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Permalink Reply by Anna Mauck-Member Services on December 5, 2008 at 6:23

Did anyone see this a few week's back?

Shell secures 25-year access to Iraq's oil, gas

Ben Lando and Alaa Majeed UNITED PRESS INTERNATIONAL
Friday, November 7, 2008

EXCLUSIVE:

A joint venture between Royal Dutch Shell and Iraq's state-owned South Gas Co. could give Shell a 25-year monopoly on production and exports of natural gas in much of southern Iraq - the biggest foreign role in Iraq's oil and gas sector in four decades.

The planned venture, spelled out in a 16-page document obtained by United Press International, goes well beyond descriptions provided by Iraqi and Shell officials on Sept. 22, when they held a public signing ceremony in Baghdad.

The officials at the time described the agreement as:

• Limited to Basra province.

• Restricted to capturing gas that is burned off and therefore wasted in extracting and processing oil.

• Primarily intended to supply Iraq's domestic market.

In fact, the two signed what is known as a "heads of agreement" (HOA) - basically a rough draft of a contract - that establishes the management team, scope, purpose and other details of the joint venture's business plan.

Though nonbinding, the confidential document is telling.

The joint-venture company would give Shell the largest foreign role in Iraq's oil and gas sector since the 1960s, when Iraq expelled the world's big oil firms after 40 years of foreign control of exploration, production and exports.

Permalink Reply by Antsu-in-Japan on December 26, 2008 at 4:56

No, I missed that! VERY interesting news.

Permalink Reply by intrepid on December 26, 2008 at 15:05

Thanks, Antsu-in-Japan! You're in a great spot to help us get perspectives we wouldn't normally see. I appreciate you posting this.

Permalink Reply by Antsu-in-Japan on December 26, 2008 at 19:02

My pleasure...I'll try to keep up with stuff from this side and pass it on. Stay well and happy holidays, Intrepid!

Permalink Reply by Antsu-in-Japan on December 26, 2008 at 18:26

Here's something I found in the December 17 JAPAN Times newspaper. Maybe this delay presents a chance for US car companies to come up with a more viable NG car:

Toyota-Isuzu Engine on Hold

Nagoya
KYODO, JIJI

Toyota Motor Corp. has frozen a joint engine project with Isuzu Motors Ltd. as it moves to curb research and development costs to deal with a global economic slump, Isuzu President Susumu Hosoi said in a recent interview.

It is also planning to postpone the opening of a new Prius factory it is building in Mississippi to beyond 2010 or 2011.

The move highlights how the global financial crisis is now affecting Japanese companies' efforts to make products that are less harmful to the environment, critics said.

Subject to the suspension is the joint development of a 1,600cc aluminum block enjine that was expected to become the world's most efficient engine in terms of weight and fuel consumption.

The two automakers were planning to start output of the "clean diesel engine" around 2012 for use in Toyota's small cars for the European market.

The clean diesel was expected to be manufactured by Isuzu in Tomakomai, Hokkaido Prefecture, sources said.

The freeze of its development was requested by Toyota. The two firms have not decided on the future of the project, Hosoi said.

Toyota is reviewing major projects as it braces for a long-term drop in auto sales from what is expected to be a global recession. Analysts said it was likely other new projects would be scaled down or frozen as well.

Toyota and Isuzu announced a capital and business tieup in November 2006 that gave Toyota a 5.9 percent stake in its smaller rival. Observers said Toyota sought the alliance to shore up its operations in diesel engines, where it lags behind other carmakers in capitalizing on a new generation of cleaner-burning diesels.

Toyota will continue building the Mississippi factory, which is 90 percent complete, but delay installation of the production facilities and hiring.

In July, Toyota said it will place greater emphasis on making smaller, more fuel-efficient models and have the Prius replace the Highlander sport utility vehicle at the factory in Mississippi.

But it was forced to review its plans after sales of smaller cars began shrinking in conjunction with the economic chaos. Toyota's sales in the United States tumbled 33.9 percent on year in November, including a 48.3 percent plunge in the Prius.

