You’re invited to my lecture at The JFK Institute of North American Studies at Freie Universität in Berlin, Germany, Tuesday 6 PM. Here is the flyer, then the Abstract. Tschüß!
ABSTRACT:
“The Global Barrel”
Today’s globalized market-centered energy system defines Washington’s relations with the EU, Japan and OPEC states Continue reading
Posted in Alternative energy, China, Economic Crisis, Energy and Environment, Euroepen Union, Faja of the Orinoco, Germany, heavy oil, international relations, Iran nuclear, Iran sanctions, Iraq, Iraqi oil, Oil prices, Oil supply, OPEC, Persian Gulf, Resource conflicts, Sanctions, Saudi Arabia, The USA, Tight oil, Transportation, U.S. oil
Tagged alternative fuels for transportation, Berlin, China, Energy, freie universität berlin, Japan, jfk institute, Middle East, OPEC, opec cartel, Organisation for Economic Co-operation and Development, United States, US oil, Washington
Iraqi oil production has surged. Source: EIA
[Updated/edited 5 June] The New York Times had an interesting article: “China is reaping biggest benefits of Iraqi oil boom” on June 2, 2013. The question that comes to mind is …
Why is Chinese production in Iraq booming, and in Venezuela lagging?
As late as 2007 and 2008, China clearly intended its investments in Venezuela to be its largest anywhere, to ramp up development of Venezuela’s huge Faja Orinoco extra-heavy oil reserves. In those years, Iraq was still mired in sectarian war. Yet, here we are in 2013, with Chinese production in Iraq surging and its companies’ production in Venezuela lagging. Why? Let’s first look at the Chinese relationship and logic in Iraq, then in Venezuela.
Geostrategic interests behind profit issue
The NYT article says that Chinese success in Iraq is largely because their oil companies aren’t especially interested in profits because they don’t have to answer to investors demanding higher returns; they just want to secure oil to bring home.
Yes, but one should see that this is also strongly a geostrategic imperative for Beijing. It is true Chinese firms can get along with lower profits, and they also have much more cash than others, which also helps them get in now at small profits for the long run. However, unlike other firms, they are under specific instructions by Beijing to persist at getting into countries with huge reserves like Iraq and Venezuela because it is in the geostrategic energy interests of Beijing to do so.
Chinese geostrategic motivations to stick in Iraq (and Venezuela)
Before examining the better situation, on the ground, for Chinese firms dealing with Baghdad as verses Caracas, it is important to recognize Beijing won’t ever give up on either state. Beijing is the one power having serious reservations about too much reliance on the US/Saudi-dominated “global barrel” market-and-security system. It is the only major power (aside from Russia) with aspirations to project power against the USA and its naval carrier fleets, at least in its near-home waters. For any such confrontation of any duration, it needs to have a certain significant percentage of oil brought directly home independent of the USA and the global market the USA dominates. So, China’s energy firms tend to blend their deepening integration into global oil-market processes with old-fashioned bi-lateral mercantilist relationships with producing states like Iraq and Venezuela. (See also the Addenda below.)
Different contractual and working relationships in Iraq and Venezuela
Venezuelan oil production has lagged. EIA 2012
Chinese firms are clearly more willing to work with the difficult resource-nationalistic conditions imposed by the Iraqi and Venezuelan states. However, in many ways Iraq’s are more difficult, yet Chinese–and many others–do better getting production going in Iraqi than Venezuela. Why? Continue reading
Posted in Chavez, Chavez lagacy, China, Faja of the Orinoco, heavy oil, Henry Capriles, international relations, Iraq, Iraqi oil, Oil supply, OPEC, PDVSA, Persian Gulf, The USA, U.S. oil, Uncategorized, Venezuela oil, Venezuelan Nationalism
Tagged China, Iraq, Middle East, New York Times, Oil reserves in Iraq, PDVSA, United States, Venezuela
A curious announcement in The Tehran Times: “Tehran, Caracas to ink $2 billion oil deal soon” (29 May, web 30 May) followed on the heels of my exposé about this relationship that was published just two weeks prior. The Tehran Times’ piece was brought to my attention by James Bourne, Senior Latin American Editor at Energy Intelligence NYC, 
who requested a comment. Energy Intelligence has kindly provided GlobalBarrel.com a PDF of Bourne’s piece in their subscriber-only Oil Daily of 31 May, which you can read at this link: Continue reading
What are the factors driving up the price of oil? Some cite fundamentals, others over-active speculation,
Persian Gulf & Middle East (UTex Lib. 2008)
and there are certainly major geopolitical issues in OPEC‘s Mideast and North African (MENA) member states–which is what this post is about.
