Why Argentinian Prosecutor Died

 

    "If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter." ~ George Washington


Argentina: Prosecutor Investigating 1994 Hizbollah Bombing Found Dead Days After Exposing Deals with Iran
Oil and arms deals. via Argentine Prosecutor Investigating Jewish Center Bombing Found Dead
Alberto Nisman, an Argentine prosecutor investigating the 1994 bombing of a Jewish center in Buenos Aires, was found dead from a gunshot wound in his apartment on Monday, days after he accused Argentine President Cristina Fernandez of secretly negotiating with Iran to avoid punishments for those behind the attack.
The bombing of the Argentine-Israeli Mutual Association (AMIA) in Buenos Aires killed 85 people and injured 300. Iran and Hezbollah have long been suspected of carrying out the attack. In 2013, Nisman, who had been investigating the bombing after Iran and Argentina reached a widely criticized deal to establish a joint “truth commission” to investigate the attack, released an indictment blaming Iran and Hezbollah for the bombing.
Last week, Nisman asked an Argentine judge to call in Fernandez as well as Argentine Foreign Minister Hector Timerman for questioning. Nisman told reporters that he believes the impunity of the Iranians involved in the attack was ordered by Timerman in exchange for securing closer ties with Iran for oil and weapons deals.
“The president and her foreign minister took the criminal decision to fabricate Iran’s innocence to sate Argentina’s commercial, political, and geopolitical interests,” Nisman had said, The Associated Press reported.
As we posted on the intrepid Nisman in 2013, Argentine Indictment Accuses Iran of Terror Plots, Cells in Latin America:

An Annotated History Of Oil Prices Since 1861

Oil prices have crashed since the summer.

But oil price volatility is not new. Indeed, the price of WTI crude surged by 5% today alone.
In a new note to clients, Goldman Sachs analysts offer this cool annotated chart of the history of crude oil prices.

Goldman Sachs

America To Arabs - "You Can Burn In Hell."

The US is well on its way to energy independence.

The share of oil consumed by Americans that was produced in the US has sharply increased over the last 10 years, according to the Department of Energy.

Back in 2005, less than 70% of oil consumed by Americans was produced by US oil. Thanks to the developments in hydraulic fracturing technology, that number’s up to 86%.

“The US oil production increased last week to 8.97 million barrels per day (bpd), which is the highest weekly level amount of domestic crude oil production in the 32-year history of the Energy Information Administration’s “Weakly Petroleum Status Reports” starting in January of 1983,” writes Mark J. Perry of the American Enterprise Institute.

And within a few weeks, the US is expected to beat that number, and produce over a whopping 9 million barrels per day. (By comparison, Saudi Arabia produced roughly 9.8 million barrels per day in the previous year.)

Net oil imports have been tumbling. Back in 2005, the number was above 60%; today net oil imports are below 28%.

“The Great American Shale Boom continues to set new production records and reach new milestones on a regular basis and has turned out to be the most dynamic, successful, and powerful single sector of the US economy, thanks to the ‘American-made’ drilling technologies pioneered and developed by America’s ‘petropreneurs,’” writes Perry.

Saudis Deploy the Oil Price Weapon Against Syria, Iran, Russia, and the US

Asian stock markets continued to fall today, propelled at least in part by the adverse reaction to the Saudi announcement yesterday that they would let oil prices fall to $80 a barrel. And further reports indicate that the Saudis intend to keep oil prices low enough to force a realignment of prices not just among various grades of crude, but also for intermediate and long-term substitutes.

It is critical to remember that the Saudis have no compunction about imposing costs on other nations to maximize the value of their oil resource long term and hence the power they derive from it. The 1970s oil shock produced a nasty recession in the US and most other advanced economies and gave a further impetus to inflation, which was already hard to manage and dampened growth by discouraging investment. 

The current alignment of factors gives the Saudis the opportunity to make life miserable for a long list of parties they would like to discipline, including the US. 

The sharp rise in the dollar means that lowering the price of oil in dollar terms is unlikely to leave the desert kingdom worse off in local currency terms. But it undermines US energy development, both fracking and development in the Bakken, as well as more development by the majors, who were regularly criticized by analysts for how much they were spending on exploration when the math didn’t pencil out well at over $100 a barrel. Countries whose oil is output is mainly heavy, sour crude, like Iran and Venezuela, find it hard to sell their oil when prices are below $100 a barrel (or at least when the dollar was weaker, but the $80 price point, even with a strong dollar, may be low enough to cause discomfort). 

In other words, this is a classic case of predatory pricing: set your price low enough long enough to do real damage to competitors, and reduce their market share, not just immediately, but in the middle to long term. 

Now admittedly some pet targets may not be hurt as badly as hoped. Russia will suffer more of an opportunity loss than an actual cost from the price reduction, since the ruble has fallen significantly against the dollar. The Saudis may hope to partially displace Russia as a supplier of oil to Europe (now roughly 1/3 of the total) but refineries would need to be retooled to refine the Saudi’s light crude, so it isn’t clear whether even what amounts to bargain prices will offset this cost (and readers point out that Russian crude may also produced a better mix of distillates for European use, since they are much heavier users of diesel fuel than the US).

But aside from the not-inconsiderable economic impact, the surprise Saudi step looks to be an even bigger geopolitical winner. The US and Riyadh have been at odds for over a year; the Saudis were particularly unhappy over the US failure to try to topple Assad last summer (you may recall the intensity of the Administration warmongering versus the dubious US interest; even Congress showed an unexpected amount of backbone and made its lack of support for Syrian adventurism clear). The Saudis have also long been less than happy with the US refusal to attack Iran (which is a rare case of the US acting as a responsible hegemon and curbing a putative ally with a bad case of blood lust). That unhappiness has ben compounded by the US now effectively helping the Assad regime and working in as distanced a manner as possible with Iran in targeting ISIS.

These parts of Marcy Wheeler’s analysis are spot on:

Cutting prices will make it far harder for Iraq’s Shia led government to invest in the fight against ISIL. So long as Western sanctions continue, it will destabilize Iran significantly, not only making it a lot harder for Iran to help Iraq and Syria, but also undermining the government that has chosen to deal with the US. The cuts will also destabilize Iran’s allies in Venezuela and Ecuador. Oligarchic forces have been trying to foment a coup in the former country for some time and this may well help to do so…The Saudis have been trying to undercut Russia for some time and — to the extent the ruble exchange with the dollar doesn’t shelter Russia from these changes [Update: though see Mark Adomanis on how this is hurting Russian consumers] — this price cut will hurt Russia too.

