Politics and Economics Headlines - 12 August, 2005
Mauritania: An All Too Familiar Story
Baba Galleh Jallow, AllAfrica.com
The recent coup that ousted Mauritanian despot Maaouya Ould Taya has elicited the usual hue and cry: condemnations from the international community and calls for the soldiers to return immediately to their barracks. ...
And, as usual, the military rulers, who had been Ould Taya's weapon of oppression for the past twenty years, have promised to return the country to civilian rule within two years. Already, the military council is talking about the drafting of a new constitution and making all the usual pacifying noises. ...
In the case of Mauritania, the situation is even more predictable, owing to the fact that within the next twelve months, the country will be producing 75,000 barrels of crude oil per day and is hoping to find more lucrative oil reserves offshore. Is it not likely that the soldiers actually had the impending oil windfall in full view as they hatched their plan to oust Ould Taya? Of course they knew about the oil. And of course they want to get richer than they already are. ...
( August 2005)
Venezuela to Buy Two Tankers, Send Fuel to Argentina
Daniel Helft, Bloomberg
Aug. 11 (Bloomberg) -- Venezuela will buy two oil tankers from Argentina and swap as much as $200 million in diesel fuel for farm and industrial goods, as Venezuelan President Hugo Chavez seeks to expand his country's influence in Latin America.
The tankers, with a capacity of 300,000 barrels, will cost $112 million, the Argentine government said in a statement distributed by the presidential palace. Argentina needs the diesel to run electricity generators amid a shortage of natural gas. Venezuela this year also said it would buy as much as $500 million in Argentine bonds to help the country meet financing needs.
Chavez, who today met with President Nestor Kirchner, is tapping into a surge oil revenue to strengthen alliances in Latin America as a confrontation between his country and the U.S. escalates, said Sergio Berensztein, a partner at Poliarquia Consultores, a political consultant and pollster. International oil prices have almost tripled since January 2002.
``Chavez is taking advantage of oil prices to make inroads in its relation with regional leaders,'' said Berensztein in an interview. ``His presence in the continent has grown significantly.''
(11 August 2005)
Philipines: Oil prices next Arroyo crisis
Gil C. Cabacungan Jr. and Abigail L. Ho, Inquirer News Service
IN THE MIDST of the worst political crisis of her presidency, here comes another whammy for President Macapagal-Arroyo.
With record crude prices that could weaken the economy and undermine her administration, President Arroyo yesterday called on the public to adopt energy conservation measures.
"The entire nation, all sectors and communities must engage in a serious effort to conserve energy and support all means to bring down our overall consumption of energy and exploit alternative sources of fuel,'' the President said in a short speech at a Flying V gas station which launched its bio-diesel fuel.
(12 August 2005)
US contingency plan for a Venezuela oil cut off
United States Congress has begun considering consequences of a potential Venezuelan petroleum cut off given the country's "political instability".
The study looks at the effects on the U.S. economy of a possible interruption in petroleum supply, contingency plans, and how to cope and mitigate the negative impact of such an action said Robert Robinson, Managing Director for Natural Resources and Environment with the Government Accountability Office, the investigative branch of Congress.
(9 August 2005)
Is Iraq war fueling the GCC's economic boom?
Emilie Rutledge, Aljazeera (opinion)
Since the US-led invasion and occupation of Iraq, the price of oil has steadily climbed upwards. A barrel of oil today costs twice as much as it did on the eve of combat, back in March 2003.
At the same time all six Gulf Cooperation Council (GCC) states - Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates, and Saudi Arabia - have experienced levels of economic growth not witnessed since the 1970’s.
According to a recent Institute of International Finance report, the GCC's aggregate nominal GDP grew by 17% in 2004 and is likely to grow as impressively this year.
(10 August 2005)
Foiled Bid Stirs Worry for U.S. Oil
Jad Mouawad, NY Times
When Cnooc, the Chinese government-owned oil company, dropped its bid to buy Unocal this month, it said political opposition in Washington had scuttled the plan. The question oil companies now face is whether they might suffer similar political retribution in their own dealings with foreign governments.
