OffshoreNet

Ever since the end of World War Two, the U.S. has come to regard Saudi Arabia as almost its exclusive oil producing enclave.

In February 1945, after the Yalta Conference with Soviet General Secretary Iosif Stalin and British Prime Minister Winston Churchill, on his way home U.S. President Franklin Delano Roosevelt and King Ibn Saud met aboard the New Orleans-class heavy cruiser U.S.S. Quincy in the Suez Canal's Great Bitter Lake. During the meeting, instigated by Roosevelt, he and Ibn Saud concluded a secret agreement in which the U.S. would provide Saudi Arabia military security, including military assistance, training and a military base at Dhahran in Saudi Arabia, in exchange for secure access to supplies of oil.

Sixty-seven years later, my, how things have changed, as China is now muscling into the Kingdom of the Two Holy Places.

On 15 January Visiting Chinese Premier Wen Jiabao and Saudi Arabian King Abdullah bin Abdul Aziz agreed to make concerted efforts to enhance bilateral relations.

The spectacle of OPEC's leading petro-state and East Asia's superpower economy making common cause has surely caused the burning of the midnight oil inside the Beltway.

While Wen said that China is willing to strengthen coordination with Saudi Arabia on all major issues by expanding cooperation in trade, investment, infrastructure, high-tech, finance, security and law enforcement, what must have surely caught the eye of Washington's mandarins was him adding that China intends to develop a cooperative partnership with Saudi Arabia in the energy sector.

And why not? Saudi Arabia is the largest supplier of oil to China and bilateral trade between the two countries soared to $58.5 billion in the period January-November 2011.

And the fruits of such bilateral proximity were on the table even before Wen made his fulsome remarks, as the state-owned Saudi Press Agency reported on 14 January that Saudi state oil giant Aramco has signed an agreement with state-owned giant China Petroleum and Chemical Corporation Ltd. (Sinopec) to build an oil refinery, named Yasref, in the Red Sea city of Yanbu, which will become operational in 2014, processing 400,000 barrels per day.

What is really going to catch Washington's and the foreign investment community's attention is how the agreement is structured - Saudi Aramco will hold a 62.5 percent stake with Sinopec holding the remainder.

In one of 2012's greatest understatements, Aramco president and CEO Khalid al-Falih said that the contract "represents a strategic partnership in the refining industry between one of the main energy producers in Saudi Arabia and one of the world's most important consumers."

Continuing his victory lap around the western shores of the Persian Gulf, Wen will also visit Qatar and the United Arab Emirates, two other stalwart U.S. allies.

And the eastern side of the Gulf?

Commenting on Iran, China's third largest source of oil imports, on 11 January Chinese Foreign Ministry spokesman Liu Weimin said at a press briefing that China will maintain its trade ties with Iran despite efforts by U.S. Treasury Secretary Timothy Geithner to convince Beijing to join a proposed embargo of Iranian oil exports.

But perhaps the most intriguing element of the Riyadh-Beijing lovefest was the announcement that on 15 January Saudi Arabia signed an agreement with China for cooperation in the development and use of atomic energy for peaceful purposes, an event of significant importance that both Abdullah and Wen attended.

No comment is really needed here, except to note that many of the questions asked about Iran's civilian nuclear power program, such as why does a leading petro-state need nuclear energy, are unlikely to be asked about this particular venture, underling that once again, reality in the Middle East is whatever your perceptions tell you in advance it is.

Source: http://oilprice.com/

By. John C.K. Daly of Oilprice.com

Malaysia-based offshore services company Hans Advisory & Trust guides individual investors and companies to make judicious investments in offshore funds and offshore trusts.

Labuan, Malaysia (PRWEB) January 13, 2012

Now any individual or company can get assistance from Hans Advisory & Trust to invest in offshore funds. One can contact this Malaysian company anytime for advice and assistance regarding offshore investments. Companies and individual investors who want to keep their investments safe will find that investing in offshore funds has a number of benefits.

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There are some limitations on borrowing and investing on public funds that are authorized in Labuan. Recognized jurisdictions schemes do not follow such provisions. For instance, a fund cannot borrow more that 25% of its total asset value. It must go through the website of Hans Advisory & Trust for details of these restrictions on investment.

Hans can also can assist to get the ship registered at the Malaysia International Ship Registry (MISR). This body is responsible for registering and keeping track of international ships. Foreign and individual shipping companies can register ships in Malaysia directly at MISR. They don't need to meet the requirements of Malaysian shareholders. As a foreigner, it is allow to hold 100% equity.

