Christophe de Margerie, Total’s chief executive, just told the FT that a clear framework needs to be put forward regarding carbon otherwise fossil fuel energy companies won't have the information they need to weigh up investments, leading to a supply crunch. Uncertainty is a greater problem for these companies than a clear tax framework, even if that tax cuts deep.
Then he told the UK to 'get the candles ready' if we don't sort it out.
Tuesday, 27 October 2009
Friday, 23 October 2009
Poor Saudis
Saudi Arabia wants financial compensation for a climate change deal that kicks the global oil habit. Bless.
Solar powered space ships
There has been much talk recently of satellites to catch sunlight for energy shipment back to earth. I can't imagine the profit margins are very tasty on that kind of enterprise??
Thursday, 22 October 2009
Troubled Borders: Egypt's Lonely Predicament After Gaza (The Legacy of Camp David 1979-2009, Middle East Institute)
If the bulldozing of Gaza demonstrated the determination of Israel and Hamas to persist with familiar strategies, it also revealed the lonely predicament of Egypt. From Israel’s formation in 1948 to the Yom Kippur War in 1973, Egypt was intent on Israel’s destruction. Yet following Egypt’s defeat that year, President Anwar Sadat set in motion a process that culminated in the signing of the Egyptian-Israeli Peace Treaty in 1979, thereby making Egypt the first Arab state to officially recognize Israel.Two years later Sadat was assassinated, but his successor Husni Mubarak continued a trajectory of normalization with Israel. By 1991, Foreign Minister ‘Amr Musa remarked that peace with Israel was “not a luxury but a need.”
Even as violence against Israel prevailed along all other borders, Egypt acted as negotiator, mediator, and critic of both Israeli and Palestinian militancy. The tenability of that approach, however, has come under strain since the recent conflict in Gaza.
Israel withdrew from Gaza in 2005, recognizing that the return of the region to the Palestinians was the sin qua non of a political resolution. Yet far from appeasing the Palestinians, Israel’s withdrawal strengthened the extreme wing of the resistance. Hamas, which formed out of Egypt’s Muslim Brotherhood in 1988 to pursue the annihilation of Israel, obtained power by election in 2006. Hamas’ ascendancy and kidnapping of Israeli soldier Gilad Shalit in June of that year, provoked the return of Israeli forces, which enforced a crippling economic blockade, restricted trade, and carried out military operations against Hamas forces.
Israel’s blockade was an attempt to undermine the leadership of Hamas, and forcibly convince the population of a semi-independent Gaza to adhere to the more moderate political character and ideals of the West Bank’s Fatah (whose political objective
is a return to the pre-1967 borders only, not the destruction of Israel proper).
Hamas responded by speculative missile attacks which, apart from the fragile truce brokered by Egypt in the summer of 2008, provoked Israel to tighten the blockade. Hamas, in turn, stepped up its offensive and launched nearly 300 rockets and mortars into southern Israel between the 19th and 27th of December. Israel’s response took the world by surprise. Sixty-four combat aircraft dropped 108 laser-guided munitions on 40 Hamas targets, commencing a broad operation intended to deal ‘painful and surgical blows’ to the Hamas infrastructure. Israeli planes, soldiers, and tanks attacked Rafah on the Egypt border, South Gaza, the Islamic University in Gaza City, Zaytun, Bayt Hanun, Jabalya, and Bayt Lahiya before entering the myriad streets and alleys to fight tooth and nail against Hamas.
But “Operation Cast Lead” caused the deaths of many hundred Palestinian civilians, the wounding of thousands more, and a collapse of electricity and aid supplies across Gaza. Israel’s rage and the impossible precision required for fighting Hamas soldiers operating within the civilian population proved to be a catastrophic combination. No state or international body intervened. The awkwardness of a presidential transition and the United States’ ultimate allegiance to Israel rendered it ineffective. Iran, meanwhile, plainly subsidises Hamas and its objectives.
The United Nations— the only “impartial” body — was roundly ignored in its calls for a ceasefire. The only positively neutral entity (in the sense of being to some degree committed to both sides instead of neither) is Egypt, but its predicament is extremely awkward in light of its demographic composition and zigzagging history of allegiance. Egypt supports the Palestinians’ rights to Gaza, but opposes Hamas for three main reasons.