Sources had earlier said Toyota is expected to further cut its group earnings projections for the second half and report an October-March operating loss of about ¥100 billion.

Permalink Reply by Snake Stewart on December 26, 2008 at 18:39

Hey Louisianagirl,
I sure hope that Royal Dutch has them big boy drawers on. Get it all set up and ready and then get thrown out by the seat of your pants. Wouldnt be pretty.

Antsu-in-Japan,
I dont think that the Liberty Bell in Philly could ring loud enough into the ears of the sickly 3 to wake them up but we can keep our fingers crossed anyway

Permalink Reply by Antsu-in-Japan on December 26, 2008 at 19:28

Thanks for making me laugh, Snake! Would grabbing them around the neck and shaking some sense into them constitute abuse? Japanese car companies are having some setbacks, too. According to today's JAPAN Times, domestic vehicle output fell 20% in November from a year earlier. Exports fell 18% with shipment to the US falling 30%. Toyota (after earlier forecasting a profit) just forecasted its first group operating loss in 71 years as sales drop and the rising yen cuts into the value of overseas sales.

Nissan's output dropped 30%, led by a 50% decline in exports to North America. Honda Motor's domestic output fell 3.9%, while exports to the US dropped 31% and Asian shipments fell 42%. Suzuki's domestic output fell 7.3%, with sales to North America and Latin America falling 24%. Mazda's output has fallen 20%, Mitsubishi has fallen 27% and Fuji (Suburu) has reduced domestic output 3.8%.

Permalink Reply by Bruce on December 26, 2008 at 18:45

Thanks for posting this Antsu. No doubt relations between Russia and Europe are based on Europe's natural gas needs, much like our relationship with Saudi Arabia. If Egypt can get the pipeline built to tie in to the Turkey pipeline, you can bet it will be extended beyond Bulgaria and into the rest of Europe thereby decreasing Russia's hold over Europe. With things like this plus the falling rouble maybe this will keep the big bear on a leash for a good while.

Permalink Reply by Antsu-in-Japan on December 26, 2008 at 19:44

Yeap....you are so right, Bruce! I was planning to go to Turkey a few years ago, and that's when I came upon research stating that it is becoming more known as a country for transporting oil and gas.

Anyway, here are a few articles I found:


Experts Raise Questions Regarding Egypt Natural Gas Strategy
Posted on: Thursday, 23 February 2006, 12:00 CST

Egypt and Turkey have recently agreed to jointly establish the "TIR GAZ" company. This company will be responsible for exporting Egyptian gas to Europe via a pipeline which will go from Egypt to Jordan, and then through Syria to Turkey. This recent deal raises again the discussion concerning Egypt's natural gas export destinations.

Following significant discoveries of oil reserves in the early 1990s, the Egyptian Government declared in 1999 that the nation's reserves (estimated at some 65 trillion cubic feet today) surpass the local needs, and called on foreign companies operating in its territory to locate export destinations.

Ever since natural gas production in Egypt grew by more than 75 percent in the last five years. In 2004, natural gas became the nation's No. 1 source of energy. Currently, approximately 84 percent of Egypt's electricity needs are supplied by power stations that run on natural gas.

Viewing Liquefying Natural Gas (LNG) projects as the most efficient means of attracting foreign investment, the Egyptian government has encouraged foreign companies operating in the country to expedite their completion of LNG export projects. Indeed many leading foreign companies understood the potential of Egypt's natural gas industry and today there are some 50 foreign companies operating in this sector.

The first gas liquefaction plant for export purposes was completed in December 2004 by the Spanish firm, Union Fenosa. The plant, located in Damietta, west of Port Said, is one of the largest worldwide. Its first export shipment to Spain was ready in May 2005, some three months ahead of schedule. The liquefaction and export capacity of this facility - about 7.5 million tons per year of LNG - has already been sold for the next 25 years.

The second gas liquefaction plant was completed in March 2005 by BG and the Malaysian Petronas Company in Idku, east of Alexandria. Its first LNG shipment left the plant in November 2005. The completion and operation of this facility in Idku led Egypt to become the world's sixth largest liquid gas exporter, following Indonesia, Qatar, Malaysia, Algeria and Nigeria).