Ultimately, though, I suspect the US is just as much the target of this move as Iran and Russia are. Since the US refused to take out Assad last year and inched forward with its Iran deal, the Saudis have been worried about having Shia Iran and Iraq take over its role as the swing producer in the world, mirroring what happened in 1976 when the US replaced Iran’s Shah with the Saudis. By destabilizing the government in negotiations with the US, the price cut will make it a lot harder to achieve such a deal.

Just as importantly, the US is now a petro-state. And this price cut will make fracking (and deepwater drilling) unprofitable. We’ve been fracking largely to give ourselves some breathing room from the Saudis; cutting the price will make it far harder for us to sustain that effort (and will make some renewables uncompetitive).

To me, then, this move looks like part of an effort to force the outcome the Saudis have been chasing for a decade and even more aggressively since the Arab Spring: to paralyze Shia governments just as the chaos of ISIL threatens to remap the Middle East.
The Saudis may well claim to be supporting our fight against ISIL, but the long-term commitment to dropping oil prices, looks more like an effort to undercut it.

And as Pam Martens and Russ Martens point out in a post today, Oil Price War Throws the Fed into Crisis Mode, the Saudi move has the effect of increasing deflationary forces, which is a nightmare for the Fed and other central banks. So just as the Saudis used their oil weapon to amp up inflation in the 1970s, so they again they look to be willing to provide more firepower to another war central bankers are losing. From their article:

It was only a matter of time until the evidence became irrefutable that the only way out of a global deflation on the order of the Great Depression was to address the fact that 571 U.S. billionaires simply don’t have enough hours in the day to spend adequate money to buy enough goods that would require the restocking of shelves, create new factory orders and thereby ramp up job hiring to keep a nation of 317 million people afloat.
A nation where the top 10 percent reaps more than 50 percent of the income is doomed to end up in the quicksand of deflation, dragging down the rich along with everyone else….
A key component that has allowed both the Fed and Congress to keep from taking strong measures to address a looming deflation has been the price of crude oil. Because oil impacts everything from transportation costs that inflate the price of food and other products to the cost of an airline ticket or heating a home, the high price of this commodity has, to a degree, masked the growing deflation threat.
Now the mask has been removed. Oil prices are in freefall and an oil price war has broken out among OPEC members, raising the specter of 1986 when oil prices fell by 50 percent in just an eight month span. A serious global slowdown has effectively turned the oil cartel, OPEC, into a beggar thy neighbor band of go-it-alone dealmakers who hope to sign individual contracts with customers and grab market share before prices decline further…
In other words, a sudden, sharp drop in inflation expectations caused by an oil price war raging around the globe was not present in the Fed’s crystal ball just a month ago. But it should have been: other commodity prices have been sending up red flags for some time now…
The market has delivered epiphanies to the Fed on multiple fronts – some of them blazing with sirens – but the Fed seems to have had its head in the sand just as securely as it did heading into the 2008 crisis.

Yves again. As much as central bankers detest inflation, they fear deflation even more, particularly when debt loads are high. I differ with the Martens as to the Saudi cuts being driven by desperation; oil market analysts expected them to hold the line at $90 a barrel. But whether this move is informed opportunism or aggressively defensive is moot. It throws a massive wrench into the global geopolitical and economic equations, both of which were already looking plenty rocky. 

As much as I am no fan of Riyadh, it’s hard not to admire their strategy. The Saudis look to have executed a masterstroke. They come out winners on many fronts that are critical to them and appear to at least hold their ground on others. And I have a sneaking suspicion that the neocons, who have US energy independence as one of their core assumptions, were caught flat footed by this audacious move.

Why The China-Vietnam Conflict

China’s adventurism In The South China Sea

Reuters
Chinese oil rig Haiyang Shi You 981 is seen surrounded by China Coast Guard ships in the South China Sea, about 210 km (130 miles) off shore of Vietnam May 14, 2014

Anti-Chinese rioting in Vietnam, the result of protests that were tolerated and even encouraged by the country’s authoritarian government, has left dozens dead this week. The uproar began when China’s state oil company moved one of its rigs to an oil block inside of Vietnam’s “exclusive economic zone” in the South China Sea; within days, suspected Chinese-owned businesses were being torched and Chinese citizens were fleeing to neighboring countries for safety.

Was the escalation a calculated move by an increasingly-aggressive Beijing? And are the neighboring countries, whose relationship has been marked by over a millennium of tension — and who have fought multiple armed engagements with one another over the past 40 years — hurtling towards an even more dangerous confrontation? A quick rundown of why the situation might be a little different from usual flare-ups over the ever-disputed South China Sea.

This an unprecedented Chinese move. As Caryl Thayer writes at The Diplomat, “This incident marks the first time China has placed one of its oil rigs in the EEZ of another state without prior permission.” As Thayer notes, the Chinese have claimed that the rig is in “territorial Chinese waters,” but it seems as if they understood the potentially-explosive nature of what they were doing: “The oil rig was accompanied by as many as 80 ships, including seven People’s Liberation Army Navy warships.”
 

Both countries have been building towards something like this. In 2010, Vietnam purchased six diesel submarines from Russia in anticipation of future confrontations with China. According to the same Reuters report, China was also pressuring businesses not to invest in Vietnamese exploration of “disputed” oil and gas blocks. In March of 2012, Vietnam officially protested the Chinese state oil company’s decision to open up bidding on 19 blocks in the South China Sea. As this graphic indicates, China claims much of the South China Sea for itself.

Still, China’s specific motives here are sort of vague. Why escalate tensions with Vietnam now, just days after a U.S. presidential visit to the region, and after recent improvements in Chinese-Vietnamese relations? Analyst Ely Ratner sees the situation as evidence that “domestic bureaucratic and political imperatives are overcoming the logic of strategy in Beijing” — in other words, Chinese leaders decided to move the oil rig without thinking through the potential strategic consequences. At the same time, Ratner writes that China has been less reactive lately in the South China Sea, and more willing to assert what it believes to be its territorial rights without waiting for its neighbors to provoke it. 

