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19 July 2014

Press review 19-07-2014 - Raging wars

There are moments like this, when war seems to burst everywhere at the same time. Afghanistan, Iraq, Syria, Gaza, Libya, Ukraine, all filled up front pages throughout the week; and these are just the conflicts the media picks up, there is plenty of other gory stuff going on in Africa, for instance. Tension mounts in a world that is definitely going through a period of re-distribution of power and influence.

In Ukraine the conflict deepened significantly with the killing of hundreds of foreign civilians. The western media blames it on the russophone separatists, while the Russian media blames it on the Ukrainian army. As Aeschylus long ago wrote, "truth is the first casualty of war". Along the way, adequate supplies of gas to Europe the coming winter seem ever more menaced.

Apart from Ukraine, Iraq remains the most threatening case to our energy predicament. The picture is starting to look really bleak for the Baghdad government. Lacking foreign intervention a victory in this war seems a remote possibility.
Reuters
Iraqi army retreats from Tikrit after assault stalls
Raheem Salman and Maggie Fick, 16-07-2014

Iraqi forces have withdrawn from the militant-held city of Tikrit after their new offensive met heavy resistance, in a blow to the government effort to push back Sunni insurgents controlling large parts of the country.

The failure highlights the difficulties of Baghdad's struggle to recapture territory from the insurgents who seized Mosul, Tikrit and other cities last month in a rapid offensive which threatens to fragment Iraq on ethnic and sectarian lines.

[...] Government troops and allied Shi'ite volunteer fighters retreated from Tikrit before sunset on Tuesday to a base four km (2.5 miles) south after coming under heavy mortar and sniper fire, a soldier who fought in the battle said.
Following the weekly column from Mitchell Prothero, who remains in Iraq and continues to feed relevant information to the west. In military speak, the Islamic State still retains the initiative in this war, pretty much dictating where and when the next battle will take place. There are again hints at relevant gains south of Baghdad.
McClatchy DC
Iraqi army remains on defensive as extent of June debacle becomes clearer
Mitchell Prothero, 14-07-2014

Five weeks after Islamist fighters stormed across northern and western Iraq in a surprise offensive that nearly reached the outskirts of the Iraqi capital, virtually every captured location remains firmly in rebel hands, while the central government’s meager efforts at a counteroffensive have met with failure on virtually every front.

Worse yet, Iraqi and U.S. officials have confirmed that fighters allied with the Islamic State not only captured hundreds of U.S.-supplied Humvees and large amounts of ammunition in their march across Iraq, but they also now possess as many as 52 U.S.-supplied artillery pieces with GPS aiming systems. The 155mm guns have a range of 20 miles, putting many Iraqi cities still in government hands easily within range of Islamic State positions.

Even the Iraqi government’s military briefings, consistently upbeat, hint at the grim outlook: The list of accomplishments cited by the Iraqi military’s spokesman are almost entirely defensive, making it clear that the Islamic State remains on the offensive and in control of when and where fighting takes place.
More details are surfacing on the sweeping of eastern Syria by the Islamic State. And the farther it expands the easier it becomes to maintain its army.
The Telegraph
Iraq oil bonanza reaps $1 million a day for Islamic State
Damien McElroy, 11-07-2014

[...] The Islamic State has also claimed to have taken Syria’s Euphrates Oil Company fields in its grip. Analysts following the movement’s progress from an al-Qaeda offshoot into an increasingly confident territorial overlord believe oil is a key asset underpinning the spread of the Islamic State.

Hassan Hassan, a Gulf-based expert, reported that Islamic State had been able to reduce the price of petrol on the streets of Deir al-Zour by three-quarters after securing the loyalty of the rebel town’s militias last week.

[...] Jordan Perry, an Iraq analyst at Maplecroft risk analyst, said Islamic State was now well placed to emerge as a jihadist version of Hamas, which used community services and welfare programmes to take control of the Gaza strip.

“If as it seems Isis is earning a $1million a day from taking oil from the plains of northern Iraq and trucking it to where it can be sold that means that it has gained control of revenue streams to buy weapons, secure the support of militias and sheikhs who in return for money say they will have nothing to do with Baghdad,” he said. “The resources also give Islamic State to copy the strategy of Hamas in providing services, health and education through which they will become much more entrenched.”
One year ago I was already averting to a possible spill over of the Sunni-Shiia war from Syria into Iraq. Presently the mainstream media is advancing the possibility of spread of this war into Saudi. I find this less likely, and not only because this time the mainstream media is willing to consider such hypothesis. On the short to mid term the Islamic State does not seem to have the resources to extend its army that far, nor to face an army with the resources of the Saudi's. But these references in the media attest on the other hand to the general surprise regarding the reach and organisation of the Islamic State army.
Bloomberg
Saudis on Alert at Iraq Border for Conflict Spillover
Glen Carey, 15-07-2014

Saudi Arabia is deploying men and high-tech machinery to boost vigilance along its 800 kilometer (500-mile) northern border with Iraq, where it faces security threats from both sides in a deepening sectarian conflict.

The National Guard and the Ministry of Defense sent an extra 1,000 men each, while border patrols have been increased and helicopters deployed to the area, General Faleh al-Subaie, commander of the Saudi Border Guard in the north, said in the city of Arar. That’s the command post for the Arar crossing station, about 60 kilometers away, where fences and 7 meter-high sand berms separate OPEC’s two largest oil producers.

