Global geo politics

Oil & gas management

Distribution

Astana, Kazakhstan

Sigve Hamilton Aspelund

The geopolitics of oil and gas

Petroleum

The Geopolitics of Oil and Gas

Geopolitics

Petroleum politics

Why are oil prices falling - explained in 60 seconds?

Inside Story - What's driving oil prices down?

Saudi Arabia's SECRET to Cause a MASSIVE Drop in Price of Oil!

Oil Apocalypse: Peak Oil - What If the Oil Runs Out?

World Without Oil: What If All The Oil Ran Out? - Documentary

Russia's economic crisis, explained

Saudi Arabia will not cut oil production

Oil prices drop following OPEC decision to maintain output

"USA-SAUDI ARABIA" WILL PAY FOR THEIR "OIL PRICE MANIPULATIONS"!

The Geopolitics of World War III

2015 - The Dangers Ahead

Dollar Collapse : The Effect of low low Oil prices on the Dollar is bad

Why Low Gas Prices Are Bad For The World

Why China Supports North Korea

Could China Save The World?

Who Supports ISIS?

Why China Hates Japan

Why are Russia and Ukraine Fighting?

Ukraine's History Explained: WWI to 2014 Revolution

Hidden Motives Behind the Ukraine-Russia Conflict

World War 3 : NATO intercepts 4 groups of Russian Nuclear Bombers over Europe (Oct 31, 2014)

Russia vs NATO 2014- The statistics

U.S. Will Defend NATO Allies Against Russia

China "Aggressively" Intercepts US Military Plane

The World's Future MEGAPROJECTS (2015-2030's)

"The World in 2030" by Dr. Michio Kaku

Future Military Robots

Inside the Stealth B2 Bomber - Military Documentary

The Origins of the 6 Major Religions Explained

World Religions Astonishing Facts

Southern Gas Corridor

The Southern Gas Corridor (SGC) project is a mega gas pipeline project

that aims to transport Caspian natural gas to Europe. 4 components

1) Shah Deniz II

Offshore Field Development (Drilling-Subsea)

Shah Deniz II

Project Description

Shah Deniz II is the second stage of the Shah Deniz Full Field Development

as well as the expansion of the South Caucasus Pipeline. It will deliver an

additional 16 bcma of gas and up to 100,000 barrels of condensate, tripling

overall production from the field.

The Shah Deniz II Project development includes new offshore platforms

constructed in Azerbaijan, up to 30 subsea wells, over 500 km of subsea

pipelines, laid by a fleet of local vessels, a major expansion of Sangachal

Terminal and the expansion of the 700 km South Caucasus Pipeline to

Georgia and Turkey to over 20 bcma per year.

The new Shah Deniz gas volumes will be exported to Europe as well as to

the existing markets in Georgia and Turkey.

2) South Caucasus Pipeline (SCP)

South Caucasus Pipeline (also known as: Baku–Tbilisi–Erzurum Pipeline, BTE pipeline, or Shah Deniz

Pipeline) is a natural gas pipeline from the Shah Deniz gas field in the Azerbaijan sector of the Caspian

Sea to Turkey. It runs parallel to the Baku–Tbilisi–Ceyhan pipeline.

3) Trans Anatolian Natural Gas Pipeline

(TANAP)The Trans Anatolian Natural Gas Pipeline (TANAP) is a natural gas pipeline

from Azerbaijan through Turkey to Europe. It would transport gas from the second phase of the Shah Deniz gas

field.

4) Trans Adriatic Pipeline (TAP)Trans Adriatic Pipeline (TAP; Albanian: Gazsjellësi Trans-Adriatik, Azerbaijani: Trans Adriatik Boru

Xətti Greek: Αδριατικός Αγωγός Φυσικού Αερίου, Italian: Gasdotto Trans-Adriatico) is a pipeline project to

transport natural gas from the Caspian sea (Azerbaijan), starting from Greece via Albania and the Adriatic

Sea to Italy and further to Western Europe.

Shah Deniz natural gas field

The Shah Deniz natural gas field is one of the world’s largest natural gas fields, and the largest in Azerbaijan.

It is located 55 km from Baku in the offshore section of the Caspian Sea.

It holds almost 1.4 trillion cubic meters of natural gas.

Shah Deniz I, the first stage of the Shah Deniz field, has been operational since 2006 and produces 9 billion cubic meters of natural gas per year, of which almost 6.6 bcm is delivered to Turkey.

Shah Deniz II, the second stage of the Shah Deniz field, is a major source base and the upstream part of the Southern Gas Corridor.

It is expected that the Shah Deniz II field will be operational by 2018.

The project will supply natural gas to the European market directly from Azerbaijan for the first time, opening the Southern Gas Corridor.

As part of the project, 25-year sales agreements were reached on September 19, 2013 for over 10 billion cubic meters of natural gas per year from the Shah Deniz II field.

Nine companies will buy this gas from Italy, Greece and Bulgaria. The Final Investment Decision (FID) was signed on December 17, 2013 for the Shah Deniz II project.

