Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
As 2010 draws to a close, we would like to thank you for following us this year. If you have found our newsletter useful, please consider supporting ODAC by donating whatever you can afford to help us continue our work. We very much appreciate your support. Click here to donate.
Oil reached a two year high above $90/barrel this week before falling back on mixed economic news. A growing list of analysts including JP Morgan, Goldman Sachs and Barclays Capital are now forecasting prices above $100/barrel in 2011. Despite the upward pressure on prices OPEC is not expected to announce any changes to its production quotas at its meeting today. Instead compliance is likely to remain low as countries cash in on the higher prices.
Among rash of revelations, Wikileaks delivered a number of cloak-and-dagger energy-related stories. We heard how Libya had threatened ‘enormous repercussions’ against Britain if Lockerbie bomber Ali al-Megrahi was not released; how Shell had apparently infiltrated Nigerian government departments; and how Hugo Chavez toned down his usual hostility and courted private oil companies to rescue Venezuela’s oil industry and economy. So far there have been no revelations about governments’ private views on peak oil.
The British government clarified its plans to fund new nuclear clean up and decommissioning this week. Nuclear operators will be responsible for paying for decommissioning up to a cap of £1bn, just over 3 times the current cost of disposal. The cap is intended convince the industry to invest, but opponents fear the cap is too low and taxpayers will still be on the hook.
This week also saw the introduction into parliament of the government’s Energy Bill. The Bill includes the Green Deal, a long awaited measure for homeowners and businesses to borrow money to make energy saving upgrades to their property, and pay back the amount over time via their energy bills. The Bill as yet makes no concrete demands of the rented sector, and other measures will be required for those on low incomes, but it is a positive step to have a major scheme aimed at energy conservation.
Oil
Oil Rises for a Second Day After China’s Crude Imports Climb
Oil rose for a second day in New York after China, the world’s biggest energy consumer, said it raised crude imports and a drop in U.S. jobless claims bolstered speculation the economic recovery is gaining momentum.
Futures narrowed their weekly decline to 0.7 percent after China said November imports surged 28 percent. The U.S. Labor Department yesterday reported jobless claims dropped more than forecast. Oil prices climbing to $100 may prompt OPEC to take action, said Abdalla El-Badri, the group’s secretary-general…
JPMorgan Says Crude Oil Price Will Reach $120 a Barrel Before End of 2012
Oil will advance to $120 a barrel before the end of 2012 as consumption grows in emerging economies, according to JPMorgan Chase & Co.
The Organization of Petroleum Exporting Countries, which is responsible for about 40 percent of global supplies, is unlikely to increase production in the first half of next year unless prices surge through $100 a barrel, the bank said in a report today. Futures traded around $87 a barrel in New York today, near their highest price in two years…
OPEC May Have to Act if Oil Gets to $100, Secretary General Says in Quito
Oil prices of $100 a barrel may indicate “something wrong with fundamentals” in the market and lead OPEC to act, said Abdalla El-Badri, the organization’s secretary-general.
Current prices are at “suitable levels,” El-Badri said today in Quito, Ecuador, where OPEC will meet Dec. 11 to review its output. Demand is growing very fast in China and India and moderately in members of the Organization for Economic Cooperation and Development, he said…
OPEC has been down this road once before
Just a few days before OPEC ministers gather in Quito, Ecuador, for their final meeting of the year, crude is again hovering near US$90 per barrel. Could this be a replay of the last quarter of 2007, when crude rose 19 per cent in three months from about $80 in early October to more than $95 by the end of the year?
So far, the trading pattern looks similar…
WikiLeaks cables: Lockerbie bomber freed after Gaddafi’s ‘thuggish’ threats
The British government’s deep fears that Libya would take “harsh and immediate” action against UK interests if the convicted Lockerbie bomber died in a Scottish prison are revealed in secret US embassy cables which show London’s full support for the early release of Abdelbaset al-Megrahi.
