| Asia worried about Iraq - Today - Manilla
High energy prices could check Asia’s growth rates and trigger a global slowdown, while ongoing violence in Iraq is holding back one of the biggest potential sources of relief for the world’s thirst for oil, officials said Monday.
Asia will have the fastest rising demand for oil of any region in the next two decades -- more than 3-percent growth on average, with China and South Asia even higher, according to figures from the Organization of Petroleum Exporting Countries presented to an industry conference in Malaysia.
Global demand, meanwhile, is expected to rise to 115 million barrels per day in 2025 from 77 million in 2002, the OPEC figures said.
But Asia can’t meet its own needs and will remain reliant on Middle Eastern oil, where a series of deadly attacks on Saudi Arabia and continuing uncertainty about Iraq have added to jitters, pushing oil prices to record highs recently, delegates said.
Malaysian Prime Minister Abdullah Ahmad Badawi, whose country is one of Asia’s few net oil exporters, warned high prices or supply problems could check the region’s growth, and hinted at wider implications for the world economy.
“Energy is going to play a major role in sustaining the growth momentum that Asian economies are generating,” Abdullah said in the conference’s opening speech. “What Asia needs is a secure, reliable and affordable supply of energy.”
While Asia weathered previous energy crises, “its sustained and continuing economic expansion means that any disruption in supply or any volatility in prices will have severe implications on further growth,” Abdullah said in a speech read out by his deputy, Najib Razak, because he is overseas.
On the supply side, Abdullah -- chairman of the world’s largest Muslim grouping, the Organization of the Islamic Conference -- said the Middle East was worrying for Asian oil consumers because, “almost in perpetuity, the region is very much embroiled in political issues and conflicts despite continuous efforts to bring peace.”
He welcomed the recently adopted plan to restore sovereignty in Iraq as a “step toward normalizing…the region, although true peace cannot be achieved until the Palestinian issue is resolved.”
Britain’s former envoy in Iraq, Jeremy Greenstock, told the conference the earlier hope that foreign investment would be flooding into Iraq’s oil sector by later this year “looks too optimistic” because of the violence and uncertainty about the government.
Iraq has the potential to produce 6 million barrels of crude per day, but needs U.S.$20 billion in foreign investment to restore dilapidated refineries and infrastructure, he said.
He predicted foreign investors would now wait until the new Iraqi government takes shape in late 2005 before seriously committing to the country.
“If it were not for the violence, we could be optimistic about Iraq,” said Greenstock, who was senior U.S. administrator L. Paul Bremer’s deputy in Iraq until he stepped down recently. “I think security is going to be a problem throughout this transitional period. There will be violence during the elections.”
David O’Reilly, chairman of San Ramon, California-based ChevronTexaco, said political instability in Iraq and Venezuela were adding uncertainties to the oil market, and that prices would only moderate after they are resolved.
He urged Asian countries to make their economies more open and transparent, reduce trade barriers and take up the hunt for new oil resources.
Crude oil prices recently soared to a record high of U.S.$42.45 a barrel due to strong global demand from expanding economies in the United States and Asia, and fears about terrorist strikes.
Azizan Zainul Abidin, chairman of Malaysia’s national oil and gas company, Petronas, said security was one of “a number of unresolved issues in several oil-producing countries that may trigger serious conflicts that would result in disruption of the supply of oil.”
He said the recent oil-price hike “has led the pessimists to predict a slowdown in the world economy.”
Maizar Rahman, OPEC’s acting secretary-general, said the group had the capacity to meet an expected rise in demand that would reach 115 million barrels per day in 2025.
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| Delays dog U.S.-funded Iraq oil projects - NBC News
U.S.-funded projects to repair Iraq's oil industry have run into severe delays, damaging efforts to raise output needed to raise funds for post-war reconstruction, according to an internal Oil Ministry report.
The report, seen by Reuters, shows that work has begun on only 119 out of 226 post-war projects, most of which were awarded to U.S. oil giant Halliburton or its subsidiaries.
