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05 July 2014

Press review 04-07-2014 - Waiting for the impact

The flow of news out of Iraq is slowly drying out. The foreign media has access to the Kurdish region, Baghdad and little else. From the newly occupied territories the jihadists are themselves the only reporters available, with gory contents regularly feed to the internet. The Baghdad government launched a counter-offensive last weekend, and although it has failed to gain any relevant territory, it seems to have halted, or at least delayed, the advance of the Islamic State (formerly known as ISIL).

Where will it all end? Can the jihadists content themselves with the Sunni territories or will they seek further expansion? Their organisation and capacities do not cease to surprise, how far can they really go?

So far their methods and efficacy have alarmed everyone else in the region, even Sunni majority states such as Saudi Arabia. For us living here in the so called West, life seems to go on exactly as before, but in fact the world has become a different place the past few weeks.

Edmonton Journal
Iraq conflict has oil companies on ‘knife’s edge’
Yadullah Hussain, 02-07-2014

However, Reuters news agency reports that many Asian refiners are shying away from buying Iraqi crude in spot markets, worried that the militant insurgency in the country could spread to the area where the oil is churned out and exported.

Mr. Horgan says oil traders are underestimating the Iraqi crisis. “They look at the map and say ‘the Sunni guys aren’t close to production,” but the 2010-11 civil war in Libya showed that production can evaporate overnight even if energy infrastructure is left untouched.

Libyan crude production stood at about 1.7 million barrels per day under Libyan dictator Moammer Gaddafi , but has now receded to 240,000 after a brief blip even though the energy infrastructure is still intact.

“We are on a knife-edge,” Mr. Horgan said. “There is a major risk now of a price spike in oil.”
The hypothesis of an assault on Baghdad is taken very seriously by the Maliki government and its allies. This week Reuters was able to get from supposed jihadists the confirmation that such operation is not a matter of if, but of when.
Reuters
Iraq chases Baghdad sleeper cells as 'Zero Hour' looms over capital
Ned Parker and Oliver Holmes, 03-07-2014

Iraqi insurgents are preparing for an assault on Baghdad, with sleeper cells planted inside the capital to rise up at "Zero Hour" and aid fighters pushing in from the outskirts, according to senior Iraqi and U.S. security officials.

Sunni fighters have seized wide swathes of the north and west of the country in a three week lightning advance and say they are bearing down on the capital, a city of 7 million people still scarred by the intense street fighting between its Sunni and Shi'ite neighborhoods during U.S. occupation.

The government says it is rounding up members of sleeper cells to help safeguard the capital, and Shi'ite paramilitary groups say they are helping the authorities. Some Sunni residents say the crackdown is being used to intimidate them.

Iraqis speak of a "Zero Hour" as the moment a previously-prepared attack plan would start to unfold.
Again attesting these prospects of a siege on Baghdad is the deployment of a larger contingent of US troops, with the explicit purpose of guaranteeing the safe retreat of American personal in case of need.
McClatchy DC
480 U.S. troops now in Baghdad as officials move to secure access to airport
Nancy A. Youssef, 30-06-2014

The United States has deployed 300 more troops to Baghdad in the last two days, with some of them assigned to secure Baghdad’s international airport, the Obama administration announced Monday.

One senior U.S. official, speaking on the condition of anonymity because of the sensitivity of the subject, told McClatchy that the troops were moved to Baghdad after American officials determined that Islamist fighters had consolidated their grip on the western outskirts of the capital in recent days. The movement “convinced us this would be prudent,” the official said.

