Russia to Cut Off Gas Supplies to Ukraine
Mike Eckel, Associated Press via Yahoo
MOSCOW – Russia will cut off natural-gas supplies to Ukraine if no compromise is reached by Jan. 1 in a dispute over prices, officials with Russia’s state-run gas monopoly said Tuesday, markedly raising the stakes in the increasingly acrimonious dispute.
Gas giant Gazprom also gave a tough rebuttal to Ukrainian President Viktor Yushchenko’s proposal that price hikes for Russian gas supplies be gradually implemented. Moscow has proposed tripling its gas prices immediately.
In an interview with the Kremlin-backed satellite TV channel Russia Today, Gazprom Chief Executive Officer Alexei Miller said time was running out for reaching a new contract with Ukraine. “If no compromise over Russian gas supplies to Ukraine is found before the New Year, the supplies will be stopped,” Miller said, according to Russia Today. …
Ukraine’s Fuel and Energy Minister Eduard Zanyuk was traveling in the gas-rich Central Asian nation of Turkmenistan and could not be located for comment. …
Against the backdrop of its disagreements with Kiev, Russia has also pushed for alternate pipeline routes to supply gas to Europe. Last week, Russian and German dignitaries marked the symbolic beginning for a pipeline that is to stretch along the Baltic seabed to Germany, allowing Russia to bypass the Ukrainian pipeline routes, as well as another that goes through Poland and Belarus.
(13 December 2005)
Energy crisis deepens
Jeremy Cresswell, Aberdeen Press and Journal
THE UK energy crisis is deepening. With the spot-market price of gas hitting ÂŁ1.70 per therm late-November compared with about 25p just weeks ago, major industrial users are switching fuels, where possible, or shutting down/restricting manufacturing.
Sectors like steel, chemicals and heavy engineering are already being hit hard, with the Confederation of British Industry levelling criticism at 10 Downing Street. A catalogue of strategic blunders by Government and the North Sea oil&gas industry, coupled with complacency, could deliver the coup de grace to what little remains of British manufacturing unless a rapid fix is found.
But there is no easy solution, as became evident at the European Autumn Gas Conference staged in London late-November. This is despite the fact that the European Union has, within close reach, 60% of the world’s known gas reserves and UK supplies from Norway will increase dramatically post 2007. Some delegates said the push towards a European market based on short-term contracts was lunacy, while others promoted the transition, which was kicked off by Britain’s gas privatisation.
And great concern was expressed about LNG (liquefied natural gas) supplies. Seen by the Government as a lifebelt, conference delegates were told that LNG was mostly bypassing Britain and that global competition for supplies outstripped availability with no sign of a let-up. Some delegates went so far as to say that they wanted tighter market regulation in the UK, not less. Energy understands that this took Energy Minister Malcolm Wicks by surprise. John Sheed, Total Gas & Power UK director, warned of increasing complexity of supply as the EU gas industry was liberated, and that current shortages in Britain indicated “just how fragile the current system is”. “It takes very few days of peak demand before there’s trouble,” said Sheed. …
David Haynes, manager LNG services at Advantica, said there was a rash of LNG projects worldwide, with up to 70 in the US and as many as 50 in Europe. However, he said the European total would likely pan out at about 25-30. “Potentially, we’re seeing 30% of UK gas being supplied by LNG from about 2008. However, it (the LNG) might not turn up. “We don’t actually have enough energy supply potentially in the world at the moment to feed the demand that people are talking about in the industry.”
(December 2005)
Read for excellent round-up of comments from UK energy industry insiders, on the need for more regulation (!), the perils of short vs. long term contracts, and the prospects for LNG.-LJ
The Big Chill
A winter fuel crisis of high prices and shortages could darken homes and factories
Marianne Lavelle, US News & World Report
Falling gasoline prices make it easy to believe the nation has seen the last of the energy woes that swept in behind this year’s Gulf Coast hurricanes. But they don’t fool an unemployed woman on the Crow Indian Reservation, using the electric oven to warm her house on increasingly crisp Montana nights because her natural-gas heat has been cut off. For brickyard workers in Mill Hall, Pa., unemployment looms after the holidays, because it will be too expensive to fire the clay kilns this winter. And one retiree in a mobile home in Millinocket plans to take her asthma medication once daily instead of three times as prescribed, to save money to pay the kerosene bills that will soar in Maine’s bitter cold. …
Whether because of cost or cold, officials are bracing for human suffering across America this winter. “Forces can come together that turn crisis for some into disaster–that’s really what I think we could be looking at this winter,” says Iowa energy assistance director McKim. “I hate to sound like the voice of doom, but somebody has to say this stuff. It’s just like Hurricane Katrina. They knew it was coming, but little was done to prepare an effective response. And the same thing is happening here.”
(19! December 2005)
Iran Supports Russia’s Participation in Multibillion Iran-India-Pakistan Gas Pipeline
MosNews
Iran supports Russia’s participation in an ambitious multi-billion-dollar plan to supply Iranian natural gas to India and Pakistan, the country’s Foreign Ministry was quoted as saying by the France Press agency on Tuesday, Dec. 13.
“The issue has been brought up. Russia is a powerful country with advanced technology. If the Indians and Pakistanis agree, and I don’t think they would have serious opposition, these countries can cooperate and go ahead with the project,” Iran’s Foreign Ministry Spokesman Hamid Reza Asefi said.
