Wednesday, September 3, 2008

Daily Sources 9/3

1. Juan Cole's Informed Comment links two more pieces on the ongoing conflict between Kurds and al-Maliki in Diyala. Asharq Alawsat's Ma'ad Fayad interviewed Massoud Barzani Monday. (Asharq Alawsat is a pan-Arabic paper based in London.) As Dr. Cole noted, Barzani refers to the al-Maliki government as "totalitarian." Barzani also says of the situation in Diyala that "it is true that it almost reached the point of confrontation." Barzani also refers to an improved relationship with Turkey. The Guardian's Jonathan Steele reports today that Kurdish peshmerga and Iraqi forces are "bracing" for a confrontation in the city of Khanaqin in Diyala province.

2. Salman Masood at the New York Times writes that a would be assassin missed the Pakistani Prime Minister--Yousaf Raza Gilani--today.

3. Eric Watkins at the Oil & Gas Journal writes that Iran has invited Brazil to join OPEC, but that Brazil has refused. Evidently, de Silva gave as his reason--outside of the $1 million membership fee--that Brazil has been investing in refining and biofuels in order to become an exporter of products, not crude.

4. Upstream online reports that Saudi Arabia's Khursaniyah oil field is now operational and producing 500 kb/d of oil. The oil field was initially due to start up in December and produces Arab Medium, a medium sour crude with an API┬║ of 28.5 and 2.85%wtS. 500 kb/d roughly equals 0.5% of world consumption. (That's a lot.)

5. Alonso Soto at Reuters writes that the Ecuadorian oil minister said that Venezuela was going to propose output cuts at the Saturday OPEC meeting, but that Ecuador was going to call for sustaining the current production quotas. Given the close ties and similar interests of Ecuador and Venezuela, I wonder what the difference in the calculus is.

6. Yesterday Venezuela's Chavez and South Africa's Mbeki signed a memorandum of understanding on energy cooperation, according to SAPA. Chavez called upon PetroSA to enter the oil production sector in Venezuela and hailed the agreement as a example of a new South-to-South cooperation and as a way to help reduce fuel and food costs in the southern hemisphere. Apparently a number of different economic and cultural cooperation agreements are being considered by the pair.

7. Gazprom signed an oil and gas exploration deal with Nigeria today, as per the AFP.

8. Reuters' Tom Pfeiffer writes that European governments are becoming alarmed at new Russian appetite for African energy deals. The concern appears to be centered on deals with African members of OPEC, i.e. Libya, Algeria, Angola, Nigeria, and Russia's reported interest in a gas exporting countries coalition organized along the same basic guidelines as OPEC. This is very interesting given China's Africa Policy of 2006.

9. Russia Economy Watch notes in two posts that growth in both the services and manufacturing sectors in Russia slowed in July.

10. Karen De Young in the Washington Post writes that the US today unveiled a $1 billion aid package for Georgia. Vice President Cheney arrives in Tblisi tomorrow.

11. Francis Fukuyama writes one of the better pieces on Russia and the American situation for the Financial Times. (History ain't over. Never thought it was. Glad Francis is on board for that one ... now.)

12. In a strange article by Rebekah Kebede in Reuters, James L. Gallogly, EVP at ConocoPhillips is quoted as saying that refinery utilization rates in the US will be at the recent (85% as opposed to more traditional 90%) utilization rates for the next few years. This doesn't make a lot of sense given that reduced demand is likely to reduce price in the short term, which in the medium term should increase demand and thus price and thus refinery runs. In any case, if it proves true, given that the share of world consumption is about 25%, this will be very significant going forward. Perhaps Gallogly is signalling that Conoco expects a worldwide slump.

13. Brad Setser, whose blog Follow the Money is hosted by the Council on Foreign Relations' Maurice R. Greenberg Center for Geoeconomic Studies, writes that demand for GSE debt from foreign central banks and sovereign wealth funds is drying up. (Evidently, they have shifted their purchasing to treasuries ... still US.) Given that there is no private appetite for the GSE debt, and that GSEs are the mortgage market in the US, that certainly doesn't bode well. (Maurice Greenberg, of course, is the former CEO & Chairman of AIG and I'm guessing this particular institution at the CFR has been funded, for the most part, by the Starr Foundation--AIG's foundation that gives grants by invitation only. Just thought worth noting given AIG's current troubles and the light this particular piece might shine on them.)

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