The militants regularly breach the Egypt-Gaza border when smuggling weapons through underground tunnels, they operate autonomously in Egyptian territory, and most importantly they embody the worrisome spread of Iranian influence. So fraught is the relationship that on occasion Turkey has had to mediate between Egypt and Hamas as Egypt tries to mediate between Hamas and Israel. Since the Egypt of today prefers to strengthen relations with the US, the EU, and, broadly speaking, the “global North,” it stands to gain from the destruction of Hamas. However, the massive loss of Palestinian civilian life in Gaza made condemning Hamas a risky business.
Egypt’s predominantly Muslim population demanded the government rather denounce Israel as well as open the Rafah border to aid and movement (turning a blind eye to the smuggling of arms that would follow). While senior Egyptian figures did
criticize Israel, with the Foreign Minister Ahmad Abul Ghayt criticizing its disregard for international consensus in pursuing the attack, the government kept the border sealed. Anti-government demonstrations flared up; Egyptian police quelled street protests in the Fatah and Azhar mosques in Cairo.
The government appeared even more isolated when Saudi Arabia, which enjoys a comparatively good relationship with the United States and frequently rebuts Iranian calls to arms against Israel, put regional differences aside in denouncing the Zionist state in stronger terms than Egypt had. Undeterred, Mubarak, along with Ghayt, Nicolas Sarkozy, Turkish Prime Minister Recep Tayyip Erdogan and others, are now attempting to implement an ‘international’ policing of the Israel-Egypt border crossings, a military presence that would detect new digging and monitor the Sinai Peninsula for aboveground smuggling. Such a presence would be both pragmatic, preventing Hamas from importing arms into Gaza and provoking further IDF attacks, and symbolic, sending a powerful message that Egypt does not support terrorism. But while such a message may be well received in Brussels or Washington, it will provoke anger at home. Egypt’s Muslim population will resent the government’s attempt to gain political leverage out of a conflict whose greatest victims are innocent Palestinian Muslims.
Furthermore, if Egypt fails to prevent Hamas from smuggling arms into Gaza (a likely scenario, given the assistance Hamas receives from Sinai Bedouins, who receive handsome payment for digging tunnels), Egypt will be in the worst of all possible positions — criticized by Arab nations for supporting Israel and criticized by the “global North” for turning a blind eye to Hamas. If Mubarak accomplishes the nearimpossible goal of securing the border without alienating his own population, Egypt’s achievement will be immense.
http://www.mei.edu/Portals/0/Publications/Legacy-Camp-David.pdf
Even as violence against Israel prevailed along all other borders, Egypt acted as negotiator, mediator, and critic of both Israeli and Palestinian militancy. The tenability of that approach, however, has come under strain since the recent conflict in Gaza.
Israel withdrew from Gaza in 2005, recognizing that the return of the region to the Palestinians was the sin qua non of a political resolution. Yet far from appeasing the Palestinians, Israel’s withdrawal strengthened the extreme wing of the resistance. Hamas, which formed out of Egypt’s Muslim Brotherhood in 1988 to pursue the annihilation of Israel, obtained power by election in 2006. Hamas’ ascendancy and kidnapping of Israeli soldier Gilad Shalit in June of that year, provoked the return of Israeli forces, which enforced a crippling economic blockade, restricted trade, and carried out military operations against Hamas forces.
Israel’s blockade was an attempt to undermine the leadership of Hamas, and forcibly convince the population of a semi-independent Gaza to adhere to the more moderate political character and ideals of the West Bank’s Fatah (whose political objective
is a return to the pre-1967 borders only, not the destruction of Israel proper).
Hamas responded by speculative missile attacks which, apart from the fragile truce brokered by Egypt in the summer of 2008, provoked Israel to tighten the blockade. Hamas, in turn, stepped up its offensive and launched nearly 300 rockets and mortars into southern Israel between the 19th and 27th of December. Israel’s response took the world by surprise. Sixty-four combat aircraft dropped 108 laser-guided munitions on 40 Hamas targets, commencing a broad operation intended to deal ‘painful and surgical blows’ to the Hamas infrastructure. Israeli planes, soldiers, and tanks attacked Rafah on the Egypt border, South Gaza, the Islamic University in Gaza City, Zaytun, Bayt Hanun, Jabalya, and Bayt Lahiya before entering the myriad streets and alleys to fight tooth and nail against Hamas.