So now what? Analysts say that this is the worst crisis in Chinese-Vietnamese relations since a 1979 border war that killed thousands on both sides. Even if this situation doesn’t reach a violent tipping point, China’s state oil company asserts that over a third of the country’s claimed oil and gas wealth is under the South China Sea. And if China can use this incident to establish a foothold in disputed waters, it’s could be the first in a series of escalations and controversies in a resource-rich, disputed, and increasingly-militarized body of water.

The Real Reason As Why China Is Fighting Her Neighbors

China Sends Oil Rig To Disputed Waters


Over the weekend of May 3 and 4, China sent an oil rig into disputed waters of the South China Sea to begin oil exploration. The rig is near the Paracel Islands, inside the 200-mile exclusive economic zone of Vietnam, which angrily protested the decision. The Vietnamese government insists that the waters, as well as the oil and gas reserves held beneath, belong to Vietnam.

Where boundaries are drawn in the South China Sea has long been a source of regional tension, but China has escalated the conflict by moving to drill the first well inside disputed territory. China said the oil rig would be operating from now until August 15.

Some observers see the move as a careful calculation by Beijing, which believes Vietnam won’t be willing to risk war over Chinese drilling. “It's going to be one more of these small, incremental steps that individually won't lead to conflict, but collectively, over time, gradually will change the status quo,” said Admiral Mike McDevitt U.S. Navy (Ret.), according to Foreign Policy.

For its part, Vietnam is demanding that China cease drilling operations. “All foreign activities in Vietnam's seas without Vietnam's permission are illegal and invalid,” Vietnam’s Foreign Ministry said in a statement. “Vietnam resolutely protests them.”

The move may also be a response to U.S. President Barack Obama’s recent trip to Southeast Asia, which included a deal with the Philippines to allow for a greater American troop presence in the region. The U.S. and the Philippines kicked off a two-week long military exercise on May 5.

The U.S. Energy Information Administration estimates that the South China Sea holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas, most of which is located in disputed territory. China believes the oil and gas reserves could be much larger.

Russia Practicing 'Geo-economic Warfare'

The last few days have brought the worst violence yet since the ongoing struggle between the governments of Ukraine, Russia and their respective civilian supporters began, and power players on both sides are using the conflict to their advantage.

Russians agitate, oil rises

Russian President Vladimir Putin's spokesman, Dmitri Peskov, recently told reporters that thousands of people in Ukraine are calling for Russia's help, and claimed that human rights violations are becoming more widespread in Ukraine.

That rhetoric is similar to the language used by Russia before its invasion and subsequent annexation of Crimea, but sources who spoke with CNBC said they don't expect an outright Russian invasion. What's more likely, they said, is continued agitation and violence.

The sources spoke on condition of anonymity because of fears about their personal safety and/or concern about their financial interests.
Oil and gas are the lifeblood of the Russian economy, and in the midst of geopolitical unrest, oil prices usually rise.

"Higher oil and gas prices are always good for Russia, but Putin thinks far more strategically than that," said Ian Brzezinski, a senior fellow at the Atlantic Council who focuses on trans-Atlantic security. "I would also note that he is not just benefiting from the unrest in Ukraine, he is driving it. This is because he wants to destabilize Ukraine so that he can seize more of it, if not all of it."

Putin seeks to maintain some level of control over Ukraine as a crucial gas transit hub for Russian natural gas. Sources close to the Russian government said that Putin currently does not have plans to invade, but one of the sources said "he will not allow Ukraine to become Estonia"—that is, he's highly unlikely to stand by and idly watch Ukraine integrate itself with the European Union or NATO.


"Ukraine's economic crisis had been transformed into geo-economic warfare caused by Russia's control of supply to Europe and Ukraine's failure to develop its own internal energy resources," Robert Bensh, managing director of Pelicourt, a private equity fund that owns assets in Ukraine, told CNBC.

"And it cannot be coincidental that Russian troops are building up close to Ukraine's gas pipelines," he added.

According to journalist Alexei Matsuka of eastern Ukraine's Donetsk and alternative Russian news channel TV Rain, "the activity of separatists is mainly in the north of the region, where there is a lot of shale gas."

Still, others say that the shale play is minimal here and that Russia is looking solely to retain control to make sure it has a firm hold on alternate routes of its own gas supplies.

More than one observer who spoke with CNBC predicted that only when there is an integrated government in Ukraine, with a substantial amount of Russian influence, will Russia finally back off. 

How Ukraine's leaders benefit

The Ukrainian government, which has warned repeatedly that the most dangerous days of the crisis still lie ahead, has used the unrest to its advantage as well. 

The conflict allows acting Ukraine President Oleksandr Turchynov and Prime Minister Arseniy Yatsenyuk to appeal directly for assistance from the United States and the European Union.
A source close to the situation told CNBC that in the earliest days of the crisis, Kiev refused to speak with the Russians, allegedly telling high-level Moscow officials that Ukraine no longer needed Russia because it had the EU and United States on its side.


In the past week, Turchynov has presented a situation in eastern Ukraine that is beyond the Kiev government's ability to handle alone, openly admitting that Ukraine's police and security forces are "helpless" when it comes to dealing with violence and unrest. 

Oligarchs playing both sides

Wealthy individuals within Ukraine have tried to cut deals with Russia in an effort to secure power in case Russia continues to have influence in certain regions of the country, sources told CNBC.
Stratfor Eurasia Analyst Eugene Chausovsky told CNBC that, although he can't confirm the names of so-called "oligarchs" who have reached agreements with Russia, Moscow does have channels of communication to many leading Ukrainian business and political figures.

Sources who asked not to be identified cited former Prime Minister Yulia Tymoshenko as a power player in Ukraine who maintains close contact with the Russian side. Tymoshenko currently trails Petro Poroshenko, the front-runner in Ukraine's upcoming elections.
Unrest in Ukraine helps Tymoshenko politically, a local source told CNBC, because she's seen as an experienced politician who can provide leadership through the crisis.

The Washington Post, citing Russian news service Interfax, reported Tuesday that Tymoshenko called publicly for the formation of a "volunteer army" that can handle pro-Russian outbreaks in place of the country's regular military.

