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18 July 2015

Press review 18-07-2015 - An historical Accord

Celebrations on the streets of Tehran.
Photo by Vahid Salemi.
At long last, Iran is set to become a full right player in the international stage again. The historical relevance of this moment is possibly unfathomable right now, a major focus of tension between East and West has been diffused and an important regional power is definitely consolidated. This agreement may well be a turning point for the Near and Middle East.

Wednesday the second quarter GDP figures for China came out, and are surprisingly high. A wave of optimism swayed the financial world. Another leg down in the Brent index certainly contributed to that.

Only Europe drags its feet, ever more swirled in problems of its own creation. For most Europeans none of this changes much to what remains a bleak outlook.
Associated Press
Q&A on the Iranian Nuclear Deal
Anne Flaherty, 14-07-2015

Iran agreed to reduce the number of uranium-enriching centrifuges it has in stock, as well as its stockpile of enriched uranium. It also has agreed to convert an enrichment site called Fordo - dug deep into a mountainside and thought impervious to air attack - into a research center.

Another key piece is the possibility of inspections: If the U.N. nuclear agency identifies a suspicious site, it can ask to inspect it. And if Iran refuses, an arbitration panel will decide whether the Iranians have to open up the site to inspection within 24 days.

All of this is aimed at slowing down the rate at which Iran could, in theory, build a nuclear weapon.

In exchange, Iran stands to receive more than $100 billion in assets overseas that had been frozen by other countries. It also will see an end to a European oil embargo and other financial restrictions on its banks. If Iran reneges on its promises, the sanctions will snap back into place.
Putin the peacemaker. Another aspect to his story that shows how overreaching the accord over Iran's nuclear programme is.
President Obama thanks Putin for integral role in shaping Iran nuclear deal
Jared M. Feldschreiber, 16-07-2015

President Barack Obama telephoned Russian President Vladimir Putin Wednesday to thank the Russian leader for his integral role in reaching nuclear deal with Iran.

Both governments' press releases described the tone of the phone call as encouraging, and the Kremlin press service specifically deemed the conversation "constructive."

"Indeed, such conversations do not remove disputable issues and cannot do so. Nevertheless, they are at least rather useful from the point of view of demonstration of the preparedness to resolve disputable issues by way of dialogue, which is definitely satisfying," the Kremlin press service said in the statement as reported by Russia Beyond the Headlines.
The petroleum market is but one dimension of the historical accord with Iran. It clearly isolates the Sunni fighting in Iraq and Syria, and it may well by the starting point for the stabilisation of the entire region.
The Guardian
Russia says Iran deal paves way for 'broad' coalition against Isis

The Iran nuclear deal has paved the way for a “broad” coalition to fight the Islamic State group, according to the Russian foreign minister, Sergei Lavrov.

“It removes the barriers – largely artificial – on the way to a broad coalition to fight the Islamic State (IS) and other terrorist groups,” Lavrov said in a statement on the ministry’s website on Tuesday.

The normalisation of the situation with Iran makes it possible to resolve “a whole number of problems and conflicts in the region” and will have a “positive influence on the situation as a whole”, Lavrov said.
Hopes are growing of a definitive commitment by the US to fight the Islamic State. But is the US really willing to stop supporting the Sunni in Iraq and Syria?
The Independent
On the Front Line of the War Against Isis, Joint Action by US and Iran Has Never Felt Closer
Patrick Cockburn, 15-07-2014

They are home to more than a million of Iraq’s Shia Muslims, and contain the tombs of that faith’s holiest figures. In recent months they have provided thousands of fighters for the militias battling Isis, but their inhabitants have watched in frustration as US air power has been deployed in support of the less effective Iraqi army.

On 15 July though, in the cities of Najaf and Karbala there was a sense that the nuclear deal struck on 14 July between neighbouring Iran, the world’s leading Shia nation, and the West may yet lead to closer US support for the Shia militias as they try to dislodge their Sunni jihadist foes from captured Iraqi cities.

“American air attacks are playing a role in the battle for Fallujah,” a divisional commander of the Iraqi paramilitary militia admitted grudgingly, though he also listed the occasions when the US had failed to support Shia forces in previous battles against Isis.
But other focuses of tension between West and East remian. In Ukraine news emerge of exhaustion among the nationalists ranks. This could well be the justification for a closer involvement by NATO.
International Business Times
Ukrainian Soldiers Refuse To Take Orders From Kiev; Desertion And Lawlessness Take Hold
Christopher Harress, 13-07-2015

An entire battalion of Ukrainian soldiers has released a video saying that it will no longer take orders from leaders in Kiev, reported Sputnik news, a pro-Russian news site, on Monday. The soldiers' refusal comes as a further blow to morale for an army that has lost many of the major battles since the war began in April 2014 and has seen desertion rates rocket since the first wave of mobilization began last year.

"We don't care about our command, the same way they don't care about us. All their orders will be ignored, and we won't surrender our weapons," said one of the soldiers in the video, who also mentioned that the commanding officer of the brigade left his post saying he was "unwilling to perform his functions" as leader of the battalion.
Indeed, all sorts of cracks are starting to show among the nationalist forces that lead the coup d'état one and a half years ago.
Ukrainian police seek calm after clash with right wing activists leaves two dead
Jared M. Feldschreiber, 13-07-2015

Two deaths and at least seven people were wounded after a gun battle broke out between Right Sector, a paramilitary group and the Ukrainian Security Services (SBU) in Mukachevo, Ukraine near the borders with Poland and Slovakia on Saturday.

Video reportedly surfaced of Right Sector members firing at police officers from a belt-fed machine gun mounted on a pickup truck.