For more information on ship registry and offshore fund in Malaysia, visit www.hansworldwide.com.

If anyone need any kind of assistance for ship registry or investment in offshore funds and offshore trusts, then kindly contact Hands Advisory & Trust for professional guidance. This Malaysia based company provides offshore banking services and helps investors to make the right choices and keep their investments safe.

About Hans Advisory & Trust Co. Ltd

Licensed under the Labuan Trust Companies Act of 1990, Hans Advisory & Trust Co Ltd provides offshore investment services, which include setting up of offshore trusts and helping to invest in offshore funds. With a corporate membership of Institut Bank-Bank Malaysia (IBBM), Hans is a licensed provider of escrow services.

Contact

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Email Address: voon(at)hansworldwide(dot)com
Web site address: www.hansworldwide.com

At the best of times, the U.S. government is regarded as somewhat out of touch with what's happening in the American "heartland," much less the world at large, so much so that the phrase "inside the Beltway" was coined to define the syndrome.

But every now and again, an incident occurs that so perfectly encapsulates Washington's self-absorbed navel gazing that little further comment is needed.

On 9 January U.S. State Department spokeswoman Victoria Nuland provided such a "Kodak moment" to the Washington press corps.

The object of her concern? Iranian President Mahmoud Ahmedinejad's visit to Latin America, where he is touring Venezuela, Cuba, Ecuador and Nicaragua.

Nuland said that, because of its civilian nuclear energy program, which both Washington and Tel Aviv believe masks a covert nuclear program despite persistent denials by Tehran, Iran should have no friends and that "We are making absolutely clear to countries around the world that now is not the time to be deepening ties, not security ties, not economic ties, with Iran."

During a regularly scheduled State Department press briefing Nuland gravely observed that Iran had "obviously carefully" chosen the four countries but "We are, meanwhile, calling on all of these countries to do what they can to impress upon the Iranian regime that the course that it's on in its nuclear dialogue with the international community is the wrong one. And, frankly, we think it's in the interest of all countries, including the countries that he (Ahmadinejad) is visiting in Latin America, that Iran proves the peaceful intent of its nuclear program to the world."

The view from Caracas?

During a meeting with Ahmadinejad, Venezuelan President Hugo Chavez tartly accused the U.S. and its European allies of demonizing Iran and using false claims about the nuclear issue "like they used the excuse of weapons of mass destruction to do what they did in Iraq. They (the U.S.) accuse us of being warmongers. They're the threat," adding that Ahmadinejad is traveling through "the axis of evil of Latin America."

Driving the point home, Ahmadinejad commented, "They say we're making a bomb. Fortunately, the majority of Latin American countries are aware. Everyone knows that those words... are a joke. It's something to laugh at. It's clear they're afraid of our development."

What is Venezuela getting out of its dalliance with charter "axis of evil" Iran?

According to Chavez, Iran has helped his country build 14,000 homes as well as factories that produce food, tractors and vehicles. During Ahmadinejad's visit, Iranian and Venezuelan government officials signed two agreements promoting industrial cooperation and worker training.

Why might Venezuela take such an uppity stance against Washington's wishes? Well, for a start the U.S. government was deeply implicated in a failed 2002 military coup against Chavez. And last year, the U.S. imposed sanctions on Venezuelan state oil company Petroleos de Venezuela SA for delivering at least two cargoes of refined oil products to Iran.

From Venezuela, on 10 January Ahmadinejad flew to Nicaragua to attend the inauguration of President Daniel Ortega, elected to a third term last November.

And why might Nicaragua be disinclined to heed Washington's advice? Perhaps the fact that President Ortega was one of the Sandinista leader who in 1979 overthrew the corrupt presidency of Anatasio Somoza, only to find itself under attack by U.S. armed and funded "Contra" insurgents operating out of neighboring Honduras in an eight-year campaign.

And, in one of those piquant ironies of history, the Reagan administration, in order to support the Contras after Congress blocked funding, in 1986-1987 covertly sold weapons for cash to... Iran, leading to the notorious "Iran-Contra" affair.

And Cuba? Well, since the U.S. has blockaded the country with economic sanctions since 1960 and currently has no direct diplomatic relations, perhaps Nuland's entreaties will receive less consideration in Havana than they might.

Which leaves Ecuador, whose president, Rafael Vicente Correa, an economist by training educated in Belgium and the United States, took office in January 2007.

And what has President Correa done to antagonize the U.S.?

