| American ties are no help in Saudi's domestic crisis (The Guardian)
When the US went to war to get rid of Saddam Hussein, one logical consequence of its inevitable victory may not have ranked high in its calculations. This was that, in overthrowing the Iraqi regime and outflanking the Iranian one next door, it would inevitably undermine the basis of its relationship with its ally Saudi Arabia. Some thought the reverse would be the case, in that victory in Iraq would enable America to withdraw most of its military personnel from the kingdom, and thus remove the largest grievance which religious Saudis had against their own government, which is that it permits armed infidels in their land.
This withdrawal was duly announced. But what the Iraq victory has also done is to reduce the degree to which the US and the Saudi regime need each other. This is happening at a time when anti-American sentiment in Saudi Arabia is at what may be its highest point ever and American exasperation with the Saudis is more and more marked.
The essential trade-off between the Saudi ruling class and the US government has been that in return for Saudi moderation on oil prices and the Palestinian issue, and facilities for the American military, both Saudi oil and the Saudi regime would be protected against Iraq and Iran. This bargain was a strained one well before the war, but now much of the sense has gone out of it. The old Iraq is gone, and the Saudis had already managed a limited reconciliation with the Iranians. It is clearer than it was before the war that the Saudi regime faces far more serious challenges internally than abroad. In dealing with these domestic threats, the American relationship is a problem not an asset - even though it is true that the Saudis and the Americans have a common stake in opposing terrorism, and despite long-established habits of cooperation and, of course, important military, economic and cultural links.
In spite of that stake and those links, the Saudi regime is being pushed towards a point at which it will have to choose between the American connection that has been the mainstay of its foreign policy, and satisfying its own people.
For the Americans and the British, what the attacks on western compounds in Riyadh underline is the need for a tougher response by the Saudi regime towards extremist groups and a more determined effort to change the broader anti-western religious culture out of which Saudi extremism springs. But, for the Saudi regime, the problem is one of finding courses of action that deal with terrorism but also avoid any worsening of relations with a discontented populace and with increasingly assertive religious groups, both official and unofficial.
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| Big oil's dirty secrets (Economist)
Even as it celebrates soaring profits—thanks to higher prices during the war—and soaring share prices, now war is over, the oil industry faces a new danger largely of its own creation. It will surprise nobody to learn that oil and ethics mix about as well as oil and water. But, just as the tobacco industry and Wall Street gained a false sense of security because for years they got away with well-known practices of an ethically shady nature, only to pay a hefty price later, so too oil's hour of reckoning may be approaching. There are several reasons, including a high-profile bribery scandal; the growing political sensitivity of the oil industry; changing attitudes to corporate governance; and some potentially explosive lawsuits.
The bribery scandal, which seems certain to grow larger as more details emerge, concerns the battle to win oil contracts in Kazakhstan. During the 1990s, several big oil firms fought for the right to exploit the oil riches of the region, including Chevron Texaco, on whose board Condoleezza Rice served prior to joining the Bush administration. And, if prosecutors are to be believed, executives at some firms behaved over-zealously as this battle raged.
This week, Swiss investigators were reported to have added a bribery and money-laundering probe involving, among others, Crédit Agricole, a French bank, to continuing American investigations into alleged Caspian corruption. Last month, a grand jury in New York issued indictments against two Americans—James Giffen, an independent banker with close ties to the Kazakh president, Nursultan Nazarbayev, and Bryan Williams, a former executive of Mobil. Both deny wrongdoing. America's Justice Department is also looking into whether Mobil, now merged with Exxon, took part in a plan to pay $78m from American and European oil firms into Swiss bank accounts belonging to Mr Nazarbayev, among others. Exxon Mobil, the world's biggest oil firm, says it knows of no wrongdoing.
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| Joseph Fiennes launches Christian Aid oil and poverty report (Reuters)
Joseph Fiennes launched this year's Christian Aid Week report, Fuelling poverty - Oil, war and corruption, at an event attended by over 200 guests from the media, development groups and industry. The actor talked about his recent fact-finding mission to Angola with Christian Aid and recalled the stories of those who live under the curse of oil.(...)
The report Fuelling poverty - Oil, war and corruption reveals how oil-wealth has, more often than not, lead to greater poverty and a high likelihood of war and corruption, rather than peace, wealth and prosperity in developing countries. Christian Aid is calling for transparency between the oil companies and governments, to bring accountability into what has become a corrupt business.
In Angola, for example, $1bn of the $5bn given from oil corporations to the government goes missing every year.
Fernando Macedo, director of the Association for Justice, Peace and Democracy - a Christian Aid partner in Angola - said that Fuelling poverty - Oil, war and corruption would give him a good opportunity to put continued pressure on his government.
'We are committed to making our Government much more accountable,' he said. 'And Christian Aid's support is vital in allowing our work to continue.'
Dr Tulegen Askarov is an economist who is pushing for transparency from the government and oil corporations in Kazakhstan. He explained how generally in Kazakhstan 25 per cent of people are living under the official poverty line, but unbelievably the level of poverty in oil producing areas is as high as 45 per cent.
'In Almaty, where I live and there are no natural resources like oil, only 5.4 per cent are living below the poverty line. Where people see the oil companies taking all the profits it is difficult to get motivated and start your own business. It is like hell, the poverty - no one can understand it.'
'It is vital to establish an international commission to monitor what is going on,' Dr Askarov said. 'It is very dangerous to allow these corporations to work without a system of monitoring.'
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| Geologist: Oil Reliance Will Remain (Salt Lake Tribune)
Despite all the talk about alternative fuels, the world will need to rely on oil and natural gas for decades to come.