Putin: Who gave NATO right to kill Gaddafi?

The Truth About Muammar Gaddafi

Air Crash Investigations Lockerbie Disaster

Abdelbaset al-Megrahi

Gadaffi to pay victims of IRA

Understanding Libya Attacks after Qaddafi Regime and Rivalry

In spite of the NATO operations completed 2011, terrorist attacks major on Tripoli in August after fierce fighting with nationalist forces.

Libya's economy took a heavy hit when rebels blockaded export terminals in July 2013.

This situation is now causing output to float along with all-important oil revenues.

The attack was part of a wider struggle between rival political and militant factions seeking to control the oil-rich country which, since the fall of Dictator Muammar Gaddafi in 2011 has spiralled into an ever greater state of anarchy.

The war has also taken on regional dimensions with Libya Dawn reportedly receiving support from Qatar, which has long sponsored the Muslim Brotherhood.

The seven-month-long conflict has now centred on the control of country’s sizeable oil reserves.

We can say that Libya’s most serious problem since 2011 has been the lack of stability and security.

Insecurity has had negative impact on daily life to ordinary people.

The lack of security stems primarily from the failure of the effort to disarm and demobilize rebel militias after the war.

As a result, various types of armed groups control much of the country and the elected government is at their mercy.

Since the overthrow of Libya's long-time dictator Muammar Qaddafi in 2011, political divisions and is now governed by rival governments and a patchwork of overlapping militia’s Islamist-dominated group known as Libya Dawn – the newest of the Middle East's self-proclaimed revolutionary movements – said it had launched an operation to "liberate oilfields and terminals".

“The attack by the so-called Libya Dawn militias represents a serious development in the nature of the conflict in Libya, threatening national unity and leading the country to civil war,” the Libyan government statement warned.

Abdullah Al-Thani’s government fled to the eastern city of Tobruk in August after Islamist militias, known as Libya Dawn, seized control of the capital Tripoli and its airport.

Islamists, with links to Libya’s outgoing parliament, the General National Council (GNC), have rejected Thani’s government which was elected in June, installing their own rival prime minister and government in Tripoli.

On December 25, 2014, the Libyan radical Islamist fighting groups organized an attack toward the energy facilities of Libya.

During that attack, the oil export terminals were targeted by this group.

They did target Es Sider, the largest oil export terminal of Libya.

In this terminal, one of six storage tanks were attacked and on December 25, and distorted on Monday.

Five tanks taking place in the terminal has still been swamping as result of the fire.

Mohammed Elharari, a spokesman for National Oil Corporation has remarked to the Libya Herald newspaper, a total of 21 tanks having the capacity of 6.2 million barrels of oil are located in in Es Sidarterminal.

At the moment, the greatest fear is the possibility of spilling 6 million barrels of oil into the Mediterranean.

In Bloomberg, it is stated by the Energy Aspects Ltd.

There has been a decrease in oil production from 850 000 barrels per day (bpd) in October to 300 000 since May.

This harsh decrease has occurred after the attacks of extremist militants to energy facilities, specifically to Es Sider terminal.

Impact of the Libya Conflict on North Africa Security

Understanding to evaluate critical energy security matter requires interdisciplinary approach and integration of the research into various disciplines, such as energy, economics, systems reliability, risk, political sciences.

In this regard, considering the Libya case, protection of critical energy infrastructure needs understanding the general framework of the possible economic developments and its political-military impacts.

We know well the ports and oil-gas terminals are one of the major security weaknesses in the critical energy security dimension.

In our argument the Libya Dawn (Islamist/Misratan Coalition) supports the General National Congress in Tripoli and is battling General Haftar and the Nationalist Coalition, which supports the Council of Representatives in Tobruk.

The political and security chaos in Libya has led various regional governments to lend financial, arms, and military support to their favoured groups in a proxy war – with Egypt, the United Arab Emirates (UAE), and Saudi Arabia backing the Nationalist Coalition and the Council of Representatives.

We think, the above mentioned developments are having mid and long terms effects on Libya and its energy security.

Terrorist groups are targeting in same time dual oil terminals that aim to economically collapse countries’ oil energy sector and income.

They also challenge to lead control not only the cities and energy facilities but also join to the Libya’s oil, political and military bureaucracies.

Not surprise, recently UN Security Council to implement the resolution 2174 which calls for the immediate implementation of a ceasefire in Libya and the holding of inclusive national dialogue between rival political parties.

The UN Support Mission in Libya (UNSMIL) and the UN Human Rights Office (OHCHR) appealed to all sides of Libyan civil war to cease all armed hostilities and engage in an inclusive political dialogue, seeking to build a State based on democracy, according to the joint statement of UN organizations.

Conclusion

In conclusion, just after the NATO operation to Libya, within the framework of UN resolution, required security and stability have not been able to be in place within the country.

However, in addition to the Syrian Crisis and its threats and uncertainties in the Mediterranean, there is still the possibility that ISIS may expand on the Iraq territory.

