Monthly Archives: October 2014


OPEC is the the Organisation of the Petroleum Exporting Countries was set up in 1960. It has 12 member countries that are known as a cartel when it comes to oil production. These countries are:-

Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates & Venezuela

The daily oil production in barrels per day:-

Algeria                  1,667,000
Angola                  1,784,000
Ecuador                505,000
Iran                        3,680,000
Iraq                        3,115,000
Kuwait                  3,127,000
Libya                      1,509,000
Nigeria                 2,417,000
Qatar                     1,966,000
Saudi Arabia       11,530,000
UAE                       3,380,000
Venezuela          2,725,000

This totals:            37,405,000  barrels per day from OPEC

Now global total oil production is 91,331,000 barrels per day


37,405,000 / 91,331,000 = 40%

OPEC accounts for just over 40% of Global Oil Production. This really is Big Oil.

The Total World Supply of Crude Oil

The UK energy giant, BP [] is one of the world “oil majors” has an energy economics team, that produce the high revered annual Statistical Review of World Energy.


This is quite a large document, but is full of interesting facts.

Based on the figures from BP that are known to be used by wider industry one can see the world total of proven Crude Oil reserves are:-

1,687,300,000,000 barrels of crude.

[One trillion, six hundred eighty-seven billion, three hundred million barrels of crude]

Now today, the world consumes:-
91,331,000 barrels of crude per day.

[Ninety one million, three hundred and thirty one thousand barrels of crude per day]

So one can calculate based on current consumption the length of time before crude oil runs out:

1,687,300,000,000 / 91,331,000 = 18474.5 days.

18474 days / 365 to give us years = 50.6 years.

So based on some ball park figures we have just over 50 years left on crude oil reserves.

Now my calculations do not factor in new reserves being found, or consumption of crude falling and new sources of energy such as solar and hydrogen which of course will alter crude oil demand, or even people following the wise example of Dean Lawford and driving a hybrid Lexus, but based on current circumstances, 50 years based on demand today, and with China, India and other Emerging Markets and Frontier Markets all getting wealthier the demand of oil is still on an upward trajectory.

Tesco PLC

The accounting scandal that has engulfed Tesco PLC is very complex. A hole of £263million that was due to an accounting overstatement.

One has to keep things in context, and by looking at the finances, one can see the scale of Tesco.


Sales of £34 billion that was a drop of 4.4% year on year.
What is interesting is the profits at Tesco Bank, that was £102 million, while the actual UK stores delivered total profit of £499 million

The annual report gives a more granular breakdown

page 71 is the balance sheet.

The liabilities are the interesting items

£10,595 million of Trade and other payables. This is what Tesco owes to its trade suppliers, from gas and electric to the goods on the shelves that it gets on credit from its suppliers. These are short term liabilities where Tesco has to pay its suppliers within perhaps 30-90 days.

£9,303 million on financial borrowings, such as loans and bonds issued.

£3,193 million in pension liabilities

Now with the deterioration in trading (sales) at Tesco it means that its credit status is potentially under threat, and one can see that it has vast sales of over £34 billion, but with debts totalling over £20 billion, Tesco has to do something to return to strong profitability, to meet all its liabilities.

Algerian Oil.

Algeria on the North Coast of Africa, has large oil and gas reserves. The land mass of Algeria makes it one of the largest countries in the world.

With a troubled political past, today it  has some level of stability.

As the demand for oil intensifies, countries with oil could potentially enjoy great wealth. Sonatrach is the Algerian state oil producers, and is the largest company in Africa.


Algeria today produces 1,667,000 barrels of oil per day.

With oil at $86.54 = £53.96, one can calculate the value of Algerian Oil Production per day.

1,667,000 barrels of oil per day x £53.96 = £89,951,320

That is £89 million a day.

The Foreign & Colonial Investment Trust

The Foreign & Colonial Investment Trust was Launched in 1868, the Trust was the first ever investment trust, allowing small investors access to the stock market. Since then it has since gone on build a track record where it has increased its dividend each year since 1971, this is an impressive track record. Its aim is to generate long-term growth and income by investing primarily in an international portfolio of listed equities. The Trust is highly diversified and cautiously managed, with exposure to around over 500 individual companies from around the world.

Its top 10 holdings are:-

Private Equity Pantheon Europe Fund V: 2.18%
Private Equity HarbourVest V Direct Fund: 1.52%
Private Equity Dover Street VII: 1.20%
Private Equity Pantheon Europe Fund III:1.17%
Financials Utilico Emerging Markets: 1.02%
Buyout HarbourVest Partners VIII: 1.02%
Buyout HarbourVest Partners VII Buyout: 1.00%
Oil and Gas BP: 0.97%
Private Equity Dover Street VI: 0.91%
Private Equity Pantheon Asia Fund IV: 0.90%

A £2,140.09m (£2.1 Bn investment fund)

It’s total holdings are listed here:

The Cost of UK Daily Oil Consumption.

The United Kingdom’s appetite for oil is large. Not entirely surprising when you know that there are 34.5 million cars in the UK today.

The UK consumes 1,468,000 barrels of crude oil a day. (1.4 million a day).

So what is the cost of this daily oil ?

Crude oil is $92.12 a barrel which is £57.65 a barrel.
1,468,000 x £57.65 = £84,630,200

So we see that the UK spends £84million a day on crude oil that we see in our petrol, diesel and other hydro-carbon products that we consume

The Pimco Total Return Fund

In the media is a news that Bill Gross, the highly acclaimed bond fund manager is leaving Pacific Investment Management Corporation [] to join Janus Capital.


The Pimco Total Return Fund that was run by Bill Gross and currently has over US$200bn under management


Nearly 19% of the $200bn is held in US Treasury 10 Year Bonds. One way of looking at major investment is total faith in the US Treasury’s ability to repay its debts.
(that is $40bn exposure).

What is curious, is that in the past 16 months $68 billion has been pulled out of the fund, a sign that the fund has not been performing, and more importantly with Bill Gross (aka The Bond King) leaving, almost certainly more money will be withdrawn.

UK HM Government September 2014 borrowings…

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In September 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury :-

11-Sep-2014 3½% Treasury Gilt 2045  £2,199.870 million
09-Sep-2014 0¼% Index-linked Treasury Gilt 2052 £854.050 million
02-Sep-2014 2% Treasury Gilt 2020 £4,177.520 million

When you add the cash raised:-

∑(£2,199.870 million + £854.050 million + £4,177.520 million) = £7,231.44 million 

£7,231.44 million = £7.231 Billion

On another way of looking at it, is in the 30 days in September, HM Government borrowed:-

£241 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2045 and 2052. All long term borrowings, we are mortgaging our futures, but at least “we are in it together….