Turkey-Kurdish oil deal reflects end of post-Ottoman order

David Gardner      Financial Times

Confirmation last week that Turkey plans to buy into the oil and gas wealth of the self-governing Kurdish region of northern Iraq has led to warnings – most stridently from the US – that Ankara is gambling with the break-up of Iraq. Indeed. But there is more at stake than that. Drop a rock in any pool in this febrile region – now hyperconnected in all the wrong ways – and the ripples will reach every shore.

In Iraq, the Kurdistan Regional Government and the national authorities in Baghdad are nowhere near a pact for sharing the country’s potentially huge oil revenues, much less a working model of federal power-sharing – with the Baghdad government of Nouri al-Maliki, a Shia Islamist aligned with Iran, invariably favouring sect and faction above state and nation.

But the future of Iraq is now just part of a discussion about the possible break-up of bits of the Middle East, given new urgency by the disintegration of Syria under the pulverising effect of two years of civil war.

That conflict has prised loose the Kurdish region of northeast Syria, galvanising Turkey into making peace with its own Kurds and drawing Iraqi and Syrian Kurds into an economically dynamic Turkosphere.

That this debate is only just starting suggests just how problematic it is – and how immense its possible consequences. What is in play is the state system that succeeded the Ottoman Empire almost a century ago in Syria and Mesopotamia.

UAE to up oil output capacity

Arab News

The UAE is seeking to increase its production capacity to 3.5 million barrels per day of crude oil to contribute to the stability of global markets, UAE Energy Minister Suhail Al-Mazrouei said.

OPEC member UAE currently pumps about 2.6 million barrels per day. The country is the fifth largest oil producing country in the team, behind Saudi Arabia, Iraq, Kuwait and Iran.

Al-Mazrouei said the rise would contribute to maintaining stability of global oil markets, but he did not disclose when they are going to increase the production.

"The recent events have proven that focusing on the security of energy is necessary in order to address natural disasters and geopolitical tensions as well as other unanticipated situations, which occur periodically in the world. That’s why the UAE undertook to construct an oil pipeline connecting Habshan-Fujairah to guarantee crude oil supplied to world market," he pointed out.

He was speaking at the opening session of the 21st Annual Middle East Petroleum and Gas conference, which began yesterday in Abu Dhabi.

Exports via Habshan-Fujairah route would allow the Gulf state to bypass the strategically vital Strait of Hormuz, which Iran has repeatedly threatened to close.

The minister added that some scenario stipulates that the global oil demand may increase by one million barrels a day until it reaches 105 million barrels a day by 2030, amid economic expansion in Asia and South America.

The Saudi Oil War on Iran

Reza Sanati*        The National Interest

When Prince Turki al-Faisal suggested last year that the House of Saud would join in the U.S.-led sanctions against Iranian oil, by seeking to displace Tehran’s oil exports from the global economy, he was not referring to a novel idea. Indeed, Saudi Arabia has led two prior oil wars against Iran.

As detailed in Andrew Scott Cooper’s The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East, the first Saudi oil war against Iran was intended to weaken the Shah’s modernization programs. The Saudis feared Iran’s rise as a regional power, and wanted to carve out space for independent decision-making in OPEC, which at the time was dominated by Iran.

As the Shah was extremely dependent on high oil prices for his ambitious goals, the Saudis grasped that dissipation of oil prices via increased global supply would be Iran’s Achilles’ heel. As Cooper chronicles, the Saudis ultimately convinced Washington to go along with their plans, facilitated by the U.S. domestic concern about high oil prices. Near the end of the Nixon administration, the Saudis started to flood the market.

Iraq and Iran’s Oil Pipeline Politics

Iran-Pakistan gas pipeline Ceremony 11 March 2013. (Photo: Mian Khursheed)

 Elie Chalhoub    Al Akhbar English

Away from the region’s headlines and wars, plans are being methodically put in place that could redraw the strategic map of the Middle East, erasing one of the region’s key colonial-era features.

Recent moves by Iran and Iraq to press ahead with the construction of a series of new oil and gas export pipelines could be attributed to Iran’s bid to counter international sanctions. The planned pipelines could also reflect Iraq’s economic recovery or perhaps pressure from oil companies for new export routes.

There may be some truth to these explanations. But a closer look makes clear that these schemes are related.

The short-term aims are evident. They include trying to lure Jordan into the region’s “resistance” axis and reducing American influence on Iran’s eastern neighbor Pakistan.

But the long-term objective is more ambitious: to connect the Middle East by way of a web of economic ties that binds them into a regional partnership whose mainstays are Iran and Iraq.

Baghdad is making it increasingly clear where it stands in terms of its regional alignment. In recent months, it has openly supported Syrian President Bashar al-Assad’s regime in Damascus, clashed with Ankara, reached out to Cairo, and been at odds with Riyadh and Doha.

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.

Islamic trade tops Turkish defense

Umit ENGINSOY    Hürriyet Daily News

Eight out ten countries importing defense exports from Turkey are Muslim nations, according to a recent list released by the Union of Turkish Defense Exporters. Total defense sales reached $1 billion in 2011, professionals say

The Union of Turkish Defense Exporters earlier this week released a list of Turkish defense exports to a number of countries, with Saudi Arabia topping the list.

