The Big, Bloody Business of Big, Bloody Oil

“Mark my words.  It will not be six months before the world tests Barack Obama, like they did John Kennedy.  The world is looking.  We’re about to elect a brilliant 47 year old senator president of the United States of America.  Remember I said it standing here, if you don’t remember anything else I said.  Watch, we’re gonna have an international crisis, a generated crisis, to test the mettle of this guy.”
Joe Biden, October 2008, at a Seattle fundraiser.

During his speech at the now famous Seattle fundraiser, Mr. Biden named the Middle East and Russia as the possible (likely) generators of the crisis.  As his words became widespread, he received lots of criticism from his fellow democrats, who warned him that by saying those things in public he was jeopardizing Senator’s Obama’s chances at the Presidency.  Mr. Biden’s comments were the target of jokes from late night comedians, and parodied in a skit on Saturday Night Life.  What most people seemed to forget, or wanted to forget, was that Mr. Biden‘s words were the result of his many years of experience in international affairs.  As a seasoned politician, he could foresee the results of this election.  He knew we would have a generated crisis, and he knew it would generate in the Middle East or Russia.

Mr. Biden was accurate in predicting which countries would generate the crisis, but he could have been even more specific:  The crisis would be generated by the oil producers, the only beneficiaries of all the geopolitical turmoil around the world.  It makes no difference whether it’s the Middle East, Russia or Venezuela.  They all act together in unison as one bloc, with one objective in mind: to keep the price of oil high.

Fast forward to the end of December 2008, and Mr. Biden‘s prescient words came to pass.  Now, at the beginning of January 2009, the crisis generated by the oil producers is in full swing.  Russia, the Middle East and Venezuela are having a field day, rubbing their hands in glee at the results.  They finally managed to reverse the steep drop in the price of oil that started in July 2008.  At that time, oil reached an all-time high of around US$150.00 a barrel, enriching the coffers of the oil producing nations and wrecking the rest of the world’s economies.  Since then, the price of oil dropped to below US$40.00 a barrel.  That meant both a respite for the rest of the world, and a serious problem for the oil producers, who need oil to be priced above US$80.00 a barrel.  Anything lower than that and they cannot sustain their dictatorships.  OPEC scheduled emergency meetings to prop the price of oil.  First, they tried cutting down production.  That didn’t help much this time, because high priced oil already caused the deepest recession around the world since the Great Depression.  The world had curtailed their use of oil and the cuts in production were barely felt.  Another emergency meeting, another production cut.  The price of oil kept going down.  By then, it was obvious that no amount of production cuts would raise the price of oil.  They had to resort to the one tried and true marketing/public relations device that never fails in raising the price of oil.

Terrorism.

First, they attacked India.  As the sole terrorist survivor of the Mumbai massacres revealed, the original planned date for the attacks was September 27.  That was changed to November 27, after the US election.  A major terror attack like the one in Mumbai coming a month before the Presidential election would have had an impact on the result, and not the oil producers’ desired impact.

Oil did go up slightly, but that was only the beginning.  Attacks in Pakistan, Afghanistan and Iraq went barely noticed.  The continuous barrage of rockets from Gaza targeting the civilian population of Israel hardly made the news.  However, that was were they concentrated their attacks.  Creating geopolitical turmoil increases the price of oil, and attacking Israel is what delivers the most bang for their buck.  Always.  Iran contacts its proxies Hamas and Hezbollah, green lights the attacks, and waits for the oil profits to roll in.  It’s a cost efficient method, too.  The UN and the WITOTs (Willing Idiots Targets Of Terror) condemn Israel, give money and aid to Iran’s proxies, and conveniently forget why the geological turmoil was generated in the first place and by whom.

To condemn Israel for defending its civilian population from terror attacks is the political equivalent of condemning a rape victim to death because she had sex outside the marriage.

Had the oil producers not attacked Israel, today oil would be below US$20.00 a barrel.  US$20.00 a barrel is not a comfortable price for Russia, Iran and Venezuela, the generators of the current crisis.  At US$20.00 a barrel, their economies crumble like dust in the wind.

Hamas and Hezbollah are called “proxies” of Iran.  However, because terrorism is about oil business, and to attack Israel was a business decision, it’s more accurate to call them “subcontractors“.