In December 2008, he declared Ecuador's national debt illegitimate, arguing that it had been contracted by previous despotic regimes, pledging to fight creditors in international courts of jurisdiction. Even worse, Correa in June 2009 brought Ecuador into the Alianza Bolivariana para los Pueblos de Nuestra America (Bolivarian Alliance for the Peoples of Our Americas, or ALBA) founded by Chavez in alliance with Cuba in 2004.

The biggest story overlooked by the Washington press corps over the past decade, fixated as it was on the Bush administration's "global war on terror" (GWOT) was Latin America's increasing assertiveness and independence from America's dictates, whose policies towards its southern neighbors even the august Council on Foreign Relations labeled "hegemony." It apparently has yet to occur to either Ms. Nuland or her superiors that countries south of the Rio Grande regard the Monroe Doctrine as a dead letter.

But Ahmedinejad's biggest secret diplomatic weapon is treating his Latin American hosts with respect, as equals. Until those "inside the Beltway" learn that simple lesson and that it's no longer 1823, the year the Monroe Doctrine was proclaimed, it would seem that the Washington press corps is bound to endure further briefings from Ms. Nuland.

Source: http://oilprice.com/

By. John C.K. Daly of oilprice.com

As we start a new year, consider the miserable plight of the average Pakistani electricity consumer.

With about 50 per cent less electricity generation capability than the actual demand, Pakistan's National Grid is facing more than a 5,000-megawatt shortfall in power generation, leading to blackouts in both urban and rural areas of the country. Due to unscheduled shortages by the National Power Control Center, urban areas are facing unscheduled minimum 8-hour power blackouts each day, while in rural areas the blackouts can last as long as 14 hours.

The situation is equally miserable in the country's compressed natural gas (CNG) sector, which is now facing three days per week suspension of gas deliveries, the country's textile sector -four days a week, while the gas supply to non-textile industry has been suspended for indefinite period.

Scrambling to exploit virtually any indigenous sources of energy, officials in the capital Islamabad are now pinning their hopes on the Thar Underground Coal Gasification (UCG) pilot project, situated in the Tharparkar desert in Sindh eastern Pakistan.

Underground coal gasification converts coal to gas while still in the coal seam, where injection wells are drilled and used to supply the oxidants to ignite and fuel the underground combustion process, with separate production wells used to bring the product gas to surface. The high pressure combustion is conducted at temperatures of 1,290-1,650 degrees Fahrenheit, but can reach up to 2,730 degrees Fahrenheit. The process produces carbon monoxide and dioxide, hydrogen and methane.

Boosters of the Thar UCG project note that Block Number 5 of Thar Coal Project contains 1.4 billion tons of low-grade lignite coal reserves. Overall the coal reserves at Thar are estimated at 175 billion tons of lignite coal.

Advantages claimed for the Thar UCG project include the fact that, as the coal is burnt 600 feet under the ground, threat of environmental pollution is minimized. In addition, as the coal is processed in situ rather than being dug out and brought to the earth's surface to be burnt to generate electricity, UCG will minimize electricity generating costs, projected to be $0.04538 to $0.05673 per kilowatt hour, as opposed to current costs at $0.11345 to $0.13614 per kilowatt hour.

And all that is required to make this energy miracle happen is for the federal government to provide an additional $100 million in funding to generate electricity from the project as soon as possible, which will then reportedly allow the Thar UCG project to supply 100 megawatts of electricity annually to the national power grid by December 2013. According to Dr. Muhammad Saleem, director of the Thar UCG project, only $9.1 million has been spent on the Thar's UCG development so far.

Science and Technology Planning Commission member Samar Mubarakmand said that Pakistan's coal reserves are sufficient to provide electricity to the nation for more than 30 years.

But the Thar UCG project has its critics. A number of professional chemical engineers and petrochemical experts, speaking on condition of anonymity, have collectively voiced their concerns, particularly about the non-technical specialist management of the project, noting,

"The huge energy and petrochemical potential of Thar is wholly dependent on the success of its pilot project and if the non-technical management of this plan does not remove the project's flaws, the country would ultimately be deprived of these huge underground assets forever. You can imagine what can happen if any pilot project fails solely due to a lack of knowledge and expertise ...
usually, every oil and gas company first does rigorous tests on oil and gas wells to determine the composition of the gas and oil and then build the multi-million dollar facility. This is the very first step but in the UCG project the team does not know anything about the composition of the gas and yet they want to build a facility. They are only spending lot of money...".

