Kalistani Major History

[Doc]

KALNAPECO Weighs increasing production to counter price increases
Kalistani Industrial Minister calls a halt to further decommissioning while matter is considered
Sulari, Suldanor
October 8, 5199


Oil Rig off Yoshimi, along Southern Limit, will pause decommissioning while Oil shortage is considered

Following the arrival of clean Fusion power generation in the 5090s, and the creation of KALENCON, KALNAPECO has experienced a century of phased decommissioning. The initial targets of 6-7% of National Capacity, primarily for export and to support KALNAPECO's small plastics and asphalt operations, have yet to be met, primarily due to continued international demand. Kalistan is currently producing at about 14% of its total capacity, which is just over half of capacity when the 6 percent target was set in 5093.

Whether further scaling back and decommissioning of KALNAPECO's formerly extensive extracting and refining infrastructure will continue is now up in the air, as fluctuations due to price setting by the International Oil Cartel, OPEN (which Kalistan has not been invited to join yet) and decreased production in the face of increased demand are expected to very rapidly create price shocks in the petroleum futures market, and send prices skyrocketting. Kalistan finds itself in an interesting position: The Empire is no longer oil dependent, not as an export commodity, and not for the operation of our economy. Oil exports last year were a paltry 135,000 barrels a day, earning Kalistan a gross K3.2 Billion. The oil export sector is now so small that world prices are no longer affected by Kalistani domestic policy.

And yet, we could affect prices and more importantly, futures earnings, if the Empire did step up production. A significant return to the international market, selling Kalistani oil at a discount, could conceivably lower prices per barrel by as much as K10 a barrel, and offset the increases in price planned or forced by speculative markets. There are downsides for the Empire for this plan: While decommissioning has crawled over the last 100 years, many of KALNAPECO's drilling operations are capped. It would require capital to reopen those wells that we have capped while the rigs were perparing for dismantling. Additionally, our refinery capacity is not what it used to be: Much of the oil Kalistan has sold over the last century has been sweet crude, not refined petrol gas. As domestic demand for gas products has dramatically dropped off since the arrival of fusion, refinery capacity has dropped sharply, to meet the reduced needs of Kalistani industry. Major capital outlays and more importantly time would be required to ramp up refinery capacity.

These considerations will be before KALNAPECO directors as they meet in Sulari next month to discuss the matter. Right now the official policy is at "Wait and see", especially if a re-entry into the volatile international market is warranted by what appears to be price gouging. Meanwhile, if envoys from OPEN were to approach Kalistan with an opportunity to join, that would also be an additional consideration. Meanwhile, all ongoing decommissioning efforts have been paused indefinitely, and it is our hope that the news of Kalistani supply stability may in and of itself provide downward pressure on Crude Prices without requiring further actions from KALNAPECO.