Joe Biden knew we would have a generated international crisis, and knew where it would come from.  Looking at the correlation of the price of oil and terror attacks,  we can all notice a pattern repeating itself.  What comes next after attacking Israel, and getting the UN, WITOTs and oil producers to condemn Israel‘s response, is a major terror attack somewhere in the world.  Somewhere where they can use extreme cruelty against defenseless people, and claim they did it because they were “angry” at Israel.

Watch the price of oil skyrocket. 

I’m concerned this major terror attack is imminent upon us.  It’s part of the script, scheduled after attacking Israel.
US$80.00 a barrel, here it comes.
All in the name of oil.
Never ever let anybody convince you that terrorism is about something other than raising the price of oil.
It’s not.

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Russia Attracting More Western Companies

Where's Russia headed? One good place to get an answer was the just-concluded St. Petersburg International Economic Forum, which followed the strained G-8 meeting in Germany. According to Russian Economics Minister German Gref, upwards of 10,000 people from over 60 countries participated in the Forum, which this year was also done in partnership with the World Economic Forum -- otherwise known as Davos.

I attended the forum and chaired the session on energy. I have subsequently been asked to answer some significant questions.

What is the outlook for the Russian economy? What is the investment environment like currently?

The political tensions, suspicion, and tough rhetoric between Russia and the United States and other members of the G-8 that were so apparent prior to that summit were mostly marked by their absence at the St. Petersburg Economic Forum. The commodities mainly evident in these very warm days and long white nights were optimism and confidence.

With just nine months to go until the Russian presidential election, this presumably last Forum for St. Petersburg-native Vladimir Putin underlined the growth story in Russia under his presidency. Since he took over at the tail end of an economic crisis in 2000, the size of the Russian economy has quintupled. It's the tenth largest economy in the world, and some are estimating that it will be the fifth by 2020 or before. It also has the third largest financial reserves of any country.

On the other side, worries center on the extent of vulnerability to lower energy prices, volatility in the Russian stock market, uncertainty from domestic politics during an election season, and what some say is the stalling of needed reforms.

How is Western business looking at the Russian economy?

There was a strong sense among Western and specifically American companies of not wanting to be left out. After all, the Russian economy is now bigger than Brazil's or India's. As one American put it when we were talking after a session, "For many years, the 'R' seemed to be missing from BRIC. No longer.

Now American companies are scrambling to put their Russia strategy together. They may still worry about the risks, but the opportunity is so much bigger." A number are already there, of course, ranging from Boeing to Procter and Gamble.

Rising income is particularly what the business community is seeing. It's estimated that 25 to 30 percent of the population is now at least in the "consumer class," if not necessarily "middle class."

That's a lot of spending power and a lot of new demand. Last year, it was said, a million cars were sold in India -- and two million in Russia. This optimism is certainly very different from what one encounters in more political circles.

You were the chair of a panel on energy at the conference. Do you anticipate more western involvement in Russia's oil industry or less?

The Putin Administration continues to be intent on revising to one degree or another the oil and gas deals that were done in the middle 1990s. The actual rewriting varies from one deal to the next. So you don't see the same kind of enthusiasm in energy that is evident in other sectors.

There's a lot of uncertainty, frustration, and pessimism about policy, decision-making and about the role of foreign capital in the energy sector. Also, exploration and development costs have been rising substantially in Russia, as elsewhere, but, at least in the mature region of West Siberia, this goes unrecognized by the very high tax rate.. Yet the resource potential is so great that the major companies can't easily stand aside.

There are two critical things that they are waiting for, both of which are promised by the end of the year. One is the definition of "strategic sectors" and how those sectors will be managed -- in which oil and gas are at the top of the list.

The other are the "rules of the road" for exploration and development in the off-shore and Artic, which will be high cost, challenging technically, but are very high potential.

What is the outlook for Russian oil and gas production? Are there any big changes underway?

For most of this decade, it was the dramatic growth in Russian oil production that, on a net global basis, balanced out the rapid growth in Chinese oil demand. Today, Russia is the world's largest producer of oil, but growth has slowed very substantially, and the future growth rate will be very sensitive to tax rates, costs, and regulation.