Criticism Despite the remarkable developments, some experts criticize Egypt's natural gas policy. Tarek Heggy, former advisor of Shell International Petroleum Companies and Chairman of Shell Companies in Egypt believes that by embarking on these huge LNG projects Egypt made two crucial mistakes.

First, Heggy explained to MenaReport, expensive LNG projects are better suited for large scale gas producers with average reserves of 100 Tcf and more and not to medium sized natural gas producers such as Egypt. The second mistake was choosing Europe as its primary export destination for natural gas. The markets in Western Europe, maintained Heggy, are too far from Egypt and too close to other major eastern European gas producers, thus forcing Egypt to lower prices in order to compete in this market.

Aside from its ambitious LNG projects, Egypt has also been striving to become a regional gas exporter, supplying gas by pipelines to neighboring Jordan and from there to Syria, Lebanon and Turkey, as well as to Israel.

A gas pipeline from Egypt's El Arish to Jordan's Aqaba has already begun commercial operation in July 2003. This pipeline is operated by the Egyptian-Jordanian Eastern Gas Company, EGC, but gas supplies to industrially underdeveloped Jordan have been quite marginal. Furthermore, the small amounts of gas exported to Jordan are also being sold at lower "favorable rates" believed to be around US$1 per 1 million BTU.

Cyril Widdershoven, from Mediterranean Energy Political Risk Consultancy, a leading natural gas analyst and prolific author on the subject, explained to MenaReport that what enabled this "favorable rates" deal between the two countries was first, the backing of various international and regional energy organizations, which subsidized the pipeline building and the whole deal; Second, the fact that Jordan was in fact Egypt's first client and relatively small market; Third, Egypt's aspiration of reaching a regional agreement in which it will supply gas from this pipeline to Jordan until Syria and Turkey.

At any rate, said Widdershoven, the feasibility of this Syrian- Turkish option is highly questionable. The Syrians do not need this gas pipeline and Turkish demand will not support another source of piped gas beyond its import deals with Russia, Iran and Azerbaijan.

The idea of selling gas to Israel, on the other hand, something which has been under discussion since the mid 1990s, seems much more viable. Israel, claimed Heggy, has always been Egypt's best export destination for its newly discovered natural gas reserves. This is the largest industrialized economy in the region and hence also the largest natural gas consumer in the region in the foreseen future. Furthermore, Israel is close to Egypt, making it much cheaper and simple to sell it the gas by a relatively short pipeline.

Israel, however, explained Heggy, has been reluctant to base its energy supplies on neighboring Egypt and Egypt, on the other hand, has been reluctant to become dependent of Israeli dollars. Eventually, however, in June 2005, a deal was signed between the two sies for the supply of $2.5 billion worth of gas to Israel. The gas would be exported to Israel by the East Mediterranean Gas Company (EMG), an Egyptian-Israeli company, through a pipeline which is to be built and fully operated by the end of 2007.

2006 Mena Report (www.menareport.com)

-------------------

Turkey Bolsters Its Regional Energy Role
Walid Khadduri Al-Hayat - 22/04/07//

Three major projects to transport natural gas from the Middle East and the Caspian Sea via Turkey to Europe, and building two refineries for crude oil in the Turkish Mediterranean port of Gehan are currently in the study and design stage.

These projects are seen as a response to the US' insistence not to export oil and gas from the Caspian Sea area via Iran or Russia, and the decision by the EU to diversify sources of imported gas, particularly aimed at reducing dependence on Russian gas supplies.

Once executed, these projects, along with the (Kirkuk-Gehan) Iraqi oil pipeline, which has a capacity of 1.6 million barrels per day, will certainly allow Turkey - despite its low oil and gas production levels - to play a key role in the oil industry in the East Mediterranean area.

These three gas projects include the Trans Adriatic Pipeline to the south of Italy, near the Brindisi port, from where it will link with European gas network.

