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The World’s Most Important Oil Consumers And Producers

The World’s Most Important Oil Consumers And Producers

Following last week’s release of the BP Statistical Review of World Energy 2020, I began to review and analyze the data. Today I take a deeper dive into the numbers on petroleum. Oil accounts for a third of the world’s energy consumption. That is the greatest share for any category of energy. In 2019, the world consumed a record 98.3 million barrels per day (BPD) of oil. This was nearly 1 million BPD higher than consumption in 2018, and marked the 10th consecutive record for global oil consumption.

Over the past 35 years, global oil consumption has risen by 39 million BPD, an average increase of 1.1 million BPD each year. Last year’s rise fell just short of that average.

In recent years, BP has begun to provide more granularity in the Review. In previous years, the oil consumption category included biofuels. Now, they have split biofuels into a separate category, so the consumption numbers above are for just oil and derivatives of natural gas and coal (e.g., synthetic oil).

The U.S. continues to lead all countries in the consumption of oil, but China has had the fastest consumption growth for several years. Below are the Top 10 global consumers of oil for 2019.

Related: Saudi Arabia Eyes Total Dominance In Oil And GasOil consumption fell in most developed countries and rose in most developing countries. A notable exception was Germany. Although consumption in OECD countries fell by 0.6% and consumption across Europe was down 0.3%, Germany bucked the trend and saw its consumption grow by 0.9%.

The biggest percentage increase in oil consumption was in Iran, which was the world’s 11th largest consumer. Demand there jumped by 10.0%. Iran was the only country in the world with a double-digit percentage increase in demand.

In contrast, double-digit decreases in oil demand were seen in Iceland (-12.7%), Venezuela (-11.6%), and Pakistan (-10.5%).

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U.S. Oil Dominance Is Coming To An End

U.S. Oil Dominance Is Coming To An End

  • U.S.’ energy dominance agenda is dead as the country’s shale industry is looking at a steep production decline.
  • The U.S. tight oil or shale rig count has fallen 69% this year from 539 in mid-March to 165 last week.
  • U.S. oil import dependence is set to grow in the next couple of years.

U.S. energy dominance is over. Output is probably going to drop by 50% over the next year and nothing can be done about it. It has nothing to do with the lack of shale profitability or other silly memes cited by people who don’t understand energy.

It’s because of low rig count.

The U.S. tight oil or shale rig count has fallen 69% this year from 539 in mid-March to 165 last week. Tight oil production will decline 50% by this time next year. As a result, U.S. oil production will fall from to less than 8 mmb/d by mid-2021.

What if rig count increases between now and then? It won’t make any difference because of the lag between contracting a drilling rig and first production.

The party is over for shale and U.S. energy dominance.

Energy Dominance is Over

Tight oil is the foundation of U.S. energy dominance. The U.S. has always been a major oil producer but it moved into the top tier of oil super powers as tight oil boosted output from about 5 to more than 12 mmb/d between 2008 and 2019 (Figure 1).

Conventional production has been declining since 1970. It fell from almost 10 mmb/d in 1970 to 5 mmb/d in 2008.

Figure 1. Tight oil is the foundation for U.S. Energy Dominance.

Conventional production has been in decline since 1970. Tight oil boosted U.S. production to more than 12 mmb/d in 2019.

Source: EIA and Labyrinth Consulting Services, Inc.

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How Saudi Arabia Caused The Worst Oil Price Crash In History

How Saudi Arabia Caused The Worst Oil Price Crash In History

  • Saudi Arabia made good on its promise to flood the market with oil after the collapse of the previous OPEC+ deal in early March.
  • The Kingdom’s oil exports jumped by 3.15 million bpd to 11.34 million bpd in April.

Saudi Arabia made good on its promise to flood the market with oil after the collapse of the previous OPEC+ deal in early March, exporting a record 10.237 million barrels per day (bpd) in April 2020, up from 7.391 million bpd in March, data from the Joint Organisations Data Initiative (JODI) showed.  

