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04 January 2014

Press review 04-01-2014 - Iraq falling into civil war

Followers of this blog know that I'm on the optimistic side regarding petroleum reserves in Iraq. The argumentation by the late Dr. Ali Bakhtiari lead me years ago to regard this country as the last bastion of cheap conventional petroleum. The eastern part of the country is largely unexplored and it is possibly that the geological structures that loked the resources today tapped by Saudi Arabia and Kuwait extended further into the north. If there is a country able to positively impact petroleum markets today is Iraq.

There is just one problem: Iraq is not a real country, it is but a synthetic creation, a legacy of colonial times disregarding any ethnic or cultural realities. The insistence on this format by modern powers seems reaching exhaustion, after a decade of violent power reshuffling. Earlier this week the Sunni representatives quit the Iraqi parliament, delivering the final blow to an already politically moribund government.

Deutsche Wella
Iraqi MPs resign following clearance of Sunni protest camp
30-12-2013

During a televised news conference on Monday, more than 40 Iraqi Members of Parliament announced their immediate resignation, citing rising tensions between security forces and the country's Sunni Muslim minority.

The parliamentarians demanded "the withdrawal of the army…and the release of MP Ahmed al-Alwani," referring to a Sunni lawmaker whom police apprehended over the weekend, according to the news agency AFP. Al-Alwani's brother and five of his bodyguards died in the subsequent shootout with police.

The announcement of the mass resignation came shortly after police had torn down a protest camp near Ramadi, which lies roughly 130 kilometers (80 miles) west of the capital city Baghdad. The camp lay on the highway which runs between the two cities and links Ramadi to Jordan.
This withdrawal from political representation means the Sunni will now seek other ways to fight for their interests.
Finantial Times
Western Iraq on brink of rebellion against Shia regime
Borzou Daragahi and Amina Ashraf, 30-12-2013

Iraq’s volatile western region was on the verge of all-out rebellion against the central government on Monday. It followed the weekend arrest of a prominent lawmaker and the dispersal of a largely peaceful protest in the city of Ramadi that left at least 13 dead, according to news agencies.

Prime minister Nouri al-Maliki, whose Shia-dominated government has alienated the country’s Sunni Arab and Kurdish minorities, described the dispersal of the anti-government protest and other military operations in Anbar province as a blow against al-Qaeda extremists. This year has brought a resurgence of terrorism in Sunni parts of the country with a campaign of bombings in the capital, Baghdad, and elsewhere.

Iraq’s smouldering civil tensions have been in danger of reigniting into full-blown conflict for months, stoked by perceptions that Mr Maliki has a sectarian agenda favouring the Shia majority, as well as by jihadists entering Iraq over the Syrian border. The latest escalation of violence in Anbar province – a centre of resistance during the US-led invasion in 2003 and subsequent occupation – has alarmed international observers.
During the first days I wondered how easy or practical would it be for the Sunni to open a second front to the East, adding to the conflict they already entertain in Syria. It didn't took long to get an answer.
Fox News
Al Qaeda sweep in Iraq cities revives battleground
04-01-2014

Two Iraqi cities that were strongholds of Sunni insurgents during the U.S. war in the country are battlegrounds once more after Al Qaeda militants largely took them over, fending off government forces that have been besieging them for days.

The overrunning of the cities this week by Al Qaeda's Iraqi branch in the Sunni heartland of western Anbar provinces is a blow to the Shiite-led government of Prime Minister Nouri al-Malik. His government has been struggling to contain discontent among the Sunni minority over Shiite political domination that has flared into increased violence for the past year.

On Friday, Al Qaeda gunmen sought to win over the population in Fallujah, one of the cities they swept into on Wednesday. A militant commander appeared among worshippers holding Friday prayers in the main city street, proclaiming that his fighters were there to defend Sunnis from the government, one resident said.
Reports are still scant but it looks more and more as a descent into civil war, in a story all similar to Syria three years ago.
BBC
Analysis: Anbar violence goes beyond sectarian conflict in Iraq
Marina Ottaway, 04-12-2014

Reports from Anbar province are confusing at present, but seem to indicate that parts of Fallujah and Ramadi are in the hands of Isis, while tribal militias control other areas.

The confrontation has been long in the making.

Since the US withdrawal, al-Qaeda-aligned groups started reorganising and the number of terrorist attacks, including in Baghdad, increased again.

The militancy of Sunni organisations escalated further after the onset of the conflict in Syria, where the Syrian-based Jabhat al-Nusra and the Iraqi-dominated Isis have established themselves as the most effective anti-Assad fighting forces and are vying with each other for dominance.

Extremist organisations have found a ready audience in Iraq, where Mr Maliki's policies continue to alienate the Sunni population.
None of this should be surprising for those following this blog. My expectation is for this process to end in a complete redesign of political borders in the region, perhaps with a great deal of violence along the way. Only then can we, the wealthy Weast, aspire to this potential source of cheap petroleum. Like Syria and Iraq, Libya lives similar turmoil, with the overthrown of an absolutist regime bringing ethnic conflicts to light. A neighbouring source of cheap petroleum now shut off sine dia.
OilPrice.com
Prospects Grim for Libyan Oil Recovery
Daniel J. Graeber, 01-01-2014

Libyan oil production failed to make the grade for much of the year and there are few signs of improvement on the horizon. High on the market radar, post-revolution Libya ranks low in terms of prospects for medium-term recovery.

