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Oil Market Analysts Issue Dire Warnings

Humberto Márquez, Inter Press Service via Common Dreams
CARACAS – While this year’s record high oil prices are unlikely to come down in the near future, analysts are warning the world’s traditional and emerging economic powers to curb consumption, saying that at the current rate, proven reserves will only meet demand up to 2030. “The current model (of consumption) is suicidal,” says the energy minister of Venezuela, an OPEC member.

While this year’s record high oil prices are unlikely to come down in the near future, analysts are warning the world’s traditional and emerging economic powers to curb consumption, saying that at the current rate, proven reserves will only meet demand up to 2030.

“The current model (of consumption) is suicidal,” Venezuelan Energy Minister Rafael Ramírez recently told journalists. “The United States, for example, will use up its oil reserves in 10 years, and after that it will go after its rivers, lakes and forests.”
(30 December 2005)

Oil prices are gushing but could soon plunge

David Smith, Sunday Times
OF all the hurdles to be negotiated by the economy this year, one of the most interesting will be that of high oil prices. Last year, no matter how hard you looked, it was difficult to detect much of an oil-price effect on the world economy, though Gordon Brown blamed it for some of Britain’s slowdown. It was, as I wrote in September, a dog that didn’t bark.

But now some interesting dilemmas are emerging. After the price per barrel of crude fell towards the end of last year into the mid-$50s, from a Hurricane Katrina peak of $70, they have crept up again. An oil price in the low to mid-$60s appears to be the new norm, and it would not take much of a supply or weather shock to push it back up to, or beyond, last August’s record.

The dilemmas are these. If global growth does not slow – and it is put at a robust 4.2% this year by Goldman Sachs – does this mean sky-high oil prices are here to stay? Could it be that the promise of extra oil supplies to dampen down prices will turn out to be a mirage, particularly now that members of Opec (the Organisation of Petroleum Exporting Countries) seem happy with a high crude price?

There is, on top of this, a longer-term dilemma. Even those who were once sceptical are convinced climate change is occurring; the only questions are of degree and the extent to which it is man-made.
(15 January 2006)

Bolivia to Seize Oil and Gas Reserves, President-Elect Says

Stewart Bailey and Alex Emery, Bloomberg News via Washington Post
Bolivia’s president-elect said his government plans to seize oil and gas reserves owned by international companies, leaving other assets such as pipelines and refineries in the hands of foreign operators.

“The state will exercise its right of ownership, and that means it will decide on the use of those resources,” Evo Morales told reporters yesterday in Pretoria, South Africa, where he is visiting the country’s President Thabo Mbeki. Oil companies “will be partners, not owners,” he said.

The comments clarify plans Morales has discussed since his election Dec. 18 to “nationalize” Bolivia’s oil and gas reserves and boost government revenue on output. All reserves are now in the hands of foreign companies such as Spain’s Repsol YPF SA, which owns 35 percent of the country’s 55 trillion cubic feet of natural gas, and Brazil’s Petroleos Brasileiros SA (Petrobras), which holds 17.5 percent. Bolivia has Latin America’s second-largest gas reserves.
(12 January 2006)

Bolivia and ALBA

toni solo, Znet
…In the gas sector, a 2% fall in shares in the Madrid stock market valuation of Spanish energy company Repsol may have resulted from Evo Morales’ electoral win, since Repsol has a big stake in gas production in Bolivia. The drop still left Repsol’s shares trading well within the middle of their range for the year and may have had as much to do with concern about Venezuelan government demands for Repsol to migrate to a new contract for a large Venezuelan field it owns jointly with US energy giant Exxon-Mobil. A more interesting development in terms of corporate reactions to Morales’s win is an apparent decision to sell resources by the owners of Argentina’s Bridas energy group which manages important energy reserves and assets in Bolivia.

Bridas, owned by Argentina’s powerful Bulgheroni family, operates in Bolivia as owners of 40% of Panamerican Energy together with the UK transnational BP-Amoco which owns the other 60% of the company. Bridas is reportedly(3) trying to sell off about US$5bn in energy assets amid fears that its exposure in Bolivia may force it to write down the value of its total reserves. If reports are correct that China’s National Petroleum Company is the main prospective buyer, that will be another major advance into the Latin American energy market by China, consolidating deals it has already reached with Brazil and Venezuela. It is not clear whether Bridas is interested in selling off its reserves and assets as Panamerican Energy or as Bridas, so the extent of any effect on Bolivia is still uncertain.