Total oil exports from Saudi Arabia, including crude oil and total oil products, also soared in April – by 3.15 million bpd to 11.34 million bpd, mostly due to the surge in crude oil exports, according to the data released by the JODI database, which collects self-reported figures from 114 countries.    

Production at the world’s top crude oil exporter also jumped in April—to over 12 million bpd, at 12.007 million bpd, the database showed.

After flooding the market with oil in April and contributing to the oil price crash, OPEC’s de facto leader and largest producer, Saudi Arabia, agreed that same month to a new round of OPEC+ cuts in response to the demand crash and plunging oil prices. Saudi Arabia had to reduce its oil production to 8.5 million bpd in May and June under the OPEC+ deal for removing 9.7 million bpd of collective oil production from the market. 

According to OPEC’s secondary sources in the latest Monthly Oil Market Report (MOMR), Saudi Arabia slashed its crude oil production in May to the required level of 8.5 million bpd.  

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Europe must prepare for life after oil

Europe must prepare for life after oil

The COVID-19 pandemic is forcing us to leave the fossil fuel era behind. Europe needs to begin preparing for what comes next.

Oil prices have crashed. The most visible cause has been the measures taken to contain the COVID-19 pandemic, which have triggered record lows in global oil demand. 

Yet the crisis also exposes structural vulnerabilities in our fossil fuel-dependent economic system, which requires us to rapidly transition to an alternative energy system if we are to avert economic collapse.

The most important scientific concept to assess and understand these vulnerabilities is ‘Energy Return on Investment’ (EROI) – the foundation of the emerging discipline of biophysical economics. EROI is designed to measure how much energy is needed to extract energy from a particular resource. What’s left is known as surplus ‘net energy’, used to support goods and services in the economy outside the energy system. The higher the ratio, the more surplus energy is left for the economy. That surplus is running increasingly thin. 

In the early 20th century, the EROI of fossil fuels was sometimes as high as 100:1: a single unit of energy would be enough to extract a hundred times that amount. But since then, the EROI of fossil fuels has gone down dramatically[1], as we are extracting fossil fuels from places that are increasingly difficult to reach. Between 1960 and 1980, the world average value EROI for fossil fuels declined[2] by more than half, from about 35:1 to 15:1. It’s still declining[3]:  latest estimates put the value at between 6:1 and 3:1.

The decline of fossil fuels’ EROI has acted as a background ‘brake’ on the rate of economic growth for the world’s advanced industrial economies, which has been slowing down[4] since the 1970s.

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Is EIA Data Disguising A Disastrous Decline In U.S. Shale?

Is EIA Data Disguising A Disastrous Decline In U.S. Shale?

The Trump administration claims that the U.S. is “transitioning to greatness,” and that energy companies are going to see “massive gains.” U.S. Secretary of Energy Dan Brouillette says there is “stability” in the oil market, and that economic activity will “explode” on the other side of the pandemic.


Dan Brouillette✔@SecBrouillette

Thanks to the leadership of President @realDonaldTrump, the transition to greatness is well underway, and our economy along with our U.S. energy companies are going to see massive gains on the other side of this pandemic.

Embedded video

Meanwhile, back in reality, U.S. oil production continues to decline as drillers shut in wells and cut back spending. Output has already declined by 1.1 million barrels per day (mb/d), and more losses are likely. New data from Rystad Energy predicts U.S. oil production declines of roughly 2 mb/d by the end of June.

“Actual production cuts are probably larger and occur not only as a result of shut-ins, but also due to a natural decline from existing wells when new wells and drilling decline,” Rystad said in a statement.

Energy expert Philip Verleger, in an article for Energy Intelligence reports that the magnitude of output declines is much larger. His latest research shows that production as of May 10 is down by almost 4 million bpd from its peak as the below chart shows.

Source: PK Verleger LLC

To be sure, the U.S. government is doing quite a bit to try to bailout the oil industry. A new report finds that some 90 oil and gas companies will benefit from the Federal Reserve’s corporate bond buying program. The Trump administration is also quietly reversing environmental protections on the oil and gas industry.

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Has Demand For Oil Already Peaked?

