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ODAC Newsletter - May 18

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.

The prospect of weaker oil demand in the face of the Euro crisis was balanced this week by warnings from the IEA and Saudi Arabia. Sadad al-Husseini, the former head of Exploration and Production at Saudi Aramco, wrote that "$100 for Brent is quite a correction and it will be a challenge to sustain such a low price beyond the short term". IEA Chief Economist Fatih Birol, meanwhile, expressed concern over investment in oil production capacity in the Middle East and North Africa since the Arab Spring. In his words "If there is no good news from Iraq, it's a bad news for the global oil outlook in the short, medium and long term". The latest from Iraq is that Shell is in talks to reduce its output targets for the giant Majnoon oilfield in the face of infrastructure and security challenges — probably not good news then.

Looking at the short-term picture, the oil price has fallen back sharply in the past couple of weeks, with Brent now below $110/barrel for the first time since January. It is interesting then that the possibility of a release from the Strategic Petroleum Reserve appears to remain under serious discussion. Oil prices are certainly hurting economies in the US and Europe, but any relief from a stock release would be extremely short-lived. In related news US shale pioneer Occidental is to scale back production in the Bakken oil field due to surging production costs. Is this the first sign of trouble in the non-conventional black gold rush?

In the UK this week the government's new nuclear plans took another knock following a report that EDF has paused earthmoving work at Hinckley Point, one of the two locations where the company is due to build a new reactor with its partner Centrica. Centrica boss Sam Laidlaw, however, told investors on Friday that "The investment case for nuclear has yet to be proven" — this after the recent withdrawal of RWE and Eon. The government must hope that its electricity market reforms, included in the Queen's Speech last week, will clarify the investment position and bring forward new candidates.

The reforms are causing consternation in the renewables sector, which argues they are designed specifically to enable new nuclear, and will be highly damaging to investment in wind and solar. In a letter to Energy Secretary Ed Davey, a group of energy companies damned the proposals' complexity; particularly the 'contracts for difference' intended to give low carbon producers a guaranteed minimum price. Keith MacLean, head of policy at Scottish and Southern Energy, part of the group, described the plans as "unworkable" and "a train wreck."

Renewable energy investors may however have been cheered to see an intervention in the green policy debate by Foreign Secretary William Hague. In a private letter to the Prime Minister about selling green growth, Hague stated that "Germany's energy shift is triggering disruptive innovation in renewables and associated supply chains". Maybe it's time to move on?

Disclaimers

Oil

IEA report raises oil demand but warns of Iran risk

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Oil price still serious risk to global recovery: IEA

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Brent Crude at $100 Is a 'Challenge' for Saudis, Husseini Says

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Shell seeks to cut targets in Iraq

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Insight - Peak, pause or plummet? Shale oil costs at crossroads

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Oil Falls a Sixth Day on Economy; Brent Premium Narrows

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U.S. to seek G8 support for oil reserve release-Kyodo

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Do we know enough to ensure safe Arctic drilling?

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Dump the Pump: Could peak oil be voluntary?

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Oil lobby presents energy policy wish-list to GOP, Democrats

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Gas

Gas leak at Elgin platform in North Sea 'has been stopped'

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In Ohio, "fracking" boom a delicate issue for Obama

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Nuclear

Power politics: French threat to UK energy

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Hinkley nuclear power station delay deals blow to government hopes

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Romney Marsh set to become nuclear dump

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Renewables

US commerce department brings heavy tariffs against Chinese solar panels

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Denmark aims low with green energy policy

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UK

William Hague tells ministers to help green industries boost economy

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Plans to reform electricity market 'unworkable', say green businesses

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Solar industry welcomes DECC review of FiT cuts, but calls for certainty

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DECC: 16 companies set to bid for £1bn CCS pot

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ScottishPower hails tidal turbine success ahead of planned array

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Green cars will lead to fall in motoring revenue for Treasury, says study

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David Cameron briefed on concerns over green deal for homeowners

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Councils 'must lower carbon emissions'

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Climate

UK wants EU to focus on new CO2 targets instead of renewables

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Report: Green taxes key to tackling European deficits

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What do you think? Leave a comment below.

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