Stratfor's Chausovsky told CNBC that there is also speculation that some domestic oligarchs in eastern Ukraine could have fomented the separatist threat shortly after the uprising as a bargaining chip with Kiev's new pro-Western leadership to preserve their domestic political power and business interests.

Stratfor's Chausovsky said he doubts that Tymoshenko was behind any unrest in eastern Ukraine, however, saying such claims are unconfirmed and "dubious at the very least."

The oil and gas issue is likely to remain front and center, experts said, with Putin playing his strong hand and attempting to determine just how far he can go without provoking the U.S. and European Union to hit back even harder than they already have. 

"People are genuinely nervous about what will happen. It's a house of cards, everyone is under threat," one source said.

俄国注销朝鲜九成债务意在输气管线

从严格意义上来讲，朝鲜和韩国仍处于战争状态。朝鲜经济总量只有韩国的2%。

路透社报道说，俄国议会批准注销朝鲜所欠近100亿美元债务，占债务总额的90%。

据信俄国通过这笔交易希望获得平壤配合铺设一条途经朝鲜通向韩国的天然气输气管道，以及铺设一条通往韩国的铁道。

这些被注销的债务大都是前苏联时代遗留下来的。俄方表示，截止去年9月，朝鲜欠俄国109.6亿美元。

俄国议会下院批准了2012年两国政府签署的债务减免协议。
剩余近11亿美元的债务将在今后20年内分期偿还，由俄国国有开发银行负责管理。

俄国媒体引述俄财政部副部长斯托尔恰克称，偿债款可用于在朝鲜开发联合投资项目，包括一条拟建设贯穿朝鲜半岛南北的输气管和铁路。

从严格意义上来讲，朝鲜和韩国仍处于战争状态。

国际社会部分力量一直在设法让朝鲜结束长期的孤立和贫困。朝鲜经济总量只有韩国的2%。

国有的俄国天然气公司长期以来一直在筹划铺设一条通过朝鲜进入韩国的输气管，希望每年由此输送100亿立方的天然气。
莫斯科希望提高能源出口市场多元化，降低对欧洲市场的依赖，增加对亚洲市场的出口。

据悉，俄国和中国预计在今年5月就俄国天然气出口中国达成协议。

Germany's Russian energy dilemma

The international community is isolating Russia for annexing Crimea. But Germany is treading carefully in putting pressure on Moscow. When it comes to energy supplies, Germany is extremely vulnerable to Russia's whims.

Once again, a passing comment by German Chancellor Angela Merkel has started a debate about Germany's energy dependence on Russia. "There will be a new look at energy policy as a whole," Merkel said on Thursday, March 27, after a meeting with the Canadian Prime Minister Stephen Harper in Berlin.

Her comments came as a surprise, since the European Union is currently more dependant on Russia for its energy supplies than on any other partner. So, do the chancellor's comments herald a change for European energy policy; a move away from Russian oil and gas supplies?

Dependent on Russia

In a recent meeting with Stephen Harper, Angela Merkel said it was time the EU reformed its energy policy

A glance at the facts, however, shows that it will be hard for Europe to turn its back on Russian energy - at least in the short term: 30 percent of the EU's natural gas imports are currently from Russia. When it comes to oil, 35 percent of the European Union's supplies are of Russian origin. And Germany's dependence on Moscow is even higher: the country sources 36 percent of its natural gas imports and 39 percent of its oil imports from Russian energy suppliers. Since the biggest transport route for Europe for Russian gas runs through Ukraine, a halt of exports to there would also have consequences for Western Europe. Half of Russian natural gas exports - around 160 Million cubic meters of gas - reach Europe via Ukraine.

If Russia were to halt imports to Ukraine, the EU could survive for three months on reserves within its borders. There are also other transport routes. One of these is the Nord Stream gas pipeline, through which 55 billion cubic meters of Russian gas reach Germany. Another is the Yamal-Europe pipeline, which brings about 33 billion cubic meters of gas to Germany, the Baltic states and Poland via Belarus. The Blue Stream pipeline transports 16 billion cubic meters of Russian gas into Turkey and to Southern Europe.

If the conflict between the West and Russia continues to escalate, an oil and gas embargo could be one of the sanctions that is considered against Russia. Especially when it comes to natural gas, however, it will be hard to find alternatives for Russian imports. The Bruegel Institute, a Brussels-based think tank, did rough calculations that show it would be a huge technical and economic endeavor to find an alternative source for the 130 billion cubic meters of natural gas that reach the EU from Russia. Germany alone uses 90 billion cubic meters of the gas.

 

Europe has the possibility to diversify its suppliers for liquefied natural gas (LNG) on the worldwide gas market. Imports of liquefied natural gas from Algeria to Europe could increase. The Netherlands and Norway could also increase their natural gas production. Germany currently gets 24 percent of its natural gas from Norway, 23 percent from the Netherlands and 11 percent from local German sources. Norway could quite quickly produce an additional 20 billion cubic meters. That would mean that LNG imports from there to Germany could be doubled, increasing them to 60 billion cubic meters, according to the numbers that the Bruegel institute provides.

But the problem is that liquefied natural gas costs almost twice as much on the global market as when sourced from Russian suppliers. And there are long-term LNG export contracts, which means that short-term changes to supplies would be difficult. The European attempt to decrease its dependence on Russian gas imports supplied via the Nabucco pipeline, which was supposed to run through the Caspian Sea, recently failed for economic reasons. Overall, it will be a Herculean task - both logistically and financially - for Europe, and especially for Germany, to free itself from its current dependence on Russian natural gas imports.

Global market could substitute Russian oil imports

Russia's oil exports to the EU are a different story, however. There is currently an abundant supply of oil on the global market, which has made prices moderate - especially in comparison to the ones during the global economic crisis in 2008/2009. There would be enough alternative oil suppliers on the market - including Canada, which extracts oil from tar sands.

Though Chancellor Merkel was referring to a long-term move towards such supply options during the visit of Canadian Prime Minister Harper, a government spokesman backpedalled on the issue this Friday. "The debate about alternatives - for example the import of gas from Canada or the US - is charming, but currently remains theoretical, because they don't export any gas."

Germany's Vice Chancellor, Economics Minister Sigmar Gabriel, made a similar statement on Thursday. Gabriel explained that he doesn't see a reasonable alternative for Russian imports of gas and oil. He warned of "creating panic": "Even in the darkest hours of the Cold War, Russia kept to its contracts," Gabriel said. But just a brief look at the recent past proves that freezes on imports to Europe have taken place, at least indirectly: In 2006 and 2009, disputes between Russia and Ukraine led to short-term supply shortages for the rest of Europe.