Visionary project for Pakistan's energy future or enterprise doomed to failure by inept crony management? Pakistani electricity customers will remain figuratively and literally in the dark until these questions are definitely answered.

Source: http://oilprice.com

By. John C.K. Daly of Oilprice.com

First, the bad news.

Although Africa has vast fossil and renewable energy sources, only twenty percent of its population has direct access to electricity and in some rural areas, four out of five people are completely without power. According to the UN, over 600 million Africans currently do not have access to electric power. A depressing 70 percent of Sub-Saharan Africa's population is living without access to clean and safe energy for their basic needs such as cooking, lighting and heating, making energy poverty among the most urgent issues facing Africa. Worldwide, more than 1.4 billion people worldwide have no access to electricity, and 1 billion more only have intermittent access.

Over 2.5 billion people, almost half of humanity, rely on traditional biomass - wood, coal, charcoal, or animal waste to cook their meals and heat their homes, exposing themselves and their families to smoke and fumes that damage their health and kill nearly two million people a year. More than 95 percent of these people are either in sub-Saharan Africa or developing Asia.

The good news?

According to the Managing Director of Nigeria's Bank of Industry (BOI), Evelyn Oputu, total investments in renewable energy in Africa rose from $750 million in 2004 to $3.6 billion in 2011. To put this in a global context, worldwide investment in renewable energy has risen from $33 billion in 2004 to $211 billion in 2011.

And the future?

According to a report issued in August 2011 by Frost & Sullivan entitled "Mega Trends in Africa: A bright vision for the growing continent," investment in renewable power in Africa is set to grow from the 2011 total of $3.6-billion in 2010 to $57-billion by 2020, a staggering 1,583 percent increase in nine short years. According to the document, "The key growth sectors will be wind power, solar power, geothermal power and foreign direct investment (FDI) into energy and power infrastructure."

The reason for the spectacular projections? Africa's combination of a massive unmet demand, including remote communities, allied to an abundance of renewable power potential in the form of solar, wind and geothermal potential. To give but one example, Only seven percent of Africa's hydropower capacity has been developed up to now.

Africa is not yet locked into the inefficient, oft-polluting infrastructure of many Western countries. Accordingly, Africa with modern efficient technologies could build a renewable energy infrastructure that could bypass the inefficient, fossil fuel-centered energy infrastructure systems of the developed world.

Modest starts in renewable energy have already begun across the continent. Wind power projects in Africa are planned or under way in Egypt, Ethiopia, Kenya, Morocco, Nigeria, Tunisia, and Tanzania - including Kenya's 0.3 gigawatt Lake Turkana project and 0.7 gigawatt of capacity under construction in Morocco, while Cameroon, Kenya, Tanzania, and Uganda all have existing biomass power capacity or plans for future development.

Solar? South Africa has its planned solar park in Upington, intended to contribute 5,000 megawatts to the national electrical grid, while North Africa's Desertec is the largest solar power project ever conceived, designed at a potential cost of $500 billion to provide a significant portion of the electricity needs of participating countries in the Middle East and North Africa (MENA) region and up to 15 per cent of Europe's electricity needs by 2050.

Africa's ambitions have the support of the United Nations, where in 2010 the General Assembly unanimously endorsed a resolution designating 2012 as "The International Year of Sustainable Energy for All." UN Secretary-General Ban Ki-moon has set three inter-linked objectives to support the goal of achieving "Sustainable Energy for All" by 2030, which are ensuring universal access to modern energy services, doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix.

The UN Sustainable Energy for All incorporates a number of initiatives focusing on Africa, including World Bank Group's Lighting Africa, the Paris-Nairobi Climate Initiative, the Africa-European Union Energy Partnership, and the Global Alliance for Clean Cookstoves, as well as the EU's decision to make access to sustainable energy a development priority through its "Agenda for Change." A number of countries, including South Africa, are also leading the way with national initiatives.

But these initiatives are relatively recent and need financial support to prosper. It was only in September 2010 that African and European leaders launched the Africa-EU Renewable Energy Cooperation Program (RECP) at the First High-Level Meeting of the Africa-EU Energy Partnership (AEEP) in Vienna.

AEEP's agenda is nothing if not ambitious, as its targets on renewable energy to be reached by 2020 include 10,000 megawatts of hydropower facilities, 5,000 megawatts of wind power capacity, 500 megawatts of solar energy capacity and tripling the capacity of other renewables, such as geothermal, and modern biomass.

