Saudi Arabia is home to less than half a percent of the world's population -- and fully 16 percent of the world's proven oil reserves. Nonetheless, Citigroup projects that the desert nation may become an oil importer in the next 20 years. "If Saudi Arabian oil consumption grows in line with peak power demand, the country could be a net oil importer by 2030," Heidy Rehman wrote in a 150 page report for the bank.
Already Saudi Arabia uses a quarter of its fuel production and all of its natural gas domestically, meaning that its per capita consumption is higher than the United States despite its miniscule industrial base. Demand for electricity, moreover, is expected to grow by as much as 8 percent a year.
The Telegraph has more:
The basic point -- common to other Gulf oil producers -- is that Saudi local consumption is rocketing. Residential use makes up 50 percent of demand, and over two thirds of that is air-conditioning.
The Saudis also consume 250 litres per head per day of water -- the world's third highest (which blows the mind), growing at nine percent a year -- and most of this is provided from energy-guzzling desalination plants.
Analysts including Jeremy Leggett of the UK Industry Taskforce on Peak Oil and Energy Security have suggested that dwindling Saudi Arabian exports could contribute to a global fuel shortage, potentially causing "massive stress to the global economy."
Rehman's report comes less than six months after another Citi report, which predicted an era of oil abundance -- and of reduced American dependence on OPEC:
[T]he US has become the fastest growing oil and natural gas producing area of the world and is now the most important marginal source for oil and gas globally. Add to this steadily growing Canadian production and a comeback in Mexican production and you get to a higher growth rate than all of OPEC can sustain.
Either way, Saudi Arabia's share of global exports is on the wane, so the United States had better stop treating it as a de facto Strategic Petroleum Reserve.
Nearly 24 hours of voting, 425 pages of legislation, over 800 proposed amendments: This is the marathon from which Canadian members of parliament (MPs) emerged on June 15.
The session, characterized by the Globe and Mail as "22-plus hours of consecutive spanking" of the dissenting opposition parties by Prime Minister Stephen Harper's Conservative majority government, will allow the government to push through omnibus bill C-38.
Canadians are up in arms about the bill because it includes legislation that will weaken and threaten the legal status of leading environmental groups.
Because Harper is determined to build a new pipeline out of the Alberta tar sands, the center of Canada's oil industry with known reserves that rival Saudi Arabia's. And he is not about to wait for November to get it done.
The proposed Keystone XL pipeline, which would have funneled Canadian oil down to refineries on the Gulf Coast, remains in political deadlock after the Obama administration blocked the deal in January.
Incensed by Obama's decision, Harper claimed the pipeline process was being "held hostage" because "certain people in the United States would like to see Canada be one giant national park for the northern half of North America."
In the meantime, Harper's government, as well as impatient oil exporters and Asian markets hungry for Canadian crude, are determined to find new ways out of land-locked Alberta in order to increase oil export volumes.
"Enbridge, a transporter of Canadian oil exports, announced a $3 billion plan called Eastern Access. It is seeking permission to build a new "Northern Gateway Pipelines" network, to bring 525,000 barrels a day to Canada's Pacific Coast. Kinder Morgan, a Texas-based energy company, said it will nearly double the capacity of an existing pipeline network along a different route."
All of these options will have to overcome staunch opposition by indigenous groups and well-entrenched environmental interests on both coasts. Which brings us back to the reasoning behind the Conservative government's push to pass the omnibus bill with the intent of weakening these groups' legal footing.
In order to further quell dissent, Harper's government has also been going after anti-pipeline charity and advocacy groups. A variety of groups, including Tides Canada and ForestEthics, have been threatened with having their charity status revoked. Canadian regulations have long maintained that charities cannot devote more thant 10 percent of their budgets to advocacy. Additional laws pushed through as part of the C-38 package "will bring more scrutiny to foreign funding for charities and also how they use money for political purposes. Charities will also have to take more responsibility for the political activities of groups to which they give money."
The government has also insinuated that shadowy foreign entities are responsible for funding charities in their efforts to derail Canada's well-oiled ascendance to the status of petrostate. The Conservatives' new efforts to regulate "transparency" in Canadian charities has gone so far as to alarm large foundations with names like Bronfman, Asper and Bombardier on their letterheads.
Turns out even Canada is not immune to the lure of "black gold."
MARK RALSTON/AFP/Getty Images
Two years ago today, British Petroleum's Deepwater Horizon offshore drilling rig exploded, causing the largest oil spill in U.S. history. Though BP reached an "estimated multibillion-dollar settlement" with lawyers representing individual and business plaintiffs in the 2010 Gulf of Mexico oil spill, the Gulf Coast is strill struggling to recover from the disaster. Fish are dying, Louisiana's seafood industry is reeling, and Gulf Coast residents and cleanup workers continue to experience health problems tied to the spill.
