Tag: Energy

  • Azerbaijan: The Stark New Energy Landscape

    Azerbaijan: The Stark New Energy Landscape

     

     

     

    August 15, 2008 | 1817 GMT

    Yoray Liberman/Getty Images

    Workers at the Baku-Tbilisi-Ceyhan pipeline terminal in Turkey

    Summary

    Russia’s military defeat of Georgia puts Azerbaijan in a difficult position. With all of its existing energy export routes now back under Russian control, Baku faces a stark set of choices that may force it to reach an accommodation with Moscow.

    Analysis

    Related Links

    • Turkey: An Oil Pipeline Fire and the Russian Alternative
    • Russia: Courting Azerbaijan for Natural Gas
    • Global Market Brief: BP Takes a Hit in the Georgia Conflict

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    • Crisis in South Ossetia

    Azerbaijan is losing some $50 million to $70 million per day due to the closure of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, the Caspian Energy Alliance said Aug. 14, adding that Baku’s total losses from the closure amounted to some $500 million. The 1 million barrel per day (bpd) BTC line, which passes from Azerbaijan to Turkey via Georgia, was shut down Aug. 6 following an attack on the Turkish part of the line, claimed by a Kurdish separatist group. If not for that attack, however, it might well have been shut down anyway amid the military conflict in Georgia that began two days later.

    Azerbaijan exports oil and natural gas to Western energy markets via three pipelines — all of which pass through Georgia, and all of which experienced cutoffs in the past several days. Two
    of them — the BTC and the 150,000 bpd Baku-Supsa — carry oil. The Baku-Tbilisi-Erzurum line carries natural gas at 9 billion cubic meters per year. The pipelines were built to provide a transport route for Caspian Sea energy to reach Western markets without having to pass through Russia, which controls the majority of pipeline infrastructure into Europe. Now that Russia has established a firm military presence in Georgia, however, it is highly likely that all three lines will continue to operate, or not, at the pleasure of the Kremlin.

    This puts Azerbaijan in a predicament. With its export routes to the West blocked by the Russian presence in Georgia, Baku is carefully considering its options. Though other potential pipeline routes exist, they are plagued with problems that could prove insurmountable. Azerbaijan may have no real option but to try to reach some sort of accommodation with Moscow.

    Initially, Baku was excited by the conflict in Georgia’s South Ossetia region because it provided a possible blueprint for dealing with Azerbaijan’s own restive separatist enclave of Nagorno-Karabakh — and for potentially imposing a new military reality on Baku’s regional rival, Armenia.. If successful, such a campaign could have allowed Baku to use Armenian territory for a new energy export route. Sources tell Stratfor that, following the Georgian military’s Aug. 8 invasion of South Ossetia, Azerbaijan’s leadership convened an emergency meeting at which they reportedly gave serious consideration to invading Nagorno-Karabakh, contingent on the eventual success of the Georgian operation.

    However, the Georgian offensive not only failed, it resulted in the Russian invasion of Georgia proper — which has effectively suspended Tbilisi’s ability to control its own territory. Russia also used air bases in Armenia to assist in the Georgian intervention, which marked a significant change in the dynamic between Baku and Yerevan. Russia keeps military assets in both Azerbaijan and Armenia, and sells weapons to both — indeed, part of Moscow’s strategy in the Caucasus is to ensure that the two rivals remain distracted by their tense relations — but from Baku’s perspective, the Russian decision to activate its assets in Armenia means Moscow is choosing sides. However possible it might have been for Azerbaijan to invade its neighbor, it has suddenly become inconceivable.

    For Baku, this is the worst-case scenario. Its energy lifelines, intended to circumvent Russian territory, are now under the overt control of the Kremlin, while its alternative of forcing a new path through Armenia is completely taken out.

    Baku also suddenly found itself trying to block the flood of Azeri volunteers heading to Georgia to fight the invading Russians. Azerbaijan’s government did not want to provoke Russia, especially with Russian tanks only a couple of hundred miles from Baku itself. For that matter, with a presidential election set for Oct. 15, Azeri President Ilham Aliyev does not want a security crisis on his hands. Even though Azerbaijan has been using its energy revenues to build up its military in recent years, it is nowhere near ready to defend itself from a Russian invasion. Its security situation is in many ways even more dire than that of Georgia (or even Ukraine).