North American, European and Australian energy and mining corporations have often threatened to cut investments in less developed countries if governments impose high levels of taxation. But access to energy and mining resources is getting harder while competition for those resources from Asian competitor countries like China gets keener every year. Morales’ government will be a beneficiary of that dynamic as US and other corporations find they have to either pay more for the resources or watch them sail away to benefit competitors in Asia. In any case, increased benefits for the State from energy and mining resources is a regional trend. Apart from Venezuela the Brazilian and even the Chilean governments are likely to increase taxation on foreign corporations in those sectors through 2006.
(30 December 2005)

Bolivia’s trial by fire

Benjamin Dangl, Upside Down World
After winning a landslide election victory on December 18th, Bolivian president-elect Evo Morales announced plans to nationalize the country’s gas reserves, rewrite the constitution in a popular assembly, redistribute land to poor farmers and change the rules of the U.S.-led war on drugs in Bolivia. If he follows through on such promises, he’ll face enormous pressure from the Bush administration, corporations and international lenders. If he chooses a more moderate path, Bolivia’s social movements are likely to organize the type of protests and strikes that have ousted two presidents in two years.

In the gas-rich Santa Cruz region, business elites are working toward seceding from the country to privatize the gas reserves. Meanwhile, U.S. troops stationed in neighboring Paraguay may be poised to intervene if the Andean country sways too far from Washington’s interests. For Bolivian social movements and the government, 2006 will be a trial by fire.
(10 January 2006)
Also posted at Znet.

A change in the weather

Paul Rogers, Open Democracy
What will happen in 2006? The blinkered logic of United States and British policy on security and the environment offers more fear than hope.
The rampant nuclear-power lobby in Britain suffers major setbacks as the full cost of decommissioning old power stations becomes clear (£56 billion and rising at the last count).

The replacement of Britain’s Trident nuclear submarine force becomes an unexpected issue as Tony Blair faces yet another backbench challenge.

The United States department of energy is revealed to be developing new mini-nukes in a programme kept from Congress and funded out of the “black budget”. Bush says it is essential to fighting the war on terror but doesn’t say how.

The climate of the near-Arctic is shown to be warming up even faster than thought. As the permafrost melts, vegetation frozen for many thousands of years starts to decay. Climatologists say this will release millions of tons of methane, a far worse greenhouse gas than carbon dioxide.

A United Nations Environment Programme (Unep) report says carbon emissions must be halved within ten years and halved again in the following decade if climate change is to be reversed.

Tony Blair has a “road to Damascus” conversion, gives up on nuclear power and announces a massive programme to promote energy conservation and renewables, together with increased tax on petrol and diversion of all proceeds into public transport. He aims to meet the Unep target even if it costs Labour the next election, and challenges the Conservative Party leader David Cameron to back him. Cameron keeps quiet. …

This column was Paul Rogers’s contribution to openDemocracy’s compendium of world writers’ views answering the question “What does 2006 have in store?”, published on 22 December 2005
(29 December 2005)
It’s interesting that almost all of Rogers’ predictions have to do with energy, its political implications and the effects of its use (e.g., climate change). -BA

Dubai Between Oil and Consumerism

Gavin Sheridan, Informed Comment
Irish blogger Gavin Sheridan was moved by the recent death of Dubai emir Sheikh Maktoum to comment on the situation of the emirate, which he visits often.

” ‘History Rising’ says the massive billboard as you ride along in a taxi on Sheikh Zayed Road in the small Emirate city of Dubai. It is quite an apt description not just of the building project it describes, but of the entire Emirate itself.

Dubai, more so than any other of the Emirates in the United Arab Emirates, has undergone a dramatic transformation. And the pace of change appears to be increasing – in my visits to Dubai in the last 4 years I have seen the construction and completion of immense building projects – and the biggest have yet to be finished.

…Dubai, as an Emirate in itself, will run out of oil within two decades (the rest of the UAE has an estimated 100 years left), and because of that it is gearing itself for tourism. Last year it made more money from tourism than it did from oil – thanks to it’s weather, its liberal attitude to alcohol consumption, fine restaurants, luxury hotels and massive shopping malls.
(12 January 2006)