[...] Saudi Arabia has ramped up security to prevent attacks from Sunni Islamist militants, who have already seized large swaths of territory in northern and western Iraq, and from Shiite militias who are aligned with Prime Minister Nouri al-Maliki. Iraq’s deepening sectarian conflict has raised concerns that the region’s biggest economy may be targeted by either group.
The news of a break through agreement a couple of weeks ago between the newly instated Libyan government and some of the factions in Cyrenaica seem now mostly forgotten. There is one more sprout of violence in Tripoli with fresh impacts on petroleum extraction and export.
Reuters
U.N. pulls staff out of Libya as clashes kill 13, close airports
Ayman Al-Warfalli and Feras Bosalum, 14-07-2014

The United Nations on Monday pulled its staff out of Libya where at least 13 people have been killed in fighting in the eastern city of Benghazi and in Tripoli, forcing the closure of the international airport.

Security and medical sources said at least six people had been killed and 25 wounded in Benghazi in heavy fighting between security forces and rival militias since late Sunday.

Militias also clashed in the capital Tripoli on Sunday, killing at least seven people, shutting the main airport and air control centre and effectively leaving Libya with no international flights. The fighting was the worst in the capital for six months.

The U.N. mission in Libya said the closure of Tripoli International Airport and the deteriorating security situation made it impossible to fulfil its work.
Before these news of fresh violence in Tripoli it was already known the closure of one more export terminal.
Reuters
Libyan protesters shut down Brega oil port: state firm NOC
Feras Bosalum, 12-07-2014

Protesters have shut down the eastern Libyan oil port Brega, state firm National Oil Corp (NOC) said on Saturday, days after the government celebrated the reopening of major ports following almost a year of blockage.

NOC spokesman Mohamed El Harari said the state-run Sirte Oil Co would have to shut down its production of 43,000 barrels per day (bpd) if the protest by state oil guards continued, without being more specific about timeframe.
The call of a terminal peak to petroleum extraction in Russia caused some stir last week, bringing an unusual number of visitors to this space (be welcome). The western media remained largely silent on the issue, but alternative media sources managed to provide a few more details.
OilPrice.com
This Top Oil Producer Hits a 6-Year Export Low
Dave Forest, 11-07-2014

Reports this week from Russian Energy Ministry division CDU-TEK show that this petro-power is seeing a drop in crude exports.

For the six months to June 30, Russia's oil shipments abroad fell 5.3%, to 4.95 million barrels. Interestingly, Bloomberg notes that this is the lowest level of exports seen since 2008, when tracking of the data began.

This is potentially a critical event for oil traders. Pointing to a supply decrease on the order of hundreds of thousands of barrels. Enough to cause a tightening in markets like Europe and Asia, where Russia is a key supplier.
Europe maintains its make believe sanction policy on Russia, well aware of the consequences of real economic warfare. This stance is clearly opening a rift with Washington, whom remains committed to bring the heat on Russia.
The Telegraph
Ukraine crisis: US breaks step with Europe over Russia sanctions
Peter Foster, 16-07-2014

The US imposed serious unilateral economic sanctions against Russia after failing to convince European leaders to get tough with Moscow over its ongoing efforts to destabilise Ukraine.

As European leaders in Brussels agreed to a further moderate tightening of EU sanctions in response to the intensifying conflict in Ukraine, the US announced punitive measures against Russian energy and defence entities, as well as major banks.

President Barack Obama said he had acted because Russia had failed to take “concrete actions” to de-escalate the conflict in Ukraine.
If last week the drive from the BRICS towards alternatives to the IMF and the World Bank was news, this week it is a similar initiative for an alternative to the IEA. Among the BRICS are found both net energy exporters and net energy importers, it will be interesting to see how such organisation can take shape. In all likelihood this will be mostly an instrument to intervene on the energy markets.
Xinhuanet
Russia proposes energy association within BRICS
10-07-2014


"Russia is going to propose the establishment of the BRICS energy association, which would guarantee energy security of the member countries, conduct integrated research and analysis of global markets," presidential aide Yuri Ushakov said.

The organization will include a fuel reserve bank and an institution for energy policy, he added.

The official said the initiative has been discussed at the governmental level.
Following an unorthodox interview with an anti source rock exploration activist from the UK. The comments on the behaviour of the mainstream media are well worthy of reflection.



More or less along these lines are some sharps thoughts penned down by Kurt Cobb. Just jump on and read it in full, worthy every word.
Resource Insights
Orwellian Newspeak and the oil industry's fake abundance story
Kurt Cobb, 13-07-2014

When what you are saying is so obviously at odds with the plain truth, it is useful to choose your words carefully to obscure this fact. This was the strategy of the Ministry of Truth, the propaganda arm of the authoritarian government depicted in George Orwell's novel 1984. The altered language was called Newspeak, a variant of standard English.

The oil industry's fake abundance story is so full of verbal legerdemain that it has become a sort of lexicon of Newspeak for oil. The public relations firms and fake think tanks behind this Newspeak have already achieved a notable goal, one styled as "doublethink" in Orwell's 1984. In an afterword to the edition I have social psychologist Erich Fromm explains the essence of doublethink: "[I]n a successful manipulation of the mind the person is no longer saying the opposite of what he thinks, but he thinks the opposite of what it true."

We now have nearly an entire population in the United States and nearly an entire media establishment that believes that oil is abundant--not because of the objective facts, but because of the oil industry's highly successful public relations campaign, a campaign that is still underway. The reason it is still underway is that it is essential to repeat the fake abundance story again and again in order to drown out any possibility that contrary facts will make their way into the public mind.
There are no positive news to report this week. Still, enjoy your weekend if you possibly can.