The cause of the gunfire and circumstances that led to the battle are unclear and disputed by the two sides.
The downturn for the North American petroleum industry is creating its own amount problems. Beyond bankruptcies and lost jobs there are growing environmental risks with abandoned drill sites. In Canada at least mitigation actions seem set to be supported by tax payers.
CBC News
Alberta faces growing backlog of abandoned oil and gas wells
Terry Reith and Briar Stewart, 14-07-2015

As Alberta's energy companies struggle through a prolonged bout of low prices, more and more are walking away from their oil and gas wells, leaving a little-known industry group to clean up the mess.

Alberta's Orphan Well Association is now responsible for 704 wells, up from 164 last year, according to Pat Payne, the association's manager.

"Industry is not doing as well, and it's due to the low commodity prices, low price of oil, low price of gas and declining production," Payne said. "Declining reservoirs [are] catching some of the companies and they're not able to survive."
In the US the under-price petroleum market is finally showing up in the statistics. For now it is just a slight decrease in extraction and authorities do not expect a serious decline. However, few of the source rock resources are economical at present prices.
EIA Confirms: Oil Production Peaked
Nick Cunningham, 12-07-2015

In its Short-Term Energy Outlook released on July 7, the EIA acknowledged that U.S. oil production peaked in April, hitting 9.7 million barrels per day (mb/d), the highest level since 1971. In May, production fell by 50,000 barrels per day, and EIA says that it will continue to decline through the early part of next year. Still, the declines won’t be huge, according to the agency’s forecast – production will average 9.5 mb/d in 2015 and 9.3 mb/d in 2016.

The EIA figures move a little closer to what some critics have been saying for some time. Data from states like North Dakota and Texas had pointed to slowing production for months while EIA posted weekly gains in production figures for the nation as a whole. Along with several consecutive weeks of inventory drawdowns, EIA figures started to look a little suspect. The latest report is sort of an acknowledgement that those figures were a little optimistic.
Far less sighted by the press, Coal is another energy source in great trouble in recent months. In the US Coal miners are being hit both from the internal and the foreign markets. Gas continues to rise as the preferred fuel for electricity generation in the country, while overseas the decline in China's pig iron production dictates a market downturn too.
International Business Times
US Coal Miner Bankruptcies Are Latest Sign Of Suffering For Beleaguered Energy Industry
Maria Gallucci, 16-07-2017

In the latest sign of suffering for the U.S. coal industry, Alpha Natural Resources is reportedly in talks to obtain bankruptcy financing. The report Thursday arrived just a day after a second coal mining company, Walter Energy, filed for Chapter 11 bankruptcy protection.

As financial troubles mount for America’s coal companies, a wave of consolidations and asset sales may soon be underway, energy analysts say. But corporate shake-ups won’t solve the sector’s longer-term problems. With power companies increasingly shifting to cheaper natural gas and cleaner renewable energy, and with U.S. coal exports set to decline, the fate of America's coal industry is murky, experts say.
Negotiations last weekend towards a new financial "aid" package to Greece made clear once and for all that a number of member states would very much like Greece to leave the EU. On its side, Russia seems pretty happy with the increasing clout it is gaining on the country.
Russia extends energy hand to Greece
Daniel J. Graeber, 13-07-2015

The Kremlin will do its part in the Greek economic recovery by working to support the country's energy sector, Russia's energy minister said.

[...] Hours before the deal was secured, Russian Energy Minister Alexander Novak said the Kremlin was ready to lend a hand in the Greek energy sector.

"In connection with this we study options for direct supplies of energy resources for the Greek government, and they may begin shortly," he said.

Greek Prime Minister Alexis Tsipras met in April with Russian President Vladimir Putin in Moscow to discuss potential Russian financial assistance. Reports circulated then that the Kremlin pledged $5.5 billion in advance of a new pipeline to help deliver gas to Europe.
I am not favourable to pitching renewable energies against nuclear in a world where future energy security is uncertain. Even if that is more or less what the article below tries, the figures it reports are nevertheless worthy of highlight, attesting to the strides these modern technologies have open in recent years.
Engineering and Technology Magazine
Renewables overtaking nuclear in major economies
Edd Gent, 15-07-2015

While global nuclear power generation increased by 2.2 per cent in 2014, solar power increased 38 per cent and wind power was up by a tenth, according to the World Nuclear Industry Status Report 2015.

Among the eight major economies where renewables – excluding hydro-electric dams – now contribute more electricity than atomic energy are China, India and Japan, which is in the midst of the first extended shutdown of its industry for 45 years in response to the 2011 Fukushima meltdown.

[...] Brazil, Germany, Mexico, the Netherlands and Spain make up the remainder of the list of countries generating more electricity from non-hydro renewables than nuclear in terms of total output.
The United States is home to possibly the best inland solar energy resource in the entire OECD. For years the cost of solar power in that country kept artificially high, well above prices in the European market. That predicament is now changing, putting the US at the forefront of solar energy prices. The figure quoted below translates into 0.0357 €/kWh, but naturally here in Europe we have VAT.
Buffett project’s record low cost part of pricing ‘trend’, says First Solar
Tom Kenning, 09-07-2015

Solar developer First Solar has agreed to sell power at US$0.0387/kWh, thought to be the lowest electricity price ever, from a 100MW solar plant to utility NV Energy, according to a filing with the Public utilities Commission of Nevada.

A First Solar spokesperson told PV Tech that its Playa Solar 2 project, located in the Solar Energy Zone in Clark County, Nevada, is expected to be fully operational by December 2016, along with the commencing of a 20-year power purchase agreement with NV Energy, an indirect subsidiary of Berkshire Hathaway Energy Company.
Have a great weekend.

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