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30 November 2013

Press review 30-11-2013

The international agreement on Iran's Nuclear programme has been making the news world go round this past week. It is a geo-political game changer for the region, leaving many happy and some unhappy. Speculation is rife on what may be behind this historical approach between the Persian power and the West, especially after it became public the secret negotiation between Tehran and Washington started right after prime-minister Rohuani took office.

What happens to petroleum prices then? Not much. For starters because the block on investments from international petroleum companies will remain in place for at least six more months (the period of trial of the agreement). And secondly because Iran is unlikely to displace on its own all the non-conventional petroleum presently feeding the market. Not even in the long term.

But Iran's resources are certainly cheaper than market prices and the country is wasting no time in reaping the profits from international trade that this agreement makes available.

The Nation
Iran invites India, China to join gas pipeline
24-11-2013

An Iranian deputy oil minister called on India to join an under-construction pipeline projected to carry natural gas from Iran to Pakistan.

Ali Majedi, who is a deputy minister for international and commercial affairs, said Iran expects India to overcome its doubts and join the pipeline, previously known as Peace Pipeline, reported FARS news agency. “If India joins the pipeline, the interests of all three countries - Pakistan, India and Iran - will be guaranteed,” he said.

“Given the initial design of the Peace Pipeline, even China can join this pipeline,” he said. Energy-thirsty India has already voiced its interest in the pipeline, but it has been dragging its heels on joining the project due to security concerns over the section of the pipeline cutting through Pakistan.
And not only the raw materials themselves, Iran is even eyeing the export of extraction knowledge and technology.
Reuters
Iran agrees to supply Indonesia with oil technology, services
26-11-2013

Iran has signed an initial agreement to supply oil sector technology and engineering services to Indonesia, less than two days after inking a key nuclear deal with the West, the National Iranian Oil Company (NIOC) said on Tuesday.

Iran and six world powers clinched a deal on Sunday to curb the Iranian nuclear programme in exchange for limited relief from some sanctions.

Western sanctions that have prevented Tehran from accessing foreign technology or services needed to boost its creaking energy industry remain in place. But Iranian oil officials say international isolation has also forced Iran to develop its own technology and services, which they hope to export.
As noted last week, one of those unhappy with the lifting of sanctions on Iran is Saudi Arabia. The Saudi discomfort over the agreement is now reaching a higher tone, clearly audible to the mainstream press. I hope this conflict remains at a verbal level.
The Telegraph
Iran nuclear deal: Saudi Arabia warns it will strike out on its own
Damien McElroy, 25-11-2013

A senior advisor to the Saudi royal family has accused its Western allies of deceiving the oil rich kingdom in striking the nuclear accord with Iran and said Riyadh would follow an independent foreign policy.

Nawaf Obaid told a think tank meeting in London that Saudi Arabia was determined to pursue its own foreign and policy goals. Having in the past been reactive to events, the leading Sunni Muslim nation was determined to be pro-active in future.

Mr Obaid said that while Saudi Arabia knew that the US was talking directly to Iran through a channel in the Gulf state of Oman, Washington had not directly briefed its ally.

"We were lied to, things were hidden from us," he said. "The problem is not with the deal struck in Geneva but how it was done."
The Saudi Kingdom has lately been in the news for other reasons. A drilling programme for the Red Sea, ambitious renewable energy goals and now plans for a full fledged Nuclear fleet. None of this resembles the policy of a petroleum rich nation, but as demonstrated time and again, the Saudis know better than anyone else to prepare their own future.
UPI
Westinghouse eyes nuclear power plants for Saudis
22-11-2013

Saudi Arabia, the world's biggest oil producer, is pressing ahead with an ambitious plan to build a chain of nuclear power plants to boost its electricity-generating capacity to free crude oil production for export and Westinghouse Electric says it's got its eye on the kingdom's program.

Riyadh is expected to seek preliminary bids in early 2014 for the first of the 16 nuclear reactors it plans to construct by 2030 at an estimated cost of $100 billion.

The Saudis plan to add 18 gigawatts of electricity from the nuclear plants to add to a planned 54 gigawatts of renewable energy in the next 10 years.
It is always pleasant to see a major mainstream media outlet questioning the status quo. World petroleum production is indeed still growing (slightly) but on the demands of rapidly increasing costs with non-conventional sources. As the author writes, something does "not add up" in the rosy forecasts of the IPCC and the IEA.
Financial Times
Oil industry sums do not add up
Mark Lewis, 25-11-2013

The most interesting message in this year’s World Energy Outlook from the International Energy Agency is also its most disturbing.