Dan L. Smith, president of the American Association of Petroleum Geologists, told the group's members gathered in Salt Lake City at their annual meeting that none of the frequently mentioned petroleum replacements -- wind power, solar or geothermal energy -- offer good alternatives to fossil fuels.
Wind power, the most frequently mentioned alternative power source, is dependent upon geography. "It is difficult to make the calculations but in Florida, for instance, you would need at least six windmills every square mile to meet that state's energy needs," Smith said.
And just to produce the amount of energy consumed daily in Houston there would need to be a solar panel 10 miles in diameter.
Smith, executive vice president of exploration for the Houston-based Sandalwood Oil & Gas, said even geothermal energy does not offer much of an alternative.
Geothermal energy production peaked in 1990 and has since leveled off, which suggests that most of the country's good geothermal sites are now in use.
Even the promised fuel cell/hydrogen economy that will rely on fuels cells to produce hydrogen will need natural gas to run. "In short, we are going to need energy to get energy," Smith said.
But not to worry, he said: The world is a long way from running out of oil and natural gas.
There are eight to nine decades of oil and natural gas available from known sources. "And there are reasons to suggest that time frame is too conservative," he said.
The AAPG's annual meeting runs through Wednesday at The Salt Palace. Upward of 5,000 petroleum and sedimentary geologists are expected to attend the four-day gathering.
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BG pips rivals to risky Iranian gas deal (The Guardian)
BG Group will today announce it has beaten European oil firms in the race for groundbreaking - but highly sensitive - gas deals in Iran.
Involvement in the $1.75bn (£1.1bn) liquefied natural gas (LNG) scheme has alarmed analysts. It is politically risky because America has extended its influence in the region through Iraq and considers Iran part of its "axis of evil".
The British exploration and development company, which will report a strong increase in first quarter profits, is expecting to take a 25% stake in the LNG plant at Bandar Tombak alongside the National Iranian Oil Company.
The venture - just given the go-ahead by Tehran - is the first of four gas plants that the Iranians want to construct and operate. The others are under discussion with BP, Shell and Total of France.
BG admitted last night that the project would carry risk. "We have made all the necessary assessments on political risk and have kept the UK government informed at all times," said a spokeswoman. She said the company had only signed a "framework agreement" and there was some way to go before the deal was finalised.
The US authorities remain hostile to Tehran and US oil companies such as Exxon Mobil are banned from any involvement there.
Energy analysts expressed concern at BG's plans, saying LNG was a capital-intensive business with low returns. "I hope it won't get involved through taking a large investment," said Tony Alves, analyst with Investec Securities.
But BG said the Iranian plant would allow it to produce LNG for shipping to India, where it is planning an import terminal.
BG is expected to report first quarter net income of up to £170m, compared with £133m last time, due to the surge in crude and US gas prices.
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| An Empty Energy Bill (New York Times)
The Senate is showing no more enlightenment on the subject of energy than the House. Except for a few modest incentives for energy efficiency, a bill now awaiting action on the Senate floor would do next to nothing to ease America's dependence on foreign oil. Apart from making an expensive and chancy bet on nuclear power, it would do next to nothing to address the problem of global warming. All in all, this bill represents a serious failure of Congressional leadership, aided and abetted by an administration that had asked for little in the way of imaginative ideas and is getting even less.
The energy bill is in fact two measures, a subsidy bill and a tax relief bill, which will be joined on the Senate floor and can thus be treated as one. Like a House version approved last month, the bill is essentially a compendium of tired ideas favoring the coal, oil and and gas industries, including one or two ideas the House hadn't thought of — notably a provision that would authorize oil and gas exploration in coastal waters that have been faithfully protected since the first Bush administration.
The biggest addition to this dreary lineup is a huge $30 billion subsidy for nuclear power, a favorite of the new chairman of the Senate energy committee, Pete Domenici of New Mexico. For many reasons, not least the fact that nuclear energy is economically uncompetitive with most other forms of power, the nuclear industry has not licensed and built a new plant for nearly 30 years. Mr. Domenici seeks to jump-start a new generation of plants with federal guarantees that even his pro-nuclear allies regard as excessively generous.
On the plus side, the bill provides $7.2 billion in various tax incentives for energy efficiency, for renewable fuels like wind and solar power and for research into President Bush's proposed hydrogen-powered fuel-cell car. But these are baby steps, which will do little to diversify the nation's energy base and are dwarfed by the bill's failure to require improvements in automobile fuel economy — the quickest and surest way to ease America's dependence on foreign oil.
This failure is all the more glaring in view of a new report from the Environmental Protection Agency showing that the average fuel economy of the nation's cars and trucks dropped in 2002 to its lowest level in 22 years, largely because of increasing sales of sport utility vehicles, pickups and minivans. The automakers continue to argue that consumers want the bigger vehicles, and that the companies' economic survival depends on them. But it seems to us that neither the American manufacturers nor, for that matter, the Japanese are making much of an effort to market more efficient vehicles. The engineering leaps of the last two decades have produced much in the way of power and acceleration, little in terms of better mileage.
Various senators will try to improve this bill on the floor. John McCain and Joseph Lieberman will offer their bold plan to limit emissions of global warming gases and to establish a market-based system for helping industry reduce these emissions at the lowest possible cost. Max Baucus will try to protect parts of the Northern Rockies from the administration's headlong efforts to open up fragile wilderness to oil and gas exploration. James Jeffords will push for much more investment in renewable energy sources. One can only wish them well. Without significant change, this bill is not worth passing.
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