The list said Turkey’s 2011 defense exports stood at $400 million. However, the exact figure was over $1 billion since sale of offset parts was ignored, according to a professional.

The union’s list rightly observed the rise of Saudi Arabia and other Islamic countries in defense buys from Turkey. In fact, eight of the 10 countries were Islamic nations. “This was not our intention, but is right. We sell most to Islamic countries,” one senior procurement official said.

SaSaD, the Defense Industry Manufacturers Association, makes a more balanced estimate and takes into account the defense exports of all Turkish companies, including their sales in the fourth quarter of the year. It also takes into account companies, including the likes of Turkish Aerospace Industries (TAI), which make major contributions to the sales through offsets.

Venezuela Oil Reserves Surpassed Saudis In 2010 - OPEC

Dow Jones Newswires by Benoit Faucon

LONDON - Venezuela's crude proven reserves surpassed those of Saudi Arabia in 2010, making it the world's largest oil reserves holder, the Organization of Petroleum Exporting Countries said in its annual statistical bulletin.

Venezuela's proven crude oil reserves reached 296.5 billion barrels in 2010, up 40.4% on the year and higher than Saudi Arabia's 264.5 billion barrels, OPEC said.

In the long run the boost in reserves, which comes alongside increases from Iran and Iraq, may empower members of OPEC who favor a defense of high prices. However, there are doubts over whether all of Venezuela's heavy oil discoveries are economically viable.

The data broadly confirm Venezuela's statements that it had reached this level of reserves in January. OPEC normally relies on its members' assessments for statistical data.

Iraq's and Iran's proven reserves were also respectively upgraded by 24.4% to 143.1 billion barrels and by 10.3% to 151.2 billion barrels respectively, roughly in line with the countries' earlier disclosures.

Venezuela, Iran and Iraq were part of a group that refused to endorse a Saudi-led push to hike output at an acrimonious OPEC meeting June 8.

Analysts have questioned how economic Venezuelan reserves additions could be, as most come from the heavy and extra-heavy oil in the Orinoco Belt, which is difficult and expensive to extract.

Saudi Arabia's Nuclear Ambitions Part of Broader Strategy

Saurav JHA     World Politics Review

Saudi Arabia's recent announcement that it plans to build 16 large reactors by 2030 may have seemed incongruous in the wake of the Fukushima crisis. In fact, it actually buttresses the Middle East's current trajectory as a major future market for nuclear energy and underscores the continuing attractiveness of nuclear power for industrially underdeveloped economies. Moreover, given the sheer size of the plan -- well more than $100 billion will go to the reactors alone -- Riyadh is in a position to set terms and use the project to enhance new partnerships while balancing old ones.

The kingdom's interest in nuclear energy is often traced to its rivalry for regional leadership with Iran and Riyadh's unwillingness to be outstripped by Tehran's nuclear prowess. But Saudi nuclear ambitions crystallized in the run-up to the 2009 Copenhagen Summit, when it realized that global efforts to control climate change could end up punishing countries that put off including noncarbon-based energy sources in their power portfolios. In April 2010, King Abdullah issued a royal decree stating, "The development of atomic energy is essential to meet the kingdom's growing requirements for energy to generate electricity, produce desalinated water and reduce reliance on depleting hydrocarbon resources." Left unsaid is that those depleting hydrocarbon resources would be put to better use generating export revenue to facilitate the modernization of the Saudi economy rather than meeting the kingdom's growing domestic electricity requirements. Saudi Arabia is at present experiencing 6-8 percent annual growth in electricity demand and will need to put in place 60,000 megawatts of new capacity by 2020. ...

Source:
http://www.worldpoliticsreview.com//articles/9186/saudi-arabias-nuclear-ambitions-part-of-broader-strategy

Interests of Saudi Arabia and Iran Collide, With the U.S. in the Middle

Helene Cooper & Mark Landler      The New York Times

WASHINGTON — The brutal crackdown in Bahrain poses the greatest Middle East democracy dilemma yet to the Obama administration, deepening a rift with its most important Arab ally, Saudi Arabia, while potentially strengthening the influence of its biggest nemesis, Iran.

Relations between the United States and Saudi Arabia have chilled to their coldest since the American invasion of Iraq in 2003. Saudi officials, still angry that President Obama abandoned President Hosni Mubarak of Egypt in the face of demonstrations, ignored American requests not to send troops into Bahrain to help crush Shiite-led protests there. A tense telephone call between Mr. Obama and King Abdullah on Wednesday, Arab officials said, failed to ease the tensions.

“King Abdullah has been clear that Saudi Arabia will never allow Shia rule in Bahrain — never,” an Arab official who was briefed on the talks said. He said King Abdullah’s willingness to listen to the Obama administration had “evaporated” since Mr. Mubarak was forced from office.

The Saudi position is rooted in the royal family’s belief that a Shiite uprising next door in Bahrain could spread and embolden Saudi Arabia’s own minority Shiite population and increase Iranian influence in the kingdom, a fear that American officials share. But where Mr. Obama and King Abdullah have parted ways, administration officials say, is on how to handle the crisis.