David Seaton's Energy Links®

"The Stone Age came to an end not for a lack of stones and the oil age will end, but not for a lack of oil.'' 

Sheikh Ahmed Zaki Yamani
 

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Editorial
*Iran seeks to sign key oil deal with China by January - Reuters
*The year we watched the rise of oil, gold, China and India - Glasgow Herald
*Oil falls as warmer weather forecasts outweigh OPEC's improved demand forecasts - AFX
*Bush Friend Evans considering job at Russian oil co. - Seattle Post Intelligencer
*Investigators seek cause of oil depot fire in Britain - Boston Globe
*Kazakhstan opens oil pipeline to China - Al Jazeera
*Oil prices enter "super-spike" phase - CNN

David Seaton's Energy Links® Editorial - CIA Chronicles: the Witch and the Wardrobe
Perhaps the most surprising thing about the CIA torture scandal is everyone’s surprise. As if some “Narnia” like spell had been broken, suddenly supposedly well informed people could see a world that had always been there… if only they had cared to look. Veteran journalist, Anthony Lewis, twice winner of the Pulitzer Prize, wrote in The Nation magazine, “When the Nazis came to power in Germany in 1933 and proceeded to carry out their savagery, many in the outside world asked how this could have happened in the land of Goethe and Beethoven. (...) Hannah Arendt and many others have stripped us, since then, of confidence that people will resist evil in times of fear. (…)But it still comes as a shock to discover that American leaders will open the way for the torture of prisoners”. However, in counterpoint to Lewis, Naomi Kline in the same issue of The Nation recalls the CIA’s “Operation Phoenix” in the Vietnam War, where its agents operated forty interrogation centers where more than twenty thousand suspects were killed and thousands more tortured. Klein continues by reminding amnesiacs of the US Army’s notorious, “School of the Americas” in Panama, where from 1946 to 1984 students--military and police officers from across the hemisphere--were trained in many of the same "coercive interrogation" techniques which were used extensively in Chile, Argentina and El Salvador and which have since resurfaced in Guantánamo and Abu Ghraib.  Klein writes, “The Bush Administration's open embrace of torture is indeed unprecedented--but let's be clear about what is unprecedented about it: not the torture but the openness.”

But in the way of children and geniuses, it was playwright Harold Pinter in his Nobel Prize acceptance speech who went directly to the point: "Everyone knows what happened in the Soviet Union and throughout Eastern Europe during the post-war period: the systematic brutality, the widespread atrocities have been fully documented and verified. But my contention is that the US crimes in the same period have only been superficially recorded, let alone documented, let alone acknowledged, let alone recognized as crimes at all. I believe this must be addressed and that the truth has considerable bearing on where the world stands now. (…)You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis.” Pinter opens a door a wardrobe that must be explored. The cold war was a mutually sinister, demeaning and deforming experience for all its participants. The "losers" have shuffled off into history, but what can we do to protect ourselves from the "winners"? 
David Seaton