After taking measures such as sacking then-CEO Tony Hayward, running an aggressive advertising campaign throughout the region, and settling on the multibillion-dollar payout, BP continues to shower the Gulf Coast with goodwill. According to Mike Utsler, president of BP's Gulf Coast Restoration Organization, the company is still spending "millions of dollars" on the cleanup operation, and even offering guided tours of the recovery efforts.
Millions of dollars, of course, is just a drop in the bucket for BP, which Forbes recently called "one of the greatest corporate survival stories in history":
"Since last year BP has risen a remarkable 379 spots to 11th place in The Forbes Global 2000 survey. Key to the climb is a return to profitability in a big way. In 2010 BP took a $41 billion charge against earnings, giving shareholders their financial whipping all at once rather than dribbling it out over years. In 2011 BP reversed the previous year's $3.3 billion net loss, posting $26 billion in income, with promises of a further profit surge in the years ahead, thanks to high gasoline prices and a new slate of projects coming online."
One of the 15 new projects that BP plans to bring online by 2015 is its first post-spill well, Kaskida, located 250 miles southwest of New Orleans. If anything goes wrong, one hopes CEO Bob Dudley won't be as insensitive as his predecessor.
BEN STANSALL/AFP/Getty Images
Wow, that was fast. Just days after South Sudan achieved independence, the Chinese government has already established a vocational training program for welders in Juba. From Chinese state media outlet Xinhua:
JUBA - China has started a welder training course to help South Sudanese master knowledge and techniques relevant to the petroleum industry in which the newly-born nation has a large potential.
A total of 30 trainees selected from about 800 applicants are under the vocational training, the first of its kind in South Sudan, and are expected to be backbone workers in the petroleum industry in the future.
In the wake of South Sudan's vote this February to break away from Sudan, China has been working aggressively with both countries to maintain access to their oil reserves, most notably through Sudanese President Omar al-Bashir's visit to Beijing in late June. Before the split, Sudan exported more than half of its daily oil output to China and was China's third-largest trading partner in Africa. Now, though South Sudan contains 75 percent of the two countries' combined oil reserves, it continues to rely on Sudan for the bulk of the processing and transportation infrastructure, including a crucial port on the Red Sea.
The establishment of a program to train welders suggests that China would like to reduce South Sudan's dependency on Sudanese infrastructure. It's a sensible goal. Tensions over oil revenues figure to be a major sticking point in Sudan-South Sudan relations; the countries have yet to establish a plan to divide revenues in an industry that generates 90 percent of the north's hard currency and 98 percent of the south's revenues. Meanwhile, the invasion of the border region of Abyei by forces loyal to Bashir has highlighted the threat of a major conflict between the two countries. There are certainly more stable countries from which to import your oil, but, with domestic demand at near-record levels, China may not have much choice.
ROBERTO SCHMIDT/AFP/Getty Images
The president of LUKoil Overseas, Andrei Kuzyayev, met Ghana's energy minister, Joe Oteng Adjei, for discussions about the expansion of the company in Ghana, including the development of new projects, according to the latest corporate newsletter, Neftyanie Vedomosti. After leaving Ghana, Kuzyayev held talks in the capital of Sierra Leone, Freetown, and LUKoil Overseas senior vice president Dmitry Timoshenko visited Liberia's capital of Monrovia.
Countries like Sierra Leone and Liberia, “which have just come through terrible civil wars … are today, with the interest of foreign investors, quickly resurrecting their shattered economies,” the company's publication said.[…]
The West African continental shelf is an interesting prospect for many international companies, said Valery Nesterov, an oil analyst at Troika Dialog. “I think almost all Russian companies will be looking at the West African shelf — including TNK-BP,” he added.and
LUKoil's potential resources in the area currently consist of up to 35 million barrels. The company said in September that it might have more petroleum in West Africa than in West Siberia.
Between the increasing international competition for the region's oil resources, burgeoning nuclear programs, the promise of greater U.S. engagement, the fallout from the Ivory Coast's political crisis, elections in Nigeria, the beginning of Liberia's election cycle, and concerns over drug trafficking and terrorism bubbling just below the surface, this should be an extremely interesting and consequential year for West Africa. Thankfully, for the United States at least, Iran's efforts at engagement in the region appear to have badly faltered in 2009.
Iraq is still paying the world back for Saddam's actions -- literally. The Christian Science Monitor reports that the Iraqi government has agreed to pay $400 million to American citizens who claimed to have been tortured or traumatized by the Iraqi regime following Saddam's 1990 invasion of Kuwait. With a 15-30 percent unemployment rate, ubiquitous violence, and a still lacking infrastructure, why is the new Iraqi regime paying so much money to American citizens when it was all Saddam's fault? Because the payment may help Iraq's case to end U.N. sanctions that have lasted since Saddam Hussein's rule:
Settling the claims, which were brought by American citizens, has been seen as a key requirement for Washington to be willing to push for an end to the UN sanctions.