No project has been finished and only half the work has been completed in 94 of those under way, the recently prepared report says.
A senior Iraqi industry insider said many of the problems were not security-related, although violence in Iraq has aggravated them. "These projects were due to be completed between July last year and April," he said.
Halliburton officials in Baghdad and Kuwait were not available for comment. The projects, jointly identified by U.S. and Iraqi officials, include water injection plants, surface work, communications, maintenance on oil wells and other facilities.
Iraq's oil sector was in poor shape after last year's U.S.-led invasion because of post-war looting, combined with the effects of more than 12 years of U.N. sanctions and damage suffered in three wars in a quarter of a century.
Iraq now exports around 1.6 million barrels per day (bpd), compared to around two million before the invasion and more than three million before the 1990 Gulf war.
Apart from the problems with the U.S.-funded projects, guerrilla attacks on contractors and infrastructure and lack of funding for the Oil Ministry's own projects helped to derail plans to raise exports to two million bpd by March 2004.
Iraq's U.S.-led administration has delayed releasing $1.5 billion that was to have come from this year's state budget to fund Oil Ministry projects, financed by oil revenue deposited in a U.S.-managed bank account, Iraqi officials say.
These funds were separate from more than $1 billion of U.S. money spent so far on the Iraqi oil sector.
The Coalition Provisional Authority (CPA) released around $800 million of Iraqi oil funds to the ministry two months ago for projects to raise output, the officials say.
CPA officials could not immediately be reached for comment. Thamir Ghadhban, the new oil minister in the interim government formed this month to take over from the CPA on June 30, said last week he remained confident Iraq would reach pre-war output of three million bpd by the end of this year.
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| Saudi oil workers bemoan inadequate security - UPI
Foreign oil workers fearing for their safety bemoan the incompetence of Saudi Arabia's security amid mounting terrorist attacks targeting Westerners in the kingdom.
United Press International obtained copies of e-mail exchanges between Saudi Aramco executives pointing out the ineffectiveness of Saudi forces in dealing with mounting threats of Islamist terrorism.
The e-mails discuss the lack of security for foreign employees and their families and ask that "hired guns" be retained to provide better protection.
The two inter-company e-mails exchanged between three executives were sent on June 3 and June 8 under the heading: "Security Concerns and Suggestions." Saudi Aramco, the state-owned oil company, holds the world's largest oil reserves.
"Aramco and Saudi Arabian forces are completely inadequate in terms of training, capability and motivation," reports one of the executives.
The exchange of e-mails talks of "a new level and type of threat to the Kingdom and to expatriate employees." It warns of "a clear danger to Saudi Aramco's expatriates," and says that "oil industry workers and non-Muslims in the Eastern province" are specifically targeted.
Terrorist attacks in Saudi Arabia, meanwhile, continue to raise serious security concerns. One American was shot dead in Riyadh and another kidnapped Saturday. Last Tuesday gunmen killed an American citizen only two days after an Irish BBC cameraman was killed and a British journalist wounded. These attacks followed two earlier bloody raids on an American company in Yanbu, killing six, and a housing complex in Khobar that left 22 dead.
The terrorist's ultimate goal "is to harm the Saudi government by disrupting Saudi oil operations and, thereby, disrupt the global economy."
"Security at Saudi Aramco residential facilities is completely inadequate against the type of attack that occurred at the Oasis compound," reports one of the executives, referring to the May 29 Khobar attack.
"Terrorists that take hostages, kill hostages and then barter for their escape are a new threat that the compounds are not protected against."
The executive, whose name has been removed from the original document, offers harsh words to his staff, but at the same time provides solutions.
"I am going to talk tough, so here is my opinion," he says. "There are contract hired-guns available. Ex-SAS, (British special forces) U.S. Special Forces and ex-CIA operatives have set up private security firms."
The company "should consider hiring these chaps," says the executive, who stresses the need for "a team who can take action within minutes and take out permanently any unauthorized armed intrusion."