Has Demand For Oil Already Peaked?

Oil prices continue to rise on the prospect of a rebound in fuel demand as economies begin to reopen.  But there is a large difference between oil demand rising from recent lows and actually growing relative to pre-COVID-19 trends. In other words, demand destruction on the order of nearly 30 million barrels per day (mb/d) may have been brief, but we are a long way from a 100-mb/d oil market. 

In fact, some are wondering whether the world will ever get back to 100 mb/d of oil demand. Even oil executives have their doubts. Royal Dutch Shell’s CEO Ben van Beurden recently suggested that a rebound is unlikely, even looking out beyond 2020. “We do not expect a recovery of oil prices or demand for our products in the medium term,” he said.

“We basically have a crisis of uncertainty. Uncertainty about demand, about prices,” van Beurden said in a video address when presenting first quarter results at the end of April. “Maybe even uncertainty about the viability of some of our assets given all of the logistical issues we have.”

BP’s CEO Bernard Looney largely admitted the same thing. The COVID-19 pandemic could entrench certain societal changes – more teleworking, less commuting, less flying – that could permanently erode a portion of consumption. “It’s not going to make oil more in demand. It’s gotten more likely [oil will] be less in demand,” Looney said in an interview with the FT

“I don’t think we know how this is going to play out. I certainly don’t know,” Looney said. “Could it be peak oil? Possibly. Possibly. I would not write that off.”

Not everyone agrees. ExxonMobil’s chief executive Darren Woods recently said that the long-term trends “have not changed.” 

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U.S. Oil, Gas Rigs Fall Below 400 For The First Time Since 1940

U.S. Oil, Gas Rigs Fall Below 400 For The First Time Since 1940

Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week by 34, falling to 374, with the total oil and gas rigs sitting at 614 fewer than this time last year as U.S. drillers scurry to keep their heads above water amid strict stay-at-home orders that caused oil demand to plummet at alarming rates—and oil prices along with it.

It is the fewest number of active rigs since Baker Hughes started to keep in 1940.

The number of oil rigs decreased for the week by 33 rigs, according to Baker Hughes data, bringing the total to 292—a 513-rig loss year over year. It is the fewest number of active oil rigs since late 2009.

The total number of active gas rigs in the United States fell by 1 according to the report, to 80. This compares to 183 a year ago.

The EIA’s estimate for the week is that oil production in the United States fell to 11.9 million barrels of oil per day on average for week ending May 1, which is 1.2 million bpd off the all-time high and a substantial 300,000 bpd lower than the week prior. It is the fifth straight weekly production decline. It is the first sub-12 million bpd rate in the United States since February 2019.

Canada’s overall rig count decreased by 1 rigs this week, to 26 rigs. Oil and gas rigs in Canada are now down 37 year on year. 

At 1:12 am, WTI was trading up 1.53% at $23.91, while the Brent benchmark was trading up 2.82% at $30.29.

Will covid-19 delay peak oil?

Will covid-19 delay peak oil?

With global demand having fallen by about 29 million barrels per day from a year ago, it seems like this pandemic might delay peak oil production while the pandemic and consequent depression lasts, since so much less oil is being consumed. Since storage is getting full, many oil producers are being forced to shut down wells, since there’s nowhere to put the oil or demand for it.

Shut down wells may produce less oil after being restarted

Shutting in wells can reduce oil production when restarted, but that doesn’t happen every time.  Sometimes you get lucky.  More often though, the sub-surface gremlins in the reservoirs are going to get you.  The net effect will likely be less oil and gas than there was before.

With prices so low and storage so full, some producers are shutting down wells. But the problem with that is it can have long term consequences, damaging the reservoir so that in the future not all of the oil can be produced (Brower 2020).

In addition to reservoir problems, especially tar sands, conventional and other wells face restart issues with the pipes, valves, separators, pumps, pipelines, older wells, and so many other technical problems that at least about 10-20% plus a loss of ability to reopen marginal projects.  Depending how the game is played by the industry, the damage can be twice that, easily, especially in offshore and ultra-deep offshore wells, where methane hydrates will form immediately in seafloor pipelines and plug them. These wells could be 100 times more difficult to restart than a shale well (Patzek 2020).

