China oil product imports fall, growth in demand eases - Reuters
Chinese oil product imports slumped in February as local refiners churned out more supply and a major holiday trimmed usage, while broader data showed underlying demand growing at a more measured pace. Imports of key products such as diesel and fuel oil into the world's second-biggest oil user tumbled, data from the General Administration of Customs showed, although record-high refining rates were seen topping up inventories. The trade figures, combined with domestic refinery output data, implied oil demand growth of around 5% from the previous year, according to Reuters calculations based on core oil products including gasoline, diesel, kerosene and fuel oil. That is a marginal decline from January's 6% growth rate but a drop from 2004's double-digit surge in demand. The figures exclude liquefied petroleum gas (LPG) and naphtha, as refinery output data for these products were not available. Economic cooling measures and an easing electricity supply crunch should help rein in demand that surged by more than 15% last year, but analysts are watching for any upside surprises to a consensus forecast of 8% growth. “(Oil) demand overall remains strong,” said Victor Shum at consultants Purvin & Gertz in Singapore. “China essentially shuts down for two weeks over the new year, which explains the fall in product imports.” China's Lunar New Year, when many factories and offices close, fell in February this year but in January last year. “Last year's demand growth was phenomenal, and no one really expects that to continue,” Shum added. But economic data so far this year shows an expansion still in full swing. Fixed-asset investment and industrial output both grew by a higher-than-expected rate in the year through January-February, at 24.5% and 16.9%, respectively. The customs data also confirmed a rebound in crude oil imports, with net imports jumping to 10.3 million tonnes (2.7 million barrels per day) versus 7.3 million tonnes (1.7 million bpd) in January, the lowest figure in 14 months.
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Oil Dips from Highs - ABC News
Oil rolled back a little on its recent gains on Tuesday, but concerns about the rapid rate of demand growth this year kept spot prices above $57, within reach of last week's record high. U.S. crude traded down 26 cents to $57.20 a barrel, compared to the peak of $57.60 struck last Thursday. London's Brent crude eased 13 cents to $55.52 a barrel. Oil prices are up 32 percent since the end of 2004 as rapidly expanding petroleum use, especially in emerging Asian economies and the United States, concentrates fears that global production capacity may struggle to meet demand. OPEC's president said on Tuesday the cartel would not need to decide for up to two weeks whether to increase production quotas further to cool high oil prices. "We don't think there is a shortage of supply in the market," Sheikh Ahmad al-Fahd al-Sabah, also Kuwait's oil minister, told Reuters in Algiers. "We are waiting for a period of time through negotiations to see if prices maintain at a certain level or increase rapidly then we will take a decision to increase production in the market," he said. OPEC's move last week to raise quotas by 500,000 barrels per day (bpd) to 27.5 million had little success in slowing upward momentum, leading analysts and traders to ask when, not whether, the group would push ahead with a second tranche of extra supply it had agreed to release if prices kept rising. When asked when OPEC could implement the possible new rise in quotas, Sheikh Ahmad said "at least 10-14 days to two weeks." Former Saudi Arabian Oil minister Sheikh Ahmed Zaki Yamani said that prices were unlikely to come down far soon. "I don't see a sharp drop. Only, God forbid it, if there is a crash in the U.S. economy. Hopefully that won't happen," Yamani told reporters on the sidelines of a conference in London.
