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News Analysis: Why does Kuwait keep its oil reserves secret?
Xinhua, China View
Kuwait’s Acting Oil Minister Mohammad Al-Olaim has reaffirmed the oil reserves at 100 billion barrels under the pressure from the members of parliament.
Some lawmakers had threatened not to pass this year’s budget, which is with a projected deficit of around 10.3 billion U.S. dollars, if the oil sector didn’t tell them the truth about the country’s oil reserves.
This budget, one of the largest in Kuwait’s history, is heavily reliant on oil income.
So the parliament held a part of session behind closed doors to discuss Kuwait’s oil reserves before disclosing it to the public. “We are reaffirming the declared oil reserves,” the acting minister told reporters on Wednesday, raising speculation why Kuwait is so reluctant to make public its oil reserves?
Official Kuwait oil sector statistics placed the country’s oil reserves at some 100 billion barrels, accounting for 10 percent of the world’s total reserves. The country is pumping around 2.4 million barrels per day (bpd) and oil income contributes more than 95 percent of public revenues.
Asked whether the 100 billion barrels represented exploited and unexploited reserves, Al-Olaim, also Minister of Electricity and Water, said, “What is invested at present is not part of oil reserves … there is no doubt that Kuwait has not exploited its oil reserves.”
But industry newsletter Petroleum Intelligence Weekly last year said it has seen Kuwait’s internal records showing reserves were about 48 billion barrels – half the officially stated 99 billion. Former Oil Minister Sheikh Ali al-Jarrah al-Sabah, who resigned in late June, refused to disclose reserves during his tenure saying this is related to the country’s security.
(12 July 2007)
Interesting article to appear in a government-sanctioned news outlet in China.
Kuwait and IEA Show Declining Oil Production Future
Sven Ridley-Wordich, Resource Investor
Crude oil prices could reach levels of US$100 per barrel or more if some of the latest production factors in the news become reality.
Not only has the Paris-based International Energy Agency (IEA), the energy watchdog of the Organisation for Economic Co-operation and Development (OECD) countries, warned in its latest medium-term oil market report that a market crunch is looming over around 2012, but some OPEC producers are breaking even more negative news. After a short analysis hype in the beginning of 2006, analysts have been forgetting to cover OPEC countries currently battling reserve issues.
Kuwait officials have stated that the government is studying a request by lawmakers to disclose the size of its oil reserves. Kuwait Minister of State for Cabinet Affairs, Faisal Al-Hajji, said the issue is still under review. Analysts have lingering doubts that the reserves could be sharply lower than official estimates. Most analysts’ focus will be on the overall Kuwaiti message in the coming days.
Oil analysts will be watching the Kuwaiti press to find out if the government will disclose information on oil reserves or if they will again decide to block independent assessments.
(10 July 2007)
Rebels say attack on Mexican pipeline is just the beginning
Noticias: Voz e imaginen de Oaxaca
A shadowy leftist rebel group took responsibility Tuesday for a gas pipeline blast that shut down some industry in central Mexico, including two car assembly plants.
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MEXICO CITY.- A shadowy leftist rebel group took responsibility Tuesday for a gas pipeline blast that shut down some industry in central Mexico, including two car assembly plants.
The Popular Revolutionary Army, or EPR for its initials in Spanish, said Tuesday’s explosion and two similar attacks on Pemex pipelines in Guanajuato state last week marked the beginning of a “national campaign of harassment against the interests of the oligarchy and this illegitimate government.”
President Felipe Calderón’s office issued a statement saying security was being reinforced at “strategic installations.”
Officials said no one was injured in Tuesday’s explosion; however, a Nissan plant in Aguascalientes and a Honda plant in Guadalajara were forced to close for lack of gas to produce electricity, local media reported.
Analysts said that if the early morning attack was indeed carried out by EPR, it would mark a shift in the group’s mostly propagandistic tactics and in its ability to penetrate government security.
(12 July 2007)
Mexican troops to guard energy sites
Héctor Tobar, Los Angeles Times
Guerrilla attacks on pipelines have caused fuel shortages for factories.
