End of Gulf Ban Allows BP to Expand in Familiar, Lucrative Territory

Off Shore Drill

HOUSTON — Even as drilling for new oil in the Gulf of Mexico has made a robust return since the Deepwater Horizon rig disaster in 2010, BP has been in the unusual position of spectator.  But that is likely to change next Wednesday, when the federal government auctions off the rights to new oil drilling sites.

 

The auction in New Orleans will be the first since BP and the Environmental Protection Agency reached a settlement on Thursday that lifts a ban that prevented the company, traditionally one of the most aggressive oil producers in the gulf, from pursuing new leases and other government contracts.  Analysts said both BP and the United States government needed a deal.

 

BP has been a key player in the American energy industry. Along with Royal Dutch Shell, it had led development of oil and gas drilling in the deep waters of the Gulf of Mexico. The gulf and onshore shale fields have transformed the United States from a declining oil and gas producer just a few years ago to a fast-growing one that will be able to cut imports and even export oil and gas for years to come.

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China buys up Russia’s backyard

Russia spent the end of last year battling the EU for control over Ukraine. But should the Kremlin have been paying more attention to what was going on its southern border instead? In the last three months, the Chinese have swept through Central and Eastern Europe (CEE) and Central Asia, buying up Russia’s backyard in a string of billion-dollar deals.  Chinese President Xi Jinping was set for a summit in Moscow in September last year, where Russian President Vladimir Putin was hoping to conclude a crucial natural gas deal that would see a gas pipeline built to connect Russia’s Siberian fields with China’s underdeveloped northwest territories. The pipeline project was agreed on years ago, but the deal has been held up, as the two sides can’t agree on the price of the gas that will flow through it.  However, instead of flying directly to Russia’s northern capital, President Xi went on a whirlwind tour of Central Asia. It was like a visit from Santa Claus as Xi distributed billions of dollars of deals along the way.  In what must have come as a shock to the Kremlin, during his last stop in Turkmenistan Xi signed off on a $60bn energy investment deal that includes $10bn to develop the massive Galkynysh gasfield which has gas reserves of some 1.3 trillion cubic metres – enough to meet China’s needs for several years. The Turkmen deal makes Gazprom’s deal largely superfluous.

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Global Terrorism and Saudi Arabia: Bandar’s Terror Network

Saudi Arabia has all the vices and none of the virtues of an oil rich state like Venezuela.  The country is governed by a family dictatorship which tolerates no opposition and severely punishes human rights advocates and political dissidents.  Hundreds of billions in oil revenues are controlled by the royal despotism and fuel speculative investments the world over.  The ruling elite relies on the purchase of Western arms and US military bases for protection.  The wealth of productive nations is syphoned to enrich the conspicuous consumption of the Saudi ruling family.  The ruling elite finances the most fanatical, retrograde, misogynist version of Islam, “Wahhabi” a sect of Sunni Islam.  Faced with internal dissent from repressed subjects and religious minorities, the Saudi dictatorship perceives threats and dangers from all sides:  overseas, secular, nationalists and Shia ruling governments; internally, moderate Sunni nationalists, democrats and feminists; within the royalist cliques, traditionalists and modernizers.  In response it has turned toward financing, training and arming an international network of Islamic terrorists who are directed toward attacking, invading and destroying regimes opposed to the Saudi clerical-dictatorial regime.

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Gulf states seek integrated air defence

DUBAI // Arabian Gulf states aim to integrate their air defence systems to meet threats from ballistic and cruise missiles.  “Advances in science and technology have made the world networked and connected,” said Maj Gen Staff Pilot Mohammed bin Sweidan Saeed Al Qamzi, commander of the Air Force and Air Defence.  “We need to be a single force to overcome our common threats and challenges. While the UAE faces no armed conflicts, civil wars or internal instability, we must remain vigilant to deter conflicts that are occurring regionally. We must maintain strong air defence forces to continue protecting our national and regional interests.”