Saudi officials meanwhile continue to play down threats posed by Islamist terrorists. "Of course it is a problem, but it has not reached a stage of crisis in Saudi Arabia," said Saleh bin Abdulaziz Al-Shaikh, Minister of Islamic Affairs, speaking from London Saturday. He assured foreign workers in Saudi Arabia that terrorism in the country has not reached "crisis levels."
However, urged by the U.S. and British embassies in Riyadh, many Americans and other expatriates are leaving.
"The exodus of ex-pats has begun," the Saudi Aramco executive warns. There are approximately 6 million expatriate workers in the kingdom, of whom 35,000 are Americans, working mainly in the oil industry and as military and civilian advisers. Saudi Aramco employs 56,000, of which about 2,300 are U.S. and Canadian citizens. Another 1,200 are European.
A large-scale exodus of expatriates from Saudi Arabia will hamper the country's ability to maintain production. This, the memo warns, will affect the confidence of global oil markets. "The kingdom's ability to deliver will be impacted."
"Retention of existing expatriates and attraction of new expatriates is a critical success factor for the Company and the Kingdom," continues the e-mail. It warns that failing to "retain and attract the non-Saudi knowledge and experience will cause significant risk to staying a reliable oil supplier for the world."
Among those leaving are employees with many years of experience and those with young children. "We lose our experience and our most energetic in one sweep," laments the executive. The memo next addresses the issue of dependants and their security.
"The security of our wives and children is paramount. We need to have armed guards around the schools, and we also need to erect more barricades."
The memo discusses the difficulty in detecting "small bombs." It stresses weaknesses in existing defenses that, it says, are highly insufficient. To protect the safety of company's employees and their families, UPI has chosen not to reveal the list of security gaps outlined in the memo.
The executive points out that employees face "tough and expensive measures." Added security measures, they say, "will take hundreds of millions of dollars or, put another way, one day of revenue."
Asked to comment on the safety concerns raised by its employees, a Saudi Aramco spokesman in Dhahran replied: "The company is doing everything it can to guarantee the safety and well-being of its employees and dependents.
"Saudi Aramco always reviews its security situation and works to ensure that its industrial facilities and communities are safe for employees and dependents who work and live in them. Saudi Aramco's top priority is to ensure the security of its employees, dependents, facilities and communities by working closely with Saudi government authorities. Saudi Aramco takes its responsibilities to its people and facilities very seriously, and the company is committed to carrying out the Saudi Arabian government's policy of providing a reliable supply of oil to meet world energy demand."
Asked if the company was considering retaining "hired guns," a company spokesman who asked that his name not be used, said, "Saudi Aramco and Saudi government authorities work together closely to ensure their safety."
Informed sources confirmed that the oil companies in Saudi are getting nervous. Elaine Carey, vice president of Control Risks Group, an international firm specializing in security consultancy, said her company had received several requests for security revisions from Saudi oil companies.
One of the Saudi Aramco executives recommends that the Saudi government turn to the British for help. "Counter-terrorism is their forte," he states. He adds that living in the kingdom has not been without problems.
"The lifestyle has not been attractive since 9/11 and is highly unattractive since last week." This contradicts statements by Al-Shaikh, the Islamic Affairs minister, who said that recent attacks by al-Qaida had caused little disruption to the Saudi economy or way of life. "Our assessment of the situation is that it is controllable."
The oil company executives recommend the establishment of "a world class, terrorism-trained, fully armed, security force inside the residential compounds." This force should be able to address any situation immediately. "I recommend that Gurkhas be considered," the author of the report asks.
A number of Gurkhas are currently working in Iraq for Global Security of London, and are in high demand, according to a well-informed source, but an official at the London firm said the company does not comment on its clients.
"ChevronTexaco security in London believes the idea has merit and may pursue it themselves in the kingdom," writes the oil executive. He realizes "this violates all sorts of laws in the Kingdom," but given the circumstances, the Saudi government must be convinced that business as usual is going to lose them the business. "Laws and regulations must be changed to prevail over terrorism."