During a G7 meeting this week in The Hague, US President Barack Obama called on the European Union to decrease its energy dependence on Russia. He advised the EU states to follow the US example in thinking about increasing the extraction of shale gas through fracking. In the United States, that has led to a surplus of energy at good prices but the technology associated with fracking has remained controversial in Europe because of the environmental damage it causes.

Russia doesn't want a 'gas war'

Russia's ambassador to the European Union, Vladimir Chizhov, has excluded the possibility of a "gas war" between Russia and the West. "Those are horror stories that have their origin in political fantasy," the diplomat told the Russian news agency Interfax on Wednesday. Chizhov emphasized that Russia is and will remain a reliable partner and energy supplier.

It's clearly in Russia's interest to preserve the energy status quo: According to the German research and consultancy firm Energy Comment, in 2012 natural gas sales earned Russia an estimated 68 billion dollars (50 billion euros), while oil sales brought in 290 billion dollars (211 billion euros). That means that natural gas contributes around 5 percent to the Russian national budget, while the profits from the export of oil make up around half of Russian government revenue. So what would hit Moscow hard financially wouldn't be a "gas war." It would be a freeze on Russian oil exports. Still, for the time being, Russian fossil fuels will remain an important pillar in the EU's energy supply.

China’s Oil Addiction Growing

Unless the Chinese government takes steps to cut oil consumption, China’s oil consumption may increase by 60% by 2030. Even worse, over 75% of its oil consumption will have to come from imports (so can China fight any war with America ?). That comes from a new study out by China’s Development Research Center, which highlights China’s alarming trajectory – oil demand will continue to rise and meeting that demand will have to come increasingly from foreign sources. Li Wei, the Director of the Development Research Center, said that China must transform itself to avoid the security and environmental challenges this would bring.

China passed the U.S. in late 2013 as the world’s largest importer of oil. The report dovetails with the latest monthly data coming out of China, which found that crude oil imports for January 2014 hit a record high of 6.6 million barrels per day. That is up 5.1% from December, and up 11.9% from January of last year. China’s domestic oil production cannot keep up with demand.

While China’s oil dependence is growing, the U.S. is moving in the opposite direction. Flat demand and rising domestic production has cut into U.S. oil imports, and China’s new report concludes that this may have detrimental impacts on China in terms of geopolitics. Less oil dependence may allow the U.S. to support democratic movements in the Middle East, while not feeling constrained to prop up certain governments. This will contribute to oil market instability, particularly as China becomes increasingly dependent on the region. (maybe China can send in "peacekeeping "troop to secure the oilfields and ports)

And as the U.S. continues to increase oil production, it will be able to influence the price of oil and gas around the world, the report warned.

Li Wei said that China must also deal with its deteriorating environment. He wrote that China’s current path will mean “air quality will reach unbearable levels.” He argued for China to rapidly expand the use of nuclear power, renewable energy, and natural gas.

Bitter Irony in Venezuela's Oil Sector

In a bid to show members of Venezuelan society the age of Chavismo was alive and well, Venezuelan President Nicolas Maduro decided to rename one of the largest oil fields in the world after his mentor and former President Hugo Chavez. The Maduro administration might not last the year, however, suggesting the former president's legacy is indeed out at sea.

Maduro, the former vice president and foreign minister during the Chavez era, said the nation's oil sector was "rescued" by the former president, whose 14-year reign over Venezuela ended when he died from cancer last year. Now, it's time to honor him by renaming the country's offshore Orinoco belt the "Hugo Chavez oil belt," he said.
The president in December devalued the currency in an effort to reverse the decline of an ailing oil sector. The Organization of Petroleum Exporting Countries in its February market report said member state Venezuela was producing around 2.3 million barrels of oil per day, about 1 percent less than the year before Chavez died and almost half of the level from 1997, the year before he took power.

Oil accounts for 95 percent of the country's export earnings and nearly half of its budget revenues. While the decline in production since 1997 can be attributed in part to field maturation, most of the problem can be blamed on mismanagement of state-owned oil company Petroleos de Venezuela, or PDVSA.

"Hugo Chavez" is estimated to hold 513 billion barrels of crude oil. The former administration pegged its oil recovery hopes on the field through joint ventures made between PDVA and its foreign minority partners. Output from those efforts was expected to reach the 1 million bpd mark by last year, though actual production makes Libya look like an investor's dream. Last week, PDVSA was called on to rethink its strategy.

For his part, Maduro, now 11 months into his first term in power, is facing growing political opposition and nation-wide protests that turned deadly in recent days. In a bid to secure his grip on power, he's charged opposition leader Leopoldo Lopez with terrorism. Amnesty International said those charges were politically motivated. Last year's 50.7 percent victory for Maduro brought cries of foul from rival Henrique Capriles. Lopez now is just one of the president's political concerns.

Before Maduro took office, we expected the economy in Venezuela would continue to suffer no matter who took power. Economic prospects for Venezuela are down with former top export destination United States in the midst of an oil boom of its own, leaving an already weakened Venezuelan economy struggling to stay afloat.  Inflation stands at around 56 percent. Perhaps it's with a bit of irony then that, given Chavez's failure to administer some of the largest oil reserves in the world to his country's favor, his successor decided to don the Orinoco belt with his namesake.

Why America Doesn’t Need VenezuelaLike It Used To

Venezuela’s acting President Nicolas Maduro greets oil workers during a visit to a facility at the oil rich Orinoco belt at the state of Monagas.

Protests are raging in Caracas, shoppers are fighting over chickens, and Venezuelan President Nicolás Maduro has amped up the anti-American rhetoric, blaming unrest on the American government and kicking diplomats out of the country.
While in the past, strained diplomatic relations between the the world’s most oil-rich country and the United States might have caused panic, America doesn’t need Venezuela’s oil nearly as much as it used to.

Former US ambassador to Venezuela and current Duke professor Patrick Duddy explains why:

The U.S. is still Venezuela’s largest market, but we do not buy nearly as much oil from Venezuela as we once did. The US has reduced its aggregate consumption by about 1 million barrels in recent years and we’ve also increased production, thanks largely to shale exploitation and horizontal drilling. 