Moreover, another possibility that the civil war in Libya breaks out brings the threat that this violence may spread to the neighbouring countries such as Algeria and Egypt in the North Africa.

This new picture implies that the state and public bureaucracy have collapsed, the 2% share of Libya in world’s energy production is in danger, and also implies the risk that the government and oil income would be controlled by terrorist organizations via armament and militia.

This may also ring forward the possibility of the revision of NATO’s support to Libyan Army and democratic state structure on the Brussel’s agenda.

In the spring of 2015, below issues may be expected to occupy the agenda in terms of preventing the terrorist actions from passing the red line:

• International society should take substantial steps for humanitarian aid within the framework of international law to prevent the deepening of the violence and to protect the civilians from the devastating effects of this violence.

• UN Security Council should address this issue immediately to establish the stability, disarm the warring factions and to sustain the public order and democratic political system.

• Border security of Libya should be strengthened in order to prevent the infiltration of the foreign terrorist groups, as was the case in Syria Crisis.

• Sea security should be sustained by sharing intelligence with the naval forces for early warning against possible terrorist attacks. This can also contribute to the prevention and deterrence of possible terrorist attacks to energy infrastructures in the future.

• NATO and EU, together with Arab Union, should prepare a joint solution package to give further assistance to Libyan air, naval and army forces on energy security chain and navigation and sea security in the Mediterranean.

22 Libyan soldiers killed in boat attack on oil terminals

December 26, 2014

Black smoke billows out of a storage oil tank in the port of Es Sider in Ras Lanuf after a rocket hit it.

Benghazi: Islamists have killed at least 22 soldiers

after a surprise attack in which they used speedboats

in a failed bid to seize some of Libya's main oil

terminals.

The fighting in the oil-rich region came as pro-

government forces lost ground to Islamist militias in

the eastern city of Benghazi, where jihadists

beheaded six people and killed another 14, military

officials said.

The militiamen belonging to the Fajr Libya, or Libya

Dawn, launched the attack on Al-Sidra port by firing

rockets from speedboats, setting an oil tank on fire,

security sources said on Friday.

Soldiers damaged three of the vessels before clashes in which the militants were eventually repelled.

"These speedboats had fired several rockets at the terminals of Ras Lanuf and Al-Sidra and one of them hit a tank south of Al-Sidra port which then caught fire," said Ali al-Hassi, security spokesman for the region.

Al-Sidra is in the "oil crescent" region that has been the scene of recent fighting between government forces and Fajr Libya.

The latest clashes pushed oil prices higher in Asia on Friday, with US benchmark West Texas Intermediate for February delivery rising US28 cents to $US56.12, while Brent for February gained US13 cents to $US60.37.

Libyan Army Forces that are part of the Libya Dawn operation fire a vehicle-mounted weapon on the outskirts of Al Sidra.

Terrorist threats to energy infrastructure in North Africa

Secure energy supplies play a crucial role in the world economy and are

essential to fuel the development of contemporary society.

North Africa is a region characterised by a high amount of energy

resources, and its governments struggle to guarantee the protection of

energy infrastructures, which are becoming targets for terrorist groups

aiming to disrupt the economy of North Africa’s states and to hit Western

interests.

Several non-state actors with different agendas are active within the region

and have shown on several occasions the will and the capabilities to target

energy facilities.

The relevance of North Africa’s energy

resources

North Africa is an important area for the production of hydrocarbons.

Libya, Algeria and Egypt play a leading role as producing states and are net energy exporters.

Tunisia and Morocco are also characterised by a smaller production and are transit countries for important pipelines.

Although oil and gas production and the reserves present in this region cannot be compared to those in other areas, such as the Middle East, North Africa’s role is still significant: according to the British Petroleum (BP) Statistical Review of World Energy, the region boasts 3.9% of world oil reserves and 4.5% of the world’s production.

At the same time, as regards to natural gas, the whole region has 4.3% of gas reserves and produces 4.6% of the world’s production.

Libya is the holder of Africa’s largest proved oil reserves (2.9% of the world’s

reserves), while it accounts for 0.8% of world gas reserves (the fourth largest

amount on the continent). Oil production was disrupted in 2011 and again

in 2013 as a result of the civil war and political turmoil.

North Africa is an important source of energy, especially gas, for several

European countries: Spain, Italy and France

The European Union imports, on the whole, 13% of its natural gas from

Algeria, which is the third country from which Europe imports natural gas

after Russia and Norway.

At a time when Europe is looking to ease dependence on Russian reserves,

especially after the events in Ukraine in 2014, consistency and the possible

growth in production in the North Africa region can be particularly relevant.

Most attacks hit Algeria, Libya and Egypt

North Africa is characterised by the presence of several groups that have

an interest in hitting energy infrastructures and disrupting the flow of energy

between North Africa and foreign countries.