"There was a lot of pressure on the Iraqi government to do something that gets Congress off their back," says one senior Iraqi official, adding that the settlement cleared the way for US efforts to bring Iraq out from under the UN sanctions.
That's right, Saddam is long gone but sanctions on the still rebuilding country aren't. In fact, Iraq has already paid Kuwait $27.6 billion in reparations and continues to devote five percent of its oil revenues in accordance with the U.N. sanctions resulting from Saddam's invasion. While many countries have cancelled a lot or all of Iraq's debt to them, Kuwait continues to support Iraqi reparations -- regardless of the $22 billion Kuwaiti budget surplus for the last fiscal year.
So if U.S. citizens get paid by the Iraqi government for Saddam's "traumatizing" from 20 years ago, what will the United States pay the families of Iraqi citizens that are actually killed by U.S. forces? Well, the U.S. government is trying to find ways for Iraq to pay for that too.
RAMZI HAIDAR/AFP/Getty Images
This week's quiz question:
The world's deepest offshore oil-drilling platform sits in how many feet of water?
a) 5,280 feet (1mile) b) 6,600 feet (1.25 miles) c) 8,000 feet (1.5 miles)
Answer after the jump …
BP's embattled chief executive on Tuesday visited oil-rich Azerbaijan in a bid to assuage fears that his company may sell assets in the country to help pay for the clean-up of the Gulf of Mexico oil spill. [...]
While in Baku, Hayward met with President Ilkham Aliyev and "reiterated BP's commitment to Azerbaijan and continuing successful cooperation" with the government and the state-owned oil and gas company SOCAR, the British oil company said in a statement.[...]
BP's three major projects in the Azerbaijan comprise an offshore oil field in the Caspian Sea; a 30 percent share in an export oil pipeline which goes to Turkey; and 25 percent in Shah Deniz, a massive Caspian Sea gas field. Russia's Gazprom voiced an interest last month in BP's share in Shah Deniz, but the British company has so far ruled out any sale.
Hayward also visited Moscow last week -- where the government has made life difficult for BP in the past -- to reaffirm his company's commitment to investors there. With his yacht racing and less than stellar performance in congressional hearings, Hayward hasn't done much for his company's public image in the United States. BP may have decided that his time will be put to better using reassuring investors and competitors abroad that there's no blood in the water along with all that oil.
CHRIS KLEPONIS/AFP/Getty Images
No love for BP from Russia's oil man-turned-president:
On the eve of his first state visit to the U.S. next week, Mr. Medvedev also questioned whether the Gulf oil spill might lead to the "annihilation" or breakup of BP, as the company faces billions of dollars in losses from the disaster.
He stopped short of saying Russia would re-evaluate BP's lucrative partnership in Russia, which represents almost a quarter of its oil production, but predicted the spill will prompt a fundamental rethinking of oil exploration around the world.
"This is a wake-up call," Mr. Medvedev said. Of BP's fate, he added: "Certainly, we are not indifferent to their future. ... Hopefully, they can absorb the losses."
As we've discussed recently on this blog, the Kremlin is not exactly a disinterested party in BP's fate. The Russian government taken a number of steps over the years -- including barring the TNK-BP subsidiary from Russia's lucrative energy export market and setting unreasonably high production quotas -- to make life difficult for the company, often to the benefit of Medvedev's old company, Gazprom.
Interesting, the Economist invoked Russia and Medvedev's predecessor this week in criticizing President Obama's response to the spill:
The collapse in BP’s share price suggests that [Obama] has convinced the markets that he is an American version of Vladimir Putin, willing to harry firms into doing his bidding.
That's going just a bit far. Obama hasn't sent anyone off to Siberia or even suspended anyone's visa. But Tony Hayward's still probably hoping Obama doesn't get any ideas from the Russian president when they meet next week.
DMITRY ASTAKHOV/AFP/Getty Images
As Congress reconvenes the most recent of the BP executives' unenviable appointments in Washington this afternoon, a word about Tony Hayward's current inquisitor: California Democratic Rep. Henry Waxman, chair of the House Energy and Commerce Committee. There's an interesting symmetry between today's hearing and one that Waxman held a quarter century ago, when he was a subcommittee chairman. The news peg, then as now, was an unprecedented environmental catastrophe: the December 3, 1984 chemical leak at Union Carbide's pesticide plant in Bhopal, India, which killed over 3,000 people. And then as now, Waxman (whose committee drafted the House climate change bill last year) was engaged in a protracted, long-odds battle for a game-changing piece of environmental legislation: the expanded pollution regulations that would eventually be signed into law as the 1990 reauthorization of the Clean Air Act.