ChevronTexaco Security in London could not be reached for comment. However, a former high-ranking British Special Forces officer now working as a consultant in Middle East security said that in light of recent attacks, all Western companies in Saudi are urgently considering private security for their facilities and particularly living compounds. Apparently Saudi authorities who have responsibility for security do not feel slighted and welcome the arrival of private security firms.
The memo calls for a complete upgrade around the perimeter, better security guards trained "by outside experts, and higher walls as well as "complete exclusion of non-residents from the residential area."
Housing complexes where expatriate oil workers live remain far more exposed than refineries and other installations, which are better protected. "The oil facilities are very well defended," said Roger Diwan, Managing Director of the Petroleum Finance Co. "There are armed troops, cameras, multiple levels of defenses, etc. But for the civilians, it's far more difficult. In Dhahran, you have an entire city to defend. Its very hard."
In closing, the report states that the company must "... do absolutely all that we can to provide security to people, assets and markets. Otherwise, the terrorists win."
Saudi authorities maintain they have the matter in hand, despite terrorism analysts - and continued attacks - attesting otherwise.
"If you look back through the efforts of the Saudi government in tackling terrorism, they have destroyed half of the terrorist force," the Islamic Affairs minister said.
M.J. Gohel and Sajjan M. Gohel, London-based terrorist analysts strongly disagree: "The fact that most of the arrests have resulted in open gun battles suggests either that the Saudis are remarkably inept at security operations or that the terrorists know that security forces are coming."
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| Oil giant Shell admits it fuels Nigeria violence - Sydney Morning Herald
The behaviour of Royal Dutch/Shell in Nigeria is often indirectly responsible for a vicious cycle of violence and corruption that results in the theft of its crude oil, a leaked report funded by the oil giant says.
An increase in crime in the poverty-stricken Niger Delta could force Shell out of onshore production in Africa's largest oil producer by 2008, the WAC Global Services report said.
Shell executives admitted the company had inadvertently added to the violence, saying it was difficult to operate ethically in the Niger Delta and that its attempts at community development "had been less than perfect".
But the company, which admitted it had commissioned the report to try to better understand conflict in the delta, said it did not totally agree with the findings.
"The 2008 date quoted in the report was solely the view of the report's authors. It is not a view with which we agree. Government and local communities must take the lead in ending conflict," it said in a statement.
Escalating violence in the delta results in the deaths of more than 1000 people a year, the report said. Criminal gangs siphon off millions of dollars' worth of crude oil in the swampy delta mangroves, with proceeds used to buy weapons - often from soldiers - and fuel ethnic warfare.
The lucrative theft or "bunkering" of oil is often provoked by the company's behaviour towards local communities, many of which it has isolated by its land acquisition and hiring policies, and by its contractors' corrupt behaviour.
"It is important to note that illegal oil bunkering is probably the most significant accelerator of conflict in the Niger Delta," the report said. Industry analysts say about 100,000 barrels a day are siphoned from pipelines in a process known as "hot-tapping" and sold to Nigerian or foreign buyers at about $US15 ($22) a barrel. World oil prices are about $US35 a barrel.
"One day's worth of illegal oil bunkering in the Niger Delta will buy quality weapons for and sustain a group of 1500 youths for two months," the report said.
Violence between criminal gangs, often backed by powerful political or ethnic figures, has made the delta one of the most inhospitable places in an OPEC-member country.
The delta conflict could escalate as the country approaches presidential elections in 2007, as oil thefts are likely to be linked to political campaigns, the report said.
An uprising by militants of the Ijaw tribe in Delta state last year killed scores of people and forced oil companies to temporarily shut 40 per cent of the country's oil output. Shell produces almost half of Nigeria's total oil output. At least 11,000 people have been killed in sectarian violence since the return to civilian rule in 1999.
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| Take an oil price over $40 - then quadruple it - Telegraph
Everyone agrees that we are running out of oil, what no one knows is how quickly. Pessimists say it could only be a few years until we are plunged into bitter darkness, causing a typhoon of war and famine to sweep the Earth.