The downside to this picture? Three things - the need for massive amounts of investment capital, a problem attendant to massive amounts of cash - corruption, and the continent's changing political landscape, which is already impacting the Desertec North African solar initiative as the Arab Spring roils the south coast of the Mediterranean.

But both the need and potential are there - all that are currently lacking to make the future predictions a reality are cash and political will.

Source: http://oilprice.com/

By. John C.K. Daly of Oilprice.com

Taiwan imports 99 percent of its energy, which is vital to its rapidly industrializing economy.

The island nation's electricity demand was recently growing at almost 5 percent per year, but this is slowing to about 3.3 percent per annum to 2013. Nuclear power has been a significant part of the electricity supply for two decades and now provides 17 percent of the country's overall energy needs.

But this has come at a potential cost. The country's three nuclear power plants (NPPs) comprise four General Electric boiling water reactors and two Westinghouse pressurized water reactors.

Taiwan launched its nuclear power project in 1972 with the construction of a General Electric boiling water reactor (BWR) at the Chinshan 1 Nuclear Plant in northern Taiwan. By 1985 Taiwan had a total of six reactors online at the Chinshan, Kuosheng and Maanshan NPPs, which provided nearly 20 percent of the island's power that fueled Taiwan's economic take off. The NPPs are operated by the Taiwan Power Co. (Taipower) utility under the Ministry of Economic Affairs.

In the wake of the 11 March Fukushima nuclear catastrophe in Japan, Professor Chan Chang-chuan of National Taiwan University's College of Public Health noted that Taiwan's three existing nuclear plants and a fourth, the one now under construction, are located in earthquake-prone regions near the sea, which originally facilitated the transportation of nuclear fuel and construction materials but leaveS the sites facing the double hazards of earthquakes and tsunamis. Chan said, "Such locations expose our reactors to a double risk."

All six of Taiwan's existing reactors are built near major fault lines, and two more reactors are under construction at the advanced boiling water reactor (ABWR) Longmen NPP in New Taipei City's Gongliao District. On 31 October Taiwan's Minister of Economic Affairs Shih Yen-shiang said that the Longmen facility is expected to enter commercial operation no later than 2017.

Now the issue of the country's NPPs has entered the arena of the country's upcoming presidential elections, scheduled for 2012. All three of Taiwan's presidential candidates agree that the life of the country's three operational nuclear power plants should not be extended, but are divided on whether construction of the Longmen NPP should continue.

Capturing the high ground, on 3 November Taiwanese President Ma Ying-jeou unveiled the government's new nuclear energy policy, promising to gradually move the country towards a nuclear-free future, announcing that the scheduled 40-year service life of the Chinshan, Kuosheng and Maanshan nuclear plants would not be extended, while the New Taipei City Longmen NPP would only begin commercial operations when all necessary safety requirements were met. Ma said, "This new energy policy is crafted in a proactive, practical and responsible manner in keeping with the principles of no power rationing, maintenance of stable electricity prices and continued reduction of carbon dioxide emissions to meet international goals."

Going Ma one better, on 15 December Opposition Democratic Progressive Party (DPP) Chairwoman candidate Tsai Ing-wen declared that if she wins next year she will close all three of Taiwan's existing nuclear power plants and mothball the Longmen NPP, seeking to end Taiwan's nuclear energy program by 2025 and candidate number three, James Soong of the People First Party, favors not extending the service life of the three existing NPPs but favors a 'wait and see' approach on the Longmen NPP. The Chinshan NPP license expires in 2018-2019, Kuosheng in 2021-2023 and Maanshan in 2024-2025.

The policy represents a significant turnaround in Taiwan's commitment to nuclear power, as in May 2009 Taipower was examining the prospects for six more reactors, starting with the Longmen NPP.

Therefore, the only remaining question is whether the South China Sea's notorious weather patterns will remain benign over the next 14 years. If not, according to Wang To-far, economics professor at National Taipei University, "if a level-seven nuclear crisis were to happen in Taiwan, it would destroy the nation."

Fingers crossed.

Source: http://oilprice.com

By. John C.K. Daly of Oilprice.com

The last decade has seen a sustained campaign by the hydraulic fracturing ('fracking") industry against its critics, as the fracking industry in the U.S. alone was worth an estimated $76 billion in 2010 and is projected to grow to $231 billion in 2036 if only those pesky environmentalists can be sidelined. According to Washington's energy Information Administration, production of shale gas in the United States in 2010 totalled 4.87 trillion cubic feet (tcf) compared with 0.39 tcf only a decade earlier.