Baghdad’s airport would be critical to any evacuation of Americans from the capital, where hundreds remain assigned to the U.S. Embassy, the largest American diplomatic mission in the world.
If in Iraq itself the Islamic State does not appear to be advancing much at the the moment, in Syria it has made important gains, reportedly without fighting. Al-Nusra appears to be dissolving in face of the Islamic State's success, with the latter rapidly absorbing jihadists and tribesmen.
McClatchy DC
Islamic State seizes key areas in Syria as al Qaida’s Nusra Front withdraws
Mitchell Prothero, 03-07-2014

Fighters from the Islamic State stormed into eastern Syria from their Iraq strongholds Thursday, overrunning or co-opting Syrian tribes and rebel groups holding the strategic towns along the border that control both the main highways and the bulk of Syria’s oil production.

Fighters from the Islamic State, which declared itself a new caliphate Sunday, overcame the last bastions of al Qaida’s Nusra Front in both Deir el Zour, the capital of the province by the same name, and Abu Kamal.

The startling advance was the first major sign that the Islamic State’s spectacular military success in Iraq had won it new sympathizers among Sunni Muslims in Syria.

[...] The oil fields around Deir Azzour represent a possible output of 75,000 barrels of oil production per day when properly functioning, a large financial windfall for the new caliphate, which has seen its financial and military resources grow exponentially since it took over Mosul, Iraq’s second largest city, on June 10, then swarmed through much of the Sunni Muslim areas of central and northern iraq.
One of the growing stories these past weeks is the successful export of petroleum by the Kurdish autonomous authorities. Israel is reported by some as the costumer of these cargoes, with Turkey happily playing the role of intermediary.
Rudaw
Second Tanker of Kurdish Oil Delivered, Two More Loading
Harvey Morris, 21-06-2014

A second tanker load of Kurdish oil has been safely delivered to buyers and two more vessels are being loaded at the Turkish port of Ceyhan, the Ministry of Natural Resources in Erbil announced.

The MNR has so far not identified the buyers of the first consignments of crude to be shipped through the new pipeline to Ceyhan in recent weeks. However, Reuters news agency reported on Friday that the first cargo of KRG oil aboard the SCF Altai was due to be offloaded at the Israeli port of Ashkelon.

The ship-tracking service MarineTraffic on Saturday showed the 80,000-tonne Liberian-flagged tanker moored at Ashkelon port.

Israeli officials told Reuters they did not comment on the origin of crude oil imported by private refineries in Israel. The agency said it was not able to confirm whether the KRG sold the oil directly to a buyer in Israel or to another party. It noted that cargoes often changed hands multiple times before reaching their final destination.
And this may just be the tip of the iceberg, with the Kurds accelerating a process to declare independence. The Iraq we once knew seems now just a shadow of the past.
Bloomberg
Iraq's Kurds Vow to Keep Kirkuk Oil Fields Until Referendum
Khalid Al-Ansary and Nayla Razzouk, 01-07-2014

Iraq’s semi-autonomous Kurds plan a referendum for independence and will keep troops in the nearby oil hub of Kirkuk until people there can vote on whether to join the Kurdish enclave, a regional government spokesman said.

“As a people, we have the right to be independent, but the issue is up to the Kurdish people, to be decided upon via a referendum,” Safeen Dizayee, spokesman of the Kurdistan Regional Government, said in an interview in the city of Erbil yesterday. “We now have arrived at a new reality. If the Kurdish people, through referendum, were to opt for complete independence, we want it to be done through negotiations with Baghdad, like what happened in Czechoslovakia.”

Iraq’s minority Kurds, who historically have resisted control by Arab-dominated central governments, are charting a course to independently develop oil reserves that the KRG calculates at 45 billion barrels -- larger than BP Plc’s estimate for deposits in the U.S. or Nigeria, Africa’s biggest producer. Kurdish armed forces moved last month outside their region in northern Iraq and occupied the long-disputed Kirkuk oil fields after the Iraqi army fled from Islamist militants.
From Libya come in contrast positive news, with the fresh Tripoli government reaching an agreement with Cyrenaica towards the resumption of petroleum exports. Recent history in the country advises against optimism at this early stage, but there seems to be a favourable change in the wind.
Deutsche Wella
Libyan PM: oil crisis is over after deal with separatists
03-07-2014

Libyan television reported on Wednesday that Prime Minister Abdullah al-Thinni had confirmed that the government now controls the ports of Ras Lanuf and al-Sidra, which export about half of Libya's oil.

