Britain’s secret ties to governments, firms behind ISIS oil sales
In the scramble to access Kurdistan’s oil and gas wealth, the US and UK are turning a blind eye to complicity in ‘Islamic State’ oil smuggling
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A Different View of Venezuela’s Energy Problems
A Different View of Venezuela’s Energy Problems
It would be easy to write a story about Venezuela’s energy problems and, in it, focus on the corruption and mismanagement that have taken place. This would make it look like Venezuela’s problems were different from everyone else’s. Taking this approach, it would be easy to argue that the problems wouldn’t have happened, if better leaders had been elected and if those leaders had chosen better policies.
I think that there is far more behind Venezuela’s financial and energy problems than corruption and mismanagement.
As I see the story, Venezuela realized that it had huge oil resources relative to its population, back as early as the 1920s. While these oil resources are substantial, the country misestimated how high a standard of living that these resources could support. To try to work around the issue of setting development goals too high, the country chose the path of distributing the benefits of oil exports in an almost socialistic manner. This socialistic approach, plus increased debt, hid the problem of a standard of living that could not really be supported for many years. Recent problems in Venezuela show that these approaches cannot be permanent solutions. In fact, it seems likely that Venezuela will be one of the first oil-exporting nations to collapse.
How the Subsidy from High-Priced Exported Oil Works
Oil is a strange resource. The cost of oil production tends to be quite low, especially for oil exporters. The selling price is based on a world oil price that changes from day to day, depending on what some would call “demand.” The difference between the selling price and the cost of extraction can make oil exporters rich. In a sense, this difference might be considered an “energy surplus” that is being distributed to the economies of oil exporters.
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Britain’s secret ties to governments, firms behind ISIS oil sales
Key allies in the US and UK led war on Islamic State (ISIS) are covertly financing the terrorist movement according to senior political sources in the region. US and British oil companies are heavily invested in the murky geopolitical triangle sustaining ISIS’ black market oil sales.
The Kurdish Regional Government (KRG) in Iraq and Turkish military intelligence have both supported secret ISIS oil smuggling operations and even supplied arms to the terror group, according to Kurdish, Iraqi and Turkish officials.
One British oil company in particular, Genel Energy, is contracted by the KRG to supply oil for a major Kurdish firm accused of facilitating ISIS oil sales to Turkey. The Kurdish firm has close ties to the Iraqi Kurdish government.
Genel operates in the KRG with the backing of the British government, and is also linked to a British parliamentary group with longstanding connections to both the British and KRG oil industries.
The relationship between British and Kurdish energy companies, and senior British politicians, raises questions about conflicts of interest — especially in the context of a ‘war on terror’ that is supposed to be targeting, not financing, the ‘Islamic State.’
Kurds, Turks and blind eyes
One of ISIS’ most significant sources of revenue is oil smuggling. The Islamic State controls approximately 60% of Syria’s oil, and seven major oil-producing assets in Iraq.
Using a carefully cultivated network of intermediaries and ‘middlemen’ in the Kurdish region of Iraq, as well as in Turkey, ISIS has been able to produce a phenomenal 45,000 barrels of oil a day, raking in as much as $3 million a day in cash by selling the oil at well below market prices.
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Why EIA, IEA, and BP Oil Forecasts are Too High
Why EIA, IEA, and BP Oil Forecasts are Too High
When forecasting how much oil will be available in future years, a standard approach seems to be the following:
- Figure out how much GDP growth the researcher hopes to have in the future.
- “Work backward” to see how much oil is needed, based on how much oil was used for a given level of GDP in the past. Adjust this amount for hoped-for efficiency gains and transfers to other fuel uses.
- Verify that there is actually enough oil available to support this level of growth in oil consumption.
In fact, this seems to be the approach used by most forecasting agencies, including EIA, IEA and BP. It seems to me that this approach has a fundamental flaw. It doesn’t consider the possibility of continued low oil prices and the impact that these low oil prices are likely to have on future oil production. Hoped-for future GDP growth may not be possible if oil prices, as well as other commodity prices, remain low.
Future Oil Resources Seem to Be More Than Adequate
It is easy to get the idea that we have a great deal of oil resources in the ground. For example, if we start with BP Statistical Review of World Energy, we see that reported oil reserves at the end of 2013 were 1,687.9 billion barrels. This corresponds to 53.3 years of oil production at 2013 production levels.
If we look at the United States Geological Services 2012 report for one big grouping–undiscovered conventional oil resources for the world excluding the United States, we get a “mean” estimate of 565 billion barrels. This corresponds to another 17.8 years of production at the 2013 level of oil production.
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Busting The “Canadian Bakken” Myth
Busting The “Canadian Bakken” Myth
The financial pages of Canadian newspapers have been full of headlines lately announcing the potential of two large shale oil fields in the Northwest Territories said to contain enough oil to rival the Bakken Formation of North Dakota and Montana.
The report by Canada’s National Energy Board (NEB) evaluated, for the first time, the volume of oil in place for the Canol and Bluefish shale formations, located in the territory’s Mackenzie Plain. It found the “thick and geographically extensive” Canol formation is expected to contain 145 billion barrels of oil, while the “much thinner” Bluefish shale contains 46 billion barrels.
Related: More OPEC Oil Coming When Iranian Sanctions Removed
The report did not estimate the amount of recoverable oil, but points out that even if one percent of the Canol resource could be recovered, that represents 1.45 billion barrels. The calculation immediately had reporters comparing Canol and Bluefish to the Bakken, where the latest USGS estimate shows 7.4 billion barrels of technically recoverable oil (this includes the Three Forks Formation underlying the Williston Basin straddling North Dakota, Montana, Saskatchewan and Manitoba).
“Northwest Territories sitting on massive shale oil reserves on par with booming Bakken field in U.S.,” enthused the Financial Post. “NEB and GNWT study finds 200 billion barrels of oil in the Sahtu,” gushed CBC News, referring to a region of the sprawling territory that cuts across three provinces and touches the Arctic Ocean.
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