ODAC News
Wednesday 25 April
The Oil Depletion Analysis Centre
1a/ UK economy 'skating on thin ice'
(BBC News, Mon 23 Apr)
1b/ UK economy
is 'skating on thin ice', says report
(The Independent, Mon 23 Apr)
2a/ Russia’s
Energy Sector Requires Investment of $542 Bln by 2020
(FC Novosti, Mon 23 Apr)
2b/ LUKoil Ready to Begin Qurna
Project in Iraq (FC Novosti, Wed 25 Apr)
3/ Letters: Drought in
Australia - Thinking the unthinkable in drought-stricken Australia
(The Independent, Tue 24 Apr)
4/ LNG15: Industry must
clear obstacles to new supply (Oil and Gas Journal, Tue 24 Apr)
5/ UKOOA replaced by
wider-range trade body (Oil and Gas Journal, Tue 24 Apr)
6/ A
green and winding road ahead
(Financial Times, Tue 24 Apr)
7a/ Iraq may hold twice as much oil
(Financial Times, Wed 18 Apr)
7b/ A
warning over good news on Iraqi oil 'wealth' (Financial Times, Tue 24 Apr)
8/ US cautions Austrian
oil giant over gas deal with Iran (National Council of Resistance of
Iran - Foreign Affairs Committee, Tue 24 Apr)
9/ FACTBOX-The Strait of Hormuz, Iran and the risk to oil
(Reuters AlterNet, Fri 30 Mar)
10/ Russia
to Delay Construction of Pacific Pipeline Due to Oil Shortages (MosNews, Wed 11 Apr)
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1a/
http://news.bbc.co.uk/1/hi/business/6581489.stm
Comment: It is somewhat baffling that
the media and reports such as the one in this article fail to discuss the
economic consequences of the
Article: An influential forecast group
is worried about the risks individuals, firms and ministers are taking with
amounts borrowed.
Ernst & Young's Item Club spring forecast said
people are "overly relaxed about risk" and are "spending as if
it was going out of fashion".
Club chief economic adviser Peter Spencer said:
"The bottom line is that we are all living beyond our means."
"Ultimately we are all skating - not to say
wobbling - on thin ice," he added.
The report highlights the current deficit in the
public sector and expresses surprise that it built up at a time of economic
strength and buoyant tax revenues.
"If the Chancellor is forced to borrow so much
when the economy's so sweet, what will happen when it turns sour?" Mr
Spencer asked.
The Item club also says that the business sector is
driving economic growth faster than either government or consumer spending.
It points out that business investment at the end of
last year was 13.5% higher than it had been a year before.
1b/
http://news.independent.co.uk/business/news/article2474486.ece
Article: A leading economics think-tank
today warned that the economy is "skating on thin ice" because of
excessive household debt.
The respected Ernst & Young ITEM Club, which uses
the same economic model as the Treasury, said the economy was running "at
full tilt", thanks to the booming business sector, particularly services.
But although Gordon Brown appears to be leaving No 11 on a high, the strong
economic performance is built on shaky foundations. It said the current benign
macroeconomic environment had made both individuals and firms overly relaxed
about risk, inflating asset values and transactions and boosting borrowing and
spending.
"Many people are following the Chancellor's lead
and are borrowing to finance consumption," said Peter Spencer, the ITEM
Club's chief economic adviser.
"The
Professor Spencer, however, believes that one more
hike, to 5.5 per cent in May, will be sufficient to bring inflation back to its
2 per cent target.
The report also highlights the huge black hole that
has opened up in the public finances, despite the strength of the economy and
buoyant tax revenues. Mr Brown upped his borrowing forecasts yet again in last
month's Budget, and is now expecting the Treasury's coffers will be in the red
to the tune of £34bn in the 2007-8 financial year.
Professor Spencer said: "The bottom line is that
we are all living beyond our means. In the short-term, Mr Brown has resorted to
borrowing for consumption. If the Chancellor is forced to borrow so much when
the economy's so sweet, what will happen when it turns sour?"
Despite the grim warnings, the ITEM Club predicts the
economy will expand by a healthy 2.9 per cent this year, in line with the Chancellor's
2.75 to 3.25 per cent forecast. Growth is expected to slow slightly to 2.7 per
cent in 2008.
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2a/
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment: The numbers for natural gas
do not add up in this article. If “The share of gas in the fuels balance is to
decrease from 68% to 50%”, while the demand for electricity more than doubles
from 153GW now to 340-392Gw in 2020, that still means that the total amount of
natural gas used will rise substantially, much higher than the quantities
consumed now. FC Novosti has often reported over the last few months that the
aim is to use more coal and uranium to reduce the amount of gas used, so that
there is enough to meet other domestic demand and exports.
Article: The Russian government has
considered and approved a master plan for building power generation facilities
until 2020, drafted by the Ministry for Industry and Energy and Russia’s RAO
UES energy holding.