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MEXICO CITY – Mexican President Felipe Calderon has dispatched a new 5,000-strong elite military unit to guard strategic sites, including oil refineries and hydroelectric dams, in the wake of guerrilla attacks on pipelines operated by the national oil and gas company, Pemex, according to news reports Thursday.
Business leaders said as many as 1,000 factories and other businesses in the Guanajuato-Queretaro region of central Mexico have been forced to shut down or reduce operations this week because of fuel shortages caused by attacks this month.
The leftist Popular Revolutionary Army, or EPR, claimed responsibility for the attacks Tuesday, saying they were in retaliation for the disappearance of two of their militants last year in the southern state of Oaxaca.
The EPR communique said the rebels had bombed three pipelines and a switching station in Queretaro and Guanajuato states. The explosions severed natural gas pipelines and a crude oil pipeline that links storage facilities in the Gulf of Mexico port of Poza Rica to a refinery in Salamanca, in Guanajuato, reducing fuel supplies in the region.
(11 July 2007)
Mexico: A Nation-State Dissolves?
Jeff Vail, The Oil Drum
In my annual new years predictions, I said that the most significant, and surprising, development of 2007 would be the collapse of both Mexico’s economy and its very existence as a viable Nation-State.
While there hasn’t been a spectacular, single event confirming my prediction, there has been a steady erosion on all fronts-with five months left in the year, I’m not yet willing to push back my prediction of Mexico’s “collapse” to 2008.
The decline of the Mexican Nation-State is a bellwether for the massively complex network of geopolitical influences sometimes termed above ground factors. It provides some insight into how symptoms of oil scarcity already being felt in poorer parts of the world will increasingly spill over into our own back yard…
UPDATE: After I wrote this story (July 7th), things took a serious turn for the worse with a series of rebel attacks on Mexican oil infrastructure: Bloomberg, Forbes (research credit: Dantes Peak).
Before I highlight the specific events that are undermining the Mexican Nation-State, let me talk first for a moment about what it means for a Nation-State to collapse…
(12 July 2007)
More comments by author Jeff Vail.
Vital ingredient is missing from oil mix
Carl Mortished, UK Times
What is the International Energy Agency (IEA) up to, yelling about a supply crunch? These are not prophets of doom, walking the streets with sandwich boards bearing dire warnings about Armageddon. These are sober civil servants, serious forecasters, and as such they ought to know that commodities don’t run out. They just get more expensive.
…Prices rise, in a market, to the point where something gives. There was a missing number in the IEA’s Mid-Term Oil Market Report and that was its oil price assumption. The agency doesn’t issue public forecasts of the cost of crude – it’s too political a number and the IEA is too august a body to allow its internal price forecast to be broadcast on the street like a grubby brokerage.
What the IEA is really doing is making an urgent call for more investment in energy. Claude Mandil, its executive director, has done this before, but few are listening and those who do listen are unable to respond. The multinationals are full of cash and are spending aggressively, drilling at stupendous depths in the Gulf of Mexico and mining oil sands in Canada. Yet the best opportunities to spend are in places where the Western companies are unwelcome, such as Iran and Saudi Arabia, or where it is too dangerous, such as Iraq.
The bigger question is why so many do not listen to the IEA. The answer is that they cannot hear the price signal. Demand for oil is strongest in those places where the price signal is weakest. The agency points to rampaging oil consumption in East Asia and the Middle East – only last month riots broke out in Tehran when Iran’s Government introduced petrol rationing.
Fuel is priced at a fifth of its market value in Iran, energy is similarly underpriced in Saudi Arabia.
(11 July 2007)
Mr. Mortished underestimates the effects of energy scarcity. Not only do prices rise, but riots break out, governments fall, wars are started. I’m not sure why he singles out Middle East countries for examples of subsidized gas prices. The U.S. also subsidizes gas prices, but in a more roundabout way. It’s not only in the Middle East that consumers “cannot hear the price signal.” -BA