The combination of horizontal drilling and hydraulic fracturing has already transformed North America's natural gas market in less than half a decade. In 2000 shale gas was 1 percent of America's gas supplies; today it is 25 percent. While U.S. energy companies began fracking for gas in the late 1990s, there was a dramatic increase in 2005 after the administration of President George W. Bush exempted fracking from regulations under the U.S. Clean Water Act. According to Washington's energy Information Agency, shale gas production has grown 48 percent annually.

But there still some snakes to be chased from the industry's campaign to convince the electorate that natgas produced by fracking is safe, as on 8 December the Environmental Protection Agency said for the first time it found chemicals used in fracking in a drinking-water aquifer in west-central Wyoming.

Soothing the electorate, the industry group Energy in Depth reported, "The history of fracturing technology's safe use in America extends all the way back to the Truman administration, with more than 1.2 million wells completed via the process since 1947."

And the feds are backing fracking as well, as a new estimate from the U.S. Department of Energy, estimates that the national gas resource can be sustained for 110 years at current consumption rates.

Numbers?

In 2009 an industry-financed study reported that 622,000 people are directly involved in the discovery, extraction and distribution of U.S. natural gas.

As for "insider" influence, in 2005 former Vice President Dick Cheney, in partnership with the energy industry and drilling companies such as his former employer, Halliburton Corp., successfully pressured Congress to exempt fracking from the Safe Drinking Water Act, the Clean Air Act and other environmental laws.

Even worse, a report released the following month by the U.S. National Center for Atmospheric Research noted that switching from coal to natural gas as an energy source could result in increased global warming, mainly due to the methane leakage problem, which is common but unregulated.

In a further potential federal sandbagging of the natgas industry, the federal Environmental Protection Agency, which studied fracking and deemed it safe in 2004, is taking another, broader look at the practice and may end up taking a more active role, with a broader study expected to be finished next year.

Maalox moments all - but now fracking is being charged with contributing to global warming by releasing substantial amounts of methane, a greenhouse gas 20-100 times more potent than carbon dioxide. According to Igor Semiletov of the International Arctic Research Centre at the University of Alaska Fairbanks, "Each methane molecule is about 70 times more potent in terms of trapping heat than a molecule of carbon dioxide."

According to Iraqi Council of Representatives Oil and Energy Committee member Furat al-Sharei, the 10 oil fields that spread across the Iraqi-Kuwaiti frontier are still waiting to have a line drawn through them to delineate the border, more than eight years after a coalition led by U.S. forces toppled the regime of Iraqi President Saddam Hussein.

According to al-Sharei, the two countries must first collaborate in developing legislation for equitably sharing the fields before oil extraction can begin, noting, "The problem of the common fields can be resolved by developing legal mechanisms."

While Iraq and Kuwait are now at peace, many of the border issues that led to conflict two decades ago remain, which no amount of diplomatic bonhomie can completely paper over.

In 1993 the United Nations Security Council Resolution 833 precisely delineated the previous borders between Iraq and Kuwait following Saddam Hussein's invasion of his neighbor in August 1990. Iraqi forces were summarily expelled by a 34-nation coalition led by the United States during Operation Desert Storm, which began in February 1991. That conflict left Iraq with a $22 billion reparations bill to Kuwait that it is still struggling to pay off, tithing 5 percent of its oil revenue to its tiny plutocratic southern neighbor.

What were some of Saddam Hussein's grievances against Kuwait? By the time Iraq signed the ceasefire in its punishing eight year war with Iran in August 1988, Iraq was virtually bankrupt, owing $80 billion in debt to Saudi Arabia and Kuwait, which now pressured Baghdad for repayment with interest. Iraq pressured both nations to forgive the debts, but they refused. Iraq also accused Kuwait of exceeding its OPEC quotas and driving down the price of oil, thus further hurting the Iraqi economy, as collapsing oil prices further decimated the Iraqi economy.

Baghdad also repeatedly protested to no avail about what it claimed was economic warfare waged by Kuwait's slant-drilling into disputed border regions, which reached as far as Iraq's Rumaila oil field.

Despite the overthrow of Saddam Hussein's regime in March 2003, two years later Kuwait began the construction of a 125-mile metal barrier along its land borders with Iraq in early 2005.

