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China’s Kazakh prize: The expert opinion
Jeff Moore, Asia Times
Success is not yet assured for the Chinese National Petroleum Corporation’s bid for the Canadian oil company PetroKazakhstan (PK). That will require a two-thirds vote by shareholders at a meeting to be held in October, and probably the approval of the Kazakh government, which has had tense relations with PK in the past. India’s OME consortium is still said to be in the hunt, and Russia lurks in the background.
But oil industry experts interviewed by ATol say that PK will be a good acquisition for CNPC: it has good assets, including a relatively new refinery and some top-quality fields; it produces high-quality light, sweet crude; and it’s strategically located near the Chinese border.
(25 August 2005)
Chinese takeaway is going nowhere
Anxieties about China’s foreign oil acquisitions are overblown
Mark Tran
…But concerns about China’s energy deals are overblown. It is immaterial who owns oil reserves as sooner or later the oil ends up on the world market. If China decides to hoard oil from one of its foreign reserves, say in Kazakhstan or Sudan, it frees up a barrel of Saudi oil for the world market.
Owning reserves does not change the price either. If the price of oil goes to $100 a barrel, and China owns a field in Sudan, the price for that barrel from Sudan is still $100. If China hoards that oil from Sudan for its own use, it would miss the chance to sell it at the higher price. That oil from Sudan would effectively cost the Chinese the same as if they bought oil on the open market.
There are other reasons why China may be on to a hiding for nothing. First, China’s oil concessions abroad will not yield anything like enough for its energy needs in the next two decades. Second, most of the oil produced in China’s foreign concessions will not physically enter China because of transport and logistical costs.
The oil will most likely be sold on the international market or swapped for oil that will enter China. Consequently, China will remain reliant on the security of sea lanes. Who has the world’s most powerful navy? The US of course.
Even if China’s foreign energy policy is doomed to fail, the potential for conflict over energy nevertheless exists. One of the main reasons why Japan went to war in 1941 was the fear that the US would deprive it of access to oil. Thankfully, we are nowhere near that point when it comes to the US and China.
(24 August 2005)
The fungibility of oil is not guaranteed. -BA
Is natural gas China’s next oil?
Patrick Brethour, The Globe and Mail (Canada)
China’s unrelenting growth is driving change around the globe, fuelling a commodities boom and propelling energy prices higher.
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China’s voracious energy appetite has already helped drive crude oil to record levels and now the country threatens to do the same to natural gas as it strives to replace dirty coal with the cleaner-burning fuel.
A senior Chinese energy researcher said this week that his country will accelerate its move away from coal because of rising prices and environmental concerns. The report from Zhou Dadi, director of the Energy Research Institute, did not set a specific target for reducing China’s overwhelming dependence on coal for generating energy, with the comparatively dirty commodity accounting for nearly 70 per cent of overall production.
But with natural gas accounting for just 3 per cent of energy production, there is tremendous scope for growth in Chinese consumption, National Bank Financial says.
Environmental worries will push China toward natural gas, the bank said in a note, adding that sulphur dioxide emissions have soared so much that rain falling in parts of the country is nearly as acidic as vinegar. “The switch will need to come,” assistant chief economist Stéfane Marion said in an interview.
For the moment, Chinese consumption of natural gas is far below that of the Western industrialized world.
(24 August 2005)
Articles on the Globe and Mail seem to disappear behind a pay-to-view wall in a few days.
The “Super Spike” in Oil Prices – Implications for the U.S. and Saudi Arabia
Dr. Nimrod Raphaeli, Middle East Media Research Institute (MEMRI)
…The recent Saudi oil revenue bonanza is a double-edged sword. On the one hand, it will help reduce the Saudi national debt, estimated at $175 billion. On the other hand, in a context in which there is a rapidly growing young population that suffers a high unemployment rate of anywhere between 13% and 20% – a rate which would be even higher if women were allowed to join the labor market – the revenue bonanza is likely to raise expectations for jobs and social services. Should these expectations not be met, these young people could become a destabilizing force in the Kingdom, which could drive oil prices even higher.