Among the pollutants that Waxman was hoping to regulate were the same categories of air toxics that had caused the Bhopal disaster, and shortly after the incident he and his staff pulled together a field hearing in West Virginia, near another Union Carbide plant that produced the same chemicals as the one in Bhopal, and posed similar risks. It was a canny political set piece, and while the Clean Air Act reauthorization wouldn't make it into law for years, the spectacle whipped up by the Bhopal hearing prompted Congress to pass a precursor law requiring chemical plants to inventory and disclose their toxic emissions. It was a milestone in environmental regulation in the United States: Never before was anyone but the chemical companies understood the sheer quantity of the toxic pollutants, 2.7 billion pounds of which were emitted in 1987 alone.
I bring all of this up because in several ways, Waxman is working from the Bhopal playbook today. In The Waxman Report, the autobiography he published last year, the congressman distills the lessons of Bhopal for the sort of long, grueling legislative crusades that are his stock in trade:
In contrast to what many people imagine, legislative debates rarely occur within fixed parameters, or at least not for very long -- the center is constantly moving. In the years it can take to pass a major piece of legislation like the Clean Air Act, the terms of debate often shift significantly. Sometimes the balance shifts gradually and by design, such as from a sustained lobbying effort. At other times, the shift happens suddenly and without warning, the consequence of a new president, a shake-up in Congress, or a major news event that recasts public opinion.
The BP spill has certainly recast public opinion on oil drilling, but its implications for broader environmental policy, particularly a future energy and climate change bill, are far from clear. At the New Republic, Bradford Plumer offers a particularly gloomy reading on the response to the spill among American politicians and the public; plenty of other pundits have noted that in his widely panned Oval Office speech earlier this week, President Obama was conspicuously reluctant to tie the disaster to specific policy goals.
But keep an eye on what comes out of today's hearing. Waxman and his House colleagues are less central to the future of a climate bill than their opposites in the Senate, or the president. Still, the guy knows how to make use of a disaster.
Chip Somodevilla/Getty Images
I wouldn't say that Glenn Garvin's look back at the 1979 Ixtoc 1 oil spill in the Gulf of Mexico makes one more optimistic about the current prospects for recovery, but it's at provides some useful perspective:
Soto, who followed the fish and shrimp population off Mexico closely, found to his surprise that for most species the numbers had returned to normal within two years.
"The catastrophic effects that everybody's looking for, those are mostly limited to the first months,'' he says. "Then you start looking in subsequent months, the long-range view, and it all diminishes. The pollution effect becomes more and more difficult to find ...It's like a radio signal, when you're close, it's strong. But when you start moving away, the signal starts to fade.''
Even the physical evidence of the spill quickly began disappearing. Tunnell has been visiting Mexico regularly for 30 years, mapping the spilled Ixtoc oil on the country's beaches and coral reefs.
"In 1979, the islands around Veracruz looked like black doughnuts, there was so much oil clustered around them,'' he remembers. "It was 12 to 15 inches thick in some places. But as I came back over the years, it got harder and hard to find. After five to seven years, it was hard to see the outline, and by 2002, an unsuspecting person would have thought it was a rock ledge ... it was covered with algae and shells and just looked like a normal part of the environment.''
Even under water, where the sun can't help the oil break down, nature subverts it, says Mexican marine biodiversity analyst Jorge Brenner. "If you visit the coral reefs in the Gulf of Campeche, the tar has been covered with sea grass, algae and sediment,'' he says. "You actually have to dig a little bit to find it, although it's definitely there.''
The bad news is that the Ixtoc spill -- the worst peacetime oil spill in history -- consisted of about 140 million gallons of oil after 10 months. The high-end estimates for the BP spill put it at over 100 million gallons after only three months. The Ixtoc well was also at about 160 feet under water while the BP well was nearly 30 times that. In 1979, the cleanup effort along the Texas coast got an unexpected assist from Hurricain Fredric. It's far from certain that the Gulf will be as lucky this time.
It's from a firm called Covalence that calculates companies' ethical reputations and, on a neat mapping tool, tracks them against the amount of attention the companies are receiving in the media. (Methodology here.) From this report, a look at how different international industries have fared over the past half-decade, as the volume of information about them has generally increased:
Not only is the oil and gas industry in the basement, but it's one of the only industries whose reputation gets actively worse the more we know about it. For the largest oil and gas companies, the relationship is even starker -- spikes in attention track closely with drops in reputation.
On one level, this is probably just a measure of the very different reasons that different industries find themselves in the headlines. (When a tech company is in the news, it's because it's launching the iPad. When an oil company is in the news, it's because it has befouled a major ecosystem for a generation.) And energy companies are often particularly bad actors on the world stage.
But I suspect it's also a testament to the degree to which both the oil industry and the global public that depends on it are more comfortable when the latter knows less about how the former does its work -- the business of energy production is rarely pretty. Which is why all the unflattering attention is important: The best case for drilling domestically in the United States, rather than somewhere like Nigeria, is that the added scrutiny that operations here receive -- from the government, the media, and environmental organizations -- makes companies behave better than they do in the Niger River Delta, where oil operations are estimated to have leaked an amount comparable to the Gulf oil spill since the 1970s, and garnered a fraction of the international outrage.
