ODAC News

 

Sunday 20 May

 

The Oil Depletion Analysis Centre

 

 

1a/  Central Asia: Russian, Turkmen, Kazakh Leaders Agree On Caspian Pipeline  (RadioFreeEurope/RadioLiberty, Sat 12 May)

1b/  Russia: Energy Summit Gives Putin New Trump Card (RadioFreeEurope/RadioLiberty, Wed 16 May)

2/   Meeting the food security challenge through organic agriculture            (FAO Newsroom, Thu 03 May)

3a/  Iran Gasoline Price Hikes, Rationing System Scheduled In May          (Middle East Economic Survey, Mon 07 May)

3b/  Interesting headlines from MEES newsletter  (Middle East Economic Survey, Mon 07 May)

4a/  Coalition to invest billions to save energy       (International Herald Tribune, Wed 16 may)

4b/  Britain to Set Out Radical Energy, Planning Revamp  (Planet Ark, Fri 18 May)

5/   UES Wants More Gas          (FC Novosti, Tue 15 May)

6a/  Hamish McRae: Let us hope a 7 per cent interest rate is a bridge too far          (The Independent, Thu 17 May)

6b/  Bernanke joins critics of ‘high-risk’ bank lending         (The Times, Fri 18 May)

7a/  350th North Sea field approved [UK]  (Sustainable Energy Policy Network (SEPN) newsletter, April 2007)

7b/  Energy statistics     (Sustainable Energy Policy Network (SEPN) newsletter, April 2007)

8/   Peak Oil and the British National Party          (BNP, May 2007)

 

 

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1a/        Central Asia: Russian, Turkmen, Kazakh Leaders Agree On Caspian Pipeline            (RadioFreeEurope/RadioLiberty, Sat 12 May)

 

http://www.rferl.org/featuresarticle/2007/05/09BF853D-A94B-48BE-A3DD-937138D0B299.html

 

Article:    The presidents of Russia, Turkmenistan, and Kazakhstan have agreed to build a natural gas pipeline along the Caspian sea coast.

 

The landmark deak was agreed today during three-way talks between Russian President Vladimir Putin, Turkmen President Gurbanguly Berdymukhammedov, and Kazakh President Nursultan Nazarbaev in the coastal Turkmen city of Turkmenbashi.

 

The pipeline would carry natural gas from Turkmenistan to Europe via Kazakhstan and Russia.

 

... Still, Berdymukhammedov said plans for a rival U.S.-backed trans-Caspian pipeline that bypasses Russia had "not been completely dropped."

 

However, Russian Energy Minister Viktor Khristenko said he believed there was now little chance of it going ahead. He said that the "technological, legal, and ecological risks are so big that it will be impossible to find an investor unless it is a political investor who does not care how much gas there is to pump through."

 

Julian Lee, a senior analyst at London's Center for Global Energy Studies, says that one key issue with the West's desired trans-Caspian pipeline is that neither Russia nor Iran, which have veto rights as countries that border the Caspian, are likely to agree on the project.

 

"It seems at the moment, at least, very clear that both Russia and Iran are likely to veto any plans to build either gas or oil pipelines underneath the Caspian Sea. So I think it will be perhaps very difficult to see either gas or oil moving from Central Asia by pipeline toward Europe without bypassing Russia," Lee says.

 

... Berdymukhammedov said Turkmenistan still had a long-term interest in diversifying pipelines and listed possible projects with Iran, China, Afghanistan, India, and the trans-Caspian.

 

... "Russia has become increasingly concerned in recent years not perhaps so much about the possibility of Central Asian gas going to Europe by routes that don't go through Russia, but by Central Asian gas going to China, which can very easily be done without transiting Russian territory," Lee says.

 

"And I think what we're seeing at the moment is a Russian reaction to the possibility of very substantial gas exports from Kazakhstan, Turkmenistan, and elsewhere, going eastwards into China. And it's that, I believe, that Russia is really trying to nip in the bud."

 

Turkmenistan has not published independent audits of its gas reserves. But when he was asked if Ashgabat has enough gas for new pipelines to Iran, Afghanistan, or China, Berdymukhammedov said: "Do not worry, there is enough."

 

Khristenko told reporters that in the first stage, the new pipeline will deliver 10 billion cubic meters of gas per year by 2009-2010.

 

 

1b/        Russia: Energy Summit Gives Putin New Trump Card       (RadioFreeEurope/RadioLiberty, Wed 16 May)

 

http://www.rferl.org/featuresarticle/2007/05/2c66d7b7-9c7e-465e-a263-11a3fbab043a.html

 

Comment:  Similar to article above, but more analytical in nature. You have to wonder where the gas for the Nabucco pipeline is going to come from. 