Rather than introduce a well-designed plan for creating new sources of employment, King Abdallah has announced that the salaries of all civilian employees, military personnel, and retirees will be increased by 15%, effective the coming month of Ramadan (October). [11] In the absence of proper budgetary procedures, it is not possible to determine the financial implications of these increases. Nor is it possible to assess how these increases would resolve the chronic unemployment problem.
In the meantime, the riches of the Saudi princes continue to grow. Precisely what percentage of oil revenues lines their pockets, however, remains one of the best kept secrets in the kingdom.
(24 August 2005)
The fuel behind Iran’s nuclear drive
David Isenberg, Asia Times
Much of the argument over the intentions of Iran’s nuclear program revolves around a single proposition that goes like this. Given that Iran has huge oil and gas reserves, it has no need for nuclear power for domestic energy needs and thus its nuclear program will be used for nuclear weapons. Like much so-called conventional wisdom, is this is a highly misleading and debatable cliche?
Certainly, the fact that a state is pursuing a nuclear program per se, even if it is a nuclear proliferator, is not always a cause for alarm for the United States. Earlier this year, the US announced an agreement with India (until recently a target of US sanctions, even under the current US president) to strengthen the utilization of nuclear energy in its energy mix. …
David Kay, former head of the Iraq Survey Group, speaking in November 2004 at a forum sponsored by the Center for Strategic and International Studies said:
The first thing – of what we do know, and it’s amazing how many Americans seem to skate over this – the first nuclear reactor given to Iran was given by the United States in 1967 – a five-megawatt trigger reactor, research reactor, under the Eisenhower Atoms for Peace Program. Still operated … The other thing that Americans forget is that in 1974, the shah announced a policy of 23,000 megawatts of nuclear energy in Iraq. The US reaction? [Former US national security adviser and secretary of state] Henry Kissinger beat down the door to be sure that two US constructors, General Electric and Westinghouse, had a preferred position in selling those reactors. We did not say, “it’s a stupid idea, why would you want to do that when you are flaring gas and you have immense oil reserves?” We said, “That is very interesting; it’s an example of how the Iranian economy is moving and becoming modern.” Imagine in Iranian ears how it sounds now when we denigrate that capacity. They remember. We were sellers of nuclear reactors and wanted to be sellers of nuclear reactors to the shah.
…
In fact, president Gerald Ford signed a directive in 1976 offering Tehran the chance to buy and operate a US-built reprocessing facility for extracting plutonium from nuclear reactor fuel. The deal was for a complete “nuclear fuel cycle” – reactors powered by and regenerating fissile materials on a self-sustaining basis.
“David Isenberg, is a senior analyst with the Washington-based British American Security Information Council (BASIC), with a wide background in arms control and national security issues.
(24 August 2005)
Chavez Now in the International Spotlight
Ian James, Associated Press via SF Chronicle
A call for the U.S. to assassinate Hugo Chavez is playing into the Venezuelan leader’s political hands, bolstering his claim that Washington wants to kill him, putting him in the international limelight and probably boosting his popularity at home.
Chavez supporters said Wednesday the suggestion by religious broadcaster Pat Robertson that the United States should “take him out” gave credence to Chavez’s warnings that the U.S. government is searching for ways to overthrow his leftist regime.
“If anyone had a doubt, now they no longer do,” said Maritza Uzcategui, a 50-year-old nurse and Chavez supporter. “He’s been saying they want to kill him.”
U.S. officials called Robertson’s on-air remarks inappropriate and repeated assurances that the United States is not considering killing Chavez despite its questions about his commitment to democracy and accusations he is spreading instability in Latin America.
(24 August 2005)
The original article has good background information.-BA
Fuel efficiency plan targets SUVs, except the biggest
Brad Knickerbocker, The Christian Science Monitor
Every time you start up the family car to buy groceries or take the kids to soccer practice, a sort of meter is running – noting the impact on the environment, on US reliance on foreign oil, and most assuredly on your wallet. Whether you’re driving a gas-electric Prius from Toyota or a Hummer from General Motors, of course, makes a big difference in just how fast that meter runs.