But “Operation Cast Lead” caused the deaths of many hundred Palestinian civilians, the wounding of thousands more, and a collapse of electricity and aid supplies across Gaza. Israel’s rage and the impossible precision required for fighting Hamas soldiers operating within the civilian population proved to be a catastrophic combination. No state or international body intervened. The awkwardness of a presidential transition and the United States’ ultimate allegiance to Israel rendered it ineffective. Iran, meanwhile, plainly subsidises Hamas and its objectives.
The United Nations— the only “impartial” body — was roundly ignored in its calls for a ceasefire. The only positively neutral entity (in the sense of being to some degree committed to both sides instead of neither) is Egypt, but its predicament is extremely awkward in light of its demographic composition and zigzagging history of allegiance. Egypt supports the Palestinians’ rights to Gaza, but opposes Hamas for three main reasons.
The militants regularly breach the Egypt-Gaza border when smuggling weapons through underground tunnels, they operate autonomously in Egyptian territory, and most importantly they embody the worrisome spread of Iranian influence. So fraught is the relationship that on occasion Turkey has had to mediate between Egypt and Hamas as Egypt tries to mediate between Hamas and Israel. Since the Egypt of today prefers to strengthen relations with the US, the EU, and, broadly speaking, the “global North,” it stands to gain from the destruction of Hamas. However, the massive loss of Palestinian civilian life in Gaza made condemning Hamas a risky business.
Egypt’s predominantly Muslim population demanded the government rather denounce Israel as well as open the Rafah border to aid and movement (turning a blind eye to the smuggling of arms that would follow). While senior Egyptian figures did
criticize Israel, with the Foreign Minister Ahmad Abul Ghayt criticizing its disregard for international consensus in pursuing the attack, the government kept the border sealed. Anti-government demonstrations flared up; Egyptian police quelled street protests in the Fatah and Azhar mosques in Cairo.
The government appeared even more isolated when Saudi Arabia, which enjoys a comparatively good relationship with the United States and frequently rebuts Iranian calls to arms against Israel, put regional differences aside in denouncing the Zionist state in stronger terms than Egypt had. Undeterred, Mubarak, along with Ghayt, Nicolas Sarkozy, Turkish Prime Minister Recep Tayyip Erdogan and others, are now attempting to implement an ‘international’ policing of the Israel-Egypt border crossings, a military presence that would detect new digging and monitor the Sinai Peninsula for aboveground smuggling. Such a presence would be both pragmatic, preventing Hamas from importing arms into Gaza and provoking further IDF attacks, and symbolic, sending a powerful message that Egypt does not support terrorism. But while such a message may be well received in Brussels or Washington, it will provoke anger at home. Egypt’s Muslim population will resent the government’s attempt to gain political leverage out of a conflict whose greatest victims are innocent Palestinian Muslims.
Furthermore, if Egypt fails to prevent Hamas from smuggling arms into Gaza (a likely scenario, given the assistance Hamas receives from Sinai Bedouins, who receive handsome payment for digging tunnels), Egypt will be in the worst of all possible positions — criticized by Arab nations for supporting Israel and criticized by the “global North” for turning a blind eye to Hamas. If Mubarak accomplishes the nearimpossible goal of securing the border without alienating his own population, Egypt’s achievement will be immense.
http://www.mei.edu/Portals/0/Publications/Legacy-Camp-David.pdf
Saudi Arabia Reaps Ethiopia’s Harvest (New Internationalist, March 2009)
Saudi Arabia has reaped the first rice harvest from farmland it purchased in Ethiopia. Presented to King Abdullah this March, the harvest marks the first output of a controversial ‘outsourcing’ strategy, whereby Saudi investors purchase land overseas to produce food for Saudi consumers, bypassing local economies and the global food market.
The approach is gaining credence in the Gulf. An arid climate and prohibitively expensive irrigation costs mean the region imports 60 per cent of its food. When food prices soar, such as the tripling of rice, wheat and corn costs experienced last year, Saudi Arabia becomes food insecure. Owning more farmland, even if overseas, gives it greater control over both the production and price of food.