Over the past decade, the oil and gas industry’s upstream investments have registered an astronomical increase, but these ever higher levels of capital expenditure have yielded ever smaller increases in the global oil supply. Even these have only been made possible by record high oil prices. This should be a reality check for those now hyping a new age of global oil abundance.

According to the 2013 WEO, the total world oil supply in 2012 was 87.1m barrels a day, an increase of 11.9mbd over the 75.2mbd produced in 2000.

However, less than one-third of this increase was in the form of conventional crude oil, and more than two-thirds was therefore either what the IEA calls unconventional crude (light-tight oil, oil sands, and deep/ultra-deepwater oil) or natural-gas liquids (NGLs).
Closer to home these issues with aiming at more expensive non-conventional petroleum resources is well palpable. Identified reserves in the North Sea are being left under water due to costs. They may come on stream one day, but certainly at higher market prices.
Reuters
Chevron throws doubt on Rosebank North Sea development
22-11-2013

U.S. oil firm Chevron said on Friday the development of its North Sea Rosebank project was not currently economically attractive, raising doubts about a resurgence of the North Sea as fears rise over costs.

Chevron said Rosebank, which is located west of Shetland in the UK North Sea, "does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude."

Statoil sold its stake in the oil and gas development earlier this year to OMV of Austria.
At the eastern end of the North Sea the twilight of Petroleum production is also becoming very real. In spite of recent discoveries, Norway may have no more than a decade as a net petroleum exporter.
Reuters
Norway's 2014 oil investment plan may be too optimistic
25-11-2013

Norway's 2014 oil and gas investment plans may need to be pared back because of capacity constraints, and priority should be given to producing assets over new developments, the head of the Norwegian Petroleum Directorate said on Monday.

A string of big discoveries in recent years will keep capital spending high for several years but there is a risk of a decline beyond 2017 and 2018, unless new big finds are made, Bente Nyland told Reuters.

"My first impression is that (plans are) very optimistic so actually, we have to go in and look into if some of the expectations of what companies are planning to achieve during the next year will probably need to be delayed because we don't see the capacity in the market," Nyland said on the sidelines of a conference.
Back to the Near East. Al Qaeda took hold of the largest petroleum field in Syria, in a move that could change the course of the civil war in that country. The Shia faction may now be completely reliant on foreign aid to keep on fighting.
Reuters
Islamist rebels capture Syria's largest oilfield: activists
Erika Solomon, 23-11-2013

Islamist rebels led by al Qaeda-linked fighters seized Syria's largest oilfield on Saturday, cutting off President Bashar al-Assad's access to almost all local crude reserves, activists said.

There was no immediate comment from the government and it was not possible to verify the reports of the capture independently.

But the loss of the al-Omar oil field in the eastern Deir al-Zor province, if confirmed, could leave Assad's forces almost completely reliant on imported oil in their highly mechanized military campaign to put down a 2-1/2-year uprising.

"Now, nearly all of Syria's usable oil reserves are in the hands of the Nusra Front and other Islamist units ... The regime's neck is now in Nusra's hands," said Rami Abdelrahman, head of the pro-opposition Syrian Observatory for Human Rights.
Closing the news on the petroleum world, one of those pieces of news that never make the mainstream media but carries loads of information. There seems to be a relevant degradation in the quality of the petroleum exported by Angola. Things like this do not happen by chance and may flag an important turn for the destiny of this infant democracy.
OilPrice
Angola Destroys Its Crude Oil
Dave Forest, 27-11-2013

[...] Platts reports that the country's benchmark Nemba crude is trading at a four-month low. For reasons of chemistry.

The change comes after major Angolan operator Chevron began blending Nemba crude with oil from its Kuito field.

The problem is that Kuito crude is quite different from that of Nemba.

For one, it's more heavy. Kuito's oil rates at 22 API, as opposed to Nemba's 38.6 API.

Then there's sulfur. Kuito is much higher in content, at 0.74% sulfur. Where Nemba is sweeter, at just 0.22%.

Blending the two streams obviously creates a product that's somewhere in the middle. And that's changed the dynamics of Angola's oil market.

Refiners in Taiwan and India are already reportedly shunning the "new Nemba" oil. An understandable reaction, as many of these buyers have facilities that can only handle crude at a narrow range of chemical specs.

