Unconventional Discoveries

The impetus for change [from "resource nationalism" by such countries asMexico to a more market oriented "resource maximization"]  is the revival of North American oil-and-gas output. The extra barrels suppress prices, putting pressure on government budgets in large oil-exporting countries. That strain also can be seen in the share prices of national oil companies.

 In the past month, as Brent has fallen by about 10%, shares in Russia’s Rosneft and PetroChina 601857.SH -0.51% have both tumbled by about 13%. In contrast, Exxon Mobil XOM -0.24% is down less than 5%. And many state-backed oil companies, especially those in Russia, Venezuela and Mexico, have high debt levels. In a crunch, that could end up the government’s problem; after all, national oil champions really are too big to fail.

 North America’s shale riches also challenge resource nationalism by competing for investment. Some 38% of incremental spending in upstream oil and gas from 2009 to 2013 went to the region, according to IHS Herold.

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Fraser McKay, a principal analyst at Wood Mackenzie, says that for the biggest four majors—Exxon, Chevron, CVX -0.54% Royal Dutch Shell RDSA.LN -0.23% and BP BP.LN +0.89% —unconventional discoveries have been by far the biggest source of new resource additions over the past five years. He also points out the relatively short time it takes to get oil and gas from such prospects fits with shareholders’ current mantra for cash flow to come out of the ground rather than just go into it for years on end.

-from yesterday's WSJ on-line, "Oil's Decline: Enemy of the People."

 My guess is that this is toning-down Putin's adventurism.

 See my 2012 post, Not Scarcity but Plenty, and Sean's Comment on it.