The strategy is portrayed by the Saudi leadership as benign. Saudi Arabia manages the agricultural production and human resources. It is not, therefore, exploiting cheap local labour. Neither is it profiteering in the global food market from higher agricultural yield, since produce is flown back for Saudi consumption. Yet a closer look at the countries being approached by Saudi investors shows a preference for weak or unstable states with low taxation, minimal bureaucracy and insufficient capital to grow food on the land (and thus a willingness to sell land to those that can, for less than it is probably worth).
Nations visited by Saudi officials include Sudan, Kazakhstan, the Philippines, Ukraine and South Africa. In the case of Sudan, Hail Agricultural Development Company (HADCO) will invest as much as $45 million, cultivating wheat over 10,000 hectares, and the Sudanese Government are putting a further 780,000 hectares up ‘for sale’. All the while, Sudan fails to provide food for its own population, and is one of the largest recipients of aid from the UN World Food Programme.
Sudan is not the only poor country courting such investment. Cambodia is currently in talks with Kuwait and Qatar about a similar scheme. Hun Sen, the Cambodian Prime Minister, rejects criticisms that he is selling his peoples wares: ‘I think the Gulf can become our rice market,’ he claims. Yet the Gulf is interested in cheap land, not local produce, so talk of a ‘market’ seems confused. Simple payment for land could be of benefit to Cambodia’s development, of course, but Sen’s track record for receiving foreign investment is not too encouraging. Millions of dollars were paid to the Cambodian Government to secure oil drilling rights but have yet to appear on its balance sheet, according to NGO Global Witness.
For the people of Sudan, Cambodia and other nations in the Gulf’s sights, the new colonialism could begin impacting the most primary of commodities, and what payments are made will go to governments, not to the wider economies, serving only to reward leaders for their failure to till the land themselves.
http://www.newint.org/features/special/2009/03/11/saudi-arabia-reaps-ethiopias-harvest/
The approach is gaining credence in the Gulf. An arid climate and prohibitively expensive irrigation costs mean the region imports 60 per cent of its food. When food prices soar, such as the tripling of rice, wheat and corn costs experienced last year, Saudi Arabia becomes food insecure. Owning more farmland, even if overseas, gives it greater control over both the production and price of food.
The strategy is portrayed by the Saudi leadership as benign. Saudi Arabia manages the agricultural production and human resources. It is not, therefore, exploiting cheap local labour. Neither is it profiteering in the global food market from higher agricultural yield, since produce is flown back for Saudi consumption. Yet a closer look at the countries being approached by Saudi investors shows a preference for weak or unstable states with low taxation, minimal bureaucracy and insufficient capital to grow food on the land (and thus a willingness to sell land to those that can, for less than it is probably worth).
Nations visited by Saudi officials include Sudan, Kazakhstan, the Philippines, Ukraine and South Africa. In the case of Sudan, Hail Agricultural Development Company (HADCO) will invest as much as $45 million, cultivating wheat over 10,000 hectares, and the Sudanese Government are putting a further 780,000 hectares up ‘for sale’. All the while, Sudan fails to provide food for its own population, and is one of the largest recipients of aid from the UN World Food Programme.
Sudan is not the only poor country courting such investment. Cambodia is currently in talks with Kuwait and Qatar about a similar scheme. Hun Sen, the Cambodian Prime Minister, rejects criticisms that he is selling his peoples wares: ‘I think the Gulf can become our rice market,’ he claims. Yet the Gulf is interested in cheap land, not local produce, so talk of a ‘market’ seems confused. Simple payment for land could be of benefit to Cambodia’s development, of course, but Sen’s track record for receiving foreign investment is not too encouraging. Millions of dollars were paid to the Cambodian Government to secure oil drilling rights but have yet to appear on its balance sheet, according to NGO Global Witness.
For the people of Sudan, Cambodia and other nations in the Gulf’s sights, the new colonialism could begin impacting the most primary of commodities, and what payments are made will go to governments, not to the wider economies, serving only to reward leaders for their failure to till the land themselves.
http://www.newint.org/features/special/2009/03/11/saudi-arabia-reaps-ethiopias-harvest/
This Is Africa articles
I have written two recent features for This Is Africa, an excellent new magazine published by the FT.
