidun Fesharaki, the Chief Executive of FACTS Global Energy, a consulting group based in Singapore.On the other side of the energy equation, Saudi Arabia and other powerful low-cost producers in the Middle East are focused on keeping the price of oil at more than $80 a barrel to fund job creation and better social welfare at home and to support poorer states in the region, said Franssen of Energy Intelligence.With oil expected to stay at robust levels, the producing countries once considered to be on the periphery of the global industry are racing to build their economies by maximising foreign earnings from oil and natural gas.But perhaps in no country are the perils, as well as the possibilities, more apparent than in Iraq.A number of oil fields are still mined, and the country's lack of infrastructure means that getting oil to foreign markets is a challenge. Iraq could also explode into renewed conflict, particularly if relations worsen between Baghdad and the Kurdish authorities in the north, where some of the largest reserves are located.International oil companies still must settle how much money to contribute toward a multibillion-dollar water injection facility that is vital to regulating the pressure of reservoirs."There are wild expectations, but Iraq is not Saudi Arabia," said Issam al-Chalabi, a former Minister of Oil in Iraq who left the country 20 years ago. "There may be huge amounts of oil, but getting it out requires two things Iraq hasn't got, which are stability and expertise."Those hazards - and the possibility that Iraq will need to lower targets because of market conditions or under pressure from OPEC - have pushed international oil companies to seek deals with Baghdad that guarantee payment of their fees even when supply is disrupted, according to Mr. Chalabi.Still, oil company executives appear sanguine.Robert Dudley, the Chief Executive of BP, which is developing the vast Rumaila field in Iraq with China National Petroleum, said last month that the goal of producing 2.85 million barrels a day by 2017 was attainable and that there was no need for any change to contracts.Chalabi predicted that the Iraqi government would have to lower its production estimates by the end of the year, probably to about six million barrels a day by 2017, from current estimates of about 13 million barrels a day.
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