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Kremlin lays claim to huge chunk of oil-rich North Pole
Luke Harding, The Guardian
It is already the world’s biggest country, spanning 11 time zones and stretching from Europe to the far east. But yesterday Russia signalled its intention to get even bigger by announcing an audacious plan to annex a vast 460,000 square mile chunk of the frozen and ice-encrusted Arctic.
According to Russian scientists, there is new evidence backing Russia’s claim that its northern Arctic region is directly linked to the North Pole via an underwater shelf.
Under international law, no country owns the North Pole. Instead, the five surrounding Arctic states, Russia, the US, Canada, Norway and Denmark (via Greenland), are limited to a 200-mile economic zone around their coasts.
On Monday, however, a group of Russian geologists returned from a six-week voyage on a nuclear icebreaker. They had travelled to the Lomonosov ridge, an underwater shelf in Russia’s remote and inhospitable eastern Arctic Ocean.
According to Russia’s media, the geologists returned with the “sensational news” that the Lomonosov ridge was linked to Russian Federation territory, boosting Russia’s claim over the oil-and-gas rich triangle. The territory contained 10bn tonnes of gas and oil deposits, the scientists said.
(28 June 2007)
OPEC Outlook: Demand For OPEC Oil By 2010 Below 2005 Level
Adam Smallman and Spencer Swartz, Dow Jones Newswires via Rigzone
The Organization of Petroleum Exporting Countries Tuesday said it expected demand for its members’ crudes within three years will be almost 1 million barrels a day below 2005 volumes, largely because of growth in natural gas liquids production from non-OPEC producers.
In its long-term outlook through 2030, OPEC said there were dangers to estimating demand for conventional crude from alternative fuels, adding that, in the short term, flows of non-conventional crude from rival producers would offset demand growth.
It said daily non-OPEC oil supplies by 2010 would climb more than a tenth to 54 million barrels against 2005, “with demand rising by only a slightly higher rate. This leaves little room for additional OPEC oil.”
There were many more risks associated with weaker demand for conventional crude than with a rising need for oil, the report said, putting a question mark over long-term investment plans.
(26 June 2007)
Venezuela oil boom raises inflation spectre
Benedict Mander, Financial Times
It is boom time in Venezuela. Many of the hillside slums encircling Caracas now have satellite dishes on their corrugated iron roofs. Wealth is reaching all levels of society and it is being spent with gusto.
Endemic consumption and vibrant economic growth have been triggered by public spending on a massive scale, doubling over the past two years owing to a sixfold rise in the price of oil since President Hugo ChÃ¡vez came to power in 1999.
But this effervescent economy – averaging about 12 per cent growth in the past three years – has unleashed one of the highest inflation rates in the world. And as growth slows, which some fear it is doing, inflation could continue to rise.
(26 June 2007)
The Problem’s Not Peak Oil, It’s Politics
Go-it-alone governments are choking back output to perilous levels
Stanley Reed, Business Week
Some “peak oil” cassandras warn that global energy production will soon fall into permanent decline. But a more immediate danger to world oil supplies may be the tempestuous politics of many producing countries.
…Political rivalries and tumult in nations [in addition to Russia and Venezuela] are also keeping a lid on supplies. Violence in Iraq means production there remains below prewar levels. Iran’s exhausted domestic industry faces declines without outside help, but the country’s jousting with Washington gives even non-U.S. investors pause. Mexico faces a fall in output because it is starving Pemex, its national oil company, for capital while barring foreign investors from the sector. “You start getting into some really interesting questions [about where future supplies will come from] if countries don’t increase investment,” says David Kirsch, an analyst at Washington consultants PFC Energy.
Those questions matter for oil producers and users alike. Consumption is growing fast, and without investment in new fields the industry’s output would fall by about 3% annually. So every year the world needs new capacity of almost 4 million bbl. per day just to keep up. Western oil companies have the technology and knowhow to help countries with hard-to-tap resources get their crude out of the ground. But with today’s high prices, Russia, Venezuela, and others with large reserves don’t see the point in ceding profits to the giants. These countries prefer to let national oil companies such as PDVSA, Pemex, and Russia’s Gazprom extract the wealth-even if it they’re not quite as efficient as the foreigners.
This may make sense for the resource-rich countries. Building up a domestic industry and curbing reliance on outsiders could well serve their national interests. But for oil and gas consumers in the U.S., Europe, and Japan, that means a growing dependence on producers that don’t share their interests-and likely more years of high prices due to limited supplies, regardless of whether or not global output has reached its peak.
(28 June 2007)
On the plus side, Stanley Reed mentions peak oil, and he emphasizes the conflict of interest between oil producers and oil consuming countries – as opposed to oil consumeing countries having a Divine Right to the resources of other countries. On the other hand, his comments would be more valid if he would really investigate peak oil. These days it’s no longer enough to call us Cassandras and put “peak oil” in quotes. -BA