Links are here, if you want:
http://www.thisisafricaonline.com/news/fullstory.php/aid/91/Supply_and_demand.html
http://www.thisisafricaonline.com/news/fullstory.php/aid/113/Rise_of_the_Asian_NOCs.html
Links are here, if you want:
http://www.thisisafricaonline.com/news/fullstory.php/aid/91/Supply_and_demand.html
http://www.thisisafricaonline.com/news/fullstory.php/aid/113/Rise_of_the_Asian_NOCs.html
The pitfalls of protectionism shown by Brazil and Mexico (China Post, August 2009)
Brazil and Mexico are planning to increase the number of oil and gas jobs allocated to domestic companies. Like most protectionist schemes, the unintended consequences on employment, production and revenue outweigh the intended ones. In Brazil, with a massive new offshore oil discovery, President Luiz Inacio “Lula” da Silva is proposing to award some exploration and production rights to Petrobras, the state-owned but publicly-trading oil group, without options for foreign firms. A new state company Petrosal would also award over half of shallow-water contracts to local companies. In deeper waters beyond the capacity of local companies, foreign bids would be invited but those pledging to incorporate Brazilian staff or technical resources would be favored.
Mexico is on a similar protectionist trend. President Felipe Calderon signed off in December 2008 on plans to increase “local content” in the Mexican energy industry to 25%, partly by creating a support fund for Mexican companies.
Ironically, this protectionism in energy is the opposite of the open trade that Mexico and Brazil have adopted in regional trade agreements and international competition in other fast-developing sectors such as agriculture and aerospace. So why oil?
In fact, governments both rich and poor intervene considerably in oil and gas — including in the labor market — because the revenues can change the fate of the country. Oil allowed Angola to repay IMF debt and helped revitalize the UK economy under Margaret Thatcher. Indeed, blocking bids from foreign companies was a strategy of Norway, which actually postponed drilling to allow the country to build up other domestic oil service activities to run alongside the burgeoning industry.
The logic driving such decisions runs thus: Countries without domestic oil and gas companies find the exploration and production process becomes an enclave economy, with foreign experts shipped in and out and the fiscal proceeds going straight to government by way of royalties instead of to local companies and employees. But there are pitfalls to protectionism.
Firstly, state-owned oil and gas companies have proven less efficient than private corporations. “On average, NOCs (national, state-owned, oil companies) extract resources at a far lower rate than IOCs (independent oil companies),” says Mark C. Thurber, Director of the Program on Energy and Sustainable Development at Stanford University.
This is because monopolies are not subject to competition and are prone to corruption: Gazprom, Russia's state-owned gas company, has debts totalling US$40 billion and has brought only one new Russian gas field on stream since the early 1990s.
State companies also pursue political strategies not relevant to — and sometimes at odds with — the business of drilling. Iran, for instance, has just pledged to fund a refinery in Uganda. This makes no commercial sense, since Iran is struggling to develop its own small refining capacity (it rationed gasoline in 2006) and landlocked Uganda has no comparative advantage in refining. However, Iran may be increasing such overseas oil deals to complicate potential sanctions against its nuclear program. The problem is that inefficiency doesn't simply mean getting consistently less oil, or getting it slower. It can mean sharper slumps in oil production than with more experienced and efficient firms. In countries where oil revenues generate a significant fraction of the economy, such slumps wreak havoc on government budgets, leading to extravagant overspending or intolerable austerity.
Greater state involvement in exploitation can therefore harm fiscal planning. Venezuela shows the dangers.
“Hugo Chavez has remade PdVSA (Venezuela's state-owned oil company) into a government puppet that spends liberally on social programs, but it consistently undershoots its production targets,” says Dr. Thurber. This means the terms of foreign contracts are frequently changed to balance the government books, deterring foreign investment, which further undermines oil production and thus government spending upon which the population increasingly depends. Similar policies mean Venezuela is now short of once-abundant coffee and sugar too.
Protecting labor markets is, on balance, problematic if not incoherent. Mexico's oil group Pemex is employing foreign firms to help improve its low oil recovery rates at the same time as the Mexican government tries to increase the domestic labor share: it is precisely because its domestic industry has been unproductive that Mexico needs to invite foreign companies in.