 

Article:    … If Turkmenistan's exclusive commitment to the Russian gas pipeline project remains under question, so may be Kazakhstan's.

 

Russia's "Kommersant" daily reported on May 11 that, despite Kazakh President Nazarbaev's announcement at a meeting with Putin in Astana the day before, the two leaders failed to reach an agreement on the capacity of a Russian-operated pipeline that carries Kazakh oil produced by a U.S.-led international consortium to the Black Sea and on to Western markets.

 

Kazakhstan has long been threatening to use alternative U.S.-sponsored export routes, including the Baku-Tbilisi-Ceyhan pipeline, unless Russia agrees to boost the annual capacity of the Caspian Pipeline Consortium to 67 million tons from a current 30 million tons.

 

Some observers warn that Russia's continuous objections to the Kazakh demands, officially for profitability reasons, are fraught with risks, especially in light of a recent announcement that Astana and Ashgabat will coordinate their energy-transportation policies.

 

"Central Asia has two options today -- either make enormous profits by selling its energy resources independently from Russia, with the help of Western investments, but with high commercial risks; or opt for sound commercial guarantees and Russia's firm support but significantly lower selling prices," analyst Stanovaya wrote.

 

However, she noted that in the absence of a consensual Western energy policy, both domestic political considerations and Russia's "increasing activity on the geopolitical arena" may lead Central Asian leaders to choose the second alternative.

 

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2/         Meeting the food security challenge through organic agriculture           (FAO Newsroom, Thu 03 May)

 

http://www.fao.org/newsroom/en/news/2007/1000550/index.html

 

Comment:    No mention of the word oil, but if ultimately there is going to be very little available, then there will be no choice except for organic agriculture.

 

Article:    “Organic agriculture is no longer a phenomenon in developed countries only, as it is commercially practiced in 120 countries, representing 31 million hectares and a market of US$40 billion in 2006,” FAO underlines in a paper, Organic Agriculture and Food Security, presented here at an International Conference on Organic Agriculture and Food Security (3-5 May 2007).

 

The paper identifies the strengths and weaknesses of organic agriculture with regards to its contribution to food security, analyzes attributes of organic supply chains against the Right to Food framework and proposes policy and research actions for improving the performance of organic agriculture at the national, international and institutional levels.

 

“The strongest feature of organic agriculture is its reliance on fossil-fuel independent and locally-available production assets; working with natural processes increases cost-effectiveness and resilience of agro-ecosystems to climatic stress,” the paper says.

 

“By managing biodiversity in time (rotations) and space (mixed cropping), organic farmers use their labour and environmental services to intensify production in a sustainable way. Organic agriculture also breaks the vicious circle of indebtedness for agricultural inputs which causes an alarming rate of farmers’ suicides.”

 

The paper recognizes that “most certified organic food production in developing countries goes to export” and adds that “when certified cash crops are linked with agro-ecological improvements and accrued income for poor farmers, this leads to improved food self-reliance and revitalization of small holder agriculture.” ...

 

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3a/        Iran Gasoline Price Hikes, Rationing System Scheduled In May  (Middle East Economic Survey, Mon 07 May)

 

No link, from Newsletter.

 

Article:    Iran is to raise the price of gasoline and start its new rationing system as early as mid-May, MEES learns. Following approval of the scheme by parliament and then the Guardians Council in March (MEES, 26 March), the measures will see prices for rationed gasoline rise by 25% from IR800/liter (9 US cents/liter) to IR1,000/liter (12c/liter). Private car owners will be allocated a ration of 90 liters per month at this price, with any additional gasoline requirement paid for at international prices plus the cost of distribution, which is expected to be IR 5,000/liter ($0.60/liter). Taxis will be allocated 300 liters a month. MEES understands that under the system, rationed gasoline consumption is expected to be around 43mn liters/day (within Iran's domestic refining capacity of 46mn liters/day - MEES, 30 April), with up to 30mn liters/day supplied at the international price. The moves are expected to reduce the smuggling of Iranian gasoline abroad; but officials involved with the scheme expect potential teething problems relating to the smart card technology which has been deployed at service stations.

 

 

3b/        Interesting headlines from MEES newsletter (Middle East Economic Survey, Mon 07 May)

 

No link, from Newsletter. Each headline, in the newsletter, links to the full story, but the headline gives the gist of the story.

