http://www.financialsense.com/fsu/ed...

"...Globally, spare capacity is about 2 million barrels or 2.3% of daily demand. The spare capacity resides in only 1 country: Saudi Arabia. Production is flat or declining in all the other OPEC nations including Iran, Iraq, Nigeria, Venezuela, Mexico, etc. as all these countries have NATIONALIZED their oil companies. Modern field maintenance is a dream as public servants and governments take the maximum income and do not invest in future production or maximizing current production capacity. They take the money and run. Ever seen a business where you don’t invest in that business’ future? It is quickly on the road to ruin and a recipe for steadily diminishing income and production. It is where the global oil industry now resides.

Look no further then Venezuela, Mexico and Russia for a glimpse of the future. Petróleos de Venezuela, S.A. (PDVSA), the national oil company of Venezuela used to be a model of operation with an eye on the future, nationalized by Hugo Chavez. All the management has left the country in the hands of political appointees creating ever diminishing current production. Nationalization of the Russian oil industry under Vladimir Putin has resulted in stunting the tremendous promise of Russia’s natural resource and energy industry and ownership has gone to the NEW oligarchs residing in the government.

Anyone signing contracts with these two governments must be prepared for them to be signed in DISAPPEARING ink. Ecuador, the largest producer of natural gas, has nationalized its energy sector and is well on the way to reneging on deals with Brazil’s Petrobras, who has invested billions. These governments DO NOT have the expertise to properly develop and maintain their current and future prospects so they have NONE except the prospect of declining ones. No one trusts them to keep their agreements in any way, so there will be fewer of them."