The takeover came after an agreement with separatist rebel leader Ibrahim Jathran, the prime minister said. "We have taken control of Ras Lanuf and al-Sidra oil ports ... thus ending the oil crisis," al-Thinni told the broadcaster.

Eastern Libyan militias seized control of four oil infrastructure sites last July, effectively holding the country to ransom by cutting it off from its main source of revenue. The disruptions have cost the government and economy billions of dollars.
It is always useful to take a step back and look at the big picture to understand the full context of these developments in Africa and the Middle East. From our ASPO-USA colleagues comes a timely analysis of short term petroleum trends, again pointing the increasing concentration of remaining resources in an ever smaller number of countries.
ASPO-USA
The Oil Production Story: Pre- and Post-Peak Nations
Steve Andrews, 25-06-2014

It appears that about half of the Top 20 nations have seen their all-time highs in production. In a number of others, production is currently increasing, with America the record-setting poster child. Yet during 2013, only four nations increased by over 100,000 barrels/day-year vs. 15 in 2004, while four nations experienced declines of roughly 100,000 b/d-year vs. three in 2004. And most importantly, Russia and China are likely near peak production.

All things considered, world peak oil appears close–likely within the next few years, almost certainly before 2020–but it’s not quite here, delayed rather than dead. It’s disguised by the inclusion of still-increasing natural gas liquids in BP’s accounting, which shows world liquids production up 4.7 mbd since the crude plateau in 2005. Looking ahead, key themes to follow are: violence in the Middle East, the rate of investment in new projects, the state of China’s economy, and the status of peak oil exports. While contemplating the numbers, please forget about American “energy independence.” Despite the happy talk, the world’s petroleum future may not be a romance with abundance, but rather a plea bargain with depletion.
With the flow of gas from Russia to Ukraine's internal market cut, threats fly of further disruptions, affecting the flows to Europe. Pragmatism from the EU keeps lacking and more serious consequences may be required before our dependence on Russian gas is fully acknowledged.
ITAR-TASS
Gazprom says gas transit via Ukraine may be stopped completely
27-06-2014

Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.

[...] “What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.

Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.

“What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.
One of the interesting consequences of this drive to sway Ukraine towards NATO is the possibility of an independent international settlements system coming into place. The BRICS have persistently shown discontent with the management of the IMF and BIS. The successful creation of such a system would definitely put an end to the system set in place with the Plaza Accord in 1985.
The Voice of Russia
BRICS morphing into anti-dollar alliance
03-07-2014

On June 10th, Sergey Glaziev, Putin's economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington's money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev's critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

"We've done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing," she said casually and then dropped the bomb: "We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system]." (source of the quote: Prime news agency)
Anaemic economic activity together with the success of renewable energy programmes in Europe is leaving traditional electricity suppliers ever more stressed. This is the drive behind the persistent claims that renewable energies do not work or are too expensive. But the Rubicon has already been crossed.
Reuters
Bilfinger slashes 2014 outlook as German energy shift bites
30-06-2014

German engineering and services company Bilfinger SE slashed its 2014 outlook on Monday, blaming fallout from Germany's transition to renewable energy for its woes.

[...] "The extent of the negative impact on investment behaviour in other central European countries was not foreseeable," the statement said.

"German wind energy provided at no charge, for example, is preventing the construction of new power plants in Poland," it said.
To finish off on a light-hearted note a reminder that today the 103rd edition Tour de France gets on the road, and at the north side of the Channel. For the first time ever there will be a Portuguese rider wearing the rainbow jersey and with hopes of a top 10 result. These are unique moments for the History of Portuguese sport that are absolutely unmissable. Here below is a promotional video that shows a bit of the routine of an exceptional athlete.

Happy weekend.