David Seaton's Energy Links®

Iran seeks to sign key oil deal with China by January - Reuters
Iran hopes to sign a major oilfield deal with China's Sinopec by the end of January, Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian told the oil ministry Web site on Saturday. If China does sign a deal, it could revive Iran's moribund oil industry that has been stagnant for nearly four months while President Mahmoud Ahmadinejad tussled with parliamentarians over his choices for oil minister. But the deal could draw fire from the United States. Washington has already penalized Chinese firms for working in Iran, which it accuses of seeking nuclear arms and funding anti-Israeli militia. Tehran denies the charges. Iran is looking to export liquefied natural gas (LNG) to China for some 30 years when its exports of the supercooled fuel hit world markets in 2009. The overall value of such a contract is estimated at more than $70 billion. In return, China would take a large upstream stake in the giant Yadavaran oilfield in southern Iran. Iran signed a Memorandum of Understanding on such a deal in October 2004, but Nejad-Hosseinian said he hoped all the details of a proper contract could be finalized by January. "Experts will present a report on Tuesday to high-level decision-makers," Nejad-Hosseinian said. "A final contract could be finalized by the end of January 2006." He said one of the main negotiating areas would be the output expected from Yadavaran. "Iran estimated the production capacity at 300,000 barrels per day (bpd) but the Chinese have pledged their readiness to extract 180,000 bpd," he said. "Sinopec has said it could produce 300,000 bpd if well tests show that is possible after 180,000 bpd is reached." Other complications included the length of the concession of the oilfield and pricing. Signing big upstream investment deals is crucial for the world's fourth biggest crude producer as output capacity is dropping at an alarming rate. Previous oil minister Bijan Zanganeh said in July Iran's oilfields were depleting by up to 400,000 bpd each year. Iran is leaning toward favoring India and China in its energy investment deals, countries with booming energy demands that have proved far less politically prickly than the United States and Europe.
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The year we watched the rise of oil, gold, China and India - Glasgow Herald
IF you looked at 2005 from a distance you would scarcely believe that the oil price shock – which saw the price of crude break through $70 per barrel in the aftermath of Hurricane Katrina – would have such limited economic effects. Compare it to the earlier oil spikes of 1973 and 1980 which provoked severe bouts of “stag flation” (a nasty combination of recession and high inflation) which paralysed the global economy for several years afterwards. There are two main reasons why high oil prices, which have been matched by dramatic rises in the prices of many other commodities this year, have not led to a similar scenario this time around. The first has been that central banks responded in a much better fashion to higher commodity prices, gradually raising interest rates – or at least hinting at higher rates – in a bid to ease inflationary pressures on the wider economy. The US Federal Reserve last month raised its short-term rate to 4%, the highest level in more than four years. The second reason is globalisation, which has itself been made possible by the end of the cold war and the opening up of the Chinese and Indian markets. Back in the 1970s and early 1980s, national economies were like giant silos, and therefore far more susceptible to pricing pressures at times when energy prices went through the roof. In today’s more globalised world, both production and services are more mobile and trade union power has to a large extent been emasculated. Production can therefore be transferred to places, such as India, where unit labour and other costs are significantly lower. Mirroring the rise in oil this year has been a parallel rise in the price of gold. Lovers of the shiny metal have driven the price up to more than $530 per Troy ounce, largely because of their fears of a return to inflation and their lack of faith in the stewardship of the developed economies. In an uncertain global environment, they view gold as a deeply reliable hedge. But, this time, they might have made the wrong call. Inflationary pressures have come off the boil since the summer, as the $10 per barrel drop in the price of oil since the summer starts to work its way through the system. Energy efficiency is also playing a part in ensuring inflation has not followed the oil shock. A further reason why developed economies have been more able to accommodate high oil prices is because the shift from manufacturing to services means they are much less energy-intensive. While oil imports represented 3% of the GDP of OECD countries in 1980, they account for just 1% today. Competition and productivity improvements have further ensured the knock-on effects have been much more muted than the doomsayers feared. Global economic growth of 4.25% in 2005, as predicted by the World Economic Forum, is a creditable performance at a time of such uncertainty. Another big story of 2005 has been the continuing remarkable growth of the economies of India and China. They are expected to grow at 7% and 9% respectively in 2005, despite their dependence on imported oil. Scottish businesses that neglect the opportunities presented by these two economic powerhouses – either as a manufacturing base or as a consumer market – might well be missing a trick. Particularly when we have just passed another global economic milestone. Last week it emerged that following a revision by Beijing statisticians, China’s GDP in 2004 in fact reached £1.13 trillion, a whisker ahead of the UK’s £1.11 trillion, making it the fourth largest economy in the world. But China and India may also represent a real threat to our future economic wellbeing. Chancellor Gordon Brown recently warned that the two countries between them are training more engineers, computer scientists and university graduates – four million a year – than Europe and the US combined. Can the global economy continue to grow and the new challenges be met without the protectionism of a “fortress West” mindset among the developed economies? At year end the omens do not look good. The strains imposed by shifts in global economic power were bubbling to the surface in Hong Kong this weekend, where the crucial World Trade Organisation talks are said to be “in peril”. This is a result of the intransigence of the European Union, which is resisting calls to end its agricultural export subsidies by 2010, and US reluctance to give duty-free and quota-free access to goods from the world’s least developed countries. Without such concessions, the current Doha round of trade talks is unlikely to culminate in a fairer trade treaty next year. It would prove an unfortunate end to the economic year.
