Daily Archives: February 11, 2010

Carola Hoyos

Oil companies rushed into Iraq, offering to rebuild its huge and dilapidated fields for such low fees (around $2 a barrel) that it made executives wince. Almost every big oil company did it. Executives argued quietly that they hoped Baghdad would remember their generosity in getting the country back on its feet once Iraq was ready to give them a chance to explore for new patches of its oil. The other upside of offering such services for a pittance was that Iraqi politicians gearing up for presidential elections next month may find it more difficult – though by no means impossible – to argue Iraq got taken for a ride from big bad oil and to overturn the deals.

But there is a very big, potentially global, downside people that in the industry are now beginning to quietly admit.

Sheila McNulty

PFC Energy, the consultancy, has come up with an interesting theory regarding Chesapeake’s decision to do a string of joint ventures with major oil companies – it will keep the company from being bought out like XTO Energy was by ExxonMobil in December. If PFC is right (and its theory makes a lot of sense), the rumors that Chevron or others are looking to buy Chesapeake will not come to anything.

On January 4, Chesapeake announced its latest joint venture agreement, this time with Total, for the acquisition of a 25 per cent working interst in Chesapeake’s Barnett Shale leaseholdings in a deal valued at $2.2bn. As with its previous joint ventures, this one leaves Chesapeake with a majority working interest position in the leasehold portfolio along with a commitment to pursue joint ventures in other geographic regions.

Kate Mackenzie

On FT Energy Source:

- Chevron gets its Venezuela reward

- Wiki-fying climate science, and other ideas for the IPCC

- Oil companies launch their Iraq invasion

- Peak oil, or oil crunch? With Richard Branson

- Will nascent Chinese emissions trading schemes take off?

- Iraq’s oil boom: For and against

- Vitol’s bearishness

- An “oil-less recovery”

Further reading:

- 1977 ad: ‘Exxon believes solar’s energy is bright’

- The distracting debate over climate certainty

- Computer power to provide heat for Helsinki homes

- US could profit from pulling out of oil markets

- Crude oil and The Usual Suspects

- Can Germany afford to phase out nuclear power plants?

Kate Mackenzie

Criticisms of the International Panel on Climate Change have been growing louder in the past few weeks, with many climate scientists themselves beginning to jump in.

Nature has canvassed five prominent climate scientists’ views on how the IPCC should be reformed, and come up with as many answers.

A commonly-held belief is that the process needs to be faster – the last report was in 2007 and the next one is in 2014. But how to achieve this – and whether it should be through a more top-down or bottom-up approach – is very much up for discussion.

John Christy of the US has the most eye-catching idea; a sort of Wikipedia approach to publishing and reviewing data. But even he admits that “defining and following rules for this idea would be agonising”.

Kate Mackenzie

The IEA and the EIA have both revised their 2010 oil demand forcasts upwards this month, though only slightly. The IEA is now expecting almost 1.6m barrels per day, while the EIA puts the number at 1.2m.

Opec meanwhile kept its more pessimistic forecast of 800,000 b/d growth – and even revised it downwards, albeit by a tiny 10,000k.

Their key reason: uncertainty about economic recovery, and about how that will affect demand. It is focused on the US and other OECD economies – though not entirely, as the chart opposite shows.

Opec is known for being a little more bearish than other forecasters on oil demand – after all, it’s a producer.

But Vitol, the world’s largest oil trader, is not so much known for pessimism. It is however pessimistic – and for similar reasons to Opec.

Kate Mackenzie

The IEA has once again revised its global oil demand forecast upwards for 2010 – but only by 150,000 barrels per day, to 86.5m b/d.

Meanwhile the agency now has even more conviction that OECD oil demand may well have already peaked – so much so that its latest monthly oil report’s first special feature talks of  an ‘oil-less recovery’.

OECD oil demand fell 4.4 per cent in 2009 according to the latest estimates, and will remain flat this year despite the expected economic growth.

Sheila McNulty

For those who believe world leaders will eventually get around to imposing legislation to create a low carbon future, there is yet another carbon index. This latest one, the Global Carbon Equity Index, allows investors to gain equity exposure in those mid- to large-cap companies best equipped to tackle a world of rising carbon emissions and tougher climate legislation.

It seems, despite the failure of world leaders to make significant strides in Copenhagen, and the continued delays in the US Congress, business still believes carbon legislation is coming. So who is making the most strides in preparing for it?

Kate Mackenzie

China and India won’t agree to reduce their total emissions, but both countries are showing some interest in trading schemes to facilitate their ‘curbing’ targets. Last month we looked at India’s plans to introduce tradeable efficiency certificates which is touted as potentially being a $16bn market by 2015.

A different sort of exercise is under way in China. Like India, China will not commit to reducing its greenhouse gas emissions. Instead it is reducing its emissions per unit of GDP by 45 per cent of 2005 levels, by 2020. A pilot scheme launched in Tianjin allows certain companies to earn and buy credits, based on their performance relative to those intensity targets. Its first three sales – albeit a tiny amount – 500,000 yuan or $73,250 – were bought by Citigroup Global Markets and Gazprom Marketing & Trading.

Sheila McNulty

It has been a few years since Venezuela scared a number of the world’s major oil companies out of the country with the nationalisation of the energy sector. In 2007, ExxonMobil and ConocoPhillips – the US’ first and third biggest oil companies – were among those companies who decided the new terms being offered were unfair and left.

Exxon walked away from projects worth up to $2.3bn in Venezuela’s Orinoco Belt, which is believed to contain the world’s largest deposits of extra-heavy crude oil. ConocoPhillips’ departure resulted in a $4.5bn writedown.

Chevron, the other US major, decided to stay the course, along with the UK’s BP, French group Total and Norway’s StatoilHydro, accepting the revised terms.

Chevron has just been rewarded for that decision.

Kate Mackenzie

Venezuela auctions off two major oil projects (FT)

Scientists argue over future of IPCC (FT)

Vitol damps oil price hopes (FT)

Renewables shiver in REC’s chill wind (FT)

Suppliers of oil sands fuels shunned (FT)

CNPC in South Pars 11 deal – source (Reuters)

Opec: US economic uncertainty weighs on oil demand (Dow Jones)

Australia urges transparency in Rio case (FT)

Vestas forecasts boost in orders (FT)

Anadarko plans additional wells in deepwater West Africa (Dow Jones)

India rethinks reliance on China (WSJ)

China introduces carbon intensity cap-and-trade scheme (Argus)

Kia plans to introduce hybrid car to US market in 2011 (AFP)

Bangladesh looks to floating LNG (UpstreamOnline)

Shell’s Voser commits converts maximum bonus allowance into shares (Bloomberg)

Italy issues framework to select nuclear sites (Argus)

China’s coal imports tripled in 2009 (Xinhua)

Japan’s 2009 solar panel sales reach record levels due to subsidies (Bloomberg)

New SBI clean tech seeks SWF investors (Bloomberg)

Energy Source is no longer updated but it remains open as an archive.

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