Optimists think it will be many decades before this happens, so take your pick. When I say "no one knows" how long we've got, I really mean no one has got a clue, no matter how confident they might sound.
As Shell recently, uncomfortably, made plain, we don't even know if the reserves claimed by oil companies are real or fiction.
The latest stage of this corporate calamity saw Shell wipe 4.5 billion barrels from its "proven" reserves, meaning it's got a quarter less oil on hand than previously claimed.
I asked a few Wall Street types this week if it is really only Shell of which we can no longer be sure. To a man, they said that no other big oil companies will have to confess to overstating reserves, though this seemed to be a matter of faith rather than proof.
Faith is a big factor in the oil market. Saudia Arabia, for instance, claims to have 290 billion barrels in stock, though if anyone asks to actually inspect these supplies, the answer is: sure, as soon as green flying pigs jump over the moon.
Colin Campbell, a geologist who has worked for Texaco and BP, puts the Saudi's true reserves at less than 100 billion barrels, and predicts a "chronic long-term shortage" beginning in 2010.
At the moment, the big issue is not reserves but production. Demand is soaring, not least from China, and whether it can be met is far from clear.
In 1956, a Shell geologist called M King Hubbert predicted that oil production in America would peak in the early 1970s.
No one wanted to hear this, so the industry took the standard way out when faced with such a predicament. It laughed in derision.
Irritatingly for the oil men, Hubbert was right. US oil production peaked in 1970 and has been in steady decline ever since, which is why America has to import 60pc of its oil. That world oil production will also hit Hubbert's peak is inevitable - the big question is when.
Ken Deffeyes, whose book Hubbert's Peak: The Impending World Oil Shortage came out in 2001, has his bet on Thanksgiving Day (that's late November) 2005, though we won't know if he's right until well after then.
Deffeyes thought Shell was the least likely of the main players to have inflated its reserves, but says the bigger problem is countries, not companies. "Iran, Iraq, Saudi Arabia, they are all exaggerating," he says, both about what they've got in reserve and how much they could produce in a pinch.
Another who shares this view is Matt Simmons, who heads Simmons & Company, a Houston based energy-investment bank. Simmons is working on a book that is based on 40 years of industry documents and claims his findings are "truly scary".
Be clear that Matt Simmons is not one of those characters who actively wants us to run out of petrol because he gets such a kick from the idea of a car run on prune juice.
I don't know if he was wearing a cowboy hat and sucking on a cigar when I spoke to him, but it felt like it.
He points out that no big Saudi oil fields have been found in 30 years, and the biggest, Ghawar, is responsible for half of all Saudi oil production since 1948. "It is clear to me that we should be preparing for the day that Ghawar goes into a tailspin. We are not at all prepared for that," he said.
The CIA has been troubled about Saudi reserves for decades, which may be why Simmons was one of the contributors to Dick Cheney's secret energy task force meetings in 2001.
Simmons thinks that Shell "did the world an enormous favour by showing how fuzzy the idea of proven reserves is."
I asked the American Petroleum Institute if Shell could really be an isolated case. A spokesman said it "doesn't have sufficient information to form a view" (why the hell not, you might be asking) but referred me to the Petroleum Industry Research Foundation.
The PIRF doesn't have a press office and no one was very keen to give their name. It also declined to comment.
Although there will still be plenty of oil to go around when Hubbert does peak globally, that's the point at which production can no longer meet demand and oil prices leap. If you think it's expensive to fill up the motor now - just wait.
Oil fell well below $40 a barrel this week, but don't bet on it staying there. Simmons reckons that the correct price for oil so that demand is controlled while humankind comes up with another plan is $182 a barrel.
Simmons, Campbell and Deffeyes are not loved by the oil business, though they are being taken more seriously than ever before.
This week there was a Peak Oil conference in Berlin, a gathering of worrywarts wearing metaphorical "we are doomed" placards.