In Brazil, the offshore reserves in question are enormous and could deliver up to 1.3 million barrels per day. Maximizing the benefits of such a find would be best served by the competitive pressure of open bidding, yielding steadier tax revenue, from foreign firms as well as Petrobras.
In the current crisis governments everywhere are tempted to intervene in markets but what makes sense during the good times makes sense during the bad times too: the patriotic solution is to let the market do the work.
http://www.chinapost.com.tw/commentary/the-china-post/special-to-the-china-post/2009/08/28/222380/p2/The-pitfalls.htm
Mexico is on a similar protectionist trend. President Felipe Calderon signed off in December 2008 on plans to increase “local content” in the Mexican energy industry to 25%, partly by creating a support fund for Mexican companies.
Ironically, this protectionism in energy is the opposite of the open trade that Mexico and Brazil have adopted in regional trade agreements and international competition in other fast-developing sectors such as agriculture and aerospace. So why oil?
In fact, governments both rich and poor intervene considerably in oil and gas — including in the labor market — because the revenues can change the fate of the country. Oil allowed Angola to repay IMF debt and helped revitalize the UK economy under Margaret Thatcher. Indeed, blocking bids from foreign companies was a strategy of Norway, which actually postponed drilling to allow the country to build up other domestic oil service activities to run alongside the burgeoning industry.
The logic driving such decisions runs thus: Countries without domestic oil and gas companies find the exploration and production process becomes an enclave economy, with foreign experts shipped in and out and the fiscal proceeds going straight to government by way of royalties instead of to local companies and employees. But there are pitfalls to protectionism.
Firstly, state-owned oil and gas companies have proven less efficient than private corporations. “On average, NOCs (national, state-owned, oil companies) extract resources at a far lower rate than IOCs (independent oil companies),” says Mark C. Thurber, Director of the Program on Energy and Sustainable Development at Stanford University.
This is because monopolies are not subject to competition and are prone to corruption: Gazprom, Russia's state-owned gas company, has debts totalling US$40 billion and has brought only one new Russian gas field on stream since the early 1990s.
State companies also pursue political strategies not relevant to — and sometimes at odds with — the business of drilling. Iran, for instance, has just pledged to fund a refinery in Uganda. This makes no commercial sense, since Iran is struggling to develop its own small refining capacity (it rationed gasoline in 2006) and landlocked Uganda has no comparative advantage in refining. However, Iran may be increasing such overseas oil deals to complicate potential sanctions against its nuclear program. The problem is that inefficiency doesn't simply mean getting consistently less oil, or getting it slower. It can mean sharper slumps in oil production than with more experienced and efficient firms. In countries where oil revenues generate a significant fraction of the economy, such slumps wreak havoc on government budgets, leading to extravagant overspending or intolerable austerity.
Greater state involvement in exploitation can therefore harm fiscal planning. Venezuela shows the dangers.
“Hugo Chavez has remade PdVSA (Venezuela's state-owned oil company) into a government puppet that spends liberally on social programs, but it consistently undershoots its production targets,” says Dr. Thurber. This means the terms of foreign contracts are frequently changed to balance the government books, deterring foreign investment, which further undermines oil production and thus government spending upon which the population increasingly depends. Similar policies mean Venezuela is now short of once-abundant coffee and sugar too.
Protecting labor markets is, on balance, problematic if not incoherent. Mexico's oil group Pemex is employing foreign firms to help improve its low oil recovery rates at the same time as the Mexican government tries to increase the domestic labor share: it is precisely because its domestic industry has been unproductive that Mexico needs to invite foreign companies in.
In Brazil, the offshore reserves in question are enormous and could deliver up to 1.3 million barrels per day. Maximizing the benefits of such a find would be best served by the competitive pressure of open bidding, yielding steadier tax revenue, from foreign firms as well as Petrobras.
In the current crisis governments everywhere are tempted to intervene in markets but what makes sense during the good times makes sense during the bad times too: the patriotic solution is to let the market do the work.
http://www.chinapost.com.tw/commentary/the-china-post/special-to-the-china-post/2009/08/28/222380/p2/The-pitfalls.htm
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