In 2013, for example, including kidnappings, assassinations, bombings, and

direct assaults on government facilities and personnel, 51 terrorist attacks

have been carried out in Algeria, 146 in Libya and 17 in Tunisia. These have

been the highest figures since 2001.

In Algeria, complex regional dynamics have brought about a situation

where ideology, ethnicity, economic considerations and criminality are

deeply interconnected.

Insecurity in Algeria has increased in recent years also because of the

collapse of the Libyan state in 2011 and the insurgency in northern Mali.

Algeria has experienced the most famous attack against energy

infrastructure in the last few years.

The Al Mulathameen Battalion led by Mokhtar Belmokhtar, an al-Qaeda in

the Islamic Maghreb (AQIM) splinter group, claimed responsibility for the

terrorist attack at Tiguentourine, near In Amenas, which led to the death of

11 Algerians and 37 foreigners.

Will In Amenas gas plant attack deter Algeria investors?

Hostages missing after Algeria raid on In Amenas plant

Minnes ofrene fra In Amenas

Algeria hostage crisis: Inside the In Amenas complex

Statoils pressekonferanse om In Amenas

Etterlatte saksøker BP etter In Amenas-angrepet

Egypt has been affected by several attacks to energy infrastructure, especially in the Sinai Peninsula that is often seen as a good platform to confront both Israel and the Egyptian government.

The gas pipeline connecting Egypt to Israel and Jordan, for example, was attacked 15 times between early 2011 and July 2012.

In February 2011, terrorists hit the pipeline near the El Arish natural gas compressor station, provoking a disruption of the supplies.

In April and July 2011, other attacks were carried out against the pipelines near Al-Sabil village in the El-Arish region and near Nagah.

These acts led to severe disruptions in the flow of gas from Egypt to Jordan and to a complete halt of Egyptian natural gas supply to Israel.

In 2014, the attacks have again increased, with four attacks against the Arab Gas pipeline.

The Arab Gas Pipeline is a natural gas pipeline in the Middle

East.

It exports Egyptian natural gas to Jordan, Syria,

and Lebanon, with a branch underwater pipeline to Israel.

It has a total length of 1,200 kilometres (750 mi) at a cost of

US$1.2 billion.

As of March 2012, the gas supply to Israel and Jordan

stopped due to 13 separate attacks on GASCO's feeder

pipeline to El-Arish that have taken place since the

beginning of the 2011 Egyptian revolution—carried out by

Bedouin complaining of economic neglect and

discrimination by the central Cairo government.

By spring 2013 the pipeline returned to continuous operation,

however, due to persistent natural gas shortages in Egypt,

the gas supply to Israel was suspended indefinitely while the

supply to Jordan was resumed, but at a rate substantially

below the contracted amount.

The pipeline has since been targeted by militants several

more times.

Six Day War - Israeli victory

Economic distress, not ideological fervor, is

behind Sinai's terror boom It's too easy to blame al-Qaida and

other radical groups when looking for

the motivation behind the 13

explosions that hit the gas line

connecting Egypt and Israel, as well as

Jordan.

When one sees the Bedouin pay

inordinate sums for whatever gas

supply they receive, and as they see

how GASCO, operating from land

taken from them, generates huge

profit from pumping gas to Israel and

Jordan, one cannot help but ponder

the frustration that may drive them to

act, or aid those who wish to injure

Egypt's economy.

The pipeline explosion in the Sinai, Feb. 6, 2011.

Egyptian gas supply to Jordan stabilises

at below contract rate

Natural gas exports from Egypt to Jordan are stable at 100 million cubic

feet per day, although the contract between the countries stipulates 240

million cubic feet

A fire is seen on a gas pipeline in the Massaeed area west of the Mediterranean coastal town of al-Arish,

North of Sinai, February 5, 2012

The supply of gas from Egypt to Jordan has been

interrupted 15 times since 5 February 2011, as the

pipeline in Sinai has been repeatedly attacked.

Egypt produces six billion cubic feet of natural gas a day,

of which 55 per cent goes to the electricity sector, 20 per

cent is exported, 13 per cent goes to industries and less

than 3 per cent goes to households.

Arab gas pipeline agreement

Amman - 26 January 2004 - The Egyptian, Jordanian, Syrian and

Lebanese prime ministers signed the agreement of the second

phase of the Arab Gas Pipeline.

The second phase extends over 390 km from the city of Aqaba to

the Rehab in Jordan just 24 km from the Syrian boarder with 36-inch

diameter and capacity of 10 billion cubic meter per year to face

the increasing Arab markets demand of natural gas.

The third phase will extend from north where the Jordanian-Syrian

borders to the Turkish-Syrian boarders and from the west to Banias

and Tripoli in Lebanon.