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German BND spy agency sees shale depressing oil prices for decades

The BND said the U.S. shale boom would have a greater impact on global markets than it predicted in a previous analysis earlier this year.  “The effects from the unconventional production of oil and natural gas in the United States will be pronounced over the next 10 to 20 years,” the report said.  It added that it now expects global oil prices to sink substantially, which will cause considerable problems for gas and oil producers such as Russia and Libya and trigger changes in the Middle East.  The report said such changes would cause the biggest risks for Iran, Libya, Venezuela and Yemen, because the governments in these producer countries were banking on high prices.  It said it is possible crude oil prices will fall lastingly to about $80 per barrel.  A Reuters survey published on Wednesday found Brent crude will average $95 a barrel over the course of 2020, a drop of $20 from the estimate in a similar poll a year ago even though spot oil prices have changed little since then.

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Geography in the News: International Shipping Chokepoints

Chokepoints

Egypt’s stability and security remain uncertain. Amid calls by opposition supporters for the president’s removal in early 2011, the country erupted into widespread demonstrations against the government and President Hosni Mubarak was removed. General elections brought Muslim Brotherhood candidate Mohamed Morsi into power, he subsequently was overthrown by the military.  These actions sparked speculation about Egypt’s strategic geographic position in the region. Widespread unrest could jeopardize security of the Suez Canal, which is an important world oil chokepoint.  While incredibly important and providing passage for a large portion of the oil that arrives in the North America and Europe from the Middle East, the Suez Canal is but one narrow strait (called “chokepoints”) through which oil passes on its way to oil-dependent countries. According to an article by Business Insider, seven oil chokepoints of the world are crucial to the world economy. These chokepoints moved about half of the world’s oil production of 84 million barrels per day (bbl/d) in 2010.

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China Courts Central Asia

Even by Chinese standards, the scale of this month’s natural gas deal with Turkmenistan was significant. Standing side by side in the oasis city of Mary in the Karakum Desert, Chinese President Xi Jinping and his Turkmen counterpart Gurbanguly Berdymukhamedov marked the completion of the first phase of the world’s second-largest gas field with warm smiles and yet further cooperation.  A new deal signed on the same day will see Turkmenistan deliver 65 billion cubic meters of natural gas through the world’s longest pipeline by 2016, an increase of 25 billion cubic meters.  The Galkynysh field is “another fine example of bilateral energy cooperation for mutual benefits,” Xi was quoted as saying in the state-run China Daily.

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Lebanese encroachment on Israeli waters could lead to war

Oil rig

Israel is being advised to take legal, and possibly even military action in response to Lebanon’s issuing of an offshore energy exploration license that encroaches on Israel’s territorial waters.  Early last month, Lebanon issued licenses in five blocks of its exclusive economic zone (EEZ). One of those licenses expanded the territory into Israel’s EEZ, with Lebanon announcing that the area had a high potential for natural gas discovery.  Globes reports that international law experts are telling Israel that it must respond – either in court or through military force – or risk losing some of its maritime territory.

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Liquefied Natural Profits

As the production of unconventional oil and gas in the United States rises — and as the United States increasingly exports that energy — the world’s economic map will be forever changed. The power of today’s petro states, such as Iran and Russia, will continue to wane. More and more, the United States will be the stable, competitive source of choice for gasoline, diesel, natural gas liquids, and, soon, liquefied natural gas (LNG).  In the past two years, the United States has licensed four terminals for exporting LNG, mostly to countries with which it has no free trade agreement, such as Japan and various Latin American and European countries. By 2020, the United States could export as much as 61.7 million tons per year of LNG. That would make the United States the second-largest LNG exporter in the world, next to Qatar. Other deals in the licensing queue are likely to push the total closer to 80 million tons per year, compared to Qatar’s current total of 77.

