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Fierce competition in scramble for Libya’s black gold

AFP via Turkish Press
After 20 years of isolation, Libya has become the destination of choice for hungry oil companies ready to cut any kind of deal to get a piece of the north African state’s oil riches.

“It’s a race for our black gold,” president of the National Oil Company Shukri Ghanem told AFP. “We are organising it like the Olympic Games and may the best one win.”

With each subsequent round of concessions, companies from all over the world have been undercutting each other’s bids to the barest limits of profitability.
(4 March 2007)

Russia, pumped – the new petro empire

Shawn McCarthy, Globe & Mail
MOSCOW – This city of 12 million has all the hallmarks of an oil-fired boomtown – traffic snarled at all hours of the day along roadways not built for three million cars, ubiquitous construction cranes hovering overhead, rampant consumerism in the luxury shops of the elite and the more prosaic housewares and electronic stores of the growing middle class.

Gone from the underpasses and Red Square itself are the legions of pensioners who just five years ago were begging and selling off family treasures to put food on the table. Flush with petro-rubles, the government of President Vladimir Putin cannot only pay their state pensions but has increased them.

…The four-year boom in crude oil and natural gas prices that has supercharged economies as diverse as those of Alberta and Angola has transformed Russia’s as well. Less than a decade ago, the country was virtually bankrupt – unable to pay state workers and beholden to the International Monetary Fund and Cold War rival the United States. Prime Minister Stephen Harper talks of Canada as an energy superpower, but really it’s an energy superstore. Mr. Putin’s Russia is emerging as the real deal.

Not content just to tax the resource riches – the state collects 90 cents on every dollar above $28 (U.S.) per barrel of crude oil – Mr. Putin is transforming the industry that spawned Russia’s renaissance. Critics say that nationalizing oil and gas assets again could undermine growth, and risks derailing the very reasons for the boom.

Clearly, the stakes are enormous. Russia is a vast storehouse of energy reserves, one that western and Asian consumers increasingly rely on to satisfy growing demand. It is the world’s largest producer of natural gas and the second largest source of crude oil, slightly behind Saudi Arabia. And it has vast, untapped reserves that could, if properly developed, keep it a leading oil and gas producer for decades.
(3 March 2007)
Long, good article. Related articles that flesh out the picture:
Dmitry Orlov on the Soviet collapse
Reuters on the state of energy conservation (or lack of it) in Russia
New Yorker on Russia, Inc.

Selling Iraq by the barrel

Emad Mekay, Asia Times
The US-backed Iraqi cabinet approved a new oil law on Monday that is set to give foreign companies the long-term contracts and safe legal framework they have been waiting for, but which has rattled labor unions and international campaigners who say oil production should remain in the hands of Iraqis.

Independent analysts and labor groups have also criticized the process of drafting the law and warned that that the bill is so skewed in favor of foreign firms that it could end up heightening political tensions in the Arab nation and spreading instability.

For example, it specifies that up to two-thirds of Iraq’s known reserves would be developed by multinationals, under contracts lasting for 15-20 years.
(2 Mar 2007)

Envoy warns Chavez about oil takeover

Alexandra Olson, Associated Press
A top U.S. diplomat warned Friday that Venezuela cannot afford to drive away the major oil companies affected by President Hugo Chavez’s decision to takeover the nation’s most promising oil-producing operations.

Chavez decreed this week that his government would take a minimum 60 percent stake in projects run by four companies in Venezuela’s Orinoco River region – his latest nationalization move as he steers the country toward socialism.

Industry experts have questioned whether state-owned Petroleos de Venezuela SA, or PDVSA, has the money and capacity to take on the complex, heavy-oil upgrading projects. They are run by British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.

…Chavez’s decree gives the companies four months to negotiate whether they will stay on as minority partners. He has not said how the government will pay for its increased share in the projects, in which some of the companies are estimated to have invested some $17 million.

Companies pumping oil elsewhere in Venezuela submitted to state-controlled joint ventures last year with little resistance, reluctant to abandon a country with the largest oil deposits outside the Middle East.
(2 March 2007)

Hugo Chávez exploits oil wealth to push IMF aside

Christopher Swann, International Herald Tribune
President Hugo Chávez of Venezuela is using his country’s oil wealth to squeeze the International Monetary Fund out of Latin America, the region that once accounted for most of its business.

IMF lending in the region has fallen to $50 million, or less than 1 percent of its global portfolio, compared with 80 percent in 2005. Meanwhile, Chávez has used his oil wealth to lend $2.5 billion to Argentina, offer $1.5 billion to Bolivia and $500 million to Ecuador.

Chávez is promoting what he calls a “socialist” alternative to the Fund and its biggest shareholder, the U.S. Treasury. The timing could not be worse for the IMF, whose global clout is diminishing as countries from Uruguay to the Philippines pay their debts.

“Chávez is the No. 1 enemy of the IMF in the region,” said José Guerra, a former head of economic research at Venezuela’s central bank and now a professor at Universidad Central de Venezuela in Caracas. “He views the IMF as an agent in the service of the U.S.” ..

Venezuela is also backing bonds sold jointly with Argentina, Rodriguez said. The Finance Ministry said Monday that it planned to sell $1.5 billion of the so- called “Bonds of the South” this week following a $1 billion sale last November.

Venezuelan purchases of $2.5 billion of Argentine government bonds helped Argentina replenish its reserves after it repaid $9.5 billion of debt to the IMF in late 2005. Chávez said he wanted to “help Argentina end its dependence on the IMF.”

President Néstor Kirchner of Argentina, elected in May 2003, said IMF policies had “devastated” his country, which defaulted on $95 billion of debt in 2001. “There is life after the IMF, and it’s a good life,” Kirchner said in Munich in April 2005.
(1 Mar 2007)