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Oil falls as warmer weather forecasts outweigh OPEC's improved demand forecasts - AFX
Oil continued falling as forecasts calling for warmer-than-normal late winter temperatures more than offset OPEC's upward revision to its 2006 global oil demand forecast. At 3.44 pm, February-dated Brent futures contracts were down 78 cents at 58.62 usd a barrel, while US benchmark January-dated contracts were down 59 cents at 59.40 usd. OPEC said in its monthly oil report earlier today it now expects world oil demand to rise by 1.6 mln bpd or 1.9 pct to average 84.9 mln bpd in 2006, given the more favourable view of world economic growth next year. The cartel, supplier of about a third of the world's oil, forecast demand for OPEC oil coming in at 28.7 mln bpd in 2006, up 134,000 barrels from its previous forecast and above its current production ceiling of 28 mln bpd. It said it expects oil consumption to rise in all major regions next year, with China registering a rebound in demand. It also expects the pace of demand to outstrip growth in non-OPEC supplies, hence the higher call on OPEC crude. Oil prices failed to react to the news, however, extending yesterday's downtrend sparked by a long-range forecast from the US National Weather Centre calling for above-normal late winter temperatures. Oil prices have gained about 10 pct this month as freezing temperatures in the US Northeast, the world's largest heating oil consumer, sparked fears about winter heating fuel supplies. But prices began falling this week on unexpected weekly increases in US crude supplies. US crude stocks are currently about 12 pct above year-ago levels. 'The weather has been the primary driver in the market recently, so with stocks currently ample, any signs of lower demand on heating oil will knock the market lower,' said Sucden analyst Sam Tilley. IFR Energy Markets analyst Timothy Evans said he sees the price gains of the past few week's as a temporary upward correction within an overall downward trend. Oil prices have generally been falling since touching a record high of 70.85 usd the day after hurricane Katrina ravaged the US Gulf of Mexico, severely damaging oil facilities there. 'About the only upside potential left is the fading cold and the off chance traders will read the typical year-end inventory draw as a shortage, rather than the legalised tax-evading shell game it actually is,' he said. But Fimat analyst Mike Fitzpatrick warned that the 'performance of long term weather forecasts hasn't been very impressive' and that 'supplies have survived the first bout of cold, but winter hasn't even officially started yet'. 'If the weather were to surprise with a considerably milder finish to the month of December, that might justify a temporary probe lower, but the late November lows are probably out of reach,' he said. Oil prices are currently about 40 pct higher than they were at the start of the year.
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Bush Friend Evans considering job at Russian oil co. - Seattle Post Intelligencer
Russian President Vladimir Putin has offered former Commerce Secretary Donald Evans, a close friend of President Bush, a top job at Russian state oil company OAO Rosneft. A person familiar with the details of a recent trip Evans made to Russia said the offer came at a meeting Evans had with Putin last week at the Kremlin. This person spoke only on condition of anonymity because no public announcement has been made. Evans did not give an answer at the meeting but said he would consider the offer, the person said. The Interfax news agency quoted Deputy Prime Minister Alexander Zhukov as telling reporters at a news conference Thursday that the government would in principle welcome the participation of Western executives in Russian companies. "As for Evans, we'll soon find out," Zhukov said. Rosneft has previously declined to comment on Evans' possible appointment, directing requests to the Federal Property Agency, which holds the state's 100 percent stake in the company. No one could be reached at the agency Friday evening. The Wall Street Journal reported Friday that Rosneft is scheduled to sell as much as 49 percent of its stock in an initial public offering in 2006. Evans was in Russia last week at the invitation of the American Chamber of Commerce to discuss integrating Russia into the global economy. While in the country, he attended a number of meetings with U.S. executives doing business in Russia and with senior officials of Putin's government. A week ago, the Russian state-owned gas company OAO Gazprom named former German Prime Minister Gerhard Schroeder as chairman of a $5 billion Russian-controlled venture to build a gas pipeline under the Baltic Sea.
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Investigators seek cause of oil depot fire in Britain - Boston Globe
