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23 May 2015

Press review 23-05-2015 - Islamic Steamroller

The Islamic State has managed to resume its advances, taking some months to adapt to NATO's involvement in Iraq. In Syria it advances through the south, while in the North al-Qaeda affiliates complete the encirclement to Bashar al-Assad's regime. In Iraq Ramadi was finally taken, after an on-and-off combat that lasted over an year. The Iraqi Shiites are clearly disturbed by another rotund defeat of their US-trained Army. Next in-line to come in the fray are the militias, possibly with weaker training and equipment; right behind them is Iran.

The Brent index seems to be forming a plateau at the moment, clearly below what an healthy petroleum industry requires. Analysts process the figures, scanning for that elusive "peak oil" - 2014 is starting to look a good candidate. In the end it could all be meaningless in face of the swelling Sunni-Shiite wars rocking the Near and Middle East. With bullets flying so close to the most valuable petroleum assets in the world, nothing can be taken for granted.

International Business Times
In Syria and Iraq, ISIS Has Taken Upper Hand From US-Led Coalition
Alessandria Masi and Erin Banco, 21-05-2015

Only two months ago, the American-led campaign to contain and destroy the Islamic State group -- better known as ISIS -- seemed to be gaining considerable momentum. After years of watching Iraq and Syria descend into violence and devolve into prime breeding ground for Islamist militants, the Obama administration’s new strategy seemed finally to be yielding success.

In Iraq, government forces aided by American airstrikes were on their way to capturing the city of Tikrit, sending ISIS scurrying for safety. That same alliance, supplemented by Iran-backed Shiite volunteer fighters, was preparing to advance north toward Mosul, Iraq’s second-largest city. Once Mosul was taken back from ISIS, the group would presumably be a broken force.

In Syria, ISIS was confronting a formidable threat from the rival Islamists of Jabhat al Nusra, an affiliate of al Qaeda, threatening its claims on the caliphate it had declared across its territory. And this month, the United States joined with Turkey to launch a program aimed at training and arming moderate Syrian rebels, touting it as a means of escalating attacks on ISIS without effectively assisting other extremists.

Now, much of that supposed progress seems illusory, the tenuous triumphs part of another era. This week, ISIS reemerged as a far more potent force than conventional estimates had believed it to be, one capable of extracting oil and gas revenues across its declared caliphate and deploying such resources toward effective capture of more territory.
The mainstream media and the US administration have tried hard to play down the significance of these recent gains by the Islamic State and other Sunni organisations. But a sane look at events is not that difficult.
McClatchy DC
Elite Iraqi units abandon Ramadi in biggest Islamic State win since Mosul
Mitchell Prothero, 17-05-2015

Iraqi security forces attempting to retake control of the western city of Ramadi were routed in heavy fighting Sunday, the worst defeat for Iraq’s central government since Islamic State militants stormed across the country last June.

In a replay of last year’s military debacle, elite units abandoned their U.S.-provided equipment to Islamic State fighters and fled the area, leaving several hundred soldiers surrounded in the last government-held enclave in the city.

Multiple security sources, none of whom agreed to be identified, speaking from both within the besieged Anbar Operations Center as well as with the units fleeing the city, described the fight for control of the capital of Iraq’s largest province as essentially over after reinforcements sent on Saturday to retake the city were crushed by Islamic State fighters.
Ukraine has been featuring less frequently in this review, as some sort of military stalemate sets in. Later in the year an international court shall decide on the payments claimed by Russia on the gas consumed by Ukraine; that might get things moving to a definitive result to the conflict. Meanwhile, western Ukraine dives deeper into its Nationalistic drive, resurrecting long buried demons. The country is rapidly distancing itself from the ideals that lead to the European Union - which ironically was supposed to be the goal of the revolution.
The Jerusalem Post
Putin says Ukraine being overrun by fascists - and he may be right
Josh Cohen, 16-05-2015

As Ukraine continues its battle against separatists, corruption and a collapsing economy, it has taken a dangerous step that could further tear the country apart: Ukraine’s parliament, the Supreme Rada, passed a draft law last month honoring organizations involved in mass ethnic cleansing during World War Two.

