Daily Archives: April 9, 2009

Kate Mackenzie

John Kemp, a former commodities analyst and now columnist at Reuters, believes the defeat of the US administration’s attempt to fast-track the introduction of a carbon cap-and-trade scheme means it won’t be enacted until at least 2012 or 2013. This would be uncomfortable for the government, which has factored in $79bn in revenue from cap-and-trade in 2012.

As Kemp explains, the administration attempted to get cap and trade through congress faster by attaching it to the budget, for which there are special provisions. That fact that 26 Democratic senators chose to vote with the Republicans to exempt the climate change legislation from these exemptions exposes a big rift in the party along state lines.

Kate Mackenzie

It’s not been a good week for oil majors accused of unethical behaviour.

Several big pension funds are worried about an upcoming court judgment against Chevron over environmental damage in Ecuador, the WSJ reports, adding that the potential damages could be bigger than the $3.5bn awarded against Exxon for its 1989 oil tanker spill. Three state public employee pension funds and their New York City peer have reportedly contacted Chevron directors asking how the group would protect itself against an unfavourable ruling.

Shell was earlier this week preparing for a civil court case over the death of Ken Saro-Wiwa, the Nigerian activist executed after campaigning against environmental damage by oil companies. His execution, along with that of eight associates, was widely condemned. Shell is accused of bribing two witnesses to testify against Saro-Wiwa, but denies this accusation and says it in fact pressed for clemency. The trial, which will take place in New York, has now been delayed under late May, but Shell meanwhile is also accused of reneging on its promise to reduce greenhouse gas emissions in its oil sands projects in Alberta. Canadian environmental groups yesterday presented an affadavit to the Alberta Energy Resources Construction Board and the Canadian government saying Shell had not met its goal of the project being “less carbon dioxide-intensive than the most likely alternative, which is imported crude”. Shell pointed to the voluntary nature of the commitments, as the FT story reports:

John Abbott, Shell Canada’s executive vice-president, said Shell had taken early voluntary action, making its ventures the least greenhouse gas intense of all mineable oil sands projects.

He indicated Shell was shifting from voluntary targets. “Alberta’s current regulations and the emerging Canadian policies recognise that the need to reduce emissions is too important to rely on voluntary commitments and, along with the rest of the industry, we are now focused on meeting these new regulatory targets.”

Related links:

Shell faces Alberta oil sands dispute (FT)
Pension funds fret as Chevron faces Ecuador ruling (WSJ)
Shell faces Saro-Wiwa death claim (FT)

Kate Mackenzie

On Energy Source today:

Will China, India and Japan be Venezuela’s saviours?
New deals – and reports of deals – aplenty for oil-rich country

Does Chu support the oil shock theory?
Reports from the EIA conference

An uncomfortable moment at Bonn
Czech climate change negotiator deals with his prime minister’s avowed scepticism


Elsewhere:

Iran: Development of its abundant oil and gas has suffered for its nuclear ambitions (Gregor)

Infrastructure: After the energy grid hacking report, Infrastructurist asks a security expert how many other ’24′ plot lines are possible in real life (Infrastructurist)

Offshore wind: Chewing over the large report on the offshore continental shelf by the Department of the Interior (The Oil Drum)

Geoengineering: Team Obama will consider geoengineering, although little is known about the subject (WSJ)

Cars: Boris commits to 100,000 electric cars for London (Guardian)

Oil: Anything but oil – what happens if the tiny US wells supplying 20% of the country’s production become uneconomic? (R-Squared)

Kate Mackenzie

The US Energy Information Agency held a conference in Washington over the past two days and David Summers, an Oil Drum founder and scientist, wrote up some notes from his attendance.

A few highlights:

Summers says US energy secretary Stephen Chu appeared to agree with the theory advanced by Professor James Hamilton that the 2007- 08 oil price shock was responsible for the 2008 US downturn. (The EIA will publish the speeches later for those who want to check.) Chu was also concerned about the receding Sierra mountain snows and implications for California’s water supply.

Fiona Harvey

The European Union delegation at the UN talks in Bonn this week, the first of many this year aimed at producing a successor to the Kyoto protocol by late December, were forced to excuse the antics of the current holder of the EU presidency.  The Czech republic has the revolving presidency but its president, Vaclav Klaus, has views on climate change way out of line with the official position.

Klaus is an outspoken global warming sceptic, given to denouncing climate change as an invention, a communist plot, a product of the “new religion” of environmentalism. His views are an embarrassment to the EU, which is trying to lead the rest of the world to an agreement on cutting greenhouse gases.

Pavel Zamyslicky of the Czech delegation visibly squirmed when asked in a press conference on Wednesday about his president’s views. “The President speaks of his views on the issue. We have no problems with the little bit of difference of opinion… The EU is absolutely clear on its position.” He looked relieved when the discussion moved on to the laboured intricacies of whether the UN negotiations would produce a brand new treaty, an amendment to the Kyoto protocol, or – for complicated and largely tedious reasons – some form of combination of the two.

Related link:

Gideon Rachman: Three cheers for Vaclav Klaus (FT)

Kate Mackenzie

Two reports this morning about foreign interest in Venezuela, which has been seeking private investment to exploit its oil reserves, are not too much of a stretch. Earlier this week Hugo Chavez signed a $33.5bn investment agreement with Japan, and  was said to be meeting with China yesterday.

Today Bloomberg reports PetroChina may form three oil ventures with Venezuela – citing the 21st Century Business Herald reported, which in turn cites an unnamed executive at the Chinese company.

The ventures may include an oil company in Venezuela that would be 40 percent owned by PetroChina, the newspaper said. Another refinery venture may be formed in southern China’s Guangdong province, with the Chinese company owning 60 percent, the report said. A shipping company may also be formed, with each side holding 50 percent, it said.

Then the Economic Times of India is reporting both ONGC and Reliance may each take a stake of up to 20 per cent in at least one of the three large oil fields in Venezuela’s Carabobo region, citing people “familiar with the matter”. Reuters also cites a source at ONGC who mentions the Reliance partnership.

Pdvsa, like some of its fellow national oil companies, has been used to strengthen government coffers at the expense of investing in its future production. When oil prices were high, the government used its bargaining power to force international oil companies to cede majority control of projects to Pdvsa. But the company is now in need of more investment, and with oil prices creeping up towards the $60 mark and China’s recent deals to secure oil from Russia and Brazil, these reports aren’t too difficult to believe.

Related links:

PetroChina May Form 3 Oil Ventures With Venezuela, Herald Says (Bloomberg)
ONGC plans to bid with Reliance in Venezuela – exec (Reuters)
Petróleos de Venezuela (FT)

James Fontanella-Khan

Energy news from elsewhere:

- Australia mines minister backs strong China links (Reuters)

- Waste management sees growth turning garbage to energy in China (Bloomberg)

- Ethanol producer Aventine files for chapter 11 (WSJ)

- GDF Suez’s Cirelli nearly triples compensation after merger (Bloomberg)

- Iraq invites Brazil Petrobras to build oil refinery (Reuters)

- The Ecologist magazine goes green and drops print (Ecologist)

James Fontanella-Khan

Energy news from the FT:

- De Beers braced for turnover to fall
The diamond miner struggles to cope with a downturn in an industry it no longer controls

- Japan to restart the world’s biggest nuclear plant
Move comes nearly two years after plant was damaged by an earthquake

- Russian investors face ‘political antagonism’
Top business people blame Poland and Lithuania

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