But with a new administration in Baghdad, on 23 November 2006 Kuwait's Foreign Ministry Undersecretary Khaled al-Jarallah told reporters following talks with Iraq's Foreign Ministry Undersecretary Mohammad al-Haj, "We have signed a deal ... after which Kuwait will be able to complete the construction of the security fence," noting that as the arrangement calls for the payment of "compensation to Iraqi farmers" on the border, the requisite amount "had been deposited with the United Nations." Al-Haj added, "We have completed the practical requirements for the demarcation of borders," based on UN Security Council Resolution 833.

On 16 November in Astrakhan Lukoil president, Vagit Alekperov told journalists that his company will spend over $16 billion over the next decade to develop the country's Caspian offshore Korchagin and Filanovskii oil and natural gas fields in the Caspian, at the signing of a cooperation agreement with the Astrakhan Region.

An equitable division of the Caspian's offshore resources have bedeviled the region since the December 1991 implosion of the USSR, putting the Soviet Union's previous cozy arrangements with the Shah's Iran "into the dustbin of history," to quote Leon Trotsky.

Before the collapse of the USSR, the Soviet Union and Iran effectively divided the inland sea amongst themselves, according to the terms of the 1940 Soviet-Iranian treaty, which replaced the 1921 Treaty of Friendship between the two countries, which awarded each signatory an "exclusive right of fishing in its coastal waters up to a limit of 10 nautical miles." The treaty further declared that the "parties hold the Caspian to belong to Iran and to the Soviet Union."

Since 1991 three new nations have arisen in the Caspian basin to contest this bilateral arrangement - Azerbaijan, Turkmenistan and Kazakhstan. For the past two decades the five nations have wrangled about how to divide the Caspian offshore waters, and little has been achieved.

Amidst the disagreements Azerbaijan, Turkmenistan and Kazakhstan have tentatively moved cautiously to develop their offshore reserves in sectors that they believe would be indisputably within their future assignations under an eventual five-state agreement.

Even within these cautious offshore margins, Azerbaijan and Kazakhstan have increased their output in the last 15 years by 70 percent.

But at issue are the diametrically opposed positions of Iran and the Russian Federation about how to develop an international Caspian consensus beyond the now moribund 1921 and 1940 treaties. Iran insists that all Caspian nations should receive an equitable 20 percent of the Caspian, while the Russia Federation has consistently maintained that the five Caspian riverine nations should receive their portion based on the length of their coastline. Under the Russian formula, Iran's sector would consist of 12 percent to 14 percent of the Caspian's waters and seabed.

The stakes are high - in 2009 the U.S. government's Energy Information Administration estimated that the Caspian could contain as much as 250 billion barrels of recoverable oil along with an additional 200 billion barrels of potential reserves, in addition to up to 9.2 trillion cubic meters of recoverable natural gas.

Accordingly, all five Caspian nations have been delicately developing their offshore Caspian reserves in areas that will undoubtedly remain theirs whatever eventual agreement is hammered out between Azerbaijan, Iran, Kazakhstan, the Russian Federation and Turkmenistan. The Russian Federation and Iran are the last two nations to move "offshore."

Alekperov said, "Five hundred billion rubles ($16 billion) will be invested in development. This huge amount will provide an opportunity for sustainable development in the region."

Astrakhan Region Governor Aleksandr Zhilkin waxed lyrical on the importance of the agreement for the long-term development of Astrakhan's shipbuilding industry, situated on the lower Volga, the Russian Federation's major river emptying into the Caspian. Zhilkin commented, "All shipyards in Astrakhan Region will have work for the next ten years. Vagit Yusufovich (Alekperov) mentioned that Lukoil is investing more than 500 billion rubles ($16 billion) over the decade.

Zhilkin's remarks to reporters are hardly an idle boast, as he stated that Lukoil had paid more than $16.1 million in taxes last year to Astrakhan's regional budget.

So, the Russian Federation, like its four Caspian neighbors, is now beginning to tiptoe into its offshore waters, all the while insisting that its vision of divvying the inland sea prevails.

The last two decades have seen an apparent pragmatism slowly evolve over the Caspian offshore resources, first in Baku, followed by Astana, Ashgabat and more recently and reluctantly, Tehran and Moscow. While the issue of a final disposition of the Caspian's offshore waters remains significant if for no other reason than the various proposed undersea pipelines such as Turkmenistan-Baku, which could be an influential element in the European Union's projected $15 billion Nabucco natural gas pipeline reverie, all five nations seem to be moving cautiously towards planting their offshore flags in areas unlikely to arouse their neighbors.

It will be interesting to see if they meet in the middle.