The draft law - which is now on President Petro Poroshenko’s desk awaiting his signature - recognizes a series of Ukrainian political and military organizations as “fighters for Ukrainian independence in the 20th century” and bans the criticism of these groups and their members. (The bill doesn’t state the penalty for doing so.) Two of the groups honored - the Organization of Ukrainian Nationalists (OUN) and the Ukrainian Insurgent Army (UPA) - helped the Nazis carry out the Holocaust while also killing close to 100,000 Polish civilians during World War Two.
The so called Turkish Stream looks ever more plausible, as Russia gains support within south-eastern Europe. There are no pipelines on the ground yet, but so far the failure of European foreign and energy policies clearly favours such an outcome.
Serbia backs Russian gas pipeline interests
Daniel J. Graeber, 15-05-2015

The Serbian foreign minister told his Russian counterpart Friday joining a gas pipeline project through Turkey was in his country's best interests.

"We want to participate in this [Turkish Stream] project," Serbian Foreign Minister Ivaca Dacic said from Moscow. "At present, we can express our readiness for participation in this project because we need reliable gas supplies."

The Kremlin said the Turkish gas project will help ensure European energy security. South Stream, a longer version of the pipeline, was envisioned as a European network before the Russian government pulled it off the table in late 2014.
The new Turkish Stream mangles with the present deadlock around Greece's financial "aid" programme. It is increasingly clear that the Eurogroup wishes Greece to default on the debt imposed on the country by the Eurogroup itself. This could eventually lead Greece to leave the EU and pass on to Russia's sphere of influence. This hypothetical development clearly clashes with the strategy of the US to cut off Europe from Russia's gas supply.
US discourages Greece from Turkish Stream

Amos Hochstein, the US Special Envoy for Energy Affairs, told the New York Times on 8 May that his country was backing Greece to build the Trans-Adriatic Pipeline (TAP) that is set to bring gas from Azerbaijan by crossing through Turkey, Greece, Albania and under the Adriatic Sea to Italy.

The TAP project (see background) is a well-advanced project compared to Turkish Stream, the concept of which was launched only last December, when Russian President Vladimir Putin made it clear he was abandoning the idea of South Stream, a Gazprom-favoured gas pipeline project intended to bring Russian gas under the Black Sea to Bulgaria, Serbia, Hungary and Austria.

Instead, Turkish Stream will bring Russian gas to the European territory of Turkey, and then to the Greek border. From there, another Gazprom-financed planned pipeline tentatively called Tesla would move gas further across the territory of Greece to Macedonia, Serbia, Hungary and Austria.
A mainstream newspaper in the UK ran a rare reportage on "peak oil", rightly pointing that the drive to explore the Arctic is a clear sign that things have definitely changed for the petroleum industry.
The Telegraph
Shell’s Arctic voyage marks beginning of peak oil era
Andrew Critchlow, 17-05-2015

In his critically acclaimed 2005 book ‘Twilight in the Desert’, the prominent oil economist Matthew R. Simmons predicted that Saudi Arabia’s oil wells would soon run dry.

His argument was based on the age of the seven main fields, which the kingdom still to this day depends upon to pump the bulk of its 10m barrels per day (bpd) of crude. These fields in the main have been producing for over a generation and, despite official figures placing Saudi Arabia’s proven reserves at over 260bn barrels, Mr Simmons argued that the kingdom would struggle to increase its output to keep pace with the projected increases in the demand over the next half century marking the beginning of a period known as “peak oil”.

The kingdom, which enjoys some of the lowest production costs in the world, has the capacity to pump 12m bpd if required and shows no signs of slowing down. However, the big question remains whether the Middle East’s energy superpower along with the world’s other major oil producers will be able to keep up with the expected increases in demand over the next 25 years?
Under-priced petroleum prices have not only uncovered the shale sub-prime bubble in the US, they are straining the industry on a global scale. Rating agencies are more market makers than real assessors of risk, thus what they publish must always be taken with due reserve.
Clock Running Out For Struggling Oil Companies
Charles Kennedy, 21-05-2015

Low oil prices are endangering an increasing number of exploration and production companies.

According to a new report from Moody’s Investors Service, the oil and gas industry could see the rate of defaults rise over the next year. The companies in danger of going belly up, not surprisingly, are the ones that already have low credit ratings. Moody’s finds that the default rate for oil drillers with a credit rating of B2 or lower could jump from 2.7 percent to 7.4 percent by March 2016.