The US used to import more than 50% of the oil it consumed. Now, it imports substantially less than 50% of its consumption. We’re using less, producing more. 

Production is also expanding in Canada.  Mexico has recently changed its constitution to permit foreign participation in its energy sector and it is widely understood that they have very substantial shale reserves. Brazil has substantial off-shore reserves, known as the pre-salt deposits; Argentina has lots of shale as well.  

Imports from Venezuela to the U.S. are down to, on average, 900k barrels a day or less, and sometimes it drop substantially below that. So, the relative importance of Venezuela to the U.S. has changed.  

Duddy went on to explain why Venezuela probably needs the US more now than the US needs Venezuela. 
“Oil represents over 95% of Venezuela’s export earnings. From those earnings, they finance 45-50% of government activities,” said Duddy. “If oil revenues slips, the situation there could become more urgent.”
Things were pretty different back in 2002, when a strike in Venezuela caused the country’s oil output to collapse from 3.1 million barrels a day to arround 200,000, causing oil prices to rise sharply to the highest prices since the Gulf crisis in 1990, according to Daniel Yergin’s “The Quest.” Crises like that led President George W. Bush to push for increased fuel efficiency aimed at getting Iranian President Mahmoud Ahmadinejad and Venezuelan President Hugo Chávez “out of the Oval Office.”
Even if America is less vulnerable than it used to be, however, Venezuela is still important to the global oil market. As predicted in a research note from UBS strategist Julius Walker:
Any production outage would cause a significant price spike. Any production shut-ins as a result of political unrest would almost certainly result in sharp price spikes, and a total production shortfall would severely strain global oil markets.  (and China dies....)

中国的下一个目标对付印尼

曝光14亿中国人彻底遗忘的一片领土：纳土纳群岛

Just wait for some oil or gas get discovered there......

广东省潮州人张杰绪，荷兰入侵印尼前在纳土纳岛曾建立王国。纳土纳群岛距曾母暗沙约400公里，与曾母暗沙纬度略同。距中国大陆陆地约 1900公里，相当于广州到北京的距离。距加里曼丹岛最近之处225公里

广东省潮州人张杰绪，荷兰入侵印尼前在纳土纳岛曾建立王国。
　　纳土纳群岛距曾母暗沙约400公里，与曾母暗沙纬度略同。距中国大陆陆地约1900公里，相当于广州到北京的距离。距加里曼丹岛最近之 处225公里（台湾距大陆最近130公里）。

纳土纳群岛

1993年中国出版的一份地图把纳土纳列入版图，引起印尼强烈反弹，一度要求北京作出澄清。（或说1992年，中国将纳土纳群岛纳入中 国的专属经济区。）
　　纳士纳群岛一些比较早的华人家谱记载：清兵入关后消灭了南方的南明政权，在广东沿海岛屿上坚持抗清的几百残兵和几百家不服满清统治的渔 民逃到了南洋的一个小群岛上——荷兰人后来命名的纳士纳群岛！
　　纳吐纳群岛在当时不过是一块蛮荒之地，华人来到这片土地上劈荆斩棘，将它开拓建设成一方乐土，纳吐纳群岛成为华人的一个独立的土邦。
　　可到了一百多年前，在纳土纳岛首领（也算是国王）张杰绪去逝后，内部发生纷争，荷兰人乘机灭了张氏王国。印尼独立出荷兰后，纳土纳岛群 岛确能独立出印尼，像新加坡那样独立建国。
　　这个本来属于华人的地方，现在却成了印尼的领土，看到不由得心痛！
　　上世纪九十年代初期，东南亚传出这样一则未被证实的传 言：纳土纳岛群岛华人代表和中国大陆的领导人物邓有过秘密接触，邓表示在97香港回归后中国会考虑纳土纳岛群岛问题（使出独立出印尼成为华人国家？或成为中国的另一个“特别行政区”？）。
　　这则未被中国方面证实的小道消息确引起了印尼当局的高度重视，不久之后的1993年中国某出版社犯了一个小错误，当时出版的中国地图上 不小心把 纳土纳群岛列入中国版图，引起印尼方面的惊恐，印尼媒体也炒得沸沸扬扬，一度要求北京作出澄清。很多著名的媒体，像凤凰卫视、新加坡联合早报 都进行了报 导。

 

SAUDI AMERICA - US Oil Production Just Hit A 25-Year High


The Great American shale boom rolls on.

U.S. oil production is now at levels last seen in September of 1988, according to new EIA data.

The four-week average climbed to 8,041,000 barrels a day, or about 234,000 barrels a month. That's up from a prior 8,020,000 barrels a day four-week average.

Chart:

There Is A Shale Oil Field Under Santa Barbara Four-Times Bigger Than The Bakken

 

In the wake of the International Energy Association's extremely bullish report about America's hydrocarbon potential, the San Diego Union Tribune has published an editorial calling on California Gov. Jerry Brown to tap the state's mammoth shale oil resources.

How big are they?

According to the EIA, the Monterey Formation, which covers an enormous chunk of Southern California and terminates near Santa Barbara, has 15.4 billion barrels of recoverable crude — four times as much as the Bakken formation in North Dakota.

On Dec. 12, the Bureau of Land Management will begin auctioning off more than 17,000 acres in the formation.

The problem is, California has committed to getting a third of its energy from renewable sources by 2020, the paper writes.

So the state risks getting left behind as the rest of the world dives into shale, it says.

They write: "[T]he idea that fossil fuels will fade from the scene seems more preposterous every day. Instead of getting left behind in this new era, the Golden State could – and should – lead the way."

Russia Opens Arctic Military Base to Protect Against US Threat

On Tuesday, whilst speaking to a group of university students in Moscow, Russian President Vladimir Putin declared that the Arctic posed a region of vital importance to not only the economic interests of Russia, in terms of the vast hydrocarbon reserves buried there, but also the defence interests of the country, due to the threat of potential missile strikes from US submarines based in Arctic waters.

“Not only are there major economic interests for our country there...it is also an important part of our defence capability.
There are (U.S.) submarines there and they carry missiles. It only takes 15-16 minutes for U.S. missiles to reach Moscow from the Barents Sea. So should we give away the Arctic? We should on the contrary explore it.”


