Obama backs rise in US gas exports

Richard McGregor and Ed Crooks       Financial Times

The Obama administration has signalled support for more plants to export liquefied natural gas, as the US embraces its surging energy production as a key new element of its national security policy.

Barack Obama said at the weekend the US was likely to be a net gas exporter by 2020, the strongest sign yet that the president is swinging his support behind higher energy sales overseas.

The Department of Energy is studying applications for new liquefied natural gas terminals, with approval of one in Texas likely within months. It would be only the second such approval granted for sales to countries without trade agreements with the US, such as Japan, the world’s largest importer of LNG.

The decision over new export terminals coincides with a White House rethink of energy policy, aimed to give it an elevated place in US diplomacy.

“I’ve got to make an executive decision broadly about whether or not we export liquefied natural gas at all,” Mr Obama said during a trip to Costa Rica. “But I can assure you that once I make that decision, then factoring in how we can use that to facilitate lower costs in the hemisphere and in Central America will be on my agenda.”

The North American shale revolution over the last decade has unlocked large reserves of gas that were not previously accessible at commercially attractive rates.

The Dark Side of Energy Independence

The New York Times                Benjamin Alter and Edward Fishman      

JUST as the world was writing off America as a declining power, the country now finds itself on the cusp of realizing one of its longstanding goals: energy independence.

A wave of new technologies has made it possible to extract oil and gas from shale rock formations, and the results have been astonishing. By some estimates, the United States is on track to overtake Saudi Arabia as the world’s largest oil producer as early as 2017, start exporting more oil and gas than it imports by 2025, and achieve full energy self-sufficiency by 2030.

American politicians in both parties have long dreamed of energy independence — not only for its potential economic benefits, but also because it could free the United States from the vicissitudes of the outside world.

Last March, President Obama said that new energy sources and technologies would make America “less dependent on what’s going on in the Middle East.” The Romney campaign, meanwhile, argued that energy independence would mean that “the nation’s security is no longer beholden to unstable but oil-rich regions halfway around the world.”

But that is a fantasy. While the latest energy revolution will be a boon to America’s economy, it will in no way allow the United States to turn its back on the rest of the world. 

China in Iraq: winning without a war

Naser AL-Tamimi*        Al Arabiya

Not long ago, Robert Kaplan, the well-known American writer, “complained” in The Wall Street Journal, saying: “... We have liberated Iraq so that Chinese firms can extract its oil.” The sentiment that was expressed by Kaplan was in fact reflecting the evolution of the situation in Iraq, where the Chinese presence was rising strongly. Tellingly, Beijing’s position in Iraq evolved quickly, from among the most outspoken of critics of the 2003 U.S.-led invasion to topple Saddam Hussein, to emerging as one of the biggest economic beneficiaries of the war in Iraq.

China’s Catching-up Game

Ten years after the American invasion, Iraq turned into an important energy / trade partner for China. Indeed, the trade between Iraq and China doubled almost 34 times. The volume of bilateral trade between the two states soared to $17.5 billion by end-2012 from small amount of $ 517 million in 2002. In the same period, the trade between Iraq and the U.S. increased only 5.6 times. The bilateral trade between both countries rose to $ 21.6 billion by end-2012 from $ 3.8 billion in 2002. Last year, China was both the second-largest purchaser of Iraqi exports, $ 12.6bn, (after the U.S. $ 19.6bn) and the second-largest supplier of imports, $ 4.9bn, (after Turkey $ 10.8 bn), according to latest data from the U.N. Comtrade data. The United States still Iraq’s largest trade partners, however the current trends suggest that China will soon overtake America to become Baghdad’s top trade partner.

Turkey is economic winner of Iraq war

Daniel Dombey     Financial Times

ISTANBUL — The Americans won the war, the Iranians won the peace and the Turks won the contracts.

Turkey, which blocked the deployment of U.S. troops through its territory during the 2003 invasion that toppled Saddam Hussein, is emerging 10 years on as one of the prime beneficiaries of the battle for the Iraqi market.

Although Turkey’s relations with Baghdad are increasingly bitter, its exports to Iraq have in the past decade soared by more than 25 percent a year, reaching $10.8 billion in 2012, making Iraq Ankara’s second-most valuable export market after Germany.

Ozgur Altug, an economist at BGC Partners in Istanbul, predicts that as Iraq grows richer because of its oil reserves, demand for Turkish goods will keep climbing — by more than $2 billion a year. Turkish contractors have also been doing rich business, working on about $3.5 billion of construction projects last year, according to businessmen and officials.

One company, Calik Energy, boasts that it is building the two biggest projects in the Iraqi power sector, two gas turbine plants in the Mosul and Karbala regions, earning more than $800 million from the Iraqi government in the process.

While Iran is seen as the most influential outside power in Iraq today, on Baghdad’s streets Turkey’s presence is more visible than that of any other country, with everything from malls to furniture stores to pavement bricks bearing a Turkish trademark.

America: The Next Energy Superpower?

Anthony FENSOM*     THE DIPLOMAT

This year, the U.S. will likely surpass Russia and Saudi Arabia as the largest liquids fuel producer in the world.  

