RIYADH, Dec 13: Despite assurances from Opec officials that an output cut is just round the corner, oil prices markets continued to climb down raising questions whether the anticipated big production cut would be able to curb crude’s stunning fall over the last five months.

And the ongoing crisis in the crude markets is certain to have the long-term and immediate ramifications. The first and the foremost casualty of this downturn seems to be the emphasis on producer-consumer dialogue.

In the immediate aftermath of the oil market peak this year, there was stress on political dialogue between the producers and the consumers, regarded as so essential to keep the globe well oiled.

While Saudi Arabia convened the ‘energy summit’ in Jeddah to give a push to the process of dialogue, British Prime Minister Gordon Brown announced a follow-up on the Jeddah deliberations with an even higher level summit in London ‘sooner’ rather than later. It was supposed to be scheduled in December.

And until a couple of months earlier, a very senior and respected Norwegian diplomat, deeply involved with the energy world, remained associated with the anticipated energy summit.

However, there seems to be a lull now. We are already in December and one doesn’t hear any noise about the scheduled meeting. Perhaps the changing market environment and the necessity and urgency to hold any such meeting have evaporated.

There are other casualties too.

Texas oil tycoon T. Boone Pickens, known for making his fortunes in oil business, is now “anxious” for his company’s multibillion dollar plans to build a giant wind farm in Texas. Wind power and natural gas are integral parts of the “Pickens Plan,” a 10-year project to wean the United States off foreign oil imports.

The company Mesa Power LLC began the first phase of the project, which was expected to cost $2 billion, earlier this year. It purchased over 600 wind turbines.

The project is now in the doldrums — a casualty of market weakness.

And in the meantime, the solar industry, whose future seemed so bright just a few months ago, suddenly looks like it’s headed for a shakeout.

Even as new solar factories have opened in places like Austin, Texas, and greater Atlanta in recent weeks, several big solar companies in China and Canada warned that they would pull back on expansion plans and preserve cash, after customers cancelled projects and credit markets dried up.

Shares of many publicly held solar companies have fared even worse than the overall stock market.

The British energy group BP Plc is closing its Australian solar-cell factory by end-March 2009 to focus on bigger, lower-cost operations offshore, because of the changing market economics.

The growing financial crisis and plunging energy prices have forced companies to scale back spending and delay projects, with expensive ventures in the Canadian oil sands hardest hit. Many in the industry in recent months have been pointing at the Canadian oil sands as the rising star of the industry.

Earlier this month Norway’s StatoilHydro scrapped plans for a C$16 billion upgrade for its Canadian oil sands holdings. For the time being the company is going ahead with plans to produce 200,000 barrels per day of bitumen and would sell it on the open market instead of turning into more valuable synthetic oil.

Irving Oil is also slowing construction on its planned C$7 billion refinery at Saint John, New Brunswick, breaking work into two C$4 billion phases of 150,000 bpd each and stretching construction over as much as eight years from 2011 instead of four.

Royal Dutch Shell Plc. has also decided to delay investment decision on second expansion of Athabasca oil sands project.

Petro-Canada has also deferred the upgrading of its C$21 billion Fort Hills oil sands project.

Canadian Natural Resources Ltd has decided to slow down spending on second phase of Horizon oil sands project for 2009 after first phase costs rose to C$9.7 billion, up 42 per cent from 2004 estimate. It also scrapped timelines for phase 2, which would lift output to 250,000 bpd from 110,000.

Suncor Energy Inc. has decided to delay the C$20.6 billion Voyageur expansion by one year to 2013. Expansion boosts production from Suncor’s oil sands operations near Fort McMurray, Alberta, to 550,000 bpd from 350,000.

Nexen Inc has also delayed the second phase of Long Lake oil sands project to 2009.

Expansion would double production of synthetic crude to 120,000 bpd, while the Value Creation Group’s C$4 billion Heartland project near Edmonton, Alberta has reportedly been halted.

First phase of the project on completion was to process 77,500 bpd of bitumen into synthetic crude.Saudi Aramco is also continuing to review development projects in the light of the global financial crisis.

It has already postponed plans for a $1.2 billion project to restart production from its historic Dammam oil field. In addition, Saudi Aramco has also chosen to delay several other projects in the wake of the global financial problems.

The list includes the 400,000 bpd Yanbu Refinery, the 900,000 bpd Manifa oil field development and the 400,000 bpd refinery project at Jubail. There are many other casualties too.

Diversifying away form the Middle Eastern oil, the pet objective of the politicians in the West, thus is getting still farther. The dismally low oil price is no good news. We could be in for real crisis near- term if not immediately.