Archive for the ‘OPEC’ Category

OPEC declares war on biofuels

Tuesday, June 5th, 2007
The Financial Times reports today that Opec warned Western countries "that their efforts to develop biofuels as an alternative energy source to combat climate change risked driving the price of oil through the roof." Preempting the G-8 meeting where energy security and global warming will be central issues, Abdalla El-Badri, OPEC's secretary-general, said the powerful cartel was considering cutting its investment in new oil production in response to moves by the developed world to use more biofuels. He said OPEC members had so far maintained their investment plans but he warned: “If we are unable to see a security of demand...we may revisit investment in the long-term.” Mr El-Badri statements and warnings that biofuel production could prove unsustainable as it competed with food supplies reveal a deep rooted fear among OPEC members that the West's biofuels project will ultimately reduce global demand for their product and eventually break their economic backbone. We are probably doing something right.

Hemispheric ethanol alliance

Wednesday, February 7th, 2007
The Miami Herald reports:
In the coming months, Washington will roll out a strategic partnership with Brazil to expand ethanol and other biofuels usage in the hemisphere, hoping not only to bolster energy security and generate more rural jobs for poor countries but foster goodwill toward the United States, according to several people familiar with the issue. There's even talk that the Brazil deal could blunt the influence that Venezuela's Bush-bashing President Hugo Chávez exerts in the region by fomenting alternate fuels to Venezuela's oil wealth. U.S. officials, however, deny this, noting the arrangement would have happened regardless of Chávez. ''The United States and Brazil are the world's two largest biofuels producers so cooperation is natural,'' said Eric Watnik, a State Department spokesman. ``Our goal is advance to global energy security by helping countries diversify their supply.'
Excellent. Now, if only that 54 cent a gallon tariff on ethanol imports were removed...   UPDATE: Thanks Instapundit!

West’s energy security ever-more at the mercy of foreign governments

Friday, December 29th, 2006
Set America Free Coalition member Frank Gaffney writes in the Washington Times:
As the Communist Chinese and fascistic Russian regimes move to forge close relations with energy-rich nations like Iran, Libya, Sudan, Venezuela, Bolivia, Ecuador and Saudi Arabia, and as the Kremlin consolidates its control over Russia's own vast resources, America and her allies will find themselves increasingly imperiled by their dependency on such sources for oil products and/or natural gas. As a result, President Bush needs to make increased U.S. energy security a central part of the overhauled war-fighting strategy that he is set to announce next month. To do so, he must clearly go beyond the lip service that he paid to our "addiction to oil" in last year's State of the Union speech by taking steps that will make a difference. Done properly, energy security could be one of the most promising areas for cooperation between the Bush Administration and Democrats in Congress. By concentrating on areas where considerable progress is possible (rather than on such neuralgic issues as drilling in the Arctic National Wildlife Refuge or increased CAFE fuel-efficiency standards), America -- and in particular its gas-guzzling transportation sector -- could be made significantly less reliant on oil supplied by unstable or hostile regimes. Such a course of action has been laid out in a blueprint produced by the Set America Free Coalition -- a group spanning the political spectrum -- that forms the basis for the bipartisan, bicameral Vehicle & Fuel Choices for American Security Act (introduced in the last session of Congress as S.2025 in the Senate and H.R. 4409 in the House). It entails two principal steps: (1) ensuring all cars sold in America will be Flexible Fuel Vehicles, capable of burning not just gasoline but ethanol and methanol (or some combination thereof); and (2) assuring the availability of substantially increased quantities of such alternative fuels. This legislation would also help make electricity a true transportation fuel, by promoting the manufacture of plug-in hybrid vehicles. Since scarcely any electricity is generated in America by burning oil, the widespread use of such vehicles could greatly reduce our dependence on foreign sources of petroleum. To realize the full potential of this option, however, President Bush and the Congress will need to join forces on one other important initiative: assuring large-scale U.S. production of advanced lithium ion batteries, an essential ingredient for our future energy -- and national -- security and the competitiveness of our auto industry.

Ahmadinejad’s plan to subvert sanctions

Friday, December 22nd, 2006
excerpt from a recent oped by Gal Luft and Anne Korin:
What do you call a world leader who faces a strategic threat stemming from his country's energy dependence and introduces a crash program for energy independence that taps into his country's domestic resources? Ahmadinejad. With 43 percent of Iran's gasoline imported, Iranian President Mahmoud Ahmadinejad knows that a comprehensive gasoline embargo could cause social unrest that could undermine his regime. In response, he recently announced a three-part crash program for energy independence. One tenet of the plan is massive expansion of the country's refining capacity. While no refinery has been built in the United States in decades, Iran's refinery infrastructure is undergoing one of the world's fastest expansions, including the construction of two large new refineries. A second pillar is to secure imports of refined products from Venezuela, one of Iran's staunchest allies against the West. The third, and most innovative, part of the plan is to convert Iran's vehicles to run on natural gas rather than gasoline within five years. Iran has the world's second-largest natural-gas reserve after Russia - 16 percent of the world's total - which guarantees an uninterrupted supply of cheap transportation fuel for decades. The cost of conversion of both the cars and refueling stations is heavily subsidized by the government.
To read the full IAGS report on Iran's strategy to subvert sanctions, click here.