Libya's National Oil Corp. said it expected "good news" from the eastern Hariga port by Monday though the facility remains shuttered nearly five months after protestors closed it down. Two fields south of the port, Sarir and Messla, were open but output was curtailed because Hariga wasn't able to rotate its daily 110,000 barrel inventory.

Before civil war erupted in 2011, Libya was producing more than 1.65 million barrels of oil per day. November production of 210,000 bpd was its lowest level since the rebellion and exports are a meager 110,000 bpd from the few terminals still under the government's control.

Tribes pressing for more autonomy in eastern Libya are seeking a return to an administrative system established in the 1950s, which divided the country into three states -- Cyrenaica, Fezzan and Tripolitania. Last month, the self-declared government of Cyrenaica said it established its own oil company ready to put crude oil on the international market. Libyan Prime Minister Ali Zeidan, for his part, expressed optimism over developments at oil ports, but little progress has been made by either side.
It is a recurrent story, a top scientist retires from a petroleum company just to say that not all is well with world production. Richard Miller points the obvious: conventional petroleum production has peaked, leaving the world ever more dependent on expensive, low quality resources. Perhaps the most notable about this story is the fact that the only English version available was published by a Chinese newspaper; the western media remains silent.
South China Morning Post
Hunger and conflict in wake of oil drought
29-12-2013

A former British Petroleum geologist has warned that the age of cheap oil is long gone, bringing with it the danger of "continuous recession" and increased risk of conflict and hunger.

At a lecture on "Geohazards" at University College London, Dr Richard Miller, who retired from working at BP in 2008, said that official data from the International Energy Agency, US Energy Information Administration and International Monetary Fund, among other sources, showed that conventional oil had most likely peaked around 2008.

Miller critiqued the official industry line that global reserves will last 53 years at current rates of consumption, pointing out that "peaking is the result of declining production rates, not declining reserves".

Despite new discoveries and increasing reliance on unconventional oil and gas, 37 countries are already post-peak, and global oil production is declining at about 4 per cent per year.
Still on petroleum, a series of accidents with trains transporting petroleum in North America is causing some stir. Early to say if this will have any impact on the, for now rampant, production of petroleum from the mother rock in the region.
Associated Press
After train fires, feds warn Bakken oil may be more flammable than traditional forms of oil
Matthew Brown and James MacPherson, 03-01-2014

Following a string of explosive accidents, federal officials say crude oil being shipped by rail from the Northern Plains across the U.S. and Canada may be more flammable than traditional forms of oil.

A safety alert issued by the U.S. Department of Transportation warns the public, emergency responders and shippers about the potential high volatility of crude from the Bakken oil patch. The sprawling oil shale reserve is fueling the surging industry in eastern Montana and western North Dakota, which is now the nation's second-largest oil producer behind Texas.

Thursday's announcement from officials declares that the Bakken's light, sweet crude oil may be different from traditional heavy crudes because it is prone to ignite at a lower temperature. Experts say lighter crudes, which contain more natural gas, have a much lower "flash point" - the temperature at which vapors given off by the oil can ignite.
In other energy sources some interesting news from the Indian nuclear programme. There was a time when nuclear was cheap, but not any more. The only question is if the country will be able to source coal at cheap prices for decades to come.
ZNews
Cost of nuclear power proving high, DAE in a fix
25-12-2013

New Delhi: As the cost of electricity generation by nuclear power plants, to be set up with the help of French and American companies, is turning out to be on the higher side, the Department of Atomic Energy is in a fix over how to bring down the cost.

On one hand, it is involved in hard negotiations with the companies and on the other hand, sources said, if the cost per unit turns out to be too expensive, then it may not even pursue the project with collaborators.
And speaking of coal, the introduction of renewable energy sources in Europe continues making casualties. To see for how long governments will allow some of the larger corporations in the continent continue taking such losses.
Bloomberg
RWE Said to Drop Two Coal-Fired Power Contracts
Tino Andresen and Julia Mengewein, 23-13-2013

Germany’s biggest electricity producer, plans to drop at least two long-term contracts to buy wholesale power because of sagging energy demand, two people familiar with the matter said.

RWE won’t extend agreements with generator and trader STEAG GmbH for several hundred megawatts of hard coal-fired power that expire in the next two years, one of the people said. RWE also isn’t renewing contracts with other operators of two smaller hard-coal plants, the other person said without being specific. Both asked not to be named because the matter is private.

German power prices for 2014 slumped 17 percent this year as renewable energy production surged and power consumption fell to the lowest since 2009, cutting margins at gas- and coal-fired power stations. RWE will shut 3,100 megawatts of capacity in Germany and the Netherlands, about 7 percent of its production in northern Europe, and is looking to idle more stations, the Essen-based company said in August.
I've been trying the follow as closely as possible the situation in Iraq, thus there aren't news on many other topics. I hope to have another news update next week with the latest developments. Enjoy your weekend.