Operations in the Gulf of Mexico will likely shut last, since the miles of pipelines that carry the oil along the sea floor to processing facilities on shore can clog if shut off for too long.

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There Is Now A Record 375 Million Barrels Of Oil Stored On Tankers

There Is Now A Record 375 Million Barrels Of Oil Stored On Tankers

Last weekend we showed that as oil storage on land was rapidly filling up, a familiar sight was seen off the coast of Asia’s oil hub in Singapore: a record surge in tankers on anchor used as seaborne storage, and taking advantage of the supercontango just waiting for oil prices to rebound so they can deliver their (formerly) precious cargo.

So as more and more storage moves offshore, here is an update from Bank of America on the current status of the oil market as the “oil glut moves from tanks to tankers.”

In the last five weeks, onshore inventories held in floating top tanks climbed 180mn bbl, suggesting that builds have averaged roughly 4.3mn b/d since mid-March. These inventory increases reduce BofA’s estimates for available onshore crude storage capacity from roughly 910mn bbl to 730 mn bbl (Chart 2), although the bank still believes that this capacity is unlikely to be fully utilized due to logistical constraints and other issues.

How did we get here? As has been extensively reported here and elsewhere, WTI timespreads signalled a massive build in Cushing inventories and stocks would likely reach their operational limits within a few weeks (Chart 3). More recently, the expiration of the May WTI contract demonstrated the lack of available capacity at the hub. Cushing inventory builds are set to slow dramatically as much of the remaining capacity may be needed as an operational backstop for pipeline issues and blending needs (Chart 4). Over the coming weeks and months, US inventory trends could even reverse as producers in Canada and the Bakken shut-in output and refiners increase runs on the back of the re-opening of the economy.

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The Oil Wells That Will Never Recover

The Oil Wells That Will Never Recover

It is very common today to read about shutting-in of producing oil and gas wells to reflect the reality there are fewer and fewer places to store oil right now. An old oilfield maxim-the cheapest storage is in the ground. It wasn’t coined to meet the criteria that are extant today as regards surface storage limitations, but rather to reflect costs of production versus sales prices. As we are all learning though, these two scenarios are very much related.

I get a lot of questions from readers of my articles, and students in my Reservoir Drill-In Fluids design classes about what happens with oil and gas wells that are shut-in. As discussed, there is a lot of this going on right now due to the oil glut we are experiencing. That answer is generally, that there are definite problems associated with doing this, but it’s not guaranteed they will occur in every instance. Sometimes you just get lucky. More often than not though, the sub-surface gremlins that reside in oil and gas reservoirs are going to get you. There is a reason that service companies earn billions of dollars annually pumping stuff down wells to fix perceived problems with production. So the question before us now is what are some of the mechanisms that cause problems restoring production to oil and gas wells after they have been shut-in?

One thing that can happen to oil and gas wells when they are shut in after being on production is a change in wettability.  We will discuss ‘wettability’ in some detail in this article, but essentially amount to the surface wetting condition of the discrete particles of sand and other constituents that comprise the rock in oil and gas reservoirs. Water coning is one frequent contributor to this problem.

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WTI Crashes To 19 Year Low As Trading Reopens; S&P Futures Slide

WTI Crashes To 19 Year Low As Trading Reopens; S&P Futures Slide

After a relatively drama-free weekend, futures have started off the new week lower by about 0.4%, trading at 2850, down 20 points from Friday’s CTA inspired and momentum-driven meltup which appears to be reversing as algos realize they have frontrun a rebound in not just 2021 earnings but also 2022 and 2023.