One unusual attendee was Fatih Birol, the chief economist of the International Energy Agency, who gave a speech saying that everything is fine, before admitting afterwards to a BBC reporter that everything is not. "This is not for the press," he said, after blurting out that the Saudis need to increase supply by 3m barrels a day to avert an oil crisis by the end of the year.
If they don't or they can't, there will be more at stake than the cost of the school run.
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'Vegetable oil' cars can go the distance - Daily News - South Africa
American Etta Kantor runs a well-oiled machine. Literally. And when she fills her car's fuel tank, she doesn't go to the petrol station - but to a local restaurant. Kantor's car, you see, runs on vegetable oil.
As car owners everywhere grapple with pumped-up petrol prices, some are turning to their favourite restaurants for a solution: recycled vegetable oil.
Environmentalists with diesel cars have used vegetable oil for years as an alternative fuel to cut back on sooty emissions and, as petrol prices soar, they say their "veggie cars" are a great way to save cash.
Every two weeks, Connecticut housewife Etta Kantor drives to a local Chinese restaurant to fuel her blue Volkswagen Jetta. She calls ahead and the owner puts aside a few buckets of used oil for her.
At home, Kantor uses a colander and a bag filter to remove water and any food particles. The vegetable oil is then poured into a 57-litre tank in the back of her Jetta, where a spare tyre would usually be kept. With a touch of a button on her dashboard, Kantor can switch from diesel fuel to vegetable oil in seconds.
Restaurants that would have to pay to get rid of their old vegetable oil are happy to give it away for free.
Driver Aaron Schlechter says he picks up about 150 litres twice a month from a local restaurant. He uses it to fuel his car for his 270km commute every day to his job in New York City.
"The only way I can assuage my guilt by travelling this awful distance is by driving something that isn't consuming fossil fuels and has much more environmentally friendly emissions," said Schlechter.
Vegetable oil is becoming so popular that a Massachusetts company called Greasecar is buying it in bulk from a distributor and selling it to local customers. Since 2001, Greasecar has also been selling conversion kits, like the one in Kantor's car, that allow diesel cars to run on the recycled oil. About 200 kits were sold in the past year and a standard conversion kit sells for the equivalent of R5 500.
"Once you install it, though, you are saving hundreds and hundreds of dollars," said Greascar founder Justin Carven. "The product usually pays for itself within the first year".
Cars that have a conversion kit have two fuel systems: one that operates on diesel and the other on the recycled oil. The car is stopped and started with diesel; once it's running, the vegetable oil is heated to make it thinner. The driver can then switch fuel systems and the recycled oil is sprayed into the engine in the same way as normal diesel fuel.
The kit only works on diesel engines because vegetable oil is not flammable enough to work in petrol engines that are spark-ignited.
Although America's Environmental Protection Agency has approved vegetable-based biodiesel, which is also gaining in popularity, it hasn't given the nod to any recycled oil for sale, said Christine Sansevero, an environmental engineer for EPA.
"You just don't know what's in that oil," she said. "There could be metals, other chemicals that, when burned, could create something you didn't intend to burn. It could also be fine, but it's an unknown."
Biodiesel is a fuel derived from plant oil or animal fat. It can be used in pure form, but it is often blended with regular diesel. The most common form is B20 - a blend of 20 percent biodiesel and 80 percent petroleum diesel.
Veggie car owners agree that bio-diesel is another renewable fuel source, but say it isn't as cost effective or eco-friendly.
Pure biodiesel costs more than diesel. Even so, the trend is catching on, especially for those who have a distance to drive. The Healing Waters Band had a Greasecar conversion kit installed in its bus for a recent seven-week tour across the United States. The band used a blended biodiesel mix to start and stop the engine, and vegetable oil for the rest.
The California-based band left its hometown of San Diego on a full tank of vegetable oil and then filled up again at a Chinese restaurant in Missouri before buying 1 900 litres during a stop at Greasecar in Massachusetts.
"We only spent $200 (R1 316) for a trip that would have normally cost us about $1 200 (R7 896), and we probably could have done it all for free if we kept stopping at restaurants," said Tony Thorpe, the band's vocalist.
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