Oil and Gas Pipeline News in Egypt

Egypt Militants Bomb Gas Pipeline to Jordan

Egypt’s Drop in Gas Supplies Renews Concerns in Jordan

Hurghada's Resorts to be Fuelled with Natural Gas

Egypt Compensates Jordan for Gas Supply Disruption

Egypt to Increase Gas Exports to Jordan

Jordan to Replace Imports of Natural Gas From Egypt

Gas Pipeline to Jordan & Israel Blow Up for 10th Time

Threatens from Israel Over Gas Prices

Second Explosion Hits Egypt Gas Terminal

Egyptian Gas Pipeline to Israel, Jordan Bombed

Corruption Charges Against Mubarak Sons in Connection with Gas Exports

Terrorists Try to Blow Up Egypt-Israel Gas Pipeline

Pumping Egyptian Natural Gas to Israel

EMG's Gas Supply to Resume on March 14th

Resuming the supply of Egyptian Gas to Jordan Soon

Repair Work in Egypt to Israel Gas Pipeline

Gas Supply to Israel to Resume No Later than 4 March

President of EMG Company resigns

Gas Explosion in Sinai Peninsula

T.D. Williamson Performs Subsea Hot Tap Operation

Resuming the supply of Egyptian Gas to Jordan Soon

EMG's Gas Supply to Resume on March 14th

Pumping Egyptian Natural Gas to Israel

Terrorists Try to Blow Up Egypt-Israel Gas Pipeline

Egyptian Gas Pipeline to Israel, Jordan Bombed

Corruption Charges Against Mubarak Sons in Connection with Gas Exports

Second Explosion Hits Egypt Gas Terminal

Threatens from Israel Over Gas Prices

Gas Pipeline to Jordan & Israel Blow Up for 10th Time

Jordan to Replace Imports of Natural Gas From Egypt

Egypt to Increase Gas Exports to Jordan

Egypt Compensates Jordan for Gas Supply Disruption

Hurghada's Resorts to be Fuelled with Natural Gas

Egypt’s Drop in Gas Supplies Renews Concerns in Jordan

Egypt Militants Bomb Gas Pipeline to Jordan

Ukraine Crisis: Development Scenarios

Baku, 15 December 2014

It is no secret that Kiev has turned into a grave geopolitical problem

between the West and Russia.

The issue is of such a great magnitude that it is being debated about within

almost all major international events.

The parties are accusing one another, while the Minsk agreement contains

number of provisions that regrettably remain unfulfilled.

For now experts are suggesting different development scenarios and

evaluate various options.

Yet, no conclusive positions are shaped and therefore the problem only

adds to the geopolitical uncertainty.

Almost $60 billion evaporated from Russia’s stock market on

Monday as global investors were spooked by Vladimir Putin’s

invasion of Crimea and the West explores economic sanctions.

Russian Stocks Plunge on Ukraine Crisis; Equity Index Sheds $58B

Published March 03, 2014

Ukraine Crisis - Russian Military Intervention

Early 2014 saw the worst stand-off between

Russia and the West since the Cold War.

On February 21, Ukrainian authorities and

opposition leaders signed an agreement backed

by the European Union on settling the political

crisis, including the establishment of a national

unity government within 10 days.

On February 22, following three months of large

protests and violent clashes, former President

Yanukovych fled Kyiv. The Ukrainian Parliament

established an interim government on February

27.

Russian forces occupied the Crimean Peninsula in

support of the Russian Federation’s claim of Crimean

annexation and these forces continued to take further

actions in the Crimean Peninsula consistent with its claim.

The United States and Ukraine do not recognize this

claimed annexation.

The Russian Federation positioned military forces along

the border of eastern Ukraine while armed militants in

several eastern Ukrainian cities staged demonstrations,

seized government buildings, and attacked police and pro-

Ukrainian counter-demonstrators.

Another Putin-Obama Phone Call Goes

Poorly As Ukraine Crisis Continues To

Escalate

MAR 7 2014

Before calling Putin, Obama announced the first sanctions against Russia since the start of the crisis, ordering visa bans and asset freezes against so far unidentified persons deemed responsible for threatening Ukraine’s sovereignty.

In their telephone call, Obama said he urged

Putin to accept the terms of a potential

diplomatic solution to the dispute over Crimea

that would take account of Russia’s legitimate

interests in the region.

Oil drama: Russian finances are

struggeling

People buy things to protect their money against inflation

Oil price is decresing

Oil price 52 $/bbl vs 115 in June

The biggest oil producing countries

are struggling

Russia is one of the countries that

is struggeling the most 06.01.15

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"USA-SAUDI ARABIA" WILL PAY FOR THEIR "OIL PRICE MANIPULATIONS"!

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Hidden Motives Behind the Ukraine-Russia Conflict

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WW3 Simulation 2015

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The EU Agreement On The 2030 Framework

For Climate And Energy Policy

At its last meeting on October 23rd, the European Council finally agreed on a common framework on climate and energy policy for the period 2020 to 2030.

The Heads of State and Government of the 28 member states of the EU decided after long negotiations that by 2030 the EU must reduce its greenhouse gas (GHG) emissions by 40% with reference to the 1990 baseline.