    Turkey, Baku’s strongest ally in the region, theoretically would not stand by if Russia invaded Azerbaijan — but then, Ankara has been silent on the Russian intervention in Georgia. To the Azeris, this is a sign that they cannot depend on the Turks to commit themselves to a fight with Moscow if push should come to shove. Also, now that Georgia is under effective Russian military control, the only route for Turkish aid to Azerbaijan is cut off — neither Iran nor Armenia would provide passage.

    With the Russians in control of Georgia and with domination of Armenia out of the picture, Azerbaijan’s only other feasible export route would be southward through Iran, hooking into existing Turkish pipeline infrastructure or sending exports out via the Persian Gulf. The problem with this option is one of timing: Any move into Iran would have to wait for an accommodation between Tehran and the United States over Iraq, which appears to be getting ever nearer but could still be derailed. At $50 million in losses per day, however, Azerbaijan does not have the time to wait for these pieces to fall into place and then build a new pipeline into Iran. A Russian move to cut off all three pipelines going through Georgia would make the cost unbearable. Baku counts on i ts energy export revenues in order to maintain military parity with Armenia, so a sharp drop in funding could quickly become a national security issue.

    That leaves one other option, which from Baku’s perspective is the least desirable but the most realistic: seeking accommodation with Russia.

    Russia now effectively controls the entire already-built energy transport infrastructure between Baku and Western markets. Russia could accommodate transport of Azeri energy through Georgia for the right price. That price would be both financial and political: Azerbaijan would need to align with Moscow on matters of import in order to keep the pipelines open. Baku also could ship its natural gas through Russia proper via pipelines such as Baku-Rostov-on-Don, which used to provide Azerbaijan with natural gas supplies before it became a net exporter. There also is the Baku-Novorossiysk oil pipeline, which has a capacity of nearly 200,000 bpd, although very little Azeri crude normally goes through it.

    Azerbaijan has tried to avoid shipping its energy exports through Russian pipelines while other feasible options were open. But Baku may have to reconsider now that Russia holds all the cards.

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  • Turkey Pipeline Fire Boosts Oil Prices

    Turkey Pipeline Fire Boosts Oil Prices

    Oil prices sprung back up past US$120 a barrel yesterday after Kurdish rebels set fire to an oil pipeline in Turkey. The jump in prices stops a three day slide that had offered a brief reprieve to the consumer.

    The fire could cause the closure of the pipeline for more than two weeks, causing the jump in futures pricing. One energy consultant said: “Every day that it’s down, we lose about 1 million barrels of oil that otherwise would be available…”
      
    Source: news.yahoo.com

  • Exxon Mobil in talks with Turkey for Black Sea oil

    Exxon Mobil in talks with Turkey for Black Sea oil

    Exxon Mobil is among the companies that seek to co-operate with Turkish Petroleum Corporation in the oil exploring studies at Black Sea, a company executive told Anatolian Agency on Sunday.

     

    “Exxon Mobil is an important company for us. Our studies continue at the moment… Sending and receiving letters continue at the moment… We expect these to finalize with an agreement,” the AA quoted Yurdal Oztas, vice general manager of Turkish Petroleum Corporation (TPAO). 

     

    The area at 2,000 meters deep and the below had the real oil potential and the drilling operations here were in need of high technology, Oztas said and added that small companies had not much to do due to this difficulty.

     

    TPAO estimates more than a total of 10 billion barrels oil reserve, which can meet Turkey’s 50-year oil requirement, exists at Black Sea.

     

    Turkey has also recently initiated a mobilization to search oil and natural gas in southeastern Turkey.