Investigators searched yesterday for the cause of a huge explosion Sunday at one of Britain's largest fuel depots, including the possibility that a tanker driver had accidentally sparked the blaze. They also were looking into whether firefighters had enough equipment and training to deal with such an inferno. The chain reaction of explosions at the Buncefield oil depot blackened skies as far away as France, and triggered a blaze that burned for days. Forty-three people were injured. The Fire Brigades Union, which represents most British firefighters, accused fire authorities yesterday of not having enough foam and of not adequately training firefighters to tackle such a blaze. ''It was a catastrophe waiting to happen," said a union spokesman, Duncan Milligan. A whistleblower at the depot, meanwhile, described multiple safety hazards to The Sun newspaper yesterday, and called the facility a ''ticking bomb." But an official investigating the fire said he had had no ''grave concerns" about conditions at the depot before the blaze. The county's fire chief, Roy Wilsher, said the union's assertions were ''utter nonsense." ''The work of my firefighters and my officers has been magnificent," said Wilsher. A spokesman for Total, the French firm that operates the depot with Texaco, said that the company could not comment on specific allegations about the explosions, and that it would await the result of the Health and Safety Executive investigation.
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Kazakhstan opens oil pipeline to China - Al Jazeera
A new oil pipeline to carry oil to China from Kazakhstan has formally been inaugurated, brightening Beijing's prospects of reduced dependence on Middle Eastern crude. With the push of a button, Nursultan Nazarbayev, the president of Kazakhstan, put the $806 million pipeline into service on Thursday from the control centre of state-run KazTransOil in the Kazakh capital of Astana. "This is an event of the utmost importance for economic and commercial relations between China and Kazakhstan," President Nazarbayev said. The 1000km pipeline linking Atasu in central Kazakhstan to Alashanku in western China will now start to fill with Kazakh oil from the central Kumkol field. The route covers some of the world's most inhospitable territory, with extreme temperature ranges and earthquake-prone zones. But the pipeline, jointly developed by the China National Petroleum Corporation (CNPC) and the Kazakh state energy company Kazmunaigaz, is a first milestone in a more ambitious project: to link Chinese consumers to the far bigger oil fields of the Caspian Sea. Oil analysts said the new pipeline was an important step in Beijing's effort to reduce its reliance on Middle East supplies at a time when the country's energy needs are soaring. "The new Kazakh pipeline is small but it signals a real Chinese interest in trying to move away from Middle East oil," said Kuen Woon Paik, a researcher at Chatham House, a London think tank. Beijing also is negotiating with Russia over the construction of a proposed pipeline to deliver Siberian oil. That line, to be completed as early as 2008, would carry about 380,000 barrels per day. "Both the Kazakh and Russian lines will help China get away from dependence on Middle East oil," said Gavin Thompson, who works in Beijing for the British oil consulting firm Wood Mackenzie. The new pipeline is also a step towards breaking Kazakh dependence on its former master Russia for export routes. Deliveries are expected to start only in mid-2006, with an initial annual capacity of 10 million tonnes. But that trickle, still dependent on Russia's participation due to a huge gap in Kazakhstan's pipeline network, could become a flow once further pipelines are built westward to the Caspian. "This is the start of a long road to bring big Kazakh oil to the East," Kazakh oil minister Vladimir Shkolnik said. China's growing role in Kazakhstan thus far appears to have caused little anxiety in Moscow. Kazakh deliveries to China lessen pressure on Russian producers to sell to China rather than other markets where higher prices can be expected, analysts say. By contrast, Russia gave a distinctly frosty reception to the inauguration earlier this year of the Washington-backed Baku-Tbilisi-Ceyhan pipeline that runs from the Caspian Sea to Turkey's Mediterranean coast, and is set to carry oil from Azerbaijan and later from Kazakhstan. Thanks to such deals, Kazakhstan is forecast to become one of the top 10 world oil producers within a decade. The government wants to raise oil exports from about 1.2 million barrels a day this year to 3.5 million barrels a day in 2015.
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Oil prices enter "super-spike" phase - CNN
Already sky-high oil prices have entered a "super spike" phase that could last for four more years as global demand booms and supply growth slows, Goldman Sachs analysts said Tuesday. "We disagree with what appears to be a growing consensus that crude oil prices reached their peak levels earlier in 2005," said the firm's Global Investment Research. The analysts said oil demand remained resilient and supply growth lackluster, prompting them to keep their average U.S. crude price forecast for next year unchanged at $68 a barrel. Oil futures on the New York Mercantile Exchange have averaged $56.59 so far this year. The group also predicted oil prices could see 1970s-style price surges to as high as $105 a barrel during this period. "With WTI oil prices on-track to average about $57 a barrel in 2005, we think the past phase will be remembered as the first of what could be a four-to-five-year 'super-spike' phase," their report said. Goldman Sachs first mentioned a super-spike phase in March, five months before U.S. oil prices skyrocketed to a record $70.85 a barrel. Prices have since eased. The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand. "It is the seeming insurmountable challenge of OPEC's needing to add real new capacity on a just-in-time basis that gives us so much confidence that we are in the super-spike phase," it said. OPEC, which has been pumping at the highest rate for 25 years, is set to boost its spare capacity to 3.1 million bpd by the end of the 2006. Despite hurricanes, high fuel prices and increased conservation, energy consumption in the United States remains strong, as does China and India, the bank said. "Ultimately, we agree that the energy bull market will roll over once demand destruction really begins," it said. "We simply do not believe we have arrived at that point." The International Energy Agency, the West's energy watchdog, estimated world oil demand could grow at an average of 1.8 million to 2.0 million barrels per day through 2010. Last year's demand growth of 3 million bpd was the highest for a generation.
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