In June, India signed a deal worth $22 billion which foresees Tehran supplying 5 million tons of liquefied natural gas annually over a 25-year period from 2009 and also a memorandum of cooperation on the construction of a multi-billion-dollar gas pipeline from Iran through Pakistan. The 2,600-kilometer (1,600-mile) link is expected to cost more than $7 billion. As MosNews has reported on previous occasions, Russia has voiced its interest in the project and the idea was supported by both India and Pakisan. The country is already involved in an $800 million deal to build Iran’s first nuclear power station at Bushehr.
(13 December 2005)
The Transparency of the Oil Markets and the Agenda of the Consumer-Producer Dialogue
Walid Khadduri, Dar Al-Hayat (Saudi Arabia)
During the past three decades, oil markets have witnessed sharp fluctuations in prices, supplies, and demand. …
In a huge industry like that of oil and gas, a potential 2% statistical margin of error in supply or demand can largely alter the final figures. As the worldwide consumption currently amounts to 82 million b/d, such an error may imply a difference of more than 2 million b/d. In fact, this is not a theoretical hypothesis, but a reality we always encounter in many global petroleum statistics.
With no doubt, the same applies to the output figures, since many oil countries tend to exaggerate these figures or abstain, in most cases, from providing accurate ones. Hence, relying on press information or the so-called “secondary sources,” according to OPEC, is not convenient despite the efforts the advisers and the media officials exert. For in this industry, just few individuals are fully apprised of the accurate output figures in their countries and of the global situation characterizing the regional and international oil production.
Unfortunately, such problems are not only limited to the OPEC member states and the third world countries. For instance, despite the highly transparent US data, the statistics the International Energy Agency (IEA) and the US Energy Information Administration publish often diverge. So do the statistics provided by the government and the American Petroleum Institute representing the oil industry. …
Dr. Walid Khadduri is Editor-in-Chief of Middle East Economic Survey (MEES).
Concise excerpt extracted from speech given by Mr. Khadduri held at the inauguration of the International Energy Forum Secretariat in Riyadh.
(13 December 2005)
Massive Fire in Britain Burns a Third Day
Beth Gardiner, Associated Press
HEMEL HEMPSTEAD, England (AP) – A fire raging at an oil depot in southern Britain sent toxic smoke as far away as France and caused jitters on the global oil market Monday as firefighters struggled into a third day to douse the flames with chemical foam. …
The smoke cloud has drifted over Brittany and Normandy in northwestern France and was headed toward Spain, France’s national weather service said Monday. “Poison cloud hits London tonight,” warned the Evening Standard newspaper. Environment officials said toxins from the fire had not contaminated drinking water near Hemel Hempstead. …
The oil terminal explosions raised supply concerns, but authorities said the blasts would not lead to a shortage. Oil prices surged above $60 Monday as forecasts of colder weather in the world’s largest heating oil market, the U.S. northeast, boosted expectations of a rise in demand, and OPEC agreed to maintain its present output. Representatives of oil companies, pipeline operators and the airline industry met Monday to discuss ways of keeping fuel supplies flowing. French oil firm Total S.A. said it had implemented contingency plans to reroute supplies that normally run through the plant.
“There shouldn’t be any problem with supplies,” said Lesley Else, a spokeswoman for Total U.K. The Buncefield plant, which is part-owned by Texaco, carries jet fuel to Heathrow and Gatwick airports. It also stores gasoline, diesel and kerosene.
(13 December 2005)
Oil prices enter “super-spike” phase
Goldman analysts disagree with theory that prices peaked in ’05; see five more years of price hikes.
Reuters via CNN
Already sky-high oil prices have entered a “super spike” phase that could last for four more years as global demand booms and supply growth slows, Goldman Sachs analysts said Tuesday. …
The analysts said oil demand remained resilient and supply growth lackluster, prompting them to keep their average U.S. crude price forecast for next year unchanged at $68 a barrel. Oil futures on the New York Mercantile Exchange have averaged $56.59 so far this year. The group also predicted oil prices could see 1970s-style price surges to as high as $105 a barrel during this period. …
“Ultimately, we agree that the energy bull market will roll over once demand destruction really begins,” it said. “We simply do not believe we have arrived at that point.” …
(13 December 2005)
Exxon Mobil: Energy Consumption to Soar
Associated Press via Yahoo
HOUSTON – Global energy consumption will soar 60 percent over the next 25 years, Exxon Mobil Corp. forecast Tuesday in its annual energy outlook.
Energy demand will grow to 334 million barrels of oil equivalent a day in 2030, up from 205 million in 2000, Jaime Spellings, head of Houston-based Exxon Mobil’s corporate planning, said during a webcast of the outlook’s presentation. Oil consumption will grow 1.4 percent annually, and gas will grow 1.8 percent per year. Oil and gas will account for 60 percent of the world’s energy needs, the same share they hold today, Spellings said. Most of the growth will occur in developing countries, he said.
The Organization of Petroleum Producing Countries will have a progressively larger share of the world’s oil production as non-OPEC output growth flattens around 2010, Spellings said. To satisfy growing crude oil thirst, OPEC will have to produce more than 47 million barrels a day by 2030, a 40 percent increase over current levels, Spellings said.
“We’re very confident that that growth will happen,” he said. The planet’s remaining crude-oil resource base — approximately 2.2 trillion barrels, excluding non-conventional oil — can support that growth, Spellings said. The Middle East and Russia hold most of remaining reserves, he said. …
(13 December 2005)