However, just like last week, it is commodities and specifically oil where the deflationary puke is taking place, with WTI tumbling over 5% at the open, and sliding to $17.30, down more than $10 from last Monday’s post OPEC+ kneejerk reaction higher and the lowest price since November 2001,

The ongoing crash in oil which OPEC+’s agreement to cut 9.7mmb/d in output last weekend has failed to halt, takes place as Crude prices in the US oil capital are getting dangerously close to zero. According to Bloomberg buyers bidding for crude in landlocked sections of Texas, ground zero of the shale revolution, are offering as little as $2 a barrel for some oil streams, a precipitous markdown from a month ago. And, as discussed here on various occasions, the plunging value of physical barrels is raising the possibility that Texas producers may soon have to pay customers to take crude off their hands.

Negative prices already hit more obscure corners of the North American oil market amid a bearish trifecta of collapsing demand, swelling supplies and limited storage capacity. AS we reported at the end of March, the first U.S. grade to bid under zero was a small landlocked crude stream known as Wyoming Asphalt Sour, which went for negative 19 cents a barrel last month.

Meanwhile, in Texas prices are heading in that direction. A subsidiary of Plains All American Pipeline bid just $2 a barrel for South Texas Sour on Friday, while Enterprise Products Partners LP offered $4.12 for Upper Texas Gulf Coast crude this week, according to Bloomberg.

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For Oil and Its Dependents, It’s Code Blue

For Oil and Its Dependents, It’s Code Blue

The great price collapse of 2020 will topple companies and transform states.

Oil drop
Failing vital signs: Economists predict a depression after the pandemic. That will mean less energy spending, which translates into ongoing low energy prices that already no longer cover the cost of extraction in many places. Illustration for The Tyee by Christopher Cheung. Oil rig image: Creative Commons.

If oil has been laid low by the coronavirus, then the nations whose economies most depend on it might soon be on ventilators. By any prognosis the great oil price collapse of 2020 has pushed the world’s most volatile commodity into Code Blue.

No one expects oil, its peddlers or consumers to emerge wealthier or wiser from this crisis. Oil company bankruptcies, already happening before the pandemic, will escalate. And more petro states will begin to stumble, like Venezuela, down the rabbit hole of collapse. 

The pandemic, combined with suicidal overproduction and a brief price war between Russia and Saudi Arabia, has reduced oil consumption and revenues on a scale that is mindboggling. 

Prior to the pandemic, the world gulped about 100 million barrels a day, filling the atmosphere with destabilizing carbon. Today it sips somewhere between 65 million and 80 million barrels.

At least 20 to 30 per cent of global demand has vanished and nearly two dozen petro-producing countries including Canada have agreed to withhold nearly 10 million barrels from the market. Few expect this agreement will stop the price bleeding.

In fact, the price of Western Canadian Select or diluted bitumen remains below five dollars a barrel — cheaper than hand sanitizer. That’s a drop of more than 80 per cent compared to the month before.

Because the spending of oil fertilizes economic growth and expands national GDPs, most of the world’s economists now predict a long depression after the pandemic.

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Canadian Oil Sands Per Barrel At $4.47, Now Cheaper Than 12-Pack Coke, $5.08

Canadian Oil Sands Per Barrel At $4.47, Now Cheaper Than 12-Pack Coke, $5.08

The collapse of global oil demand has impacted the price of Canadian Oil Sands to such a degree, the price of a barrel is now cheaper than a 12-pack of Coke purchased at Walmart. According to oilprice.com, the current price of a barrel of Western Canadian Select (oil sands) is $4.47 versus a 12-pack of Coke at Walmart for $5.08.

What a deal… ah?  Now, let’s do a simple comparison of the ENERGY CONTENT in a barrel of Canadian Oil Sands vs. a 12-pack of Coke.  A barrel of oil equivalent contains 1.4 billion calories of energy.  A typical 12 oz Coke can contains 140 calories.  If we multiply it by 12, we have 1,680 calories in a 12-pack of Coke.

Doing some simple math:

Barrel Of Oil Equivalent (1,400,000,000 calories) / 12-Pack Coke (1,680 calories) =  833,333.

Thus, a barrel of Canadian Oil Sands, which contains 833,333 times the energy calories than a 12-pack of Coke, is now worth $4.47 compared to $5.08 for the 12-pack of Coke.  Again… what a deal, ah??

