DrumBeat: February 2, 2009

Natural gas glut could hit U.S.

As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Operators of these new facilities are unlikely to cut back production, however, so shipments of liquefied natural gas will most likely head to the deepest markets with the greatest amount of natural gas storage capacity — the United States.

…The wave of imports might even be strong enough to challenge growing domestic natural gas production from various shale formations, including the Barnett Shale near Fort Worth and Fayetteville Shale in Arkansas.

“This can put pressure on U.S. gas prices and could delay the full development of some of the new shale projects,” Douglas said.

Global crisis casts shadow over Saudi’s futuristic cities

King Abdullah Economic City, or KAEC, is one of six planned “economic cities” designed to help promote private investment and so wean Saudi Arabia’s economy from oil and generate jobs. A tired policy mantra elsewhere, it has real urgency here. While the UAE is racing against the depletion of its petroleum reserves, Saudi Arabia is racing against its birth rate – about three of every five Saudis are under the age of 25.

But the global economic crisis has put an abrupt halt to the Gulf oil boom, and the easy money that came with it, casting doubt over whether KAEC and the rest of Saudi Arabia will generate enough private investment soon enough to defuse what many economists call a demographic time bomb.

Saudi buys 3 mln bbls fuel from Japanese trader

SINGAPORE/DUBAI (Reuters) – Saudi Aramco has agreed to buy about 3 million barrels of gas oil from Japanese trader Itochu, as rapidly rising demand for transport and power force the top oil exporter to import, traders said on Monday.

… The Kingdom of Saudi Arabia has bought gas oil on the spot market for at least two years. Aramco has avoided long-term supply deals as the Kingdom strives for fuel self sufficiency.

Demand has been fuelled by heavy investment in economic development financed by record crude export revenues. It also may have been further fuelled by the need to burn oil products in some power stations instead of gas as the kingdom cuts oil output.

Gulf projects shock: Spending may actually rise in 2009

Government spending is set to continue on priority projects: ones that increase gas availability and power and water production.

The following sentence will shock. More money may be spent on projects in the GCC in 2009 than in 2008.

Energy industry capital expenditure in the region totalled about $60bn in 2008, according to sources. The same sources forecast that the sector will spend almost $70bn in the year to come. Non-energy project expenditures, which amounted to about $200bn in 2008, may not grow, but they probably will not fall.

Tajikistan: New Year, New Energy Crisis

Until recently, most parts of Tajiksitan have had almost no electricity: only six hours a day. But at least what came during those six hours was steady. Now, the situation becomes worse.

Turkmenistan cut off electricity for Tajiksitan in the beginning of the year due to an ongoing disagreement between the latter and Uzbekistan on transit electricity prices.

UAE to donate 320MW power plant to Pakistan

ISLAMABAD (APP): United Arab Emirates (UAE) has offered to donate power plant of 320 MW capacity as a gift to the people of Pakistan to help overcome energy crisis.

Minister for Water and Power, Raja Pervez Ashraf has left for Dubai (UAE) on Monday to sign an MoU with concerned UAE authorities and to work out the detailed plan for implementation of the agreement for the dismantling, packing and shifting of the plant to Pakistan.

Home insulation plan would aid economy

An economic stimulus should reduce the risk of a long-term economic crisis, but it should not make our energy crisis worse.

A major investment in home weatherization might lack support from lobbyists and interest groups, but it will meet both policy goals.

Cities, towns ready to vie for stimulus funds

WASHINGTON — A high-tech power plant fueled by wastewater residue. A section of road that could ease rush-hour traffic woes. A 100-year-old school that needs wiring for the 21st century.

These are among the thousands of projects around the country that will be vying for money from Washington if the economic stimulus package — which has swelled to nearly $900 billion in the Senate — is signed into law, possibly within two weeks.

Arab analyst blames Opec for collapse in prices

A prominent Arab energy analyst has blamed Opec for the collapse in crude prices, saying the oil cartel has failed to fully comply with output cuts and kept sending contradicting messages to the already sceptic market.

Nicholas Sarkis, Director General of the Paris-based Arab Petroleum Research Centre (APRC), which acts as an adviser to the Organisation of Arab Petroleum Exporting Countries (Oapec), described Opec’s behaviour in dealing with the faltering crude demand over the past few months as “suicidal.”

PDVSA cash flow hit by crude price fall

CARACAS: Venezuelan state oil company PDVSA has built up debts with providers and skipped payments to some partners under the strain of falling oil prices, a sign President Hugo Chavez may face financial problems this year.

Deterioration of PDVSA’s finances may make it harder to stabilise oil production that market sources say is already falling and may force cuts in the billions of dollars PDVSA spends on social programs that sustain the leftist Chavez’s popularity.

The cash flow problems are among the first concrete effects of the oil-price collapse on Venezuela, where a five-year consumption boom continues even as the all-vital oil industry is being blindsided by collapsing prices.

Producer Spending Cuts May Shape Future Oil Price Rebound

Once demand stabilizes, oil prices could bounce back quickly. Cash-strapped producers have cut budgets faster and deeper than in past downturns, according to the oilfield services companies that are the recipients of much of that spending. The lack of investment is already speeding up the rate of decline in older fields, and delaying the start of new production. Service companies see a possible repeat of the last four years: During this period, prices rose to record levels as demand grew faster than new supplies, an imbalance that some in the industry attribute to a lack of investment during the previous downturn.

TABLE – Russian Jan oil output rises, exports fall

MOSCOW (Reuters) – Russia’s January oil output rose slightly to 9.7 million barrels per day (41.01 million tonnes) from 9.66 million bpd in December, while exports via pipeline
monopoly Transneft fell to 4.25 million bpd (18.0 million tonnes) from 4.36 million bpd.