Construction of this pipeline is set to begin in 2008, and will have an annual capacity of 10 billion cubic meters. Gas fields in the Middle East, as well as the Shah Deniz gas field in Azerbaijan, will supply this pipeline with gas.

The Greece-Italy Pipeline, also running through Turkey, supplied with gas from Azerbaijan and Russia, reaching Turkey via the Blue Stream Pipeline, and providing Turkey with quantities exceeding its domestic consumption levels.

There is a future possibility of feeding this line, planned to reach northern Italy, with natural gas from northern Iraq.

The third line, the Nabucco Natural Gas Pipeline, which delivers gas produced from the Caspian Sea and Iran (which currently exports natural gas to Turkey) to Austria, is estimated to cost more than $6 billion.

Negotiations over this line underwent difficulties, however, following Turkey's decision to temporarily suspend talks with Gaz de France, a main partner until after the French presidential elections in the coming days, due to the French Parliament's vote last year for the decision to make denying that Armenians suffered genocide under Ottoman rule a crime.

Bulgarian, Romanian, Hungarian, Austrian and Turkish companies are also partners in this project.

There is also the possibility of linking the pipeline in Turkey with the Arab Gas Pipeline, which receives supplies from the northern Egyptian border city of al-Arish via the Jordan port of Aqaba (Jordan has completed constructing the pipeline across its territory) and Syria (where the project is currently in progress).

Proposed projects are not limited to Turkey's role in the transport of gas to Europe, as a number of companies have expressed interest in exporting oil and gas to Israel, as well.

These projects, nevertheless, have not reached the same advanced stages as their European counterparts, where in addition to the projects outlined here, there are plans to construct an oil pipeline to transfer oil from Kazakhstan and Azerbaijan to Israel through the Turkish port of Gehan, and to build two refineries there by a consortium of Turkish, Kazakhstani, Azerbaijani and international companies.

The oil pipeline running through the Mediterranean is also expected to be linked to the Eilat Ashkelon Pipeline to re-export oil to Asian markets. There are also plans for a project to construct another gas pipeline for domestic consumption.

Permalink Reply by Titleist on December 27, 2008 at 6:05

Thanks for the article links, they got me thinking. It is my understanding that there is a LNG facility in Cameron Parish. Currently this facility is permitted for importing LNG but they are trying to get a permit to export LNG. It seems like LA would benefit from exporting LNG to capitalize on the world price of this commodity however, I never read anything about this. If exporting LNG became a reality I wonder about the impact on the current trade imbalance and price of natural gas in this country.

Countries around the world are pursuing natural gas as key fuel to power their economies. In the last year, during all the election chatter, I rarely heard about making natural gas a major part our energy policy. It would appear the US has ample supply for many decades. Perhaps a new rule regarding how we account for reserves will change policy to increase use of natural gas.

From LA's perspective I see benefit to both exporting LNG and greater use of natural gas. Interested to read your thoughts.

Permalink Reply by Snake Stewart on December 27, 2008 at 6:17

Hello Titleist,
Do you have a link to the Cameron Parish facility ?
There are only 5 regasification plants operated in the U.S. right now, if I remember correctly, that cant even keep up with our projected increase in need. Much less be viable in current form to be of much help export wise. The obsticles plants like these face from an EPA standpoint are huge. We have to find common ground between Green and being able to survive economically. You raise good points and if the Government doesnt do something to lighten the restrictions placed on future development we will be left holding the empty bag, as always. Have a good one.

Permalink Reply by Les Bamburg on December 27, 2008 at 6:32

Titleist, the facility in question is Cheniere's Sabine Pass LNG receiving terminal. The permit application only covers exporting LNG that was originally delivered (imported) into the terminal by ship. The terminal does not have the capability to liquefy natural gas produced in the US.

http://www.cheniere.com/LNG_terminals/sabine_pass_lng.shtml

The new administration will likely promote additional use of natural gas for power generation by implementing new regulations that penalize the significant CO2 emissions from coal plants. Of course Big Coal and certain states and power companies will fight this.

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