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Saudi ruler offers $36bn to stave off uprising amid warning oil price could double

Ambrose Evans-Pritchard, The Telegraph
King Abdullah’s support package offers to give 18m lower and middle-income Saudi’s inflation-busting pay rises, unemployment benefits and affordable housing.

The cash-rich Saudi government pledged to spend a total of $400bn by the end of 2014 to improve education, health care and the kingdom’s infrastructure.

Charles Robertson, an analyst at Renaissance Capital, said investors are very concerned about what might happen in Saudi Arabia’s oil rich Eastern Province, the home of the kingdom’s restless Shi’ite minority. The Saudis produce 11.6pc of world output, but a much higher share of exports.

“There is potential for serious tension, and not just among the Shia. High unemployment and the youth bulge means unrest could be country-wide. If Saudi Arabia or Iran are engulfed, we have a serious problem,” Mr Robertson said….

…The warning came as Italy’s ENI announced a suspension of supplies through Libya’s gas pipeline, and a string of foreign companies evacuated staff and shut production. Libya holds Africa’s biggest oil reserves and produces 1.6m barrels a day (b/d), mostly for export to Europe.

The German driller Winthershall halted its 100,000 b/d production in Libya, while ENI stopped at a string of sites, vastly reducing its flow of 550,000 b/d. A number of producers have declared “force majeure”.

Barclays Capital said 1m b/d of Libyan output is “shut in”, with the other 0.6m at risk. While Saudi Arabia can step in by raising output, this takes time and its oil is not a substitute for Libya’s “sweet crude”.

…Jeremy Leggett, a leader of the UK industry task force on peak oil and energy security, said the Mid-East crisis “shows the extreme fragility of the global system. People don’t realise how close we are to a potential precipice if this unrest reaches critical mass in enough OPEC countries. Governments need to draw up emergency plans and get cracking on proactive measures while we still have time,” he said….
(24 February, 2011)

Political unrest casts a shadow over Desertec energy project

Sabine Kinkartz, Deutsche Welle
North Africa and the Middle East experience some 3,000 hours of sunshine every year – three times as much as Germany. So why not turn some of that sunshine into electricity and export it to Europe?

The Desertec initiative was hoping to achieve just that. It’s an ambitious project which aims to boost development in North African countries and secure Europe’s energy supply at the same time.

But as political turmoil unfolds across the region, analysts are now asking what the future holds for Desertec? Could the grand plan to generated electricity in the desert be consigned to the past before the first power station is connected to the grid?

Up to 400 billion euros will be needed over the next four decades to realize the idea of sustainable electricity generation from the desert. Why invest such sums into a politically unstable region?

Paul van Son, Desertec’s CEO, has had to answer this question on a daily basis lately. But he sees opportunities in the new political environment. It’s now, he says, that investments need to be made.

“You can improve stability by intensifying collaboration between Europe and these countries,” he said. “And that stability will benefit companies.”…
(23 February, 2011)

All eyes on Bahrain as Gulf tremors frighten oil markets

Ambrose Evans-Pritchard, The Telegraph
“While events in Libya are undoubtedly of prime importance, they are a red herring for the oil market,” said Helima Croft from Barclays Capital. “We believe the unrest in Bahrain may be of far greater importance to the strategic balance in the Middle East and to the oil market.”

The risk group Exclusive Analysis said there is a “moderate risk of an extremely violent transition” in Bahrain, the linchpin of stability in the Gulf and host to the US 5th Fleet. “There is a significant probability that the present order is completely overthrown and replaced by a new order aligned with Iran,” it said.

Marchers from Bahrain’s Shi’ite community, 70pc of the Island’s 800,000 population, poured into Manama’s Lulu square on Tuesday in another day of civic protest after the royal family promised to call off the bloody crackdown.

King Hamad is under intense pressure from the US to refrain from further bloodshed, but this softly-softly policy contains its own risks. While the centrist Shia party al-Wefaq wants peaceful reform, the more radical Haq movement is less easy to control.

…However, the immediate concern is that Bahrain’s troubles will either cause Saudi Arabia to step in directly, or serve as model for revolt in the kingdom’s Eastern Province nearby. This region also has a restless Shi’ite majority, and holds a fifth of the world’s oil reserves…
(22 February, 2011)

Iran’s ‘silent’ protests

D. Parvaz, Al Jazeera

There are reports of renewed anti-government protests in Iran, with demonstrators taking to the streets in several cities across the country.

There have also been clashes between protesters and security forces, posts on social networking sites such as Facebook and Twitter said on Sunday. There were also reports of one protester being shot dead in Tehran, a story denied by government official in state media.

Faezeh Rafsanjani, detained in a blacked-out van used by secuirty forces ro round up protesters [IRNA] The official IRNA reported that Faezeh Rafsanjani, the daughter of ex-president, Akbar Hashemi Rafsanjani, has been among those arrested for particiapting in the protest. Fars news agency reported that she was released shortly thereafter.

Protesters have apparently thronged Tehran’s Vali-Asr and Enghelab squares. Similar demonstrations are being reported in Shiraz and Isfahan…
(21 February, 2011)