2b/ LUKoil Ready to Begin Qurna Project in
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Article: Vagit
Alekperov, CEO of
He added that LUKoil would
be able to develop the
“We are ready to move really fast,” he said. “The
situation in
The consortium led by LUKoil
(68.5%) and including Russian companies Zarubezhneft
(3.25%) and Mashinoimport (3.25%) signed a PSA with
the Iraqi Oil and Gas Ministry (25%) in March 1997 to develop the West Qurna-2
field. It is effective until 2020. The field’s proven recoverable reserves
amount to around 6 bln barrels of oil.
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3/ Letters: Drought in
http://comment.independent.co.uk/letters/article2481024.ece
Comment: This was in the letters page
of The Independent, from a resident of
Letter: Sir: Current water shortages
in
The once-green lawns are now brown, and the soil baked
as hard as concrete. Our neighbours' lawn has a large crack in it, big enough
they tell me for their children's feet to fit into. Recently introduced water
restrictions in
I was concerned to see from a recent rates notice that
my wife and I were using too much water. In order to comply with the target we
have radically altered our way of life. We are still using approximately 194
litres of water each per day. This, despite taking four-minute showers (the
bath is but a dusty relic of our former lives), having the taps on low, turning
them off while we wash, not using the dishwasher, not watering the garden etc etc. Next month a plumber is coming to fit more efficient
shower heads. I doubt there is much more we can do, but I now feel guilty about
using any water at all.
Plans are in place to try to safeguard the water
supply - including building an expensive desalination plant - but they may not
be implemented in time. The unthinkable may happen - we will run out of water
altogether. That prospect is rarely discussed publicly. I wonder whether it is
because people cannot face up to that happening.
SAM KENDALL-MARSDEN
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4/ LNG15: Industry must clear obstacles to new supply
(Oil and Gas Journal, Tue 24 Apr)
Comment: OGJ. Link will work to
non-subscribers for about one week. We had warnings thro’ out last year of
future problems with LNG supplies, shortages from now to 2010, shortages 2010
-2015, shortages after 20105, you name it. Here is the latest. It is probably
worth pointing out that post-2010, both the USA and UK, two of the world’s
largest consumers of natural gas, will be increasingly looking to LNG to
replace falling production from their respective domestic reserves.
Article: Speakers on the first day of
the 15th Conference & Exhibition on LNG in
Petronas
Pres. and Chief Executive Officer Mohamed Hassan Marican, while noting in his morning keynote the tremendous
growth of LNG in recent years, nonetheless called attention to the lack of
production capacity coming on stream in the last 12 months. And many projects
have seen delays. Maricam's comments came in the main
keynote of the day.
Frank Harris, head of global LNG consulting at Wood
Mackenzie Ltd., Edinburgh, echoed Marican's concerns
in an afternoon session on globalization. The world's LNG industry is fixated
on expanding natural gas supply, he said, and for good reason.
Forecast LNG demand growth remains strong, and neither
regasification capacity nor shipping capacity will
constrain it. In short, medium, and long-term, natural gas supply adequacy
remains in doubt and will constrain growth of LNG.
Marican
predicted an LNG supply crunch by 2010 caused by rising costs and a cap on LNG
supply growth. In only recent years, capital expenditures for an LNG supply
project were about $200/tonne of export capacity. Today, he said, that figure
has risen closer to $1,000/tonne. Projects have seen costs escalate by from
25%-100%.
... WoodMac's Harris said
the balance between LNG production and demand will remain very tight through
2010, as existing capacity and capacity under construction barely keep up with
forecast demand.
From 2011, supply Harris classified as
"probable" must come on line; so-called "possible" demand
beyond that must be ready after 2012, he said.
Delays to both categories are likely, however, caused
by cost pressures and public resistance in the form of political and
environmental hurdles.
Longer term, industry's greatest hurdle will be
gaining access to gas reserves to feed new liquefaction projects, said Harris.
Despite the large amount of known but undeveloped gas, development of many
reserves for export must compete with domestic demand growth and distance
obstacles: Pipeline capacity is nearby or fields are prohibitively far from
seas and oceans, LNG's transport media...
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5/ UKOOA replaced by wider-range trade body (Oil and
Gas Journal, Tue 24 Apr)
Comment: OGJ. Link will work to
non-subscribers for about one week. UKOOA (UK Offshore Operators' Association) was one
source of rosy forecasts for oil and gas production from offshore
“It will lobby the government for a sustainable
From the Oil and Gas
Oil & Gas
TTo strengthen
the long term health of the
Article: The UK Offshore Operators'
Association (UKOOA) has dissolved and has been replaced by a new body—Oil &
Gas UK—having a wider range of interests and members outside of
Oil & Gas
Jointly chairing Oil & Gas UK will be Dave
Blackwood, BP PLC's
Blackwood said, "The combined perspective of operators,
nonoperators, and contractors will give our
activities greater depth and a more coherent voice for the industry,
particularly in its conversations with the government."
Oil & Gas
The new body will tackle issues such as production,
exploration, health and safety, employment practices, policy advisory, skills
and training, environment, economic and fiscal concerns, gas, and supply chain
management.