 

Energy Fundamentals - Barclays Predicts Oil Market Will Tighten Further In 2H07 [Second Half, 2007]

Caspian - Kazakhstan And Japan Sign 24 Uranium, Nuclear Energy Agreements

Iran - Iran's Annual Oil Production Reaches 4.05Mn B/D, Says Vaziri-Hamaneh

Kuwait - Kuwaitis Await Summer Power Cuts

 

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4a/        Coalition to invest billions to save energy      (International Herald Tribune, Wed 16 may)

 

http://www.iht.com/articles/2007/05/16/news/climate.php

 

Article:    A coalition of 13 of the world's biggest cities, five banks, one former American president and companies and groups that modernize aging buildings pledged to invest billions of dollars on Wednesday to cut urban energy use and releases of greenhouse gases linked to global warming.

 

Under a plan developed, participating banks would provide up to $1 billion each in loans that cities or private landlords would use to upgrade energy-hungry heating, cooling and lighting systems in older buildings.

 

The loans and interest would be paid back with savings accrued through reduced energy costs, organizers of the initiative said at a news conference in New York. Typically, such upgrades can cut energy use and costs 20 to 50 percent, they said.

 

Making more efficient use of energy is considered by many scientists to be the best starting point for addressing global warming, particularly because there is a potential immediate financial payoff along with the long-term environmental benefit.

 

Energy use in buildings accounts for about a third of global releases of heat-trapping greenhouse gases. In densely populated older cities, like New York and London, buildings are the dominant source of greenhouse gases...

 

 

4b/        Britain to Set Out Radical Energy, Planning Revamp          (Planet Ark, Fri 18 May)

 

http://www.planetark.com/dailynewsstory.cfm/newsid/41978/story.htm

 

Comment:    Alastair Darling, the UK Trade and Industry [Energy] Minister, wants to speed up the development of roads, airports and nuclear power stations.

 

Article:    Britain will next week set out plans for a major policy revamp to secure energy supplies and fight global warming, calling for new nuclear power plants and also giving business and individuals vital roles.

 

The government will vow to rip up red tape delaying major infrastructure projects like roads, airports and power stations and promote a mix of low carbon technologies and energy sources.

 

"I am determined that we should not become over-dependent on more and more imported oil and gas," Trade and Industry Minister Alastair Darling has said.

 

"I believe that nuclear has to be part of the energy mix along with more renewables, local energy and carbon capture from fossil fuels." ...

 

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5/         UES Wants More Gas        (FC Novosti, Tue 15 May)

 

http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192

 

Comment:    There seems to be an internal struggle in Russia between the monopoly UES which provides electricity, and wants more gas for its power stations, and Gazprom which is not keen to give them more than they are allocated already. The gas-fired power station which was completed outside St. Petersburg a year ago or so is still is not working due to lack of gas, apparently.

 

Article:    RAO UES, Russia’s state owned electricity giant, has been facing a growing shortage of gas needed for its construction projects. It had to suspend the construction of the second $220mn generator for the Kaliningrad thermal power plant TPP2 due to fuel deficiency.

 

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6a/        Hamish McRae: Let us hope a 7 per cent interest rate is a bridge too far          (The Independent, Thu 17 May)

 

http://news.independent.co.uk/business/comment/article2553967.ece

 

Comment:    Hamish McRae ponders if UK interest rates might reach 7%. In his book ‘The Oil Factor’, Stephen Leeb discusses at length why the central banks (in particular of the USA) should not raise interest rates too high - in case it triggers a property crash. The problem is not so different in the UK.

 

Article:    Some day we won't have to keep on about rising inflation and interest rates; but not for a while yet. There have been three major chunks of new information about the UK economy in the past couple of days: the inflation figures themselves; the labour market statistics; and the Bank of England's Inflation Report. Taken together there is little there that undermines the increasing concerns that interest rates may yet reach 6 per cent this cycle.

 

... Indeed I have just seen the first economist's paper that suggests that the peak may be 7 per cent in the next 18 months to two years. It comes from Chris Watling at Longview Economics and his argument is that inflation in the UK has become more pervasive than at any time at least since the Bank got its independence.

 

... Last autumn I warned of the possibility of 6 per cent rates. That fear is now commonplace. I am beginning to wonder about 7 per cent. Let's hope that really is a bridge too far.

 

 

6b/        Bernanke joins critics of ‘high-risk’ bank lending     (The Times, Fri 18 May)

 

http://business.timesonline.co.uk/tol/business/economics/article1805741.ece

 

Article:    Ben Bernanke, the Chairman of the US Federal Reserve, has become the most prominent critic of the banking industry’s appetite for financing highly leveraged private equity deals.