    Photo: AFP
  • Turkey’s energy options

    Turkey’s energy options

    By JOHN C.K. DALY
    UPI International Correspondent

    WASHINGTON, July 30 (UPI) — World-high energy prices have blindsided many countries, including a number in the oil-rich Middle East, none more so than Turkey. In 2007 Turkish domestic production supplied a paltry 8.7 percent of the nation’s crude oil and 2.6 percent of its natural gas; price increases since the beginning of the year have severely constrained the growth of the Turkish economy, leaving Ankara to search for alternatives.

    Parallel with Turkey’s scramble to secure energy resources are its efforts to position itself as the prime energy transit corridor for burgeoning energy exports from the Caspian coterie of former Soviet republics. Ankara’s greatest success to date has been the $3.6 billion, 1,092-mile Baku-Tbilisi-Ceyhan pipeline. Opened in 2006, BTC has provided a cash bonanza for Turkey in transit fees; three months ago Energy and Natural Resources Minister Hilmi Guler told journalists that BTC transit revenues had already earned Turkey $2 billion.

    An added benefit of BTC for Turkey is that it relieves tanker traffic on the Turkish Straits, which connect the Black Sea with the Mediterranean and are used by Russia and Kazakhstan as their maritime route for exports to the world market. Besides BTC, another alternative supported by Ankara is the 340-mile, $1.5 billion Samsun-Ceyhan pipeline, also known as the Trans-Anatolian Pipeline, first proposed in 2004, now being developed.

    But welcome as transit fees are, they do little to solve the country’s immediate energy needs. According to Turkish Petroleum Corp. Director General Mehmet Uysal, seven oil wells will be drilled in the Black Sea in the next three years. While Uysal believes Turkish Black Sea offshore wells ultimately will equal Azerbaijan’s riches, Black Sea production is years away from coming online, leaving Turkey with a rising import bill.

    Ankara accordingly is investigating any and all alternatives. Turkey is considering beginning construction of the country’s first two nuclear plants, to be operational by 2015. The first is proposed for the Mediterranean town of Akkuyu, where environmentalists have stalled the project since 2000, arguing the site is near a major seismic fault line. The second is proposed for the Black Sea town of Sinop; supporters argue the two new nuclear reactors could cover one-tenth of Turkey’s projected energy needs over the next 20 years.

    Wind power is also receiving serious consideration. On July 27 Energy Minister Hilmi Guler said Turkey now has 3,000 energy investors and that “Turkey has ranked 12th among the 32 countries in wind energy. We will rank the first or second in the future.”

    However, Turkey already has a rising indigenous source of electrical power — hydropower. While that is the good news, the bad news is that it severely complicates its relationships with downstream nations Syria and Iraq, as the majority of its hydropower is generated by facilities regulating the flow of the Tigris and Euphrates rivers, the historical providers of water to the “Fertile Crescent” since antiquity, where most Western and Middle Eastern scholars believe “the cradle of civilization” was established nearly 7,000 years ago.

    Turkey, Syria and Iraq now share the Tigris and Euphrates’ 303,000-square-mile river basin watershed. The centerpiece of Turkey’s hydrological ambitions and its neighbors’ concerns is its Guneydogu Anadolu Projesi (Southeastern Anatolia Project), a decades-old dream dating back to the 1930s, when Turkish Republic founder President Kemal Ataturk first proposed constructing dams on the Tigris and Euphrates. GAP is intended to provide sustainable development for the 9 million people living in southeastern Anatolia, home to the majority of the country’s Kurdish population and the country’s most impoverished hinterlands, while diminishing local support for the Kurdistan Workers’ Party, or PKK, which has waged a bloody separatist campaign against Ankara since the 1970s. While GAP’s final projected price tag is $30 billion, it is cheap compared with combating terrorism. Deputy Prime Minister Cemil Cicek recently observed of the government’s fight against the PKK, “We have spent $300 billion fighting terrorism so far. That is equivalent to 10 GAPs.”

    Unfortunately for Turkey, Damascus and Baghdad do not see GAP in the same positive light. The Euphrates’ water flow is 88 percent controlled by Turkey, 9 percent by Syria and only 3 percent by Iraq. For the Tigris River, Turkey controls 56 percent, Iran 12 percent and Iraq 32 percent. GAP’s Ataturk Dam, completed in 1993, has cut the flow from the Euphrates by about a third.