How do fluctuations in oil and gas prices affect Russia?

To understand Russia's position today on oil and gas, you have to go back to the collapse in 1998. The current leadership never wants to be in the position it found itself when oil prices collapsed back then.

The Russian government, led by finance minister Alexei Kudrin, has constructed a fiscal regime intended to insulate the economy from any future shocks. That means large government reserves and an oil stabilization fund that together, today, exceed $600 billion. This gives Russia two or even three years of protection against a downturn.

At the same time, these reserves have helped to keep down inflation and prevent the currency from appreciating more than it has. Kudrin certainly gets much credit inernationally for the management of Russia's fiscal position.

The bottom line is that Russia has very strong finances today, although there will be greater pressures to spend in an election year. As one of the senior officials put it in a private session, "At a time of high oil prices, we must resist all the temptations to spend."

Still the debate will continue as to how sensitive the Russian economy is to any downturns in oil prices. About 20 percent of GDP is accounted for by oil and gas export revenues, although obviously the indirect impact is a good deal larger.

Russia's economy has boomed under President Putin. What changes do you foresee from your discussions with business leaders when there is a change in leadership?

With perspective, one would say that, from an economic point of view, Putin's program has been directed to stabilization and restoring growth -- and restoring the state -- and state direction over the economy.

The macroeconomic results, as we heard at St. Petersburg, would never have been anticipated by either optimists or pessimists when he came to power. As a prominent American international financial figure put it when we were talking as the conference ended, "No one could have thought in 2000 that this was possible."

Putin's two most likely successors each scoped out at the conference the future emphasis from their current portfolios. First Deputy Prime Minister Sergei Ivanov pointed to aviation, shipbuilding, information technology, nanotechnology, space and nuclear power.

The Russian government is consolidating those sectors to make them internationally competitive. First Deputy Prime Minister Dmitri Medvedev pointed to the "national projects" for which he's responsible -- spending on human capital, and reconstruction in health, education, housing, agriculture. With Russia's population shrinking and ageing, pensions are a very big issue; and a second oil fund, this one specifically for pensions, is in the works.

The buildup to last week's G8 saw some harsh words between Putin and President Bush over an antimissile shield with an ultimate effort to compromise. Is there a change in attitutude toward the U.S. among business leaders? is there a change in the way Russia is treating U.S. business?

Issues like missile defense and domestic politics were not much on the agenda -- except for the appearance of the Serbian prime minister on one plenary, apparently to register Russia's position on independence for Kosovo.

And of course there was much discussion about the controversy around energy issues. It was notable to see that the third speaker on one of the plenaries with President Putin and President Nazarbayev of Kazakhstan was Professir Francis Fukuyama of Johns Hopkins University talking about "trust" and "transparency."

And there was some interesting discussion at senior levels about "Russia's brand." Rule of law and contracts got a fair amount of attention, but that is because this conference was about trade and investment.

From the Russian side, despite some some political ripostes, the forum was mostly about doing business. Putin several times cited the surge of capital inflows into Russia -- and outward investment from Russia. The perspective was summed up by one of the senior people in a meeting with non-Russian CEOs. "Come to Russia with your capital, your money, your technology," he said. "We're delighted to see you here."

This time -- in contrast to earlier years -- he was talking to an audience that seemed quite interested in taking him up on his invitation. Perhaps the mood was captured by another senior figure when he, as almost an afterthought, told the same audience, "We're very business-oriented nowadays." There was a suggestion that perhaps this person himself was a little surprised to find himself in that position.

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Oilfield Services Companies In Russia 2009

Oilfield Services Companies in Russia 2009

Amid challenging economic situation 2009 has been a year of further consolidation of the oilfield services market in Russia, as a result of acquisitions, divestitures, mergers and alliances across all segments of the oilfield services industry. Current couple of years will show how mature and strong the market players are and who will come out of the crisis stronger. ( http://www.bharatbook.com/detail.asp?id=130241&rt=Oilfield-Services-Companies-in-Russia-2009.html )

Oilfield Services Companies in Russia 2009 is the most detailed analysis of the key market segments:

* drilling
* well workovers
* seismic survey and geophysics
* intensification of oil production

Oilfield Services Companies in Russia 2009 presents over 120 detailed profiles of oilfield services companies grouped by the above mentioned segments.