Moreover, distressed oil companies make up a rising share of overall firms with a poor credit rating – roughly 14.8 percent of the companies with a B3 credit rating or worse covered by Moody’s are in oil and gas. That is up sharply from the 8 percent share that oil firms accounted for in 2014.

The credit ratings agency also said that even if oil prices rise to $70 or $75 per barrel, the weakest firms probably won’t be safe. Debt is piling up and banks are starting to restrict capital to drillers that are in the most trouble.
The decline of Coal usage in China and the ensuing decline in CO2 emissions is one of the most important trends forming today. Bad news for the cornucopians envisioning a 400% increase in Coal usage throughout the XXI century. Environment and thermodynamics prevailed. China is in fact undergoing a period of economic growth deceleration that explains much of this decline. There are reasons though to believe that this trend is not temporary.
Clean Technica
China Coal Use Continues To Fall “Precipitously”
Joshua S, Hill, 15-05-2015

New figures show that China’s use of coal has continued to fall dramatically over the first four months of 2014, according to Greenpeace Energydesk.

In fact, following news in October of 2014 that showed coal use had fallen for the first time this century, these most recent figures suggest that the decline in China’s coal use is actually accelerating.

According to Energydesk, coal consumption in China fell by almost 8%, and CO2 emissions dropped by approximately 5% over the first four months of 2015, when compared to the first four months of 2014. Impressively, for China, their figures are roughly the same as the reductions seen in the UK — whereas the reduction in coal use is equal to four times UK total consumption, a strong reminder of the need for China to increase energy efficiency.
Below a biased article on the fate of the European Pressure Rector. While the authors clearly project a pre-conceived idea of Nuclear, this article also shows the dead end this technology came to in Europe. My impression is that indeed pressure reactors are no longer part of the future, but also that Europe failed to have a proper programme to evolve the technology towards present requirements.
The Ecologist
Finland cancels Olkiluoto 4 nuclear reactor - is the EPR finished?
Jim Green & Oliver Tickell, 15-05-2015

This week Finland cancelled its option for a second European Pressurised Reactor as the existing EPR project sinks into a abyss of cost over-runs, delays and litigation, writes Jim Green. It now looks like the EPR is a failed technology and its owner, French nuclear giant Areva, is fast running out of both money and orders as its 'hot prospects' evaporate.

[...] The Finnish electricity company TVO announced this week that it had cancelled plans to build a second EPR at Olkiluoto in western Finland because of delays and problems with the first EPR on the site currently being built by Areva and Siemens.

That plant, Olkiluoto 3, is running severely over time and budget. Construction began in 2005 and it is not expected to commence operating until 2018, nine years late.

The estimated cost has risen from €3.2 billion (US$3.6b) to €8.5 billion (US$9.5b). Areva has already made provision for a €2.7 billion (US$3.0b) writedown on the project, with further losses expected. FTVO and Areva / Siemens are locked ina €10 billion legal battle over the cost overruns.
Closing with a note on a different subject. Beyond small waves in the IT world no one really paid attention to what is said in the story below. The "internet-of-Things" is coming, meaning that in short order most home appliances, cars and even electrical gadgets will have an operating system running and connecting to the internet. This new host of products will be relying almost exclusively on open source operating systems to meet security and reliability requirements. In a few years there could be thousands of millions of micro-computers running Linux, entirely eclipsing the number of computers running commercial systems.
Mark Shuttleworth: Why Ubuntu mobile really matters
Toby Wolpe, 20-05-2015

Effectively, the development of Ubuntu as a mobile OS has helped Canonical gain a foothold in the internet of things.

"We're in IoT in a way we never could have been. We don't have the economics for it, or the tools for it, or the developer engagement for it, or the mindset for it. There we are. All we had to do was take the GUI out of it. It's beautiful," Shuttleworth said.

"We've got robots with snappy Ubuntu, we've got switches with Snappy Ubuntu, we've got cars that are going to be shipping with Snappy Ubuntu. All that is our mobile platform, just without the GUI. We could never have predicted that four years ago."
Have a good weekend.

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