    In mid-January 1990, when the Ataturk Dam’s first construction phase was under way, Turkey entirely blocked the flow of the Euphrates for a month to begin filling up the dam’s reservoir, the third-largest hydroelectric reservoir in Turkey, leading Damascus and Baghdad to complain Turkey was unleashing its “water weapon.” Turkey countered by insisting it had always supplied its southern neighbors with a promised minimum flow of 500 cubic meters per second and that Iraq and Syria actually benefited from the upstream dam’s regulating water flow, as all three riparian countries were now immune from seasonal droughts and floods. The issue has rankled relations ever since.

    Some progress is visible on the horizon, however, as in January Turkey, Syria and Iraq agreed to establish a water institute to coordinate their policies on the Tigris-Euphrates flow issues. Two months later Turkish Environment and Forestry Minister Veysel Eroglu said, “No war over water resources will erupt in the region. Instead of having problems over water with our neighbors, we prefer developing joint projects.”

    One can only hope that such initiatives are successful, as water disputes in the Middle East have a long history. Genesis 21:25 records a dispute over well water between the clan of Abraham and King Abimelech: “And Abraham reproved Abimelech because of a well of water, which Abimelech’s servants had violently taken away.” Surely creative minds in oil-poor but water-rich Turkey and oil-rich but water-poor Iraq can find a way to resolve their disagreements lest their hydrological resources be “violently taken away” yet again.

  • Will Israel and / or the U.S. Attack Iran?

    Will Israel and / or the U.S. Attack Iran?

    By URI AVNERY

    IF YOU want to understand the policy of a country, look at the map – as Napoleon recommended.

    Anyone who wants to guess whether Israel and/or the United States are going to attack Iran should look at the map of the Strait of Hormuz between Iran and the Arabian Peninsula.

    Through this narrow waterway, only 34 km wide, pass the ships that carry between a fifth and a third of the world’s oil, including that from Iran, Iraq, Saudi Arabia, Kuwait, Qatar and Bahrain.

    * * *

    MOST OF the commentators who talk about the inevitable American and Israeli attack on Iran do not take account of this map.

    There is talk about a “sterile”, a “surgical” air strike. The mighty air fleet of the United States will take off from the aircraft carriers already stationed in the Persian Gulf and the American air bases dispersed throughout the region and bomb all the nuclear sites of Iran – and on this happy occasion also bomb government institutions, army installations, industrial centers and anything else they might fancy. They will use bombs that can penetrate deep into the ground.

    Simple, quick and elegant – one blow and bye-bye Iran, bye-bye ayatollahs, bye-bye Ahmadinejad.

    If Israel attacks alone, the blow will be more modest. The most the attackers can hope for is the destruction of the main nuclear sites and a safe return.

    I have a modest request: before you start, please look at the map once more, at the Strait named (probably) after the god of Zarathustra.

    * * *

    THE INEVITABLE reaction to the bombing of Iran will be the blocking of this Strait. That should have been self-evident even without the explicit declaration by one of Iran’s highest ranking generals a few days ago.

    Iran dominates the whole length of the Strait. They can seal it hermetically with their missiles and artillery, both land based and naval.

    If that happens, the price of oil will skyrocket – far beyond the 200 dollars-per-barrel that pessimists dread now. That will cause a chain reaction: a world-wide depression, the collapse of whole industries and a catastrophic rise in unemployment in America, Europe and Japan.

    In order to avert this danger, the Americans would need to conquer parts of Iran – perhaps the whole of this large country. The US does not have at its disposal even a small part of the forces they would need. Practically all their land forces are tied down in Iraq and Afghanistan.

    The mighty American navy is menacing Iran – but the moment the Strait is closed, it will itself resemble those model ships in bottles. Perhaps it is this danger that made the navy chiefs extricate the nuclear-powered aircraft carrier Abraham Lincoln from the Persian Gulf this week, ostensibly because of the situation in Pakistan.