U.S. Coast Guard
As BP executives contemplate just how much the ongoing fiasco in the Gulf is going to cost them -- not to mention the lost years and millions spent on greenwashing -- the latest news from the company's joint Russian venture TNK-BP is unlikely to cheer them up:
is pushing its unit that controls the huge Kovykta gas field into bankruptcy, TNK-BP said Thursday, as it has failed to sell the field to the government. , which controls Kovykta and whose management is loyal to TNK-BP, said it could not repay its loans and filed a petition to the local arbitration court of the Irkutsk region to initiate bankruptcy.[...]
Kovykta, which TNK-BP has controlled for about 15 years, had been meant to supply China before Moscow started asserting control over natural resources and made its gas behemoth Gazprom a gas export monopoly. Officials have repeatedly threatened to withdraw the Kovykta license from TNK-BP for low production volumes.
BP and its partners have argued that output targets for Kovykta set by the Russian government became too onerous after it was unable to supply China, because Russian demand didn't make up the shortfall.
The Russian government is essentially pressuring TNK-BP to increase production while shutting them out of the lucrative export market controlled by Gazprom. TNK-BP has been trying to sell the field the cash-strapped Gazprom, but the deal has yet to be finalized.
The unit, a joint venture with a Russian investnment group, has long been a source of frustration for the British company. Back in 2008, the Russian government denied work visa extensions to TNK-BP's British executives, who were then locked in a feud with their Russian partners over control of the company. The two sides eventually came to an understanding.
But despite the headaches, TNK-BP accounts for around a quater of BP's global production and 10 percent of its profits. So today's new could bring a little schadenfreude for the folks in the gulf, courtesy of the Kremlin.
NATALIA KOLESNIKOVA/AFP/Getty Images
Plugging BP's catastrophic oil well leak in the Gulf of Mexico, as you may have heard, is difficult. But how difficult, exactly? Nearly a month ago, BP America Chairman and President Lamar McKay compared it to performing "open heart surgery at 5,000 feet in the dark with robot-controlled submarines."
In the weeks since, the executives, engineers, government officials, and sundry experts who have descended on the Gulf may or may not be much closer to fixing this thing, but they have gotten pretty good at describing just how difficult fixing it is. Here's BP Managing Director Bob Dudley:
"Like arm-wrestling between two equally strong people."
Energy analyst Byron King, riffing on McKay's original:
"It's like doing brain surgery using robots under a mile of water with equipment that's got 30,000 horsepower of energy inside of it."
Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University:
"It's kind of like pushing toothpaste through an obstacle course."
James J. O'Brien, professor emeritus of Meteorology and Oceanography at Florida State University:
"It's like trying to unclog a toilet while you're standing on a ten-foot ladder with a long stick attached to the plunger."
Thomas Bickel, deputy chief engineer at the Department of Energy's Sandia National Laboratories:
"It's like trying to do an operation on the moon."
Andy Bowen, an oceanographer at Woods Hole, on the area of the seafloor where the leak occurred:
"It's sort of like being in the Grand Canyon with the lights out and in a snowstorm."
Dudley again, on the gas that's escaping with the oil:
"It's like a soda can, shaking it up and popping it off ... it's difficult to measure."
Does BP have someone on staff coming up with these all day? Does the company have Thomas Friedman on retainer?
Help us out here -- there must be more of these lurking among the talking points.
Alex Wong/Getty Images
In his testimony before Congress this morning, Douglas H. Brown, chief mechanic for the Deepwater Horizon oil rig, recounted a dispute between a BP official and Transocean crew members that took place the day of the rig's explosion. At issue was whether BP could replace heavy drilling fluid -- typically used in the final stages of plugging oil wells -- with a lighter liquid, a substitution crew members appear to have opposed.
"The driller was outlining what would be taking place, whereupon the company man stood up and said, 'No, we'll be having some changes to that'...The OIM, tool-pusher and driller disagreed with that, but the company man said, 'Well, this is how it's gonna be.'"
NASA via Getty Images
In a move that is sure to set conspiracy theorists aflutter, former Vice President Dick Cheney popped up yesterday in Saudi Arabia, where he met with King Abdullah. Accompanying him was former State Department diplomat and its top interpreter, Gamal Helal, who recently left the government to form a consulting firm, Helal Associates.
While the Arabic press has caught on to this story, I haven't seen it reported in the U.S. media as of yet. But still, it raises a few eyebrows: Cheney, a private citizen who has reportedly been working on his memoirs, doesn't have any obvious reasons to sit down with the Saudi monarch. The details behind the meeting could go a long way toward unraveling what the former vice president plans to do with his retirement. Here's hoping that the inevitable theorizing about his plans doesn't generate more heat than light.