Source: http://oilprice.com/

By. John C. K. Daly of http://oilprice.com

As the U.S.-led Afghan campaign lurches into its second decade, the country's vast untapped mineralogical resources are again emerging in the Western media, seemingly underpinning the benefits of International Security Assistance Force troops "staying the course" and defeating the insurgency, after which these resources can be tapped, both providing the administration of Afghan President Hamid Karzai with a source beyond drugs for reconstruction and Western companies who develop the reserves a handsome profit.

The latest discovery is that Afghanistan is rich in rare earth elements (RREs). China currently has a near monopoly on the global production of RREs, and the price for a ton of unprocessed ore has soared to a dizzying $100,000 a ton.

So, what's wrong with this picture?

Western venture capitalists should consider the following points before whipping out their checkbooks to underwrite any mining projects.

First and most obvious, Afghanistan has been in a civil war for thirty years, with Western forces intervening only in the last decade. The country is torn by tribalism and religious divides and Karzai's administrative control is largely limited to the larger cities. Mao Tse Tung in his 1947 work "The Present Situation and Our Tasks" wrote, "Concerning attacking cities, resolutely seize all enemy fortified points and cities that are weakly defended. At opportune moments, seize all enemy fortified points and cities defended with moderate strength, provided circumstances permit. As for all strongly defended enemy fortified points and cities, wait until conditions are ripe and then take them," a strategy the Taliban are apparently following to the letter, unconcerned with election cycles and opinion polls. The Taliban know that they have time on their side - as one Taliban commander told a U.S. military officer, "you have the watches, we have the time."

Secondly, the administration of Karzai is increasingly viewed by the Afghan population as illegitimate, foisted on them by foreign forces, and extremely corrupt to boot. During the August 2009 presidential election, Karzai, in an election reported by foreign observers as riven with fraud, received less than 50 percent of the popular vote, triggering a runoff. Two months later, after Karzai agreed to a runoff election, tentatively scheduled for 7 November, but five days later his main opponent Abdullah Abdullah withdrew and Afghan officials canceled the election, leaving Karzai in power for a second term, despite the provisions of the Afghan constitution, alienating many Afghans from democratic principles.

Third, Afghanistan's rich mineral base has been known for a long time. Following disastrous December 1979 Soviet invasion, extensive Soviet exploration in Afghanistan produced detailed geological maps and reports that listed more than 1,400 mineral outcroppings, along with about 70 commercially viable deposits. The USSR subsequently committed more than $650 million for resource exploration and development in Afghanistan, which included a smelting complex for the Ainak deposit that was to have produced 1.5 million tons of copper per year. In the wake of the Soviet withdrawal a subsequent World Bank analysis projected that the Ainak copper production alone could eventually capture as much as 2 percent of the annual world market. Afghanistan's Hajigak iron deposit, in the Hindu Kush mountain range west of Kabul, is assessed as one of the largest high-grade deposits in the world.

As for the recent announcement about gigantic deposits of rare-earth metals, including lanthanum, cerium and neodymium, being discovered in Afghanistan, it is worth bearing in mind that the U.S. geologists who surveyed the sites were airlifted by Black Hawk helicopters to the Khan Neshin Village in a desert area of Helmand Province, where they worked under military protection. If such deposits are to be developed, then given the lack of security forcing geologists to be airlifted to the site, then how is the mining infrastructure to be conveyed?

Fourthly, the stupendous rise in RRE ore prices has led to a frenzied search for deposits around the world, from Estonia to Mongolia, some of which will doubtless pan out. Given Afghanistan's instability, why would an investor risk his capital there, especially when neighboring Central Asian nations like Mongolia represent a far more stable and investor-friendly environment? Mongolia recently signed off on a massive $7 billion mining project, allowing Rio Tinto and Ivanhoe Mines a majority 67 percent share.

While Afghanistan's mineralogical potential is vast, the country's crippling economic and insurgency problems remain, and it's worth nothing here that despite the 2010 joint report by the Pentagon, the U.S. Geological Survey and U.S. Agency for International Development that Afghanistan possesses "previously unknown" and untapped mineral reserves worth up to $1 trillion, two-thirds of Afghanistan's population live on less than $2 a day.

So, even though Afghan Ministry of Mines adviser Jalil Jumriany said of the RRE discoveries, "This will become the backbone of the Afghan economy," the question, not only for foreign investors but the Afghans themselves remains, "qui bono?"

There are no clear answers emerging to this question from Kabul anytime soon.

Source: http://oilprice.com

By. John C.K. Daly of Oil Price