The fate of Unocal was finally settled yesterday when a majority of the company's shareholders approved a takeover offer from Chevron worth about $18 billion. The battle has left a bitter taste among many in the oil and gas industry because of the hostility displayed by lawmakers and the consequences this might have for United States oil companies worldwide.
(11 August 2005)
Reserve Judgment In Deal for Unocal, Chevron Gambles On High Oil Prices
Russell Gold, Wall Street Journal via shellnews
CEO, Battling Low Output, Foresees Surge in Demand and Global Supply Squeeze
With its planned purchase of Unocal Corp. for $18.1 billion, Chevron Corp. has landed the biggest oil acquisition in years and snatched a prize away from a government-controlled Chinese company.
But behind this victory lies a giant bet on the future of energy prices. If they stay high, Chevron Chief Executive David O'Reilly could be remembered for a stroke of genius. If they tumble, Chevron's results could suffer for many years to come because of the high price it paid for Unocal.
Unocal shareholders are expected to approve the deal today, giving Chevron access to oil and gas fields across Asia and North America. Mr. O'Reilly needs the new supplies: Chevron's production has fallen 14% since he took the reins in 2000, according to the energy research firm John S. Herold Inc.
Chevron's decision to swallow Unocal comes amid an increasingly tense debate over whether the world's oil supplies have hit a peak and are about to start running out. If so, that will mean sky-high oil prices and a race for control of companies such as Unocal that own proven reserves.
...While Mr. O'Reilly hasn't said that oil production is peaking, he believes that oil output won't be able to keep pace with galloping demand as China and India emerge as huge oil consumers. With governments scrambling to secure energy supplies, he foresees oil becoming an increasingly scarce and expensive commodity.
...Chevron isn't the only Western oil company scrambling to boost production. The fields that once transformed oil companies into leviathans are petering out. The best remaining opportunities are in the Middle East, West Africa and the former Soviet Union, regions with unstable political situations.
Mr. O'Reilly argues that the industry has entered a new era of high prices. "The time when we could count on cheap oil and even cheaper natural gas is clearly ending," he told industry executives in a February speech that he wrote himself. Some in the oil industry started calling it the "Brave New World" speech. Not long afterward, the company started an advertising campaign with a similar message. The new era, Mr. O'Reilly writes in a letter featured in the ads, will be defined by "more competition for the same resources."
(10 August 2005)
I don't drive; why should I care about oil prices?
Megan Lane, BBC News Magazine
With crude oil prices at a 22-year high, motorists are paying out up to £1 a litre at the pumps. Will this hike hit those who don't own a car - or drive for a living?
With crude oil prices topping $64 a barrel - up from $10 in 1999 - the sobriquet "black gold" has rarely seemed so apt.
The impact on the drivers of the UK's 28 million cars is clear; less immediately obvious is how the rising cost of crude oil has ramifications for all.
"If you take buses, trains or planes, you will be paying more for your fare. And our shops are filled with plastics, which are oil-based products," says Roy Holloway, the director of the Petrol Retailers' Association. "When producing - and delivering - these household goods gets more expensive, consumers will bear the brunt."
(10 August 2005)
China Energy Watch: Foreign Upstream Investors Wanted
Irene Tang, Dow Jones via Schlumberger
SINGAPORE - China is changing direction in a key aspect of its energy policy, and is now trying to woo foreign investors back into its upstream onshore sector, particularly in the natural gas sector.
This coincides with the failure of one recent effort by China to bridge its widening energy gap - its attempt to buy existing sizable overseas oil and gas assets through CNOOC Ltd.'s (0883.HK) purchase of Unocal Corp. (UCL).
As far as overseas reserves are concerned, the Unocal experience may lead Chinese companies to fall back on tried-and-tested methods, like using bilateral relations to gain footholds in either marginal fields or lengthy exploration projects.
But back home, Beijing is now stepping up efforts to get more foreign companies participating in drilling geologically-complex oil and gas blocks at home, after having cold-shouldered them in recent years.
(10 August 2005)