Saudi Press Agency
The Coast Guard just released the above video, shot by Petty Officer 1st Class Justin Sawyer, of yesterday's contolled burn of oil on the surface of the Gulf of Mexico from the Deepwater Horizon spill site.
It's a pretty incredible sight.
The NASA sattelite image above terrifyingly shows both how big the Gulf of Mexico oil slick is -- compare it to the size of New Orleans -- and how close it's getting to the Louisiana coast.
For more on the ongoing cleanup effort, see this week's FP explainer.
NASA/MODIS Rapid Response Team
Still think China's going to sign on to a new round of tough sanctions against Iran? Think again. China has most likely already passed the European Union to become Iran's No. 1 trading partner, the Financial Times reports:
Official figures say the EU remains Tehran’s largest commercial partner, with trade totalling $35bn in 2008, compared with $29bn with China.
But this number disguises the fact that much of Iran’s trade with the United Arab Emirates consists of goods channelled to or from China. Majid-Reza Hariri, deputy head of the Iran-China Chamber of Commerce, said that transhipments to China accounted for more than half of Tehran’s $15bn (€10.9bn, £9.6bn) trade with the UAE.
When this is taken into account, China’s trade with Iran totals at least $36.5bn, which could be more than with the entire EU bloc. No definite conclusion is possible because it is unclear how much of Iran’s trade with Europe is channelled via the UAE.
Iran imports consumer goods and machinery from China and exports oil, gas, and petrochemicals.
Today, China depends on Iran for 11 per cent of its energy needs, according to the chamber.
Look at it this way: Would the United States support hard-hitting sanctions against Saudi Arabia, which in November supplied nearly 8 percent of U.S. oil imports?
Uganda's Chief Magistrate's court dismissed a landmark case on Wednesday that had been filed by two Ugandan journalists, Angelo Izama and Charles Mwanguhya Mpagi. The file was introduced by the journalists as an attempt to use Uganda's Access to Information Act to force the Ugandan government to release the details of five oil Production Sharing Agreements that it has signed with oil companies. The government and the oil companies has resisted pressure to divulge even the smallest details to the public -- both attempting to deflect criticism by citing the other's insistence in maintaining secrecy over the deals.
Oil explorers have long been skeptical of Uganda's potential for holding large oil deposits but in the last few years oil exploration has proved wildly successful. The estimates now lie upwards of 6 billion barrels of oil -- if on the higher end, Uganda would surpass Sudan for the fifth largest oil reserves in Africa.
Observers are not optimistic at the implications of Uganda's oil finds. Although it would inject billions of dollars annually into Uganda's economy, widespread corruption (Uganda was ranked 126th out of 179 countries in Transparency International's Corruption Perception Index) increases the risk that the country could slip into the feared "resource curse". While the government and the oil companies paint a rosy picture for the public, analysts are less sanguine. As Taimour Lay writes in The Guardian, the components for a bad situation are all there:
The ingredients for the so-called "resource curse" are all in place: contract secrecy, government corruption, commercial disinformation campaigns, with environmental protections ignored, and a simmering border dispute with the Democratic Republic of the Congo frozen rather than resolved.
Although the Chief Magistrate's reasoning behind the dismissal of the case was less than convincing (he cited "national security"), it certainly highlighted Uganda's press freedom, right? That is, until Angelo Izama was slapped with a charge of libel and driven to jail on the very next day. The complaint? A December 2009 article in which Izama suggested parallels between President Yoweri Museveni and Philippine dictator Ferdinand Marcos.
Although this is not a new tactic -- typically used by the Ugandan government to intimidate journalists -- such cases have certainly picked up in the last year. In a country where press freedom is one of the most important aspects of its "partly free" rating by Freedom House, this is a disturbing trend.
The Committee to Protect Journalists reports on the Ugandan government's widespread use of defamation statutes to coerce its critics:
"If anything proves that a government is authoritarian, it's jailing journalists who raise questions about the government," said CPJ Africa Program Coordinator Tom Rhodes. "It's regrettable that the magistrate charged Angelo Izama and Henry Ochieng with criminal libel. It's time for Uganda to join the ranks of democracies by eliminating criminal defamation statutes."
Izama and Ochieng are among several Monitor journalists facing criminal charges in connection with their coverage, according to CPJ research. Sedition charges also hang over radio journalists Robert Kalundi Sserumaga and Betty Nambooze, while a government ban remains on popular debate programs and Central Broadcasting Services, the station of the traditional kingdom of the Baganda, Uganda's largest ethnic group, since last September.
Election fever for the 2011 presidential elections starts in the next few months and President Yoweri Museveni will be running for his fourth term. A potential resource curse and press intimidation are not the best of omens for a free and fair election. Ugandan journalists will play an essential role in pushing for transparency -- and I have a hunch they won't be cowed.