    This leaves the possibility that the US will act by proxy. Israel will attack, and this will not officially involve the US, which will deny any responsibility.

    Indeed? Iran has already announced that it would consider an Israeli attack as an American operation, and act as if it had been directly attacked by the US. That is logical.

    * * *

    NO ISRAELI government would ever consider the possibility of starting such an operation without the explicit and unreserved agreement of the US. Such a confirmation will not be forthcoming.

    So what are all these exercises, which generate such dramatic headlines in the international media?

    The Israeli Air Force has held exercises at a distance of 1500 km from our shores. The Iranians have responded with test firings of their Shihab missiles, which have a similar range. Once, such activities were called “saber rattling”, nowadays the preferred term is “psychological warfare”. They are good for failed politicians with domestic needs, to divert attention, to scare citizens. They also make excellent television. But simple common sense tells us that whoever plans a surprise strike does not proclaim this from the rooftops. Menachem Begin did not stage public exercises before sending the bombers to destroy the Iraqi reactor, and even Ehud Olmert did not make a speech about his intention to bomb a mysterious building in Syria.

    * * *

    SINCE KING Cyrus the Great, the founder of the Persian Empire some 2500 years ago, who allowed the Israelite exiles in Babylon to return to Jerusalem and build a temple there, Israeli-Persian relations have their ups and downs.

    Until the Khomeini revolution, there was a close alliance between them. Israel trained the Shah’s dreaded secret police (“Savak”). The Shah was a partner in the Eilat-Ashkelon oil pipeline which was designed to bypass the Suez Canal. (Iran is still trying to enforce payment for the oil it supplied then.)

    The Shah helped to infiltrate Israeli army officers into the Kurdish part of Iraq, where they assisted Mustafa Barzani’s revolt against Saddam Hussein. That operation came to an end when the Shah betrayed the Iraqi Kurds and made a deal with Saddam. But Israeli-Iranian cooperation was almost restored after Saddam attacked Iran. In the course of that long and cruel war (1980-1988), Israel secretly supported the Iran of the ayatollahs. The Irangate affair was only a small part of that story.

    That did not prevent Ariel Sharon from planning to conquer Iran, as I have already disclosed in the past. When I was writing an in-depth article about him in 1981, after his appointment as Minister of Defense, he told me in confidence about this daring idea: after the death of Khomeini, Israel would forestall the Soviet Union in the race to Iran. The Israeli army would occupy Iran in a few days and turn the country over to the much slower Americans, who would have supplied Israel well in advance with large quantities of sophisticated arms for this express purpose.

    He also showed me the maps he intended to take with him to the annual strategic consultations in Washington. They looked very impressive. It seems, however, that the Americans were not so impressed.

    All this indicates that by itself, the idea of an Israeli military intervention in Iran is not so revolutionary. But a prior condition is close cooperation with the US. This will not be forthcoming, because the US would be the primary victim of the consequences.

    * * *

    IRAN IS now a regional power. It makes no sense to deny that.

    The irony of the matter is that for this they must thank their foremost benefactor in recent times: George W. Bush. If they had even a modicum of gratitude, they would erect a statue to him in Tehran’s central square.

    For many generations, Iraq was the gatekeeper of the Arab region. It was the wall of the Arab world against the Persian Shiites. It should be remembered that during the Iraqi-Iranian war, Arab Shiite Iraqis fought with great enthusiasm against Persian Shiite Iranians.

    When President Bush invaded Iraq and destroyed it, he opened the whole region to the growing might of Iran. In future generations, historians will wonder about this action, which deserves a chapter to itself in “The March of Folly”.

    Today it is already clear that the real American aim (as I have asserted in this column right from the beginning) was to take possession of the Caspian Sea/Persian Gulf oil region and station a permanent American garrison at its center. This aim was indeed achieved – the Americans are now talking about their forces remaining in Iraq “for a hundred years”, and they are now busily engaged in dividing Iraq’s huge oil reserves among the four or five giant American oil companies.