More precisely, economic sectors covered by the European Emission Trading Scheme (ETS), i.e. power plants, smelters, paper factories and the like, must reduce their emissions by 43%, while non-ETS sectors (buildings, transportation, small enterprises, etc.) must globally decrease their GHG emissions by 30%.

Other three targets are part of the climate and energy deal struck in Brussels.

The first concerns renewable sources of energy which must represent at least 27% of the European gross final energy consumption; however, this binding goal must be reached at the European level and does not involve any specific enforceable target for individual member states.

The second target is merely indicative and is about energy efficiency: by 2030 the EU must reduced its total energy consumption by at least 27% with reference to the consumption level foreseen by the business as usual scenario computed in 2007.

Finally, by 2030 any EU member states must be well interconnected with the energy grids of its neighbours; more specifically, any state must have interconnections with the electric networks of it neighbours equal, at least, to a 15% of its own generation capacity; the European Commission (EC) will report on the issue and try to fully exploit any financial resource available for the completion of already selected projects of common interest.

The agreement reached in Brussels confirms the commitment of the EU to fight against climate change and lead on-going international negotiations that are supposed to achieve a meaningful conclusion at the UN Conference in Paris next year.

Indeed, a couple of weeks after the European Council agreed on the 2030 policy framework, America and China followed suit, unveiling a framework agreement on GHG emissions, according to which America will reduce emissions by 26-28% by 2025 (the baseline year adopted here is 2005), while China will augment the use of low carbon energy sources and stop the increase of its own emissions by 2030.

The decision of the European Council seems in line with the Climate and Energy Package adopted by the EU in 2009 and with the content of the 2011 European Roadmap to a low carbon economy by 2050; however, despite the similarities the deal agreed last October is different at least for two aspects.

2030 Framework on Climate and Energy - Connie Hedegaard | European Commissioner for Climate Action

The Phantom of Russia-China Gas Deal

New gas deal between Russia and China is a good instrument for Beijing to receive the access to many attractive Russian assets while for Kremlin it is a weak attempt to show the existing alternative for energy partnership with the West.

China is the side that receiving the most from the war between Ukraine and Russia and the clash in international relations that appeared during the conflict.

After Russian aggression against Ukraine Moscow received the full scale sanctions from EU, US and many more others international players for rude violation of international law, human rights and a whole set of international treaties.

Having no intention to solve the conflict and reduce the level of violence on the East of Ukraine Russian president Vladimir Putin decided to play the Eastern game with the attempt of tight cooperation with China.

The prominent place of such special relations between Moscow and Beijing should have been the new gas deal.

Signed in May 2014 and technically supported in October 2014 treaty

between Russia and China about joint realization of project “Sila Sibiri

(Power of Siberia)” instead of great turn to the East became the second

role pipeline to China with unclear perspectives.

According to the basic memorandum signed in May the contract was

signed for 30 years with the price of 400 billions dollars.

According to it Russia is supposed to export about 38 billions of cubic

meters of gas annually to China.

The first gas was supposed to come in 2018.

Now Russian side announces the delay of first gas export on 2020 and the

reduction of gas volume up to 5 Bcm at the beginning.

The thing is that Russia now has no money to build this gas pipeline by itself.

Loans in Western banks are now no longer available.

Russia’s own financial abilities are vanishing due to the dynamic fall of oil price which is the main Russian export product.

So the only possible donor is China.

But Beijing is not in a big hurry to give money for the new gas pipeline.

So far Russian gas is not being critical for China.

The main role of new gas contract, which is extremely important for Vladimir Putin, is to open the access to Russia’s resources deposits and new technologies mostly in the military sphere.

By relatively not expensive price (about 25 billions of dollars as loans for Russia on the pipeline construction which will be returned by gas export) Beijing is getting the access and can become the side in exploiting the Siberian oil and gas fields.

Moreover, Russia opened the gate for China to enter the Arctic projects for oil and gas production.

The gas for the new pipeline to China was supposed to be produced on gas fields of Kovyktaand Chayanda.

But because of international sanctions of Russia the development of these fields will be delayed as Russia does not produce all necessary equipment for the gas production itself.

It is also possible to add that new gas pipeline to China brings many other risks to Russia.

One of them is technological as Russia is falling in deep international isolation without the possibility to break import technological dependence, especially in energy sphere.

So the only possible substitution for Moscow could be more tight technological cooperation with Beijing in oil and gas production on Russian fields that bears additional political risks.

They can lead to the situation when big groups of Chinese workers will come to exploit Russian Siberia which will be the start of open Chinese expansion on the current Russian territories.

Besides, delivering to Beijing new military technologies Moscow will find the situation that China can one day become more technologically developed in military and defense sphere then Russia.

Future of NATO and Atlantic Security after

the 2014 Wales Summit

NATO Wales Summit - North Atlantic Council opening, 05 SEP 2014

The History of Nato

Almost a quarter century after the Cold War, NATO leaders met in Newport at a critical transition moment in history of the alliance.