The heavy nuclear-powered GM cruiser Pyotr Veliky (Peter the Great) that leads the forces at the Arctic base.

In order to provide greater defensive options and more control over the region, Putin has ordered for an old Soviet military base to be reopened in the Arctic, that will be able to protect the northern coast as it turns into a more popular global shipping route, and any energy infrastructure operating in the area.

Russia, the world’s second largest oil exporter, is one of the countries vying for a piece of the Arctic now that global warming is causing sea ice to melt at a faster rate, making the vast deposits of oil, gas, and precious metals more accessible. Other countries interested in the area are Canada, the US, Denmark, and Norway.
Reuters says that Moscow has already laid claim to a large portion of the Arctic seabed, stating that it is theirs by right as it is an extension of the Siberian continental shelf.

Now with the knowledge of how Russia views the Arctic as a matter of defensive and economic importance, it is slightly easier (although not much) to understand their overreaction to the Greenpeace protestors arrested in Arctic waters in September. Only through sever international pressure were the charges against the 30 activists dropped from piracy, carrying a 15 year jail sentence, to hooliganism, which carries a seven year sentence.

美国子弟卖命流血 伟大祖国坐吃其享

中石油收购伊拉克巨型油田25%权益

When America and friends were fighting a war in Iraq, China, France and  Malaysia were pulling their legs. Did America bring down Hussein for Iraqi oil ? No. America oil companies only got a very small portion of the oil interest after the war. And Chinese and Malaysia oil companies got more. Something that SPG does not bring your attention to.

 

中国最大的油气生产商中石油 (PetroChina)同意从美国埃克森美孚(ExxonMobil)收购伊拉克西古尔纳-1期油田(West Qurna 1)的25%权益，这笔交易有助巩固中国能源集团在伊拉克石油业的主导地位。

埃 克森美孚还将向印尼国家石油公司(Pertamina)出售10%权益，从而将其在西古尔纳-1期油田所占权益从60%降至25%，但它仍将 是这 个油田的作业方。荷兰皇家壳牌(Royal Dutch Shell)的股份保持在15%不变，其余权益由伊拉克国有实体拥有。
埃克森美孚与伊拉克政府的关系在2011年出现恶化，当时该公司在未经巴格达核准的 情况下，签署了六份在伊拉克库尔德地区勘探石油的合同。伊拉克中央政府认为此类合同是非法的。
伊 拉克中央政府的政策是，将在库尔德地区签订合同的石油公司列入黑名单，对其表明：必须在北方和南方之间作出选择。但是，对一家大型海外石油公 司而言，不寻常的是，埃克森美孚成功保住了其在伊拉克南北两部分的权益。

西古尔纳油田位于巴士拉西北方向大约50公里处，是世界上储量最大的油田之一。埃克森美孚估 计，西古尔纳-1期油田到2013年底石油产量将达到60万桶/日。

 

中石油在一份声明中表示，参与西古尔纳油田项目将使其“与中国石油在伊拉克其他项目形成协同效益”，并且有助于该公司“在中东地区上游业务 做大做强”。
中国企业已经在伊拉克占有大片 地盘。中石油的国有母公司——中国石油天然气集团公司(CNPC)正与英国石油(BP)和一些伊拉克机构协 作，开发距 离西古尔纳油田不远的另一个大油田鲁迈拉(Rumaila)。中石油还拥有伊拉克哈法亚(Halfaya)和艾哈代布(Ahdab)油田的权 益。

西古尔纳-1期油田的开发合同是大型海外石油公司在萨达姆•侯赛因(Saddam Hussein)倒台后签署的多笔合同之一。这些合同旨在帮助遭受了多年战乱、制裁和忽视的油田恢复元气。
 
但是，具体作业经历让各大石油公司感到泄气。苛刻的财务条款使他们难以从这些合同中赚钱。基础设施的制约因素（尤其是缺乏管道和储存设施） 妨碍了生 产活动，而伊拉克的官僚作风造成严重拖累。进口的设备往往被卡在港口几个月之久，等候通关，为雇员申请签证也可能要折腾几个月。

受命在全球各地获取能源供应的中国企业，一般而言比其他大型石油公司更愿意接受比较苛刻的财务条款。

中石油入股西古尔纳油田并不是中国能源集团今年达成的唯一大笔石油交易。今年3月，中国石油天然气集团公司斥资42亿美元，从意大利埃尼集 团(ENI)手中买下莫桑比克海上大型天然气田的一笔权益。

美产 原油 20年来首超进口 世界能源格局巨变

美国能源信息署说，10月份美国原油日产量同比增加11%， 达770万桶。

该署日前说，此次原油日产量，已创下25年来同期最高纪录，超过了日均原油760万桶的净进口量。这是近20年来的首次，标志着美国开始减少对外国原油供应 的依 赖。

美两年后最大油气生产国

“这将是一个异乎寻常的转变。”该署主管谢尔敏斯基称，“我们将迎来对市场状况、以及思考这种状况所带来机会的全新时代。”

国际能源署估计，2015年美国将超越俄罗斯和沙地阿拉伯，成为世界上最大的 石油 和天然气生产国。

报道说，这将推动全球能源行业发生翻天覆地的变化。

然而，国际能源署首席经济学家比罗尔指出，尽管美国能源供应快速增长，未来并不会出现“石油过剩”局面，因为需求压力巨大，而现在油田的 产量 在下降。中东仍将在未来一段时间里，维持在全球石油行业的中心地位。

此外，美国对外关系委员会专家列维警告：“基于美国将在一、二十年后实现能源自给自足的假设，来制定国防政策是极度不负责任的。如果这一 假设 错误，后果可能是灾难性的。”

Is There A  Peak Oil  Approaching ?

 

There are many zigs and zags, twists and turns, and unintended consequences along the path to higher priced and scarce oil. Only three months ago it seemed we were headed towards an aerial bombardment of Syria’s armed forces which would likely send oil and gas prices towards the sky in anticipation of a response. Well, the AAA reports that the current average price of regular gasoline is $3.18 and its spokesperson is saying we should be seeing $3.10 a gallon by Christmas and maybe even $3. What’s happening?

First let me disabuse you of the idea that we are seeing more than a temporary blip and that sub-$3 gasoline will become a permanent feature of life in America. The underlying forces that will cause oil production to peak – i.e. oil fields depleting faster than new ones are being found and developed at affordable prices – is still with us as will become apparent one of these days.