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High oil prices here to stay: IMF - New Zealand
Oil prices edged towards US$57 a barrel yesterday as the IMF forecast high energy costs to stay for the next two years. The forecast was based on worries that robust demand would strain global supplies despite moves by Opec producers to raise output. The world would have to live with lofty oil prices for at least the next two years due to a combination of strong demand and supply constraints, Rodrigo Rato, the managing director of the International Monetary Fund, said on Sunday. World oil prices have climbed almost 50 per cent in the past year and scaled record nominal highs last Thursday. "We have to be aware that probably oil prices will stay high, although probably not at this level, in the next two years at least because of demand pressures - there is certainly very strong demand in the world for oil - and also because of certain supply constraints," Rato told reporters in the Indian capital. The world economy enjoyed its strongest growth in 30 years last year, despite the spike in oil prices, and Rato said he expected growth of more than 4 per cent again this year. But he said growth could be hit if oil stayed at current levels or climbed even higher and urged oil-producing countries to be more receptive to private-sector investment. The Organisation of Petroleum Exporting Countries (Opec) on Wednesday announced an immediate 500,000 barrel per day (bpd) increase in output, with another half a million bpd to come should prices fail to ease. Saudi Arabia said the extra oil was meant to ward off a supply crunch at the end of 2005. But with output already near a 25-year high, the group is stretched to meet demand growth. Other major exporters Russia and Norway also cannot add significantly to this year’s supply. Rato said, though, the supply bottlenecks forcing prices higher also reflected a lack of refining capacity, where the major responsibility lay with oil-consuming countries. Stricter environmental concerns, along with decades of low margins caused by overcapacity, have made major oil companies reluctant to invest in new refineries in the United States and Western Europe. Consumers needed to be aware of the real cost of oil, and Governments needed to diversify their sources of energy, he said. "It’s clear that at this level of prices - even if they’re reduced a little bit in the medium term - Governments of all consuming countries have to have a very clear energy policy both in terms of demand and pricing," said Rato, who is on the last leg of a five-day trip to China and India. "The problem for Opec members and their ability to control prices is that they are now at a stage where the market is aware of how much spare capacity they have, and it is not a lot," said Mark Pervan, a Melbourne-based analyst at Daiwa Securities. "So pledging more production just means less available supply from them."
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Terrorists strike at oil's heart - The Australian
THE suicide car bomb that gutted a suburban theatre in Doha yesterday, killing one and injuring 12, marks a new phase in the creeping spread of terrorism into the Gulf states – the critical yet vulnerable heart of the world oil industry. The attack on this soft target in the Qatar capital has yet to be claimed, but it is widely believed to be the work of the Islamist fighting cells already active in Saudi Arabia and Kuwait, which have both been plagued by bombings in the past 12 months. The latest blast abruptly raises the stakes. Qatar, a small, distinctly liberal-accented city-state, perched above the world's largest natural gas reserves, represents the future of global energy supply, rather than its present. The country is in the midst of a large-scale economic expansion supported by expatriate experts – the targets of the weekend attack, which struck a theatre full of Westerners watching a performance of Shakespeare's Twelfth Night. One English citizen was killed, the theatre was reduced to rubble and the staff members of a British school directly opposite were evacuated. At a stroke, a new estimate of the security context in the Gulf is required. The Saudi kingdom is already engaged in elaborate counter-terror policing, and has raised visible security on the streets of its major cities. In Kuwait, a recent upsurge of Islamist attacks has transformed the country's sense of distance from the crisis in neighbouring Iraq. The contagion has now spread to Qatar, a desert peninsula bordered by Saudi Arabia and insulated by its pragmatism from the wilder debates of Arab politics. Much about the attack's site and timing is suggestive. Qatar is celebrated as the home of Al-Jazeera, the pan-Arab satellite network that has transformed the airwaves of the Arab world, and has also become the chief transmission channel for messages from militants and associates of al-Qa'ida leader Osama bin Laden. The country was the base camp for the US invasion of Iraq on March 19, 2003 – the second anniversary of which was marked by huge rallies around the world at the weekend. It is also the Gulf state with the closest informal ties to Israel – and if a long-term peace deal is struck between the Israelis and Palestinians, Qatar would be the Arab nation most likely to follow suit and establish diplomatic ties with Jerusalem. The bombing appears to have been, despite its devastating physical impact, less effective than at first feared: most of those in the theatre audience who were wounded have already left hospital, according to Doha authorities. Only the car-bomber and one victim were killed. The vehicle used in the attack was registered to an Egyptian, the Interior Ministry has determined: beyond that, little more is known. Security chiefs, both in Qatar itself and in the wider region, are nervously aware of the spreading extent of the terror strikes under way against soft targets linked to Westerners. Saudi and Kuwaiti officials had thought that a series of raids in late January had done much to roll up the Islamist networks in the Arab peninsula professing allegiance to Osama bin Laden and his cause: the Doha blast raises the possibility that a new group has proliferated there. The further fear is that other attacks will follow on relatively undefended locations frequented by Westerners in the Gulf's business cities. The model for Doha's expansion is neighbouring Dubai, economic centre of the United Arab Emirates and the hub of the modern Arab high-technology sector. Until now, the Islamist militants have presented the air of freelance fighters determined to mount assaults on Western diplomatic compounds or government ministries. But last week, a leader of al-Qa'ida in the Arab Peninsula group issued a call on an Islamist website, demanding that his fellow militants in the region should make strikes against "crusader" targets. If a campaign against such civilian locations is continued, the nature of the expatriate societies of the Gulf, so vital to the region's economic development, will change forever – and the prospects for further liberalisation and progress towards democratic government are also likely to be affected.