Doing business, Saudi style

Monday, December 18th, 2006
The short version: 1. The British were investigating a 60 million British Pound slush fund set up to bribe Saudi princes into buying British military jets. 2. Saudis got mad. Saudis said they'll call off the 10 billion Pound deal unless the investigation is called off by, well, yesterday and buy French planes instead. SURPRISE! Longer version.

Oil funds terrorism in Iraq

Saturday, November 25th, 2006
The New York Times reports on a federal government estimate that groups responsible for many insurgent and terrorist attacks in Iraq get "$25 million to $100 million [a year] comes from oil smuggling and other criminal activity involving the state-owned oil industry, aided by 'corrupt and complicit' Iraqi officials". The article adds "other estimates suggest the sums involved could be far higher. The oil ministry in Baghdad, for example, estimated earlier this year that 10 percent to 30 percent of the $4 billion to $5 billion in fuel imported for public consumption in 2005 was smuggled back out of the country for resale. At that time, the finance minister estimated that close to half of all smuggling profits was going to insurgents. If true, that would be $200 million or more from fuel smuggling alone."

China: Oil at any cost

Monday, October 30th, 2006
China's Sinopec sees crude imports rising 21% this year
According to Zhang Yuqing, deputy head of the Chinese National Reform and Development Commission (NRDC)'s energy department China imported 38.34 million tons of crude oil from Africa in 2005, accounting for 30 percent of its oil imports.
In 2005, Saudi Arabia was China's largest source of crude oil, followed by Angola. Four African countries, namely, Angola, Sudan, Congo and Equatorial Guinea, were among the top 10 oil exporters to China in 2005. By the end of 2005, China had invested in 27 major oil and natural gas projects in 14 African countries, including Sudan, Algeria, Angola and Nigeria. Zhang said the government will encourage Chinese firms to expand their cooperation with African countries in the energy sector. (China Daily)
"China's fast-growing economy has created a deep thirst for oil that has pushed it to do business with some of the most corrupt and dangerous regimes on Earth, several of them in Africa. [...]
"Beijing's guiding philosophy of noninterference with the affairs of other nations, and its growing financial involvement in the developing world, are having an overwhelmingly negative effect on stability and human rights. Setting aside China's stonewalling on efforts to crack down on nuclear threats posed by Iran and North Korea, its reluctance to impose tough sanctions on Sudan (where it has significant oil interests) is contributing to the ongoing murder, rape and displacement of hundreds of thousands of people in the Darfur region.[...] "Chinese banks haven't signed on to the Equator Principles, a voluntary set of environmental and human rights guidelines adopted by 80% of the world's commercial lenders. This makes it easier for Chinese banks to do business with corrupt government officials. "

Meanwhile, in the Persian Gulf:

"the importance of energy cannot be underestimated when examining Sino-Arab relations. China is the world's second-biggest energy consumer and third-biggest importer. Its oil consumption surpassed Japan's in 2003 and now stands at 6.5 million barrels per day, compared to 20 million barrels per day for the US. [...] "Today, 58 percent of China's oil imports come from the Middle East, mostly from the Gulf. China has adopted a strategy of geographical diversification by investing in foreign oil and gas fields in more than 20 countries including Venezuela, Nigeria and Australia. But diversification away from the Middle East has its limits. Two-thirds of proven oil reserves are located in the region, mostly in the Persian Gulf. Similarly, many of the oil reserves in non-Middle Eastern countries are rapidly being depleted. The I.E.A. predicts that Chinese oil imports from the Middle East will rise to at least 70 percent by 2015, underpinning that the future of the Chinese economy is inextricably tied to the Middle East. [...] "China has the closest relations with Saudi Arabia, the world's largest oil producer. China is now Saudi Arabia's fourth-largest importer and fifth-largest exporter. Saudi Arabia is China's biggest oil supplier, accounting for almost 17 percent of China's oil imports. Trade between the two has grown an average of 41 percent a year since 1999, according to the Chinese Ministry of Commerce. "Saudi Arabia's oil exports to China increased to some 500,000 barrels per day in 2005, up from 440,000 barrels in 2004. This is set to increase further after Saudi oil giant Aramco agreed to provide the China Petroleum and Chemical Corporation (Sinopec) with 1 million bpd by 2010. Abdallah Jum'ah, president of Aramco, described China and Saudi Arabia "as among the most important energy relationships on the planet." "In April of this year King Abdullah became the first Saudi king to visit China. This was Abdullah's first trip outside the Middle East since ascending to the throne in 2005, potentially signaling a new strategic alignment. During the three day visit, King Abdullah told Chinese legislative chief Wu Bangguo that Saudi Arabia considered China a "truly friendly country" and hoped that their relations would become "better and better."
"The summit saw the signing of five agreements, including a landmark pact for expanding cooperation in oil, natural gas and minerals. Saudi Arabia also granted China a loan to improve infrastructure in China's oil-rich Xinjiang region and offered Chinese companies investment opportunities in Saudi’s enormous infrastructure sector. "

We've been beating on this drum for a while. Further reading:

The Sino-Saudi Connection

U.S., China Are on Collision Course Over Oil

Fueling the dragon: China's race into the oil market

China's oil rush in Africa

Chinese Quest for Crude Increases Focus on Africa

As Set America Free's Anne Korin said to UPI:

"'We don't want to see it escalate to a resource conflict' [...] The Set America Free Coalition says the best solution is to help China help itself [..] allowing Beijing to be steered away from its oil dependence.