Every company profile contains:

* brief description
* corporate structure (including subsidiaries)
* regions of operation
* list of services offered
* major customers
* operation facilities and indicators (2008 year-end)
* financial indicators (2008 year-end)

Oilfield Services Companies in Russia 2009 covers all types of market players:

* service departments of vertically-integrated companies
* oilfield service holdings (with profiles of subsidiaries)
* independent Russian oilfield services companies
* international oilfield services companies (including their earlier acquired Russian subsidiaries)

Oilfield Services Companies in Russia 2009 is a source of valuable information for:

* oil and gas companies
* services companies
* equipment manufacturers and suppliers
* banks and investment companies

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Oil Prices Climb on Speculation That Opec and Russia Will Cut Production

Speculation that oil prices are beginning to bottom helped push crude contracts higher yesterday (Wednesday), as traders closed out short positions and rumors surfaced that both Russia and the Organization of Petroleum Exporting Countries (OPEC) are planning to cut production next week.

Light, sweet crude for January delivery rose $1.45, or 3.4% to settle at $43.52 on the New York Mercantile Exchange, after climbing by as much as 7% earlier in the day. Futures have plunged roughly 70% since hitting a record-high $147.27 a barrel in July. However, they may be set for a rebound as traders close out short positions and production cuts offset slackening demand.

Traders who took short positions on crude contracts, or placed bets that prices would fall, are buying contracts to cover those bets now that oil has dropped more than 20% in the past two weeks. Their exit from the market has been expedited by the belief that prices are nearing a bottom, as well as suggestions that both OPEC and Russia will cut production next week.

Russia will air proposals on oil production cuts no later than December 17, Sergei Shmatko, the nation’s energy minister, told Interfax.

“Right now we need to see where we stand with respect to OPEC’s stated position,” Shmatko said. “I know that OPEC is preparing serious plans to cut production.”

Shmatko added that OPEC President and Algerian Oil Minister, Chekib Khelil was keen “to see Russia in OPEC,” but that Russia rather see “non-OPEC suppliers consolidate their position in order to keep the market stable.”

OPEC members are scheduled to meet in Algeria on Dec. 17 to discuss further production cuts. Oil has fallen more than 30% since the cartel last slashed its production quota, a 1.5 million barrel per day (bpd) reduction on Oct. 24. Analysts anticipate the OPEC that the next supply cut could be anywhere between 1.5 million bpd and 2.5 million bpd.

“The expectation of an OPEC cut is going some way toward curbing the downward momentum in prices,” Toby Hassall, an analyst at investment firm Commodity Warrants Australia, told The Associated Press. “A cut of 1.5 million to 2 million barrels a day seems like a reasonable range.”

Demand for oil has plunged over the past six months, with the onset of what is shaping up to be a severe global downturn. In its last monthly oil outlook, issued Nov. 17, OPEC trimmed its 2009 demand forecast by 530,000 to 86.68 million bpd. The Paris-based International Energy Agency is expected announce a cut to its 2009 forecast in its monthly report, set for release tomorrow.

Still, many analysts believe the market has “overshot” the downside to oil, and that further production cuts will be enough to create a floor for prices.

“We’re probably in the early stages of forming a base at the moment, and the price will likely edge up toward $60 or $70 by the middle of next year,” Hassall said. “We probably overshot on the downside the same way we overshot to the upside earlier this year.”

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Why Dubai is Having Property Explosion? Dubai After Oil Boom!

Dubai's gross domestic product as of 2006 was US$46 billion. Although Dubai's economy was built on the back of the oil industry, revenues from oil and natural gas currently account for less than 3% of the emirate's revenues.