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Secret US plans for Iraq's oil - BBC
The Bush administration made plans for war and for Iraq's oil before the 9/11 attacks, sparking a policy battle between neo-cons and Big Oil, BBC's Newsnight has revealed. Two years ago today - when President George Bush announced US, British and Allied forces would begin to bomb Baghdad - protesters claimed the US had a secret plan for Iraq's oil once Saddam had been conquered. In fact there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of "Big Oil" executives and US State Department "pragmatists". "Big Oil" appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants. Insiders told Newsnight that planning began "within weeks" of Bush's first taking office in 2001, long before the September 11th attack on the US. An Iraqi-born oil industry consultant, Falah Aljibury, says he took part in the secret meetings in California, Washington and the Middle East. He described a State Department plan for a forced coup d'etat. Mr Aljibury himself told Newsnight that he interviewed potential successors to Saddam Hussein on behalf of the Bush administration. The industry-favoured plan was pushed aside by a secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq's oil fields. The new plan was crafted by neo-conservatives intent on using Iraq's oil to destroy the Opec cartel through massive increases in production above Opec quotas. The sell-off was given the green light in a secret meeting in London headed by Ahmed Chalabi shortly after the US entered Baghdad, according to Robert Ebel. Mr Ebel, a former Energy and CIA oil analyst, now a fellow at the Center for Strategic and International Studies in Washington, told Newsnight he flew to the London meeting at the request of the State Department. Mr Aljibury, once Ronald Reagan's "back-channel" to Saddam, claims that plans to sell off Iraq's oil, pushed by the US-installed Governing Council in 2003, helped instigate the insurgency and attacks on US and British occupying forces. "Insurgents used this, saying, 'Look, you're losing your country, you're losing your resources to a bunch of wealthy billionaires who want to take you over and make your life miserable,'" said Mr Aljibury from his home near San Francisco. "We saw an increase in the bombing of oil facilities, pipelines, built on the premise that privatisation is coming." Philip Carroll, the former CEO of Shell Oil USA who took control of Iraq's oil production for the US Government a month after the invasion, stalled the sell-off scheme. Mr Carroll told us he made it clear to Paul Bremer, the US occupation chief who arrived in Iraq in May 2003, that: "There was to be no privatisation of Iraqi oil resources or facilities while I was involved." Ariel Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq's oil fields. He advocated the plan as a means to help the US defeat Opec, and said America should have gone ahead with what he called a "no-brainer" decision. Mr Carroll hit back, telling Newsnight, "I would agree with that statement. To privatize would be a no-brainer. It would only be thought about by someone with no brain." New plans, obtained from the State Department by Newsnight and Harper's Magazine under the US Freedom of Information Act, called for creation of a state-owned oil company favoured by the US oil industry. It was completed in January 2004 under the guidance of Amy Jaffe of the James Baker Institute in Texas. Formerly US Secretary of State, Baker is now an attorney representing Exxon-Mobil and the Saudi Arabian government. Questioned by Newsnight, Ms Jaffe said the oil industry prefers state control of Iraq's oil over a sell-off because it fears a repeat of Russia's energy privatisation. In the wake of the collapse of the Soviet Union, US oil companies were barred from bidding for the reserves. Ms Jaffe says US oil companies are not warm to any plan that would undermine Opec and the current high oil price: "I'm not sure that if I'm the chair of an American company, and you put me on a lie detector test, I would say high oil prices are bad for me or my company." The former Shell oil boss agrees. In Houston, he told Newsnight: "Many neo conservatives are people who have certain ideological beliefs about markets, about democracy, about this, that and the other. International oil companies, without exception, are very pragmatic commercial organizations. They don't have a theology."
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