(Hat Tip: Michael Wilkerson)
Chris Jackson/Getty Images
It was reported last week that attacks on and kidnappings of aid workers in Chad have caused six aid organizations, including the International Committee of the Red Cross, to suspend operations there. Undeterred, this morning the top U.N. official in Chad announced "positive signs on the horizon," predicting increased peace and stabilization in the country.
This isn't the first time violence has driven away aid groups: in May, 2008, the head of the Eastern Chad mission of British aid organization Save the Children was shot and killed. At first, the organization announced that it would continue working in the country, but five months after the killing ultimately decided to leave.
At this point, the situation doesn't seem that dire with regards to the ICRC: In an interview, Bernard Barrett, an ICRC spokesman, said, "We're not pulling out totally. We're suspending some activities -- we're maintaining life-saving services, particularly medical services." The organization's other work in Chad ranges from water sanitation projects to animal vaccinations; hardly trivial work, particularly given the persistent lack of food security. As far as resuming these activities, Barrett reports a wait-and-see scenario. "Once we've obtained the release of our delegate who was kidnapped, at that point we'll be able to ascertain the security situation," he says.
Chad is a country in dire need of help. Last May, Doctors Without Borders led the effort to combat an outbreak of meningitis, immunizing 7.5 million people in the region. DWB is another organization that has been driven to suspend operations in Chad because of the recent violence. It's terrible to contemplate how many deaths might have resulted from the 65,000 cases of infection in and around Chad had DWB left just six months earlier.
The violence that has hindered desperately needed assistance ultimately stems from poor governance, said Richard Downie in an interview with FP. According to Downie, a fellow with the Africa Program at the Center for Strategic and International Studies, "Until you have credible political parties and some sort of civil society developing, it's hard to see the long-term prospects of Chad looking bright."
That sort of civil society seems a ways off. Chad ranks 173 out of the 180 countries surveyed in Transparency International's 2008 Corruption Perceptions Index, just three spots up from Afghanistan. And the country's heavily oil-dependent economy has only reinforced the political maladies that accompany "the devil's excrement."
It's tough to avoid Downie's conclusion: "I don't see a long-term solution to what's going on in Chad at the moment without much more engagement from the international community."
Photo: FRANCESCO FONTEMAGGI/AFP/Getty Images
The Libyan strongman has been erratically working toward a rapprochement with the West, including abandoning his fledgling WMD programs, cooperating on counterterrorism, and opening up his country to oil investment. Even his execrable human-rights record has improved.
It's not exactly clear whether the elder Qaddafi himself is driving this process, or whether his son Saif al-Islam -- who hangs out with the Davos crowd and talks a good game on democracy -- is the brains behind this operation.
But as Schenker points out, Muammar is his own worst enemy. He's like that unpopular kid in your high-school math class who makes everyone laugh by saying outrageous things, but still doesn't have any friends (yeah, OK, that was me). And by comparing the Security Council to al Qaeda and suggesting that swine flu was cooked up in a laboratory, he's only reinforced that image today.
There's one reason, though, that Qaddafi's bizarre remarks today won't leave him completely isolated. Anyone have a wild guess?
Photo by EMMANUEL DUNAND/AFP/Getty Images
In May, FP and our readers enjoyed going through the many, many silly acronyms in use around the world, including PIIGS, STUC, MILF, and MANPADS. But last week's agreement between Nigeria and Russia on a joint gas venture has a name that tops all of those for awkardness:
It probably seemed a good idea at the time. But Russia's attempt to create a joint gas venture with Nigeria is set to become one of the classic branding disasters of all time -- after the new company was named Nigaz.
The venture was agreed last week during a four-day trip by Russia's president Dmitry Medvedev to Africa. The deal between Russia's Gazprom and Nigeria's state oil company was supposed to show off the Kremlin's growing interest in Africa's energy reserves.
Instead, the venture is now likely to be remembered for all the wrong reasons -- as a memorable PR blunder, worse than Chevrolet's Nova, which failed to sell in South America because it translates as "doesn't go" in Spanish[...]
An article in Brand Republic pointed out the obvious: that the name has "rather different connotations" for English-speakers.
Stan Marsh sympathizes.
DMITRY ASTAKHOV/AFP/Getty Images
There's a lot of competition for top crises these days -- what with Somali pirates going overboard, Pakistan and Afghansitan looking increasingly perilous, Mexico's chaos scarily peering over the border...
But I vote for adding Nigeria to that very pressing list of concerns.
A new report released today, puts last year's death toll from unrest in the oil-producing Niger Delta region at 1,000. The almost-guerrilla war dragged the economy down by $20.7 billion in lost oil revenue, with little sign of abating in 2009. With oil prices already lower, government revenues are falling. More worrisome -- the rebels in that region who earn most of their cash from oil bunkering will be short on dough, inspiring more of the kidnappings-for-ransom that already breached the 300 mark in 2008. NGO workers on the ground tell me that things will really heat up if the prices (or the oil production levels) drop much lower.
