The OPEC nations constitute an interesting potpourri of politics, geopolitics, regional forces, and internal alliances. On one end of the spectrum sits Saudi Arabia, whose massive oil reserves of about 264 billion barrels and 9.4 million barrels of daily crude output make it easily the kingpin of the cartel.
At the other end sits Angola, the organization's newest member, whose 9 billion barrels of crude reserves and 1.3 million barrels of daily production place it near the group's bottom on both counts. In between lies an amalgamation of nations with an alphabetic range from Algeria to Venezuela, and a mix of ethnicities and willingness to work with western oil companies.
Perhaps the most interesting member of the group today, at least from the perspective of newfound production pragmatism, is Libya. This large nation sits along the Mediterranean Sea on Africa's northern rim, to the west of Egypt and east of Algeria. It produces about 1.7 million barrels a day of crude oil, and exports about 1.3 millions barrels of daily production. Its 41.5 billion barrels of crude reserves rank it behind the Saudis, Iran, Iraq, and Kuwait, but ahead of the cartel's other members.
But Libya's leader, Col. Moammar Gadhafi -- who was a longtime thorn in the side of the West, eventually bringing about bombing raids on the nation in the spring of 1986 -- has, unlike his counterpart in Iran, determined that Western companies can perhaps reverse his nation's declining energy production. As such, he recently agreed to permit BP (NYSE: BP ) to spend about $2 billion over the next seven years to search for hydrocarbons (primarily natural gas, it turns out) in the nation's Ghadames region and Sirt basins.
The BP agreement follows a Libya-Royal Dutch Shell (NYSE: RDS-A ) (NYSE: RDS-B ) pact signed some two years ago, and another between Gadhafi's folks and ExxonMobil (NYSE: XOM ) , inked in February. The Exxon agreement will permit a subsidiary of the company, ExxonMobil Libya, to explore offshore across 2.5 million acres, at water depths between 4,000 feet and 6,500 feet.
So, while Venezuela's Hugo Chavez is bouncing western companies as part of a nationalization program, Moammar Gadhafi recognizes that his nation's energy production -- which was important to BP in the 1950s and 1960s -- can be strengthened and accelerated through the application of western technology. Let's hope that Gadhafi's approach constitutes the start of a trend.
For related Foolishness:
Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Motley Fool does have a disclosure policy.
RSS Headlines
Fool UK