It is estimated that Dubai produces 240,000 barrels of oil a day and substantial quantities of gas from offshore fields. The emirate's share in UAE's gas revenues is about 2%. Dubai's oil reserves have diminished significantly and are expected to be exhausted in 20 years. Historically, Dubai and its twin across the Dubai creek, Deira (independent of Dubai City at that time), became important ports of call for Western manufacturers. Most of the new city's banking and financial centres were headquartered in the port area. Dubai maintained its importance as a trade route through the 1970s and 1980s. The city of Dubai has a free trade in gold and until the 1990s was the hub of a "brisk smuggling trade" of gold ingots to India, where gold import was restricted. Dubai is an important tourist destination and its port, Jebel Ali, constructed in the 1970s, has the largest man-made harbor in the world. Dubai is also increasingly developing as a hub for service industries such as IT and finance, with the establishment of a new Dubai International Financial Centre (DIFC). The government has set up industry-specific free zones throughout the city. Dubai Internet City, combined with Dubai Media City as part of TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority) is one such enclave whose members include IT firms such as EMC Corporation, Oracle Corporation, Microsoft, and IBM, and media organisations such as MBC, CNN, Reuters and AP. The Dubai Financial Market (DFM) was established in March 2000 as a secondary market for trading securities and bonds, both local and foreign. As of Q4 2006, its trading volume stood at about 400 billion shares worth US$ 95 billion. The DFM had a market capitalization of about US$ 87 billion. The government's decision to diversify from a trade-based but oil-reliant economy to one that is service and tourism-oriented has made real estate more valuable, resulting in the property appreciation from 2004–2006. Large scale real estate development projects, undertaken by firms such as Emaarskyscrapers in the world such as the Emirates Towers, the Pentominium and the world's tallest hotel, the Burj Al Arab. As of July 2007, Burj Dubai -also being constructed by Emaar Properties- is already the world's tallest structure and is expected to be taller by several hundred feet, once construction is complete. Properties, have led to the construction of some of the tallest Recently, the Land Department set up the Real Estate Regulatory Authority (RERA) to regulate developers and safeguard consumers from errant parties. All developers are required to register with the RERA, provide documents and verifiable facts about their properties, and setup escrow accounts to protect consumers' money. KM Properties, a member of KM Holding, was the first company to register with the Land Department. Organizations within Dubai have expressed an intention to invest in medical tourism, including the Emaar group's plans in India. Within Dubai, there is considerable interest in developing this market, and the Dubai Healthcare City is scheduled to open by 2010.. There will be a corresponding increasing need for attention to quality and to quality control in healthcare within Dubai, including international healthcare accreditation.Moving to dubai consult 1Dubai propertyLeading neutral advice when considering property.

Dubai – From the Past to Nowadays

There are many things in Emirates to wonder at - history of this country, high level of all - round development, local traditions and custom, everything you see and hear from all quarters. The Dubai way of life did not always center on oil and its profits. Dubai was originally a fishing settlement. Inhabitants lived by fishing, pearling, herding sheep and goats, and by the turn of the century was an important trading port.

The history of Dubai UAE is rather different from the histories of most similarly-sized cities in the West. The usual pattern is for different periods of history to be layered on top of each other in an imperceptibly slow process. Then the historian's job is to separate the half-blended strata in order to tease out the story of the place. But this approach doesn't work when you're finding out about Dubai, as the city's dramatic transformation resembles a TV makeover show more than a gradual evolution.

Dubai began as a very small, sleepy settlement; until 3000 years BC the area in which Dubai UAE is now found was occupied by nomads who herded sheep, goats and cattle. These nomads supplemented their diet with fish. Agriculture began half a millennium later with the cultivation of the date palm. During the Bronze Age, the area was linked with the copper trade. After that, there is a big gap in what we know until the 7 th century, when the region became Islamic.

Trade expanded even as Dubai was under the British protectorate, and Dubai began to grow in merchant appeal. By the early 1900s, almost a quarter of the population was foreign. The population in the 1930s was 20,000, and of that, 2,000 were Persians, 1,000 Baluchis, many Indians and substantial communities from Bahrain, Kuwait and the Hasa province in eastern South Arabia. In 1954, the British established a political agency there as well.

Many people think that it was the sudden discovery of oil in 1966 which poured wealth into Dubai resulting high demand for Dubai property, leading to its rapid reinvention from a quiet settlement to the land of the blink. This isn't far from the truth, but the whole truth is more interesting and subtle.