I just wanted to post this simple comparison to show how much the Global Oil Industry is being gutted.  If OPEC, Russia, and the United States do not come up with “MEANINGFUL CUTS,” then we could see Western Canadian Select trading for $1 a barrel or less.

As for RESTARTING the U.S. and Global Economy after an extended shutdown, I have my doubts, as so does Gail Tverberg at her blog, OurFiniteWorld.com.  Check out her most recent article; Economies won’t be able to recover after shutdowns.

COMING NEW VIDEO: I am finishing putting together the charts for my next video on why the GOLD & SILVER PRICES will explode due to the collapse of the Global Financial Ponzi Scheme.

Some Oil Producing Nations Agree to Cut Production 10%

Some Oil Producing Nations Agree to Cut Production 10%

Oil-producing nations led by Russia, the U.S. and Saudi Arabia reached an unprecedented agreement on Sunday to cut oil production by 9.7 million barrels per day, or nearly 10 percent of what is currently produced, as The New York Times reported.

Since the COVID-19 pandemic has triggered lockdowns around the world, the demand for oil has plummeted nearly 35 percent, causing huge surpluses in oil supply and deep drops in the price of crude oil, which fell to 18-year lows. The new agreement to slash oil production starting in May is twice the size of the cuts agreed to during the global financial crisis 12 years ago and signals a truce in a growing price war between Russia and OPEC’s de facto leader, Saudi Arabia, according to The Guardian.

The alliance, called OPEC+, includes OPEC members as well as non-members like Russia and Mexico, but not the U.S. The deal was struck after marathon negotiations and concessions made to Mexico, which held up the deal. Mexico opposed the amount it was being asked to cut, but finally agreed to cut 100,000 barrels per day, instead of its initial allocation of 400,000 barrels per day, according to NBC News.

The deal means oil producers will drop their production in May and June and then steadily increase it again until the deal expires in two years. That also means that most Americans will actually see the price of gasoline go up, leaving some to wonder why a U.S. president would broker a deal that will make Americans pay more at the pump, according to POLITICO. It seems Trump was spurred by the U.S. shale oil industry, which asked for help after oil prices dropped to an 18-year low. The industry has been amongst his most loyal supporters.

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U.S. Oil Drilling Grinds To A Halt At Key Shale Hotspots

U.S. Oil Drilling Grinds To A Halt At Key Shale Hotspots

Shale rig

Oil and gas production in the United States has peaked and is already in decline. 

The latest data from the EIA’s Drilling Productivity Report sees widespread production declines across all major shale basins in the country. The Permian is set to lose 76,000 bpd between April and May, with declines also evident in the Eagle Ford (-35,000 bpd), the Bakken (-28,000 bpd), the Anadarko (-21,000 bpd) and the Niobrara (-20,000 bpd). 

Natural gas production is also in decline, a reality that occurred prior to the global pandemic but is set to accelerate. The Appalachian basin (Marcellus and Utica shales) are expected to lose 326 million cubic feet per day (mcf/d) in May, a loss of 1 percent of supply. In percentage terms, the Anadarko basin in Oklahoma is expected to see an even larger drop off – 216 mcf/d in May, or a 3 percent decline in production. 

The sudden declines in production illustrates the fatal flaw in the shale business model. Once drilling slows down, production can immediately go negative due to steep decline rates. Shale E&Ps have to keep running fast on the drilling treadmill in order to keep production aloft. But the meltdown in prices has forced the industry to idle 179 rigs since mid-March. 

With drilling grinding to a halt, output has slumped as “legacy” production declines take hold. That is, without new wells coming online to offset the declines from existing wells, overall production falls. 

In specific terms, the Permian, for example, will lose 356,000 bpd from “legacy” wells in May, more than overwhelming the 280,000 bpd in new output from new wells. On a net basis, the Permian is set to lose 76,000 bpd in May. 

That legacy decline rate has deepened with each passing year, requiring more aggressive drilling each month to keep production on an upward trend. But the treadmill has finally caught up to the industry. 

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Olduvai IV: Courage
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Olduvai II: Exodus
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