Oil & Gas
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6/ A green and winding road ahead
(Financial Times, Tue 24 Apr)
http://www.ft.com/cms/s/213c6c6c-f272-11db-a454-000b5df10621.html
Comment: A
Article: Jamie Borwick
is either brave or reckless. He has sunk the entire £14m he made from selling a
family stake in Manganese Bronze, the manufacturer of the iconic
But Mr Borwick has a vision
of his electric trucks and minibuses trundling quietly and cleanly around big
cities, delivering goods and people. Not just in the
... “Now everybody wants to be green,” says Mr Borwick. “Big companies want to show to their customers
that they care about their environment. The Modec
allows them to have a £25,000 ‘billboard’ to show that they’re really, really
green.” Tesco has ordered 15 Modecs
to try out as vehicles for delivering groceries to the homes of customers who
shop online. Two other supermarkets are negotiating orders. A gaggle of public
authorities wants to evaluate the vehicles...
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7a/
http://www.ft.com/cms/s/23bedd7e-edd8-11db-8584-000b5df10621.html
Comment: As item 2b indicates, some
foreign companies are happy to move into
Article:
The potential presence of a further 100bn barrels in
the western desert highlights the opportunity for
If confirmed, it would raise
The study from IHS, a consultancy, also estimates that
... Of
7b/ A warning over good news on
Iraqi oil 'wealth'
(Financial Times, Tue 24 Apr)
http://www.ft.com/cms/s/5e6a5224-f200-11db-b5b6-000b5df10621.html
Comment: Letter to the editor.
Letter: Sir, Your prominent report
(front page, April 19), which began "
Most readers don't know that IHS, the consultancy that
conducted the study into
It forecast in 2002 that gas production in the
The use of language such as "oil production"
is inaccurate when referring to non-renewable resources. Oil is extracted, not
produced.
Advanced extraction methods such as "horizontal
drilling" do not increase "production" - they merely speed up
depletion and ensure that when it approaches it is sudden, and not gradual as
with conventional drilling.
If in any doubt, witness what is happening with
Cantarell in
The fact is that the media are being massaged by a
steady drip of "good news" on the energy front. Each drop - the
hydrogen economy, clean coal and, more recently, ethanol - serves merely to
confuse us and to distract us from the big picture.
Alfred Nassim
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8/ US cautions Austrian oil giant over gas deal with
http://www.ncr-iran.org/content/view/3281/152/
Comment: Last Saturday an Austrian oil
company was the latest to sign a deal with the Iranians to develop the South
Pars gas field. The EU is not bothered, apparently, the
Article: The
It will also set up a liquefaction facility for the
Iran Liquefied Natural Gas project and conclude further supply agreements for
LNG from
State Department spokesman Sean McCormack said
... At the same time the
"We question whether or not this is the right time
to be handing the Iranians those kind of -- at the very least, public relations
-- victories," he said.
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9/ FACTBOX-The Strait of Hormuz,
http://www.alertnet.org/thenews/newsdesk/L30417840.htm
Article: ... Analysts
fear
The strategic channel at the entrance to the Gulf is
the world's most important waterway or choke point because of the huge volume
of oil exported through it daily.
-- Oil flows through the Strait account for roughly
two-fifths of all globally traded oil, according to the U.S. Energy Information
Administration (EIA).
-- Some 16-17 million barrels of crude oil are carried
through the narrow channel on oil tankers every day, according to the
International Energy Agency (IEA).
-- Some 2 million barrels of oil products, including
fuel oil, are exported through the passage daily.
-- Ninety percent of oil exported from Gulf producers
is carried on oil tankers through the Strait.
-- Over 75 percent of
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10/
http://www.mosnews.com/money/2007/04/11/pipelinedelay.shtml
Comment: This item was reported
previously, but this version contains more info. Note the amount of money spent
on geological surveying – it is not as though they cannot find oil because they
are not looking:” Budget
allotments for geological surveying in
Article: Russian government official
said on Tuesday, April 10, that construction of the second leg of Asia-bound
Pacific oil pipeline could be delayed by three-four years from its original
March 2008 deadline due shortages in oil supply from underdeveloped East
Siberian fields.
“Failure to meet mineral base targets may delay the
construction of the second phase of the pipeline by three or four years at
best,” Sergei Fedorov, head
of geological and mineral resources department in the Natural Resources
Ministry, told a Russian energy forum in
The first $11-billion leg of the pipeline came on
stream last April and is expected to link Taishet
near the East Siberian city of
... A decision to launch the construction of the
second leg, with a projected capacity of 50 million metric tons (366.5 million
barrels), depends on filling the first leg, which has a projected capacity of
30 million metric tons (220 million barrels) by the second half of 2008, and on
the development of East Siberia’s oil fields, Fedorov
said.
Sergei Grigoryev, vice president of
... Fedorov said that the
Natural Resources Ministry would draft proposals to increase budget funding for
geological prospecting in
Budget allotments for geological surveying in
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