From previously challenging the “tyranny of oil,” newly inaugurated U.S. President Barack Obama enters his second term in office as leader of a potential oil and gas superpower.

According to BP’s Energy Outlook 2030, unconventional sources will make the United States virtually energy self-sufficient by 2030, largely thanks to the shale gas revolution.

“The U.S. will likely surpass Russia and Saudi Arabia in 2013 as the largest  liquids producer in the world (crude and biofuels) due to tight oil and biofuels growth…. Russia will likely pass Saudi Arabia for the second slot in 2013 and hold that until 2023. Saudi Arabia regains the top oil producer slot by 2027,” the London-based oil and gas giant said.

The U.S. Energy Information Administration (EIA) has forecast that the nation could become a net exporter of liquefied natural gas (LNG) as early as 2016, and a net exporter of total natural gas (including via pipelines) by 2020.

For the Asia-Pacific region, potential U.S. gas exports could undercut higher priced gas from Australia and elsewhere, resulting in lower fuel bills for major importers such as Japan and South Korea.

However, fast-growing China and India are expected to become even more reliant on imports to satisfy domestic demand, BP said in its report.

Why The Middle East Has A Big Oil Problem: 'Squaring Obama's Xi Circle'

Matthew Hulbert     Forbes

‘Stick or twist’ sums up the changes of political power in America and China in November 2012. President Obama won another four year term in Washington, whileXi Jinping assumed stewardship of China. This intricate ‘Chimerican’ relationship is fundamental to the global outlook anywhere you care to look, and nowhere more so than the Middle East. External security provision is still provided by the West, while economic pull has shifted to the East. Sounds a simple division of labour, but the ‘roles’ actually become very mixed up once you take a closer look. Squaring this awkward ‘Chimerican’ circle is going to be a tough ask for Gulf States to get right, but it’s absolutely critical to their geo-economic and geopolitical future to do so over the next four years.

Team America

From the U.S. perspective, the old mantra has always been that a threat to Middle East oil supplies correlated to a direct threat to American national security. This was explicitly spelt out in the 1980 Carter Doctrine that’s been the cornerstone of Washington’s role in the Gulf ever since. But times are now rapidly changing, and doing so, precisely because the U.S. has seen enormous hydrocarbon production growth on home soil. The initial energy ‘revolution’ was in natural gas, making America the world’s largest single (651bcm) producer, and’s now shifting towards liquids. U.S. oil production growth has been 500,000b/d over the past four years, with total liquids output expected to hit 11.4mb/d next year and onto 13-15mb/d towards 2020. That will make America the largest single liquids player in the world, surpassing even Saudi production numbers, with the obvious upshot that Washington no longer sees MENA oil as the valued prize it once was. Whether you’re like the International Energy Agency and fully signed up to the ‘U.S. energy independence’ narrative or not doesn’t really matter: The Obama Administration believes it has sufficient ‘hydrocarbon’ space to pick and choose what it does or doesn’t decide to do to underwrite global energy supplies in future. That’s exactly what it’s going to do over the next four years.

The energy wars heat up

Michael KLARE*     Le Monde Diplomatique

Six recent clashes and conflicts on a planet heading into energy overdrive

Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time. Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things. Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time. Consider these flash-points as signals that we are entering an era of intensified conflict over energy.

From the Atlantic to the Pacific, Argentina to the Philippines, here are the six areas of conflict — all tied to energy supplies — that have made news in just the first few months of 2012:

* A brewing war between Sudan and South Sudan: On April 10th, forces from the newly independent state of South Sudan occupied the oil center of Heglig, a town granted to Sudan as part of a peace settlement that allowed the southerners to secede in 2011. The northerners, based in Khartoum, then mobilized their own forces and drove the South Sudanese out of Heglig. Fighting has since erupted all along the contested border between the two countries, accompanied by air strikes on towns in South Sudan. Although the fighting has not yet reached the level of a full-scale war, international efforts to negotiate a cease-fire and a peaceful resolution to the dispute have yet to meet with success.

The challenge of Libya: Where will it end? The Americans, the Europeans and the Arabs must all hold their nerve

The Economist


THE spectacle of American, British and French missiles pulverising an Arab and Muslim country at the dead of night arouses a sense of foreboding. Such ventures have too often begun with good intentions and naive overconfidence, as oil-rich despots see their armour crumple and burn beneath superior Western technology. Within weeks, though, vainglory turns into a costly and bloody quagmire.

Yet nobody could accuse Barack Obama and his allies, chiefly Britain’s David Cameron and France’s Nicolas Sarkozy, of overconfidence in attacking Libya on March 19th. It is hard to think of a military enterprise that has been conceived in so much doubt and anxiety. What if Muammar Qaddafi sits out the raids in his bunker? What if Libya is partitioned? What if, chastened by news footage of dead women and children in a Tripoli market, the coalition starts to fall apart? What if many of the eastern Libyans whom the outside world is protecting turn out to sympathise with al-Qaeda? What if they go on to behave as murderously as the colonel and his paid killers?