The latest NATO summit which was described as ‘one of the most important summits in the history of our alliance’ by Rasmussen, was held on September 4-5, 2014 in Wales, United Kingdom.

This summit should be handled carefully as it was NATO’s first meeting since Russia provided large-scale military support to separatist forces fighting in Ukraine and the last before the completion of the alliance’s mission in Afghanistan.

Summit meetings tend to speed up the decision-making processes in NATO.

Allied leaders have encountered with the new challenging tasks and blurred visions for re-defining NATO’s possible strategic roles and providing the means of credibility and stability in the Euro Atlantic region, from Ukraine to Africa and Middle East.

New developments and regional crises have led to better relations between American and European allies; and also reinforced the determination.

NATO’s political and military dimensions are faced with a new kind of alarming nature in ongoing risks and threats.

With the civil war in Eastern Ukraine and radical Islamic extremists’ attacks across Syria and Northern Iraq; NATO has turned its face toward new threats and also made a final decision to withdraw the ISAF mission from Afghanistan.

During the Wales Summit, NATO discussed how to respond to Russia’s politics in Ukraine and how to stop the civil war since the ongoing conflict affects the border security of member states.

Russian President Putin was not invited to the NATO summit, but he was still the center of attention for 67 heads of state and government gathered in Wales.

Future of NATO’s Deterrence Capacity

Recent NATO summit has succeeded in building a reliable response to new security challenges.

The leaders have decided to organize a new mode of Readiness Action Plan; reconciled NATO’s missions of collective defense capacity and crisis management ability.

From a pessimistic perspective, when we observe the ongoing military and political developments of global strategic trends, we can see that today the world is turning out to be a far more dangerous place than a peaceful place.

But in spite of NATO’s enlargement, the allies have encountered with a new kind of responsibility mission that differs from the Cold War security challenges: piracy, terrorism, cyber-warfare, and Russia’s hybrid de-stabilization strategy.

Nature of the strategic security environment has changed dramatically, which is full of friction with traditional and non-traditional risks and emerging threats.

However, we think that these unpredictable challenges will not be eliminated soon.

After the fall of the Berlin Wall, the dissolution of the Soviet Union and the

end of the Cold War, it might have been legitimate to question NATO’s

future.

From those 12 founding members in 1949, there are now 28 members

accounting for over 60 percent of world defense expenditures.

NATO has recently focused on taking more ‘operational’ roles – with

missions in the Balkans, whereas the former Secretary General Lord Roberts

has noted that it primarily operated to save the lives of Bosnian Muslims.

It operated in Iraq… and, most recently, of course, in Afghanistan

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Allies affirm the alliance’s unrivalled military might and they are committed to provide the resources needed to address today’s and tomorrow’s challenges; but they also pledge to use NATO as the unique and essential transatlantic forum for political consultation as it was always intended to be.

Russia broke that trust by annexing Crimea and invading Eastern Ukraine, and the NATO Parliamentary Assembly decided earlier this year to expel the Russian Parliament after it authorized the use of military force.

Furthermore, we are grateful for the contributions of recent conflicts which have reminded us that we cannot take security for granted.

In Wales, allies have recognized that NATO’s relationship with Russia has fundamentally changed, demonstrating unity by stepping up NATO and allies’ political, economic and military support for Ukraine, deploying more defensive assets in Eastern Europe, and strengthening NATO’s rapid reaction capability and its ability to respond to ‘hybrid warfare’

NATO has adopted a “Readiness Action Plan” to strengthen NATO’s collective defense and shield Central and Eastern European states as the former Soviet bloc that joined the alliance in the last 15 years by modernizing their military infrastructure, pre-positioning equipment and supplies, rotating air patrols and holding regular joint exercises on their territories.

• Can NATO provide credible collective defense to its members?• Can NATO still keep effective deterrence capability?• Has NATO missed early warning signs of emerging security threats?• What are the successes and failures of the alliance for response?

These questions are at the heart of NATO’s strategic challenges.

NATO membership in Europe

NATO Members

Many analysts claim that the Wales Summit is the most important meeting and the most difficult test for NATO.

The alliance must rise to the challenge emerged with Russia’s aggression to reassert its own credibility.

Prior to the summit, it is expected that the most important topics would be the end of the ISAF operation in Afghanistan by emphasizing the question:

‘How will NATO be able to continue its presence in Afghanistan and its activities after ISAF?

The other relevant discussion topics were:

‘What will be the future of NATO and where the alliance goes?’

‘What will be the value of military capabilities of the alliance’

‘The situation in Ukraine and NATO’s role in it’.

In fact, the following are the formal agenda items outlined by NATO’s leaders for the Wales Summit;

Enhancing allied readiness and strengthening collective defense capabilities in response to Russian aggression,

Marking the planned withdrawal of the NATO’s ISAF in Afghanistan at the end of 2014 and launching a non-combat security sector training mission in the country

Boosting NATO’s support for partners.

Nevertheless, according to official documents, it could be claimed that the meeting’s agenda has been marked by the Ukraine crisis as well as the emergence of Islamic State in Iraq and Syria.

