Monday, September 8, 2008

Daily Sources 9/8

1. The Tel'nik has an interesting piece on the Friday meeting of the Collective Security Treaty Organization (CSTO) in Moscow last Friday. Although Armenia appears to support Moscow's version of the Georgia conflict narrative, they are uncomfortable with the recognition of South Ossetia and Abkhazia as independent regions, given Nagorno-Karabagh. I'm not clear on how this plays out, as Nagorno-Karabagh is a breakaway region of Azerbaijan, with an ethnic majority of Armenians, and basically under the military protection of Armenia, which would lead you to think Armenia would be gung-ho regarding the independence of South Ossetia and Abkhazia ... but it is a complicated region.

2. Jamey Keaten at the Associated Press has the story that President Medvedev has pledged to remove all Russian troops from Georgian territory once EU monitors arrive later in the month.

3. Michael Abramowitz at the Washington Post has the story that the Administration is going to pull from Congressional consideration a nuclear deal with Russia which would have facilitated cooperation between the Russian and American nuclear industries and allowed Russia to import spent nuclear fuel from the US. The deal was signed 4 months ago in Moscow, but the conflict in Georgia means it is unlikely that it would be agreed to in Congress.

4. AP reports that on Sunday Chavez announced upcoming joint maneuvers with Russian warships in late November or December. A Russian Foreign Ministry official confirmed today that this might take place.

5. Kaveh L Afrasiabi has an interesting analysis of the Georgia conflict written as if from the Azeri perspective in the Asia Times. The bit on the never-ending negotiations regarding the status of the Caspian, and how that would seem to put the kibosh on certain pipeline plans, is a fair explanation.

6. Thomas Grove and Orhan Coskun at Reuters have a piece on Turkish efforts to increase Azeri gas exports to the country, given the unreliability of Iranian supply and increased tensions with Russia as Turkey works to maintain good relations with Moscow and meet its NATO obligations. Currently Turkey imports about 6 billion cubic meters of natural gas annually from Azerbaijan's Shah-Deniz field and Hilmi Guler, the Turkish Energy and Natural Resources Minister, is flying today to Baku where he is expected to repeat a request that Turkey import 8 billion cubic meters annually for domestic consumption. Shah-Deniz is estimated to have reserves of 1.2 trillion cubic meters of natural gas and 1.75 billion barrels of condensate. The stakeholders in the project are: BP (25.5%), Norway's Statoil (25.5%), the State Oil Company of Azerbaijan or SOCAR (10%), Russia's Lukoil (10%), Iran's oil trading company NICO (10%), France's TOTAL (10%), and the Turkish Petroleum Corporation or TPAO (9%).

7. Following last Tuesday's news that the Iraqi cabinet has paved the way for CNPC to develop the Al-Ahdab oil field, comes the story by Ahmed Rasheed and Tim Cocks at Reuters that Shell should close a deal by the end of the month to develop natural gas in the southern Basra province.

8. ZAMIN writes that the Supreme Islamic Council of Iraq--a key Shia political organization in Iraq--has announced in Tehran that the Mojahedin-e Khalq [MKO] has been given notice that it has 6 months to remove its members from Iraq. ZAMIN notes that the US has a "vested interest" in the MKO and that we have taken a lead role in guarding their compound in Ashraf, which is in Diyala province. I am not clear as to what the American vested interests are, but it is clear that the US is probably the only organization which could be trusted to provide security for them.

9. Emily Wax at the Washington Post has an interesting story on the potential of a trading route being opened between Kashmir and Pakistan, after protesters have closed down the routes from the region to the rest of India.

10. Ariana Eunjung Cha at the Washington post has another interesting story on how the energy shock is making Chinese--or any distant--manufacturing economically unattractive. Expensive transportation fuels means for a smaller mass market, which would be a feedback loop all its own. It looks like OPEC might try to defend $100/b, but Saudi Arabia is key and have said in the past that $100/b is too high. Even at $80/b the basic emerging markets economies business plan needs to be re-examined.

11. The Wall Street Journal has an op-ed by John D. Shages, former deputy assistant secretary for petroleum reserves at the Department of Energy, lauding Barack Obama's plan to make the grades of crude oil in the Strategic Petroleum Reserve match the sophistication of American refining capacity. Whew. OK ... 40% of American refining capacity is sophisticated enough to profitably refine heavy complicated grades of crude oil. The SPR holds nearly only light sweet crudes, which are easy to refine. The plan is to exchange a good portion of the SPR's light sweet holdings for heavier crudes. The difference could be captured monetarily, as in money back to the Government and perhaps taxpayers, or by getting a larger volume of the heavier crudes in return for a smaller volume of light sweet, thus growing the emergency capabilities of the SPR. Probably a good idea. (Interesting to see the WSJ back an Obama plan, too.)

12. Hurricane Ike's 5 day track, as of 5pm EST Monday, courtesy the NOAA:

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