This fall, however, there are several factors that have come together to force oil prices down. One major factor, higher U.S. oil production, is unlikely to last more than a few years, while others such as steadily weakening demand may be with us for a while.
When oil prices got high enough five or six years ago, it became profitable to drill and hydraulically fracture tight oil formations in North Dakota and Texas. What made fracking feasible was that oil prices in the last decade rose from $20 a barrel to circa $100, making the drilling of very expensive fracked wells with very short productive lifetimes feasible.

From about 5 million barrels per day (b/d) in 2007, U.S. domestic production has climbed by 2.5 million b/d to 7.5 million bthis summer. For a time the oil industry had difficulties moving this oil to market as it was coming from regions without sufficient pipeline capacity so that a big glut of crude built up in the mid-West where the fracked oil came from. This glut drove down the value of domestic crude until at one point it was selling at $25 a barrel below world prices.

While this oil was making its way to refineries in the mid-West, it was not getting to the Gulf or East Coast. We in the East were buying our crude at world prices which have been hanging around $100 a barrel for the last four or five years. Thus while the great fracked oil boom was helping consumers in the middle section of the country it was not doing much for the coasts where most of the people live.

North Dakota where nearly a million of our 2.5 million b/d of fracked oil is coming from was -- and still is -- not deemed worthy of building expensive pipeline collection systems because of the rapid depletion of its wells.

The solution to this dilemma turned out to be railways, which America has in abundance. It took some time to build the terminals along rail lines, but once on board trains the oil could be directed to the highest bidder anywhere in the country. Movement of oil by rail costs some $5 a barrel more than that moved by pipeline, but when it still costs less than imported oil it is going to be used.
The next factor behind our cheaper gasoline prices is lower demand. Since the U.S. economy went south in 2008, demand for oil has been weak. While the average consumption of oil products in 2007 was 20.7 million b/d, by 2012 it was down to 18.5 million b/d with an increasing share being exported. While some of this decline was due to more efficient cars and trucks, the bulk of it was simply less driving due to hard economic times.

Our next factor is a little more complicated and has to do with what happens when oil is refined. To make the story short, when you refine crude, among other products, you end up with roughly two barrels of gasoline for every barrel of distillates (diesel, heating oil, kerosene, etc.) that you produce. Now this is very nice when your demand for these products is equal to your consumption, but when they get out of balance you have to import or export to avoid shortages or gluts. Now Europe taxed itself into a lot of more-efficient diesel cars years ago, so European refiners had been ending up with large surpluses of gasoline which they were happy to sell to America, where we really love the stuff.

Currently Europe has a lot more energy problems than we have here in America. North Sea oil production has been dropping for decades; the economy is really bad so that oil consumption is down; refineries are closing; and to top it off, Libyan oil production of 1.3 million b/d, most of which went to Europe, went down the tubes this summer amidst political chaos.

The solution to this was for Europe and other Libyan customers to import diesel and other distillates from the U.S., which led to a rapid growth in U.S. exports of finished oil products. The U.S. of course was set up to refine more oil than we currently are using, but this summer our refineries hummed at record rates cranking out distillates for export.

The problem was that for every barrel of diesel that we shipped out of the U.S., there were two barrels of gasoline left behind. The export statistics tell the story. In 2007 the U.S. exported 120,000 b/d of gasoline and 260,000 b/d of distillates. By the summer of 2013 gasoline exports had climbed to 380,000 b/d, but distillate exports were up to 1.4 million b/d.

So there is the story of our “cheap” gasoline in a nutshell. We are refining some 1.4 million b/d of distillates for export and are ending up with 2.8 million b/d of extra gasoline, as a result of which we can only export 380,000 b/d. Welcome to lower gasoline prices for as long as this imbalance lasts.

US Shale Oil Production Causes WTI Price to Fall

crude oil price will go down because of the American's new oil and also more and more oil is now found in all over the world. Will China single handedly hold price up with their demands is questionable as her economy is showing fatigue. So Bolehland's heavy dependence on oil revenue days is numbered. Will we ended up like other failing states by exporting workers for survival ?

With this, it also mean America can start telling the Arabs to go fuck themselves and they would not care a shit if the Israelis go hammer them next time.

According to data from the U.S. Energy Information Administration, U.S. crude oil inventories rose by 5.2 million barrels last week, the fifth largest build of the year, with stocks at the Cushing hub rising for the second week in a row. Over the past four weeks, inventories have risen by 22 million barrels, marking the biggest four-week build since April 2012 and the second largest since February 2009.

The crude oil stored at Cushing, the delivery point for the U.S. futures benchmark contract, amounted to 33.34 million barrels in the week that ended Oct. 18, an increase of 358,000 barrels. As noted in an article in the FT, certainly flows of shale oil have been surging from areas such as Bakken, North Dakota and Eagle Ford, Texas, where output has reached 1 million barrels a day.


As a result, prices have fallen to their lowest level since July. On Wednesday, NYMEX West Texas Intermediate dropped more than $2 to a low of $96.16 a barrel, before recovering slightly. The decline saw the price differential between WTI and global benchmark Brent increase to more than $13 – the widest since April – before narrowing. ICE Brent for December delivery was down $1.75, to $108.21 a barrel.

Is this the oil market following the natural gas market with a widening differential between domestic and global prices? It would be nice to think so, but no, oil either in crude form or as refined products is much more readily exported than natural gas. As such, US prices will move in tandem, if not at the same level, as global oil prices.

Inventory increase has caught the market by surprise

Analysts had expected a rise of roughly 2.9 million barrels, as planned maintenance at refiners reduced crude demand. The FT quoted the EIA as saying that refinery runs were 14 million barrels a day in the week ending Oct. 18. Plants had operated at 85.9% of capacity, compared to June and July, when runs were above 16 million barrels per day.


However, with maintenance schedules winding down and lower prices encouraging refiners to stock up to meet export demand, expect the differential between WTI and Brent to narrow. As Brent is constrained by reduced Libyan and Nigerian shipments, it seems more likely for WTI to rise than for Brent to fall. So make hay while the sun shines and for purchasing that is tied to spot WTI numbers consider taking current lower price levels as they are not expected to prevail for long.