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Syria Intervention: For Human Rights or ‘Pipelinestan’?

pipelineRemember Hama? Hama is Syria’s fourth largest city. In 1982, in a military conflict with the Muslim Brotherhood, Hafez al Assad (Bashar’s father) destroyed the city by indiscriminately launching aerial and heavy weapons strikes against it. In Hama, a stronghold of the Muslim Brotherhood, everyone was considered an enemy. The exact number of dead is unknown, but 25,000 is a reasonable guess.  Those who were wounded or simply hidden in the rubble were alleged to have been eliminated by heavy mechanized use of cyanide gas. The world could barely contain itself to say nothing about the wanton slaughter.  Between 1964 and 1969, in the civil war in Yemen, the Egyptian army used poison gas in support of the rebel militias against the monarchy. The world was outraged to the point of deafening silence.  Then there was the nasty business of combination gases that the United States used  in Vietnam to clear Vietcong tunnels. Although the United States claimed the use did not violate the Geneva Conventions, many nations saw it otherwise, especially with regard to DM gas, which can kill, although not designed to do so. When the Ford administration signed the Geneva Protocol on the use of chemical weapons, the previous use of gas in Vietnam was prohibited.

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China took away the Turkmenistan – Afghanistan – Pakistan – India pipeline from USA

Baku, Fineko/abc.az. “With a subtle motion of the hand” China took away the Turkmenistan – Afghanistan – Pakistan – India (TAPI) pipeline project from USA and became yesterday the chief controller of gas resources in Central and South Asia.  Somebody else’s ideas and plans have been expropriated by means of contract for sale of 25 bn cu m of gas per year concluded between State Concern Turkmengas and Chinese Company CNPC.  The deal will increase the total volume of Turkmen gas supplied to China up to 65 bn cu m. At the same time the agreement is achieved on the planned new direction of Turkmenistan – China pipeline (D direction) for additional supplies.  Gas agreements enabled Xi Jinping, the General Secretary of PRC and Gurbanguly Berdimuhamedow, the President of Turkmenstan, to adopt mutual Declaration on establishment of strategic partnership relations between Turkmenistan and PRC.

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What The US And Russia Are Really Quarreling Over: Pipelines

Nearly two months ago, former National Security Agency (NSA) contractor-turned-whistleblower Edward Snowden handed smoking-gun documents on the international surveillance apparatus to The Guardian and The Washington Post in what’s become one of the most captivating stories in recent memory.  Snowden now lives in Russia after a Hollywood-like nearly six-week-long stint in a Moscow airport waiting for a country to grant him asylum.  Journalists and pundits have spent countless articles and news segments conveying the intrigue and intensity of the standoff that eventually resulted in Russia granting Snowden one year of asylum. Attention now has shifted to his father, Lon Snowden, and his announced visit of Edward in Russia.  Lost in the excitement of this “White Bronco Moment,” many have missed the elephant in the room: the “Great Game”-style geopolitical standoff between the U.S. and Russia underlying it all, and which may have served as the impetus for Russia to grant Snowden asylum to begin with. What’s at stake? Natural gas.

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Commodities: Egyptian bloodbath threatens crucial routes for oil and gas supplies

After last week’s bloody crackdown by the Egyptian army, fears of a disruption of oil supplies to the West have boosted the oil price. Brent crude prices were propelled to a four-month high of $111.23 on Thursday. If the turmoil gets worse – or unrest spreads to other countries – the risk premium currently factored into the price of crude is likely to increase further.  Egypt is not a major energy exporter, producing a nominal amount of the world’s oil and gas. The North African country appears at number 54 on the list of the world’s largest oil exporters, producing about 0.9pc of the world’s oil and 1.8pc of global natural gas supply.However, Egypt plays a vital role in international energy markets through the operation of the Suez Canal and the Suez-Mediterranean (Sumed) pipeline. These are vital pieces of infrastructure in the global oil market.

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At the root of Egyptian rage is a deepening resource crisis

With more than 600 people killed and almost 4,000 injured from clashes between Egyptian security forces and Muslim Brotherhood protesters, the country’s democratic prospects look dismal. But while the violence is largely framed as a conflict between Islamism and secularism, the roots of the crisis run far deeper. Egypt is in fact on the brink of a protracted state-collapse process driven by intensifying resource scarcity.  Since the unilateral deposition of President Morsi, the army’s purported efforts to “restore order” are fast-tracking the country toward civil war. The declaration of a month-long state of emergency—ironically in the name of defending “democracy”—suggests we are witnessing the dawn of a new era of unprecedented violence with the potential to destabilize the entire region.