Muammar Gaddafi, the Libyan leader, made explicit and “thuggish” threats to halt all trade deals with Britain and harass embassy staff if Megrahi remained in jail, the cables show. At the same time “a parade of treats” was offered by Libya to the Scottish devolved administration if it agreed to let him go, though the cable says they were turned down…
WikiLeaks cables: Shell’s grip on Nigerian state revealed
The oil giant Shell claimed it had inserted staff into all the main ministries of the Nigerian government, giving it access to politicians’ every move in the oil-rich Niger Delta, according to a leaked US diplomatic cable.
The company’s top executive in Nigeria told US diplomats that Shell had seconded employees to every relevant department and so knew “everything that was being done in those ministries”. She boasted that the Nigerian government had “forgotten” about the extent of Shell’s infiltration and was unaware of how much the company knew about its deliberations…
WikiLeaks cables: Oil giants squeeze Chávez as Venezuela struggles
Venezuela’s tottering economy is forcing Hugo Chávez to make deals with foreign corporations to save his socialist revolution from going broke.
The Venezuelan president has courted European, American and Asian companies in behind-the-scenes negotiations that highlight a severe financial crunch in his government…
China May Postpone Fuel Price Increases on Inflation, CICC Says
China, the world’s fastest-growing major economy, may delay increases in fuel prices because of inflation concerns, the nation’s largest investment bank said.
Adjustments may be postponed even after crude prices have risen 5 percent since the last fuel-price adjustment in October, Bin Guan, an analyst at China International Capital Corp., wrote in an e-mailed note dated yesterday…
A Shetland oil spill could reach Norfolk and Greenland, Chevron admits
An oil spill from a deepwater blowout near the Shetland Islands could reach the coastlines of Scotland, eastern England, Norway and Greenland, according to a company which began drilling there in October.
Chevron, one of the world’s largest oil companies, made a worst-case forecast of the impact caused by a spill of 77,300 barrels per day lasting just 14 days…
Desire Petroleum says no Falklands oil discovery
Desire Petroleum, the oil explorer, said further tests showed it did not make an oil discovery in the Falkland Islands, days after it said it believed it had found oil.
Shares in the Aim-listed oil explorer plunged 45pc after the company said in a statement on Monday that additional analysis of data from Rachel North well did not support initial indications of oil being found in significant quantities…
Gas
US independents to buy into shale oil boom
Plunging US natural gas prices are pushing independents that have long focused on gas to buy into the shale oil boom.
To finance the switch they are selling their traditional businesses to cash-rich foreigners or international oil companies that can afford to wait for the rebound in gas prices…
US gas export plan sparks price fears
An outcry from big US energy users is complicating plans to export some of the country’s bounty of natural gas.
Two consumer groups said they were worried that proposals to liquefy for export as much as 3.4bn cu?ft per day of domestic gas would drive up prices. Monday is the deadline for public comment on a project to export gas from Louisiana state…
Dick Cheney and others face charges in Nigeria
Nigerian investigators say they have filed charges against former U.S. Vice President Dick Cheney and others connected to the energy services company Halliburton, accusing them of paying bribes to secure a lucrative natural gas project in the 1990s.
Cheney and nine others are accused of charges that include “conspiracy and distribution of gratification to public officials,” Femi Babafemi, a spokesman for the country’s Economic and Financial Crimes Commission, said Wednesday…
Repsol Makes Argentina’s Largest Gas Find in 35 Years in Neuquen Province
Repsol YPF SA, Spain’s largest oil company, found 4.5 trillion cubic feet of unconventional natural gas in Argentina, the country’s largest discovery in 35 years.
