Tagged: Oil

The Economist | Israel’s and Palestine’s oil and gas: Too optimistic?

ARE governments of the Levant fooling their people with false promises of an offshore gas bonanza? From the proceeds, Lebanon hopes to fund a bullet train that will end Beirut’s traffic snarl-ups. Across the water, the Cypriot government has equally grandiose plans. By 2020 a vast new complex in Vasilikos, on Cyprus’s southern coast, is supposed to start shipping liquefied natural gas (LNG) to Europe and even Asia, salvaging the country’s finances. Gas reserves, say Cypriot optimists, amount to 96 trillion cubic feet.

Yet most oil analysts say this is all wildly over the top. Even Israel, whose development of offshore gas is most advanced, is unlikely, they reckon, to start exporting large amounts by 2020, as it hopes.

The sceptics say that the main brake is a lack of regional co-operation rather than a shortage of oil and gas. The Americans’ official Geological Survey estimates that from Gaza’s coast to southern Turkey the eastern Mediterranean holds 122 trillion cubic feet of gas, comparable to the reserves of Iraq. But Lebanon’s caretaker government lacks the authority to pass the legislation needed to persuade foreign oil companies to start drilling; a heralded auction is again likely to be delayed. America’s effort to mediate over a disputed maritime boundary between Lebanon and Israel is stalling progress. The civil war in Syria is scaring away big oil companies. And drilling off the Lebanese coast has yet to begin. (…)

Read the rest of the piece here.

The Economist | Libya’s oil: Gurgle and splutter

After an initial recovery in output, oil prospects are dipping

 

BOTH sides in Libya’s civil war knew they would need to sell oil again fast once the conflict was over. So for the most part they took care not to ruin the energy infrastructure. For example, while fierce fighting was devastating the western town of Zawiya, the large oil refinery to its north lay idle but untouched by war, its workers still able to have lunch in the canteen.

By mid-2012, less than a year after Muammar Qaddafi’s demise, Libya’s oil production, almost entirely switched off during half a year of ferocious fighting, had regained its pre-war level of about 1.5m barrels a day (b/d)—years earlier than expected. Proudly, Libya’s new leaders said output could soon rise to 2m b/d or more. The oil minister, Abdelbari Arusi, promised a new hydrocarbons law and an auction of leases for unexplored territory to foreign oil companies. Libya’s oil reserves, at 47 billion barrels, already Africa’s biggest, could—it was said—increase by another 10 billion. (…)

Read the rest of the piece here.

The Economist | Algeria’s oil and gas: Not so jolly

Recent events and wariness of foreign investors dent the oil-and-gas economy

TIGHT military control and generous spending on social services, thanks to the high price of oil and gas that Algeria has in abundance, have so far prevented President Abdelaziz Bouteflika and his regime from being shaken by the upheavals in other Arab countries. In 2011 oil exports earned Algeria $55 billion. Foreign-currency reserves are strong. GDP is expected to rise by more than 3% this year, says the IMF. The official unemployment rate of around 10% is lower than elsewhere in the region.

But all is not well. Of the world’s big oil-producing regions only the North Sea’s output has dipped more steeply in the past five years. And many of Algeria’s usual markets are shrinking. North America, where refineries once paid a premium for Algeria’s high-quality crude, takes the largest dollop of the country’s 1.2m barrels a day. Now they are tapping cheaper supplies from North Dakota. Moreover, Algeria has become too reliant on high prices. To break even, its budget banks on oil at around $120 a barrel, above typical forecasts for this year; today’s price is around $116 for Brent. (…)

Read the rest of the piece here.

NB, I was not in Algiers, despite the dateline above. This was an editing error.

The Economist | Iraq, Kurds, Turks and oil: A tortuous triangle

The governments of Turkey, Iraq and Iraqi Kurdistan play a dangerous game

Dec 22nd 2012 | ERBIL |From the print edition

SNAKING their way from Kirkuk, a city 240 kilometres (150 miles) north of Baghdad, through Kurdistan and across Turkey’s eastern region of Anatolia to the Mediterranean are pipes that once carried 1.6m barrels a day (b/d) of Iraqi oil to the global market and yielded fat transit fees to Turkey along the way. The infrastructure underpinned the two countries’ mutual dependence. But nowadays the balance of power has shifted. A third party, the Iraqi Kurds, has changed it. It is unclear who will emerge on top. But Iraq’s central government in Baghdad is on the defensive.

Wars, saboteurs and, since the 1990s, economic sanctions have left the Iraqi sections of the pipeline system in a mess. Barely a fraction of its capacity is used. One of the two parallel lines stands empty and the source that once fed them, the giant Kirkuk oilfield, is dilapidated. The oil ministry in Baghdad has vague ideas about revamping the pipeline, perhaps to carry crude extracted near Basra, in the far south, though this would need an expensive new pipeline to link both ends of the country. (…)

Read the rest of the piece here.

 

The Economist | Iraq’s oil: The Kurdish opening

Iraqi Kurds and Western oil firms have outfoxed the government in Baghdad

Nov 3rd 2012 | from the print edition

IRAQ is blessed with abundant oil that is cheap to extract and close to newly built export terminals. Production has hit a three-decade high and continues to rise steadily. By 2035, predicts the International Energy Agency (IEA), an advocate for rich-world consumers, Iraqi output could more than double, to 8.3m barrels per day (b/d).

But Western oil firms are increasingly reluctant to play a part in this boom. ExxonMobil appears keen to sell its stake in West Qurna, one of the giant fields in southern Iraq that will provide much of the production growth. Royal Dutch Shell and BP are both still working in the south, but unhappily so. Suffocating bureaucracy and onerous contract terms make life difficult. Heavier-than-expected costs and delays to infrastructure undercut profits. (…)
Read the rest of my piece here.

 

The Economist | Saudi Oil: Down (just a bit) with the price

The Saudis are worried that high prices are hurting the world’s economy
Oct 6th 2012 | DAMMAM | from the print edition

CRANES loom over the landscape in Dammam, a sprawling port city on Saudi Arabia’s Gulf coast. Shiny shopping malls are rising. Flashy cars stream across the causeway towards Bahrain and its nightlife. Young Saudis are making the most of their kingdom’s latest oil boom.

In a compound up the road in Dhahran sits Saudi Aramco, the world’s largest exporter of crude oil and the source of the country’s flourishing finances. Oil prices have averaged about $110 a barrel this year and for months Aramco has been pumping around 10m barrels a day (b/d), one of its highest rates. The Energy Information Administration, the American energy department’s statistical arm, says Saudi Arabia’s net oil income in 2011 was $311 billion. Prices were lower then; this year the country will earn even more. (…)

Read the rest of my piece here.

Writing projects

I’m doing lots on Iran (natch), quite a bit on Iraq and turning back to Libya again.

On Iran, I’d like to get some nuts and bolts — sorely missing in much coverage — about actual shipments and cargoes now. I’ve got good information about how Iran’s discounts system is working. In short, it’s keeping Asian buyers sweet at a cost of about $1.20 per barrel per month. The method is a little more complex than that… But I’ve also got contradictory information about the White House’s sanctions strategy. I’m reliably told it wants a 25% drop in volumes, which is hardly earth shattering. (That said, Iran’s at the table to negotiate, or may be soon, so it might be working.)

On Iraq, the piece is done. But all information on Iraq is gratefully received.

On Libya, well, I’d really like to get there again. Failing that, I’m working on a wider story or two. One is an attempt to navigate the politics — and to explain why the country’s oil industry seems to be coping fine while mini political implosions happen all around it. Also: where is the oil money going?

Please get in touch.