The pearling industry in Dubai collapsed at the end of the 1920s, dealt a double blow by the Wall Street Crash and the invention of the artificial pearl. This forced the emirate to look around for other sources of revenue. But the development of Dubai had already begun at the end of the nineteenth century, when the ruler at the time allowed tax exemption for foreign traders. This coincided with the port of Lingah in Iran losing its own status as a free port, so Dubai nabbed all its customers. Thus began Dubai's proud history as a place where items are re-exported. Debate rages over whether "re-exporting" is a euphemism for smuggling, just as it does over the issue of whether Dubai could have been important without the oil. The most realistic answer to the second question is that Dubai used oil revenue to gain capital for the creation of a trade and manufacturing infrastructure, alongside a booming tourist industry. If Dubai had relied on its oil reserves to spend freely without putting any money into developing other industries, the place would now be in serious trouble, as oil and gas reserves were small. Now, nearly 90% of Dubai's revenue is not oil-based. So the secret to Dubai UAE's success is doing the best with what you have - something every self-respecting makeover show advises.

Dubai is a popular choice with GCC locals and foreigners alike, both of whom are currently zapping up off plan property in Dubai before it has even had a chance to hit the market. Many of those moving to Dubai for the first time are reluctant to buy due to the fact that they are still testing the waters so to speak. In addition, the red tape surrounding the purchase of Dubai property by non GCC citizens was enough to put many off buying before they had even considered investigating the market. Thus the demand for Dubai property to rent opened the way for local landlords to hype rental prices substantially. It is estimated that in the last year or two alone, rental rates have increased by between $1000 and $5000 per annum. In the event that you are able to purchase a decent apartment or villa and rent it out at a reasonable rate, you are likely to easily be able to cover your mortgage repayments and possibly still make yourself a little extra.

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Top 10 - Proven Oil Reserve Countries

This is a list of countries with proven reachable oil reserves in billions of barrels, and is a rough estimate based on the ability to recover the oil by current technological and economical means.

Saudi Arabia - 262

Saudi Arabia is the largest exporter of petroleum in the world, and plays a leading role in OPEC, which stands for The Organization of the Petroleum Exporting Countries; an international organization made up of eleven oil producing nations.

Canada - 180

Canada's Athabasca Oil Sands Project is what puts Canada on the map in this list. Current surface mining techniques and in-situ methods to extract bitumen from the oil sands make for an overwhelmingly positive future for Canada's oil industry.

Iran - 126

Iran's economy relies heavily on oil export revenues, and as oil prices rise, Iran's economy improves. Iran is in the process of diversifying by investing some of it's oil reserves into other areas, such as petrochemicals; and is in the process of creating more favorable climates for foreign investment.

Iraq - 115

According to oil industry experts, new exploration may raise Iraq's reserves up to 300 billion barrels. This has created global foreign interest to re-establish within the country. The US, UK, France, China, Russia, and Japan all vie for major concessions complicated by unrest in the post-Saddam Hussein era.

Kuwait - 102

Though the loss has been estimated at 2% of total oil reserves, Kuwait has recovered fully from the invasion of Iraq. The KPC, or Kuwait Petroleum Corporation, has grown to become one of the ten largest oil companies in the world.

U.A.E. - 98

At one time an underdeveloped region, by 1985 the UAE had the highest per capita income in the world. The largest areas of petroleum production occur in two of the seven constituent parts of the UAE; these being Dubai and Abu Dhabi. Abu Dhabi qualifies as a oil state in the same sense as Kuwait.

Venezuela - 77

Venezuela is the fifth largest oil exporter in the world, and a founding member of OPEC. Oil output has been hampered at times due to protest and controversy, but the country remains an active contributor to the world supply of oil.

Russia - 60

Russia has the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. The country is the world's largest exporter of natural gas and the second largest oil exporter. Reorganization of the Russian Energy Sector has shown improvements in the industry over the last few years.

Libya - 39

Though sanctions against Libya had been removed by United States President Bush and also by The United Nations, some Libyan authorities caution foreign optimism about prospects in the country's socialist driven economy. Nonetheless, the removal of sanctions allows Libya to drive forward.

Nigeria - 35

Nigeria is the largest oil producer in Africa, and is a major oil supplier to both the United States and Western Europe. Proven oil reserves are expected to be expanded to 40 billion barrels by the year 2010 Retrieved from "http://www.articlesbase.com/environment-articles/top-10-proven-oil-reserve-countries-1287.html"

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