As a result, automobiles and “light trucks” – pickups, mini-vans, and SUVs – feature prominently today in any political or scientific discussion about US energy policy or climate change. And with the country at war in an oil-rich part of the world, and gas pump prices bumping up against $3 a gallon in parts of the country, the question of fuel efficiency is as burning as it’s ever been since Uncle Sam began setting standards 30 years ago.
The Bush administration this week announced its proposal to make light trucks more efficient. The announcement comes even as individual states push to limit greenhouse gases, which could put pressure on automakers to build more fuel-efficient vehicles.
The proposal is a complicated formula based on the dimensions (not weight) of six different categories of such vehicles.
(25 August 2005)
New auto standards fuel debate
Administration boasts of gasoline savings, critics point to loopholes
Zachary Coile, SF Chronicle
Washington — The Bush administration has announced new rules that will increase slightly the fuel economy standards for minivans, pickup trucks and sport utility vehicles starting in 2008, but critics say the regulations are riddled with loopholes that will encourage automakers to keep building large gas- guzzling vehicles.
The new rules — the first major rewrite of the Corporate Average Fuel Economy or CAFE standards since they were created in the 1970s — will replace the current requirement that automakers meet a single average mileage standard for their entire fleet of light trucks with a new system that divides vehicles into six classes based on their size.
(24 August 2005)
Guzzling the order of the day
David Lazarus, SF Chronicle
If the limited increases in fuel-efficiency standards announced by the Bush administration Tuesday are seen as a win for the auto industry, that’s no coincidence.
Automakers have fought long and hard to keep government-imposed fuel efficiency from impairing their ability to crank out gas-slurping sport utility vehicles.
(24 August 2005)
Slight Shift for S.U.V. in New Rule on Mileage
Danny Hakim and John M. Broder, NY Times
The Bush administration’s long-awaited plan to overhaul fuel economy regulations was released yesterday, promising to save gasoline by requiring modest improvements in the performance of sport utility vehicles and other trucks.
But the proposal was swiftly condemned by environmental groups and other critics, who said it would do little to slow the nation’s swelling oil consumption.
Top administration officials said their plan would save 10 billion gallons of gasoline over nearly two decades, or roughly 25 days’ worth of gas under current consumption trends.
…”This plan is good news for American consumers,” Transportation Secretary Norman Y. Mineta said in a statement, “because it will ensure the vehicles they buy get more miles to the gallon, requiring fewer stops at the gas station, and ultimately saving them money at the pump.” Mr. Mineta announced the plan at a news conference in Los Angeles, where he arrived in a silver Lincoln Navigator sport utility vehicle.
(24 August 2005)
Emphasis added.-BA
Fuel hardy
While gas remains a relative bargain, some drivers ready to pay any price
David Montgomery, Washington Post via MSNBC
WASHINGTON – Everywhere thirsty cars, appalled drivers. The remarkably precise signs displaying prices change daily. New records have been set nearly every day for the last two weeks in the Washington area, the first time that’s ever happened.
…We can smell gas. We can feel it pulsing through the hose into our tanks. But we hardly ever see it.
It is the ghost in the machine. Out of sight, we worship it, worry over it. We admire its proxies: Power. Speed. The thunder of a revving engine.
Invisible, potent, practical, gas is also metaphorical. While of course central to the functioning of the economy and the lifestyle of the suburban car culture, it is inseparable from that part of the American identity starring John D. Rockefeller, Henry Ford, Jack Kerouac, Bruce Springsteen: macho men of a certain kind of power and a certain kind of poetry.
(24 August 2005)
Longish journo-poetic essay.
Republicans Eye Offshore Drilling in U.S. Budget Bill
Richard Cowan, Reuters via ENN
WASHINGTON — Republicans next month may try to open new U.S. offshore areas to oil and gas drilling in a move that would bring in billions of dollars in new revenue and let politicians claim progress in boosting domestic energy supplies at a time of record prices.
Such a plan would face stiff opposition from environmental groups as well as influential California, Florida and New York lawmakers who fear offshore drilling’s impact on tourism.
The move could come when the U.S. Senate and House of Representatives return from summer recess Sept. 6 and try to craft a package of federal spending cuts and tax reductions that Congress outlined last spring.
(24 August 2005)