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The Biggest Oil Discovery In 50 Years?

In a virtually uninhabitable section of South Australia, a discovery has been made which could rock the world.  Some are calling it the biggest discovery of oil in 50 years.  Earlier this year, a company called Linc Energy announced that tests had revealed that there was a minimum of 3.5 billion barrels of oil equivalent sitting under more than 65,000 square kilometres of land that it owns in the Arckaringa Basin.  But that is the minimum number.  It has been projected that there could ultimately be up to 233 billion barrels of recoverable oil in the area.  If that turns out to be accurate, the oil sitting under that land is worth approximately 20 trillion dollars, and it would be roughly equivalent to the total amount of oil sitting under the sands of Saudi Arabia.  In essence, it would be a massive game changer.

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India’s Shale Gas Boom: Dream or Reality?

As India prepares for the release of its long anticipated shale gas policy, pressure continues to mount on New Delhi. An increase in coal imports over the past 12 months has demonstrated the stress on current energy supply and the negative impacts it has on India’s public health and environment.  In March, Veerappa Moily, India’s Minister for Petroleum and Natural Gas, said that the government’s shale gas policy would be released in early April, yet such a policy, which Moily stated in an interview with Reuters in March would be a “game changer” for India, is still to materialize. Many analysts continue to point to the importance of improving the country’s energy security. Indeed, shale gas production could offer a reprieve for energy-starved India as well as a much needed boost to its economy.

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Oil & gas reserves add to existing tensions between Israel & Lebanon

TEL AVIV: The recent discovery of oil and gas reserves in the eastern Mediterranean off the Israeli, Cypriot and Lebanese coasts is a great boost to the independence and self-sufficiency of these countries.  But the discoveries also add to existing tensions between Israel and Lebanon as both are claiming the oil and gas reserves as their own.  In April, natural gas from the Israeli Tamar reserve began to flow from an offshore rig in the Mediterranean Sea into Israel, giving the country the chance to hone its energy security and freedom.

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Turkish energy hub plan faces hurdles

TEL AVIV, Israel, May 9 (UPI) — Israel’s rapprochement with onetime strategic ally Turkey is a vital element in Ankara’s drive to become the intercontinental east-west energy hub in the Mediterranean and many expect it to produce an energy alliance that will transform the region.  Turkish Prime Minister Tayyip Recep Erdogan has, since taking power in 2002, transformed his country’s economic prospects through a wide-ranging diplomatic drive aimed at restoring Turkish leadership in the region.

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China, India spar over Persian Gulf oil

ABU DHABI, United Arab Emirates, April 26 (UPI) — China’s plan to build a second aircraft carrier and the Indian navy’s recent test-firing of a submarine-launched cruise missile should be ringing alarm bells in the Persian Gulf.  Beijing and New Delhi are squaring off militarily in the Indian Ocean, the key energy artery from the Middle East and Africa to the Asian giants who need the oil and gas to fuel their expanding economies.  eijing and New Delhi are squaring off militarily in the Indian Ocean, the key energy artery from the Middle East and Africa to the Asian giants who need the oil and gas to fuel their expanding economies.

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Turkey may have secretly sign oil deal with Iraqi Kurdistan, defying Baghdad

ANKARA/ERBIL,— Iraq’s Kurdistan region has signed a landmark agreement with Turkey to supply it directly with oil and gas, two people familiar with the matter said.The accord was signed last month when Turkey’s Prime Minister Recep Tayyip Erdogan met Iraqi Kurdistan Prime Minister Nechirvan Barzani in Ankara, said the people, who asked not to be identified because the plans are private. Turkish Energy Minister Taner Yildiz, contacted via his press office, declined to comment, as did an Iraqi Kurdish official. The Oil Ministry in Baghdad didn’t immediately respond to a request for comment.

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