 

Mr Bernanke gave warning yesterday that piling so much debt into some deals posed “significant risks”, particularly if the US or other big economies ran into trouble if hefty loan repayments became difficult to meet.

 

“I urge banks to closely evaluate the risk that they’re taking, not only in the context of a highly liquid, benign financial environment, but in one that might conceivably be less liquid and benign,” Mr Bernanke told an audience in Chicago. “There are some significant risks associated with the financing of private equity. We are looking at that. We do think it’s very important for banks to be quite aware of the risks associated with the financing of private equity.”

 

Mr Bernanke joins a chorus of concern that private equity firms are overpaying for businesses because they are sitting on an unprecedented mountain of investment capital. The increasing competition among buyout firms for deals is pushing up the prices of the companies they buy, and the banks are happily making bigger and bigger high-margin loans to help to finance the deals.

 

In the UK, Anthony Bolton, the influential Fidelity stock-picker, gave warning this week that banks were heading for disaster by recklessly lending huge sums to private equity firms. Mr Bolton said: “I think the phrase is ‘covenant lite’, but in many cases it appears to mean no covenant at all.”

 

Such loans enable borrowers to bypass many of the safeguards that protect against the possibility of default.

 

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If you would like to receive the SEPN newsletter, send an e-mail to Ian.Montague@dti.gsi.gov.uk with “Please add me to the SEPN newsletter mailing list” in the subject field.

 

 

7a/        350th North Sea field approved [UK]    (Sustainable Energy Policy Network (SEPN) newsletter, April 2007)

 

No link, newsletter

 

Comment:    From the UK Dept of Trade and Industry Sustainable Energy Policy Network newsletter. 340 billion cubic feet is almost 10 B cubic metres. The UK consumes this amount on average in 1-2 months, let’s say 2 weeks per field. This is hardly meeting the UK’s oil and gas needs. UK natural gas reserves – see the graph Gas Reserves V Time. All gone by 2020.

 

Article:    The continued central role of the North Sea in meeting the UK's oil and gas needs was underlined on 29 April as Trade and Industry Secretary Alistair Darling announced approval for the 350th offshore field in its 40 year history.

 

He confirmed three fields - Caravel, Shamrock and Kelvin – which will be operated by Shell (in partnership with ExxonMobil) and Conoco Phillips.

 

While underlining the commitment to the industry, he also set out the opportunity for the North Sea to lead the world in carbon capture and storage.

 

In total the three fields should add an extra 340 billion cubic feet of gas to overall UK reserves.

 

 

7b/        Energy statistics    (Sustainable Energy Policy Network (SEPN) newsletter, April 2007)

 

No link, newsletter

 

Comment:    ‘Energy Trends’ can be accessed from the ‘UK Oil and Gas’ page on the ODAC we bsite.

 

Article:    Energy Trends and Quarterly Energy Prices publications were published on 29 March by the Department of Trade and Industry. Energy Trends covers statistics on energy production and consumption, in total and by fuel, and provides an analysis of the year on year changes.

 

The March edition of Energy Trends also includes articles on: "Carbon dioxide emissions and energy consumption in the UK", "UK oil industry over the past 100 years", "UKCS capital expenditure survey 2006", and a number of articles concerning energy consumption in the regions. Quarterly Energy Prices covers prices to domestic and industrial consumers, prices of oil products and comparisons of international fuel prices.   

 

DTI website: Energy Trends

 

DTI website: Quarterly Energy Prices

 

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8/         Peak Oil and the British National Party  (BNP, May 2007)

 

http://www.bnp.org.uk/

 

Comment:    The BNP (British National Party, far right political group) seem to have been triggered in to another bout of Peak Oil articles by the recent Peak Oil article in the Daily Mail. As of today, there are three Peak Oil articles:

 

Ahead of the pack on Peak Oil crisis

Peak Oil Week Day 2 - Eating up the oil reserves

Peak Oil Series Day 3 - A looming economic depression?

 

Peak Oil Day 4 - Building an electricity based economy

http://www.bnp.org.uk/reg_showarticle.php?contentID=2573

 

In terms of UK political parties, the BNP certainly are way ahead of the pack on the Peak Oil crisis. It is bizarre that the main political parties ignore the problem, while the BNP recognise the implications very clearly:

 

 http://www.bnp.org.uk/peakoil/index.htm

 

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