The result is that the world may have lost one of its go-to sweet oil blends. Which might increase buying pressure on other high-quality crudes globally.
Following, an article with good insight on the impacts PV is having on the European electric sector at large. Contrary to what the author claims, the problem is rooted on the low electricity prices PV presently provides, barring other suppliers from the market.
Platts
Energy Economist: tough times for European utilities may have a lesson for the US
Ross McCracken, 22-11-2013

[...] In June, negative pricing took a new twist as it struck across EU borders. Wind and solar in Germany combined with cross-border market coupling to transfer the power surge into France, Belgium and Austria. In a significant but still pale imitation, the same month saw prices at the Mid-C hub in the US plummet toward zero, owing to a combination of strong hydro output and wind generation. The Old World can still do some things on a grander scale than the New.

Negative pricing is just the visible tip of the iceberg. No region in the US has the same solar PV concentration as Germany, where over 30 GW of capacity has been installed, but when they do, they too are likely to see traditional pricing relationships turned on their head. Peak demand arrives, but peak pricing is gone. Peak and baseload prices are compressed. Storage plants become uneconomic. Scarcity rents — those extreme highs in pricing on which peaking plant profits depend — decline in size and frequency, a situation known in Europe as the “missing money”.

[...] According to consultancy Capgemini’s recent European Energy Observatory report, average gas-fired plant utilization rates dropped to 11% in Spain in first-half 2013 and to less than 21% in Germany in 2012. The International Energy Agency says gas plants need a utilization rate of 57% to be profitable. About 130 GW of gas-fired generation capacity across Europe — equivalent to around 60% of total installed gas-fired generation in the region – is currently not recovering its fixed costs and is at risk of closure by 2016, Capgemini said, citing IHS estimates.
Still on energy, two weeks ago Euan Mearns shared important insight on the world LNG market that is of the utmost importance for energy policy in Europe.
Energy Matters
LNG Heading East
Euan Mearns, 14-11-2013

[...] Continued economic and population growth in East Asia (S Korea, China, Taiwan, India) and resultant growth in energy demand is a major contributing factor to high LNG prices.

For the first time ever, 2012 witnessed a drop in LNG supply caused by gas production constraints in certain countries and operational factors. This too has contributed to upwards pressure on price.

Europe does not seem to have a plan to deal with a mounting gas security issue. It has built 205 BCM LNG import capacity without having a clear idea about where these import volumes may come from. In 2012 it imported just 65 BCM facing fierce competition from Asia. At the same time, the EU Large Combustion Plant Directive means coal fired power generation is being decommissioned, 11.6 GW in the UK alone. Meanwhile, traditional suppliers along Europe’s borders, like Libya, seem to be descending into chaos.
And to finish off the energy news something a bit more on the bright side. Bets on EROEI are open.



On to the technology news, there's a new form of attack that Windows users must worry about. The interesting thing is that it uses Bitcoin has a means to reap off the victims without leaving trace; cleaver indeed. I do not believe the present state of affairs with digital currencies can prevail for much longer.
Forbes
Cryptolocker Thieves Likely Making 'Millions' As Bitcoin Breaks $1,000
Parmy Olson, 27-11-2013

It was mid-October when a new form of malware quietly found its way onto one of the computers of a small business in England, threatened to permanently encrypt most of its files, and then did just that.

IT administrator David* had never heard of Cryptolocker, and was nonplussed when he got into the office that morning and saw a strange pop-up with a timer that was counting down.

It told him that thousands of his company’s files had been encrypted, and that he had to pay a $300 ransom to get the decryption key to save them or else they’d remain locked forever.

He had no backups, but he also gave no thought to paying up.

David and his company were one of the early victims of Cryptolocker, a type of malware also known as ransomware that has spread via e-mail across thousands of computers in the U.K. and forced people to literally put a value on their data.
And to close a web presentation with the time-line of the revelations on the NSA/GCHQ spying. The author requires over 80 slides to tell what is only a six month story.
ZDNet
NSA mass surveillance leaks: Timeline of events to date
Zack Whittaker, 22-11-2013

The biggest scandals of the year — perhaps even the decade — the U.S. government's massive, global surveillance machine has been hitting headlines in international media, as a result of documents leaked by former U.S. contractor Edward Snowden.

With dozens of documents already published since they first went live in June 2013, Snowden is slated to have stolen hundreds of thousands of files. Led by The Guardian and The Washington Post on both sides of the Atlantic, numerous other news agencies have also reported the vast number of secret snooping programs.

The scandal has implicated numerous high-profile G20 countries in assisting the U.S. government in its intelligence gathering efforts. Meanwhile, many other countries have fallen foul to the U.S.' privacy-invading surveillance techniques. The past six months alone have seen some of the toughest tests to global diplomatic relations since World War II.
Have a nice weekend.