"'In the same way (developing countries) skipped wires by going right to wireless, they could leapfrog oil and go right to alternative energy sources'"

And the U.S. should lead by example.

So who pays for it?

Monday, October 30th, 2006
Mark Steyn in his new book America Alone:
"What gives the jihad its global reach? It's not difficult to figure out: Wahhabism is the most militant form of Islam, the one followed by all nineteen of the September 11 terrorists and by Osama bin Laden.  The Saudis, whose state religion is Wahhabism, export their faith and affiliated local strains in lavishly endowed schools and mosques all over the world and, as a result, traditionally moderate Muslim populations from the Balkans to South Asia have been dramatically radicalized. "That kind of operation doesn't come cheap.  So who pays for it? "You do. After September 11, George W. Bush told the world, 'You're either with us or with the terrorists.' [...] why should anyone take the president's demand to choose sides seriously when America itself refuses to:  the United States is both 'with us' and 'with the terrorists.' American taxpayers are in the onerous position of funding both sides in this war.  In the five years after September 11, the price of oil rose from $12 a barrel to hit an all-time high of $70 - so, if you sell oil, your revenues are five times what they were.  And there's nothing like bigger oil windfalls to drive powerful despots down ever crazier paths. 'Looking at it another way,' wrote Frank Gaffney in his book War Footing, 'Saudi Arabia - which currently exports about ten mbd [million barrels of oil a day] - receives an extra half billion dollars every day.' Where does that extra half-bil go? It goes to the mosques and madrassas that the Saudis fund in every corner of the planet. Oil isn't the principal Saudi export, ideology is - petroleum merely bankrolls it."

Buying the support of a third of humanity

Thursday, October 12th, 2006
Saudi Arabia Woos China and India:
"In January 2006, Saudi king Abdullah bin Abdul-Aziz al-Saud visited China and India, a trip some commentators labeled "a strategic shift" in Saudi foreign policy and reflective of "a new era" for the kingdom. It was King Abdullah's first trip outside the Middle East since taking the throne in August 2005, and it was also the first trip by a Saudi ruler to China since the two countries established diplomatic relations in 1990. "Abdullah's travel was significant. His reception suggested both Chinese and Indian recognition of the House of Saud's role in regulating global oil prices and the impact that Saudi oil policy has not only on Western economies but on the Chinese and Indian economies as well. Riyadh's relations with Beijing and Delhi are not shaped by energy alone, however. There is a major political component to Saudi strategic thinking. The royal family wishes to engage China and India in order to create a political alternative to its relationship with the United States. Saudi thinkers may believe that an Asian alternative will make the kingdom less susceptible to Western pressure on such issues as democratization and terror financing. [...] "Many Saudi officials, annoyed with U.S. pressure to cease funding Islamist and terrorist groups, find Beijing's no-questions-asked policies attractive."  Read the whole thing.
Also read: The Sino-Saudi Connection Fueling the dragon: China's race into the oil market

How Iraqi Oil Smuggling Greases Violence

Thursday, October 12th, 2006
Bilal A. Wahab in the Middle East Quarterly:
"Oil is the lifeblood of Iraq. As Iraqis work to emerge from years of war and sanctions, oil exports are the government's greatest source of revenue. Since 2003, the new Iraqi government has exported US$33 billion in oil. But rather than just fund reconstruction, oil has become a primary commodity on the black market and a central component of the web of corruption, terror, and criminality in Iraq. Oil smuggling has led to a convergence of crime and terrorism that increasingly destabilizes the country [...] "Up to 30 percent of Iraq's imported gasoline has been lost to smuggling networks, half of which is pocketed by the Iraqi insurgency [...] Not only have funds for vital projects been lost, but a portion of the missing revenue helps fund insurgency. Terrorism, in turn, hampers foreign investment. Attacking the oil pipelines could be a criminal enterprise but, regardless, insurgents benefit by extorting protection money from oil trucks. Terrorists and criminals have established a dangerous symbiosis[...] "While problems associated with subsidies and oil industry corruption may seem mundane amidst continued kidnapping and car bombs, until U.S. and Iraqi authorities manage to constrain Iraqi oil smuggling, violent crime and insurgency will continue to flourish."
Read it all. More on this: Fencing in looters and saboteurs in Iraq Iraq's Oil Sector One Year After Liberation (June 2004 paper)