The Present Saudi Pumping Surge is a Key Element of the US & EU Iran Sanctions Strategy
It is certain that the Iran confrontation will only intensify as the mid-summer sanctions deadline approaches. By July, Washington and the EU hope to significantly curtail Iran’s ability to export oil. In this situation, it is perhaps surprising that prices have not gone higher.
This past week, the normally understated Economist, while noting the Saudis’ extraordinary efforts to pump excess capacity, nevertheless warned that the Iran crisis could trigger a worst-ever oil shock:
Posted in China, Economic Crisis, Euroepen Union, international relations, Iran nuclear, Iran sanctions, OPEC, Persian Gulf, Resource conflicts, Sanctions, The USA, U.S. oil, Uncategorized
Tagged China, Iran, Middle East, Obama, OPEC, Saudi, Saudi Arabia, United States
[Edited Tues 630 EDT] The Negra Hipólita, a tanker operated by an affiliate of PDVSA, should be arriving at the Syrian port of Banias after a 15-17 day voyage from the Venezuelan refinery at Puerto La Cruz (El Universal, 17Feb12).
Syrian tanks are seen in Bab Amro near the city of Homs,12Feb12. Photo Reuters
Puerto La Cruz produces about 187k bbl/day and, the Negra Hipólito, if fully loaded, will deliver 47,000 (47k) tonnes of diesel fuel to alleviate reported widespread shortages of fuel in Syria. That’s about 330k barrels of fuel usable as home heating oil, or as fuel for Assad’s Russian tanks “indiscriminately” shelling neighborhoods, as in the city of Homs. Note:
In Vienna, the U.N. chief demanded the Syrian regime stop using indiscriminate force against civilians caught up in fighting between government troops and Assad’s opponents. “We see neighborhoods shelled indiscriminately,” Ban told reporters. “Hospitals used as torture centers. Children as young as ten years old jailed and abused. We see almost certain crimes against humanity.” (Time World, Syrian Troops Shell Central City with Tanks. 17Feb12).
What, however, is the geopolitical significance of this shipment? Let’s examine three issues:
Posted in Chavez, China, Euroepen Union, European Union, Faja of the Orinoco, Gaddafi, Hugo Chávez, international relations, Iran nuclear, Iran sanctions, Libya, OPEC, PDVSA, Resource conflicts, Sanctions, Syria, The USA, Uncategorized, Venezuela diplomacy
Tagged Assad, Chavez, Hugo Chávez, Iran, Middle East, Puerto La Cruz, Syria, Venezuela
(Edited, 20 Jan.) President Ahmadinejad of Iran visited Venezuela on January 9, and then three of President Chavez’ closest Latin American allies, to search for help. His tour was part of a flurry of diplomacy in the New Year leading up to the imposition of severe new U.S. sanctions on Iran’s ability to export oil, beginning in June.
Presidents Ahmadinejad and Chavez in Caracas (Photo: El Universal)
While these two presidents met in Caracas, U.S. Treasury Secretary Geithner was visiting South Korea, Japan and China, and other U.S. officials were Continue reading
Northampton, MA (Area of “the five colleges,” UMass Amhers, etc.)
On Thursday, the lead headline story in the WSJ asserted “New Cracks in Oil Cartel: OPEC Fails to Agree on Production Boost Amid Rising Saudi-Iran Tensions.” The “cracks” may have widened at this meeting, but they are hardly “new.” Continue reading
Posted in OPEC
Tagged Ali Al-Naimi, Business and Economy, geopolitics, Iran, MENA, Middle East, Northampton Massachusetts, oil rents, OPEC, Persian Gulf, Qatar, Saudi Arabia, United States, Wall Street Journal
The Global Barrel 