Repsol found so-called tight gas reserves at the Loma La Lata area in the Patagonian province of Neuquen after its YPF unit drilled four exploratory wells in the region, according to a statement from Madrid-based Repsol today. The company also said that it discovered so-called shale gas in the province…
EU Wants To Clamp Down On Abuses In Energy Trading
The European Commission proposed Wednesday new rules to clamp down on illicit practices in wholesale energy trading, in a bid to make prices more transparent as it pushes for stronger competition in a market worth billion of euros.
The rules would prohibit use of insider information and outlaw manipulation on the electricity and natural gas markets where prices are pushed artificially high, the commission, the EU’s executive body, said in a statement. Distributing false news or rumors that give misleading signals would also be banned…
Coal
EU Commission caves in to Germany on coal subsidy deadline
Germany has won concessions from the European Union on coal subsidies paid out to loss-making mines. The EU Commission said Wednesday it would push back a phase-out date on subsidies by four years to 2018.
The Commission had said in July that failing mines would have to be closed by 2014, arguing that subsidies were bad for the environment and promoted unfair competition…
Mining and Minerals
Japan’s Toyota Tsusho in India rare earths plan
Japanese trading house Toyota Tsusho will build a plant for processing rare earth minerals in India, the company said, as Japan scrambles to diversify supply sources beyond dominant producer China.
Toyota Tsusho, a trading house procuring for auto giant Toyota Motor, said Wednesday the company and its local subsidiary will “construct a manufacturing plant for processing rare earth oxides in the State of Orissa in India.”…
Hitachi Develops Machinery to Recycle Rare Earths for Use in Electronics
Hitachi Ltd. said it developed machinery to harvest rare earth metals from discarded hard- disk drives and compressors as electronics makers seek to reduce their reliance on Chinese supply.
The machine can extract 100 rare earth magnets from hard disk drives per hour, about eight times faster than manual labor, Tokyo-based Hitachi said in a statement today. The company plans to get 10 percent of its rare-earth needs through recycling when the business begins operating in fiscal 2013, according to spokeswoman Satoko Yasunaga…
UK
UK lays out new nuclear clean up proposals
New nuclear operators in Britain will have to put money aside for the eventual decommissioning of plants to make sure taxpayers won’t have to foot the bill, the government said on Tuesday.
The new rules will also require operators to secure enough funds in place before building new power stations…
Deal to tackle poorly insulated homes is unveiled
A “green deal” to tackle the UK’s poorly-insulated housing stock has been outlined by the government.
After 2012, people will be able to approach their energy supplier for a loan to cover the cost of insulation, instead of paying in advance…
UK gas U-turn angers energy users
One of the elements of today’s energy bill that is likely to go relatively unnoticed (except for by FT readers of course) is a clause asking gas companies to pay a market price for the gas they use, even if an emergency has sent gas prices soaring.
The idea is that it will encourage gas companies to make sure they never get into that situation, as it would be prohibitively expensive to buy gas at such prices. At the moment, the companies would pay the same price during an emergency as they would have done immediately before…
Speeding up support decision for UK renewable energy
Earlier and greater certainty about the level of support available to large-scale renewable electricity projects will be provided under the UK Renewables Obligation from 2013, according to UK Energy Minister Charles Hendry.
Renewable energy developers will get an indication from mid-2011 of the support they will receive for large-scale renewable energy projects staring electricity generation from April 2013…
Climate
U.S. Court To Hear Utilities’ Emissions Suit Appeal
The U.S. Supreme Court said on Monday that it would hear an appeal by four big coal-burning utilities of a ruling that a group of states and New York City can proceed with a global-warming lawsuit seeking to reduce the carbon dioxide emissions of the power companies.
The justices agreed to review a ruling by a U.S. appeals court that reinstated a 2004 lawsuit by eight states, New York City and three land trusts claiming the utilities have created a public nuisance by contributing to global warming…
Shipping to steer cleaner carbon course
Ships could be charged different fees to dock depending on how much carbon they emit, according to ideas being discussed at the UN climate summit.
The government of Papua New Guinea is considering the plan, and is hoping other nations may become involved…