The following oil production and exports data were supplied by Russia’s Energy Ministry. The volume figures are in millions of tonnes and show the month’s total and the year to date. Percentage change figures are based on daily volumes.

Iraq oilfields ready for revival, await foreigners

BASRA, Iraq (Reuters) – Next to a pipeline snaking across a desert in Iraq’s south, villas built to house an expected influx of foreign oil workers stand empty.

Nearby, a faded plaque in Russian and Arabic commemorates the opening of a pumping station in 1972, a reminder of the foreign ties that helped Iraq develop its oil industry.

As U.S. President Barack Obama confronts the legacy of a war his predecessor launched almost six years ago, Iraq has once again begun to open its vast oil reserves to foreign companies.

China’s natural gas output jumps to ninth in the world

China’s oil and natural gas production in 2008 maintained double digit growth with an increase of 13.7 percent, according to the China National Petroleum Corporation (CNPC). This was the sixth consecutive year that China’s oil and natural gas production recorded double digit growth.

Ruble Falls to 11-Year Low as Speculators Push to Break Target

(Bloomberg) — The ruble slumped to its weakest level against the dollar in 11 years as investors speculated Russia will be forced to give up its currency defense after draining reserves.

Brazil’s Real Weakens as Falling Crude Prices Hurt Trade Flows

(Bloomberg) — Brazil’s real weakened for a third day as falling prices of oil, one of the nation’s top three exports, reduced trade flows to Latin America’s biggest economy.

“The real is very tied to the performance of commodities because the currency market is heavily dependent on export flows,” said Paulo Fujisaki, a foreign-exchange strategist at Socopa Corretora in Sao Paulo. Nearly two-thirds of Brazil’s exports are commodities.

Teachers aims at Petrocan

Long dissatisfied with what it sees as the oil company’s poor performance, the giant pension fund is about to take a more activist role in Petro-Canada.

Kuwaiti companies will need to restructure or consolidate in 2009 to attract much needed capital and emerge stronger

The Kuwaiti business landscape has dramatically changed over the past few months affected by the world’s liquidity crisis, deteriorating oil prices, postponed infrastructure projects, and the lack of an immediate and clear domestic stimulus package addressing many of the country’s ailing but vital economic sectors including financial services and building materials.

Wind turbine firms feel downturn’s pinch

Last summer, wind turbine manufacturers couldn’t make parts fast enough to meet demand. Now, industry executives say, financing has all but disappeared because of the economy, causing some planned projects to be put on hold. Unless there’s a robust economic rebound, or the government steps in, they say, construction of wind turbines nationwide will be set back, and the companies that make turbine parts could be forced to cut jobs.

Lithium deposits could power long-exploited Bolivia’s future

Government officials think that Bolivia possesses the world’s biggest lithium reserves, and they also think that the country is poised to profit big-time from the automakers’ push to develop electric cars that will run on lithium ion batteries.

Obama’s Billions for Energy Fuel Stanford, MIT Research Dreams

Researchers at U.S. universities, led by Berkeley, Stanford University and the Massachusetts Institute of Technology, are targeting the $2 billion in energy research funds contained in the House recovery bill. The research dollars will produce jobs, reduce U.S. dependence on foreign oil and stem the production of greenhouse gases, according to the Association of American Universities, a group of 62 schools that conduct research.

Carmakers fear emission plan could ruin recovery

SACRAMENTO – When President Barack Obama moved to increase gas mileage and curb tailpipe emissions last week, the leaders of the battle against global warming rejoiced.

But his directives could steer automakers and the buying public down a bumpy road.

Along the way, critics warn, near-insolvent automakers will be forced to invest billions in new technology all the while hoping higher sticker prices and more-limited selections don’t scare customers away from showrooms.

Project envisions post oil Vegas

The goal was to address social, economic and environmental problems in Las Vegas and answer how they can be addressed for the year 2016 when the global supply of oil will be steadily declining. Lee-Anne Milburn, an associate professor at UNLV explained that “the whole idea was that [the groups] had to look out to 2016 when we are running out of oil…They [were] supposed to figure out how we need to redesign Las Vegas to deal with the fact that we’re going to have less oil, less ability to drive.”

City decides to test cycle lanes on Burrard Bridge

The City of Vancouver will temporarily close up to two lanes on the Burrard Bridge this spring while it tests designated cycling lanes on the crossing.

The tests will look at the safety of both cyclists and pedestrians, who now share the bridge sidewalks, and how the reduced lanes affect traffic.

Melting Arctic Prompts Calls for ‘National Park’ on Ice

With arctic sea ice melting like ice cubes in soda, scientists want to protect a region they say will someday be the sole remaining frozen bastion of a disappearing world.

Spanning the northern Canadian archipelago and western Greenland, it would be the first area formally protected in response to climate change, and a last-ditch effort to save polar bears and other animals.

Dispatches from the frontline of a mission to save the world

The Centre for Climate Change Economics and Policy was recently launched at Leeds University to drive forward the green agenda. Here six of its top scientists discuss the key issues.

Rising sea salinates Ganges – expert

KOLKATA (Reuters) – Rising sea levels are causing salt water to flow into India’s biggest river, threatening its ecosystem and turning vast farmlands barren in the country’s east, a climate change expert warned on Monday.

It’s Time To Adapt To Climate Change, Scientists Say

In the United States, most of the debate over climate change is focused on how to reduce greenhouse gas emissions. But some environmentalists say we’re talking too much about how to prevent our climate from changing — and not enough about how to adapt to change that’s already here.