    But this war was started without wider strategic thinking and without looking at the geopolitical map. It was not decided who is the main enemy of the US in the region, neither was it clear where the main effort should be. The advantage of dominating Iraq may well be outweighed by the rise of Iran as a nuclear, military and political power that will overshadow America’s allies in the Arab world.

    * * *

    WHERE DO we Israelis stand in this game?

    For years now, we have been bombarded by a propaganda campaign that depicts the Iranian nuclear effort as an existential threat to Israel. Forget the Palestinians, forget Hamas and Hizbullah, forget Syria – the sole danger that threatens the very existence of the State of Israel is the Iranian nuclear bomb.

    I repeat what I have said before: I am not prey to this existential Angst. True, life is more pleasant without an Iranian nuclear bomb, and Ahmadinejad is not very nice either. But if the worst comes to the worst, we will have a “balance of terror” between the two nations, much like the American-Soviet balance of terror that saved mankind from World War III, or the Indian-Pakistani balance of terror that provides a framework for a rapprochement between those two countries that hate each other’s guts.

    * * *

    ON THE basis of all these considerations, I dare to predict that there will be no military attack on Iran this year – not by the Americans, not by the Israelis.

    As I write these lines, a little red light turns on in my head. It is related to a memory: in my youth I was an avid reader of Vladimir Jabotinsky’s weekly articles, which impressed me with their cold logic and clear style. In August 1939, Jabotinsky wrote an article in which he asserted categorically that no war would break out, in spite of all the rumors to the contrary. His reasoning: modern weapons are so terrible, that no country would dare to start a war.

    A few days later Germany invaded Poland, starting the most terrible war in human history (until now), which ended with the Americans dropping atom bombs on Hiroshima and Nagasaki. Since then, for 63 years, nobody has used nuclear weapons in a war.

    President Bush is about to end his career in disgrace. The same fate is waiting impatiently for Ehud Olmert. For politicians of this kind, it is easy to be tempted by a last adventure, a last chance for a decent place in history after all.

    All the same, I stick to my prognosis: it will not happen.

    Uri Avnery is an Israeli journalist, member of Gush Shalom and contributor to The Politics of Anti-Semitism (AK / CounterPunch).

    Source: www.counterpunch.org, July 14, 2008

  • INTERVIEW-Turkey, Syria to create a joint oil company

    INTERVIEW-Turkey, Syria to create a joint oil company

    Thu Jul 17, 2008 2:34pm IST

    By Orhan Coskun

    ANKARA, July 17 (Reuters) – Turkey and Syria’s state owned oil companies will establish a joint firm this year to develop their oilfields, the head of Turkey’s state oil company TPAO told Reuters.

    “The completion of the company’s establishment is targeted for 2008. The purpose of the company is to produce oil from fields in Syria, Turkey and third countries,” said TPAO general manager Mehmet Uysal.

    He added the company will first look for production opportunities in Syria before Turkey and third countries.

    Private sector energy experts say they are still trying to determine the extent of Syria’s oilfields. Existing fields are in need of investment for development.

    TPAO plans on exploring extensively in the Black Sea, where it already has operations, as well as in the Mediterranean Sea.

    Uysal also said Turkey, during Prime Minister Tayyip Erdogan’s trip to Iraq earlier this month, won approval to form a consortium to bid for oil exploration rights in Iraq.

    “We have ongoing talks to make an deal with Royal Dutch Shell (RDSa.L: Quote, Profile, Research) regarding exploration,” said Uysal.

    Iraq’s oil ministry has finished negotiations with oil majors on six short-term oil service contracts and hopes to sign the deals in July.

    In the absence of a long-delayed national oil law, Baghdad has been negotiating short-term technical service contracts. The deals are worth around $500 million each.

    Five of the deals that have been under discussion are with Royal Dutch Shell, Shell in partnership with BHP Billiton (BHP.AX: Quote, Profile, Research), BP (BP.L: Quote, Profile, Research), Exxon Mobil (XOM.N: Quote, Profile, Research) and Chevron (CVX.N: Quote, Profile, Research) in partnership with Total (TOTF.PA: Quote, Profile, Research).

    Source: Reuters, July 17, 2008