To add another twist, the main rebel group in the region, the Movement for the Emancipation of the Niger Delta (MEND), today e-mailed a statement rejecting an amnesty offer that members of the ruling party allegedly proposed. In classic form, the rejection is colorful:
The Movement for the Emancipation of the Niger Delta rejects this evil agenda by the [ruling party] PDP and its cohorts and vow never to sell our birth right [to Nigeria's oil] for a bowl of porridge."
The deal itself was even more interesting: the government would provide fighter amnesty, prisoner release, and huge payouts to MEND in exchange for a rebel promise to help rig the coming elections in favor of the ruling party. That offer may well be an exaggeration on the part of the rebel spokesman. Then again, given Nigeria's rather wretched election history... it might not.
Why should this mess end up in the top echelon of global worries? Don't forget: Nigeria is the third largest oil supplier to the United States. And when regional powerhouses go down in flames, it can't bode well for any of the unlucky neighbors -- many of whom are recovering from their own bouts of conflict.
PIUS UTOMI EKPEI/AFP
Political scientist Gustavo Coronel, an oil expert and former member of the Venezuelan congress, believes the plummeting petroleum payouts will seal the fate of Hugo Chávez's Bolivarian dreams, thanks to the Venezuelan leader's habitual failure to invest in any form of state infrastructure.
Speaking at the Andes colloquium organized by the George Washington University and the Strategic Studies Insitute, Coronel explained just how deep mismanagement runs within the state-run oil sector. This threw me for a bit of a loop:
"Under Chávez the company [PDVSA] has lost about 500,000 barrels per day of production capacity, which amounts to a loss of income of about $30 to $50 million a day, depending on the price."Ouch. Today, a barrel of crude petroleum is at a mere $39 on the Venezuelan market, down from soaring highs of roughly $145 earlier in 2008. To Coronel, this reality merely exacerbates the "termites" that have been eating the regime from within.
Having taken these steps, Coronel predicts Chávez
will not only lose a constitutional referendum that would permit indefinite
reelection -- similar to the failed attempt to ratify the country's constitution by popular vote in December 2007 -- but also fizzle well before his current term runs out in 2012.
Whenever he's suffered setbacks in the past, Chávez has always promised to accept the situation 'Por ahora' (For now). Save a petro rally, por ahora might be a while.
Photo: JUAN BARRETO/AFP/Getty Images
Petroleum Intelligence Weekly's annual ranking of the world's top oil companies - based on criteria like reserves, refining capacity, and sales - was just released, and there is just a bit of shuffling near the top. Four of the five top oil companies now are state owned - Saudi Aramco, Iran's NIOC, Venezuela's PDV, and China's CNPC. A few highlights:
- Saudi Aramco remains No. 1, and China's CNPC surpasses BP and Shell.
- Russia's Rosneft makes biggest jump, from 24th to 16th.
- Majority state-owned national oil companies now make up 27 of 50.
Good for the Washington Post's editorial board for injecting some sense into the energy debate in the United States by calling for higher gas taxes to shore up falling prices and encourage smarter consumer choices.
Unfortunately, this falls into the category of "stuff that won't happen, but should." Note that in President-elect Barack Obama's interview Sunday on 60 Minutes, he gave no hint that he is going to risk his political future by calling for a tax:
Kroft: When the price of oil was at $147 a barrel, there were a lot of spirited and profitable discussions that were held on energy independence. Now you've got the price of oil under $60.
Mr. Obama: Right.
Kroft: Does doing something about energy is it less important now than…
Mr. Obama: It's more important. It may be a little harder politically, but it's more important.
Mr. Obama: Well, because this has been our pattern. We go from shock to trance. You know, oil prices go up, gas prices at the pump go up, everybody goes into a flurry of activity. And then the prices go back down and suddenly we act like it's not important, and we start, you know filling up our SUVs again.
And, as a consequence, we never make any progress. It’s part of the addiction, all right. That has to be broken. Now is the time to break it.
And yesterday, TNR's Brad Plumer reports, Jeff Bingaman, chair of the Senate's Energy and Natural Resources Committee, said "flat out... that a gas tax or 'floor' on oil prices was never going to happen, because 'the politics are problematic.'"
So, instead of the one tool that we know for a fact spurs innovation and encourages people to change their oil-consumption habits -- higher prices -- we're probably going to get massive, complicated subsidies and tax credits for powerful, well-connected constituencies (e.g. the corn lobby). The U.S. government, rather than the market, is going to decide which technologies to support.
Somehow, I don't think the House of Saud is too worried about that pledge to wean the United States off of oil from the Middle East in 10 years.
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