In that regard, in order to reach a comprehensive approach regarding the overall consequences of the summit, it will be useful to examine the final declaration.

Islamic State crisis: US hits IS oil targets in

Syria

Photos released by the Pentagon show the Gbiebe

Modular Oil Refinery in eastern Syria before (left) and

after air strikes25 September 2014

The US-led coalition against Islamic State

(IS) has targeted 12 oil refineries in Syria on

a third night of air strikes against the

militants.

Raids carried out by US, Saudi and UAE aircraft killed 14 of the group's

fighters and five civilians in eastern Syria, activists said.

According to the Pentagon, the refineries generated up to $2m (£1.2m) per

day in revenue for the militants.

In northern Syria, Kurdish forces say they have pushed back an IS advance.

US President Barack Obama has vowed to dismantle the IS "network of

death".

Syria

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SYRIA WAR. ISIS rebels attacked by

the Syrian army tanks and air strikes.

Mann fra Levanger drept i Syria

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Mann fra Levanger drept i Syria

Syria conflict: Sarin gas chemicals destroyed

Syria: Mapping the conflictIn particular, over the last few months,

fighters from Islamic State (IS) - the

extremist group that grew out of al-Qaeda

in Iraq - have been battling regime forces in

new areas, clashing with other armed

groups close to Damascus as well as

invading Kurdish regions.

Syria conflict: BBC exclusive interview with

President Bashar al-Assad

Syrian refugees in the region

Humanitarian crisis

The escalating violence and recent IS advances

have had a significant humanitarian impact on Syria

and its neighbours.

Syria is now the world's biggest internal

displacement crisis, with an estimated 6.5m people

forced from their homes but remaining in the

country.

Overall, the UN Office for the Co-ordination of

Humanitarian Affairs (Ocha) estimates that there are

10.8m people in need inside Syria.

Meanwhile, more than three million Syrians have

fled the country's borders, mainly taking refuge in

surrounding countries.

Lebanon and Turkey have each taken in more than

one million Syrians, while Jordan, Iraq and Egypt

have become home to hundreds of thousands more.

Islamic State (IS) oil production

Is believed to control six out of 10 of Syria's oil fields, including the Omar

facility, and four small fields in Iraq, including Ajeel and Hamreen

Production in Syria is estimated at 50,000 barrels per day and 30,000 in Iraq,

generating revenue of between $1m (£600,000) and $5m per day

Oil is sold to local merchants, or to middlemen who smuggle it into Iraqi

Kurdistan or over borders with Turkey, Iran and Jordan, and then sell to

traders in a grey market; oil is also sold to the Syrian government

Seizures of smuggled fuel in Turkey rose from 35,260 tons in 2011 to more

than 50,000 tons in the first six months of 2014, before the Turkish authorities

began to crack down on illegal trade

IS has seized large areas of Syria and Iraq in recent months and controls several oilfields. Sales of smuggled crude oil have helped finance its offensive in both countries.

The US has launched nearly 200 air strikes against the militants in Iraq since August and expanded the operation against IS to Syria on Monday.

Syria News 25/1/2015, Syrian Arab Army eliminates hundreds of terrorists

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Why does Russia support Syria's Al-Assad?

Iran's sphere of influence

In other developments:

The Netherlands has advised its soldiers not to wear uniform in public while

travelling on public transport as a precautionary measure as the Dutch

prepare to deploy six F-16 fighters to join the US-led air campaign

Syria's army said it had retaken the key strategic town of Adra, north-east of

Damascus, which had been held by militants from the Nusra Front among

others

France launched air strikes on IS targets in northern Iraq - its first there in

nearly a week - and pledged more support for opposition forces in Syria

IS publicly killed a human rights lawyer, Samira Salih al-Nuaimi, in the Iraqi

city of Mosul after convicting her of apostasy, the UN announced

US Rear Admiral John Kirby: Strikes aimed at stopping IS making money

'Successful strikes‘ Ten fighters from the UAE and Saudi Arabia joined six US

jets to carry out Wednesday night's strikes, the Pentagon said.

The strikes hit "small-scale" refineries that were producing "between 300-500

barrels of refined petroleum per day".

"We are still assessing the outcome of the attack on the refineries, but have

initial indications that the strikes were successful," the US Central

Command said in a statement.

Pentagon spokesman Rear Adm John Kirby said the purpose of the strikes

was "not necessarily to kill militants" but to destroy the facilities, which were

funding IS through the black market.

He said the Pentagon was looking into reports that civilians had been killed

in coalition air strikes.

Planes came "with a terrifying sound and red lights before the explosions",

said one activist quoted by AP news agency.

The strikes killed 14 IS fighters in Deir al-Zour and five civilians in Hassakeh,

according to the UK-based Syrian Observatory for Human Rights, an activist

group that monitors the Syrian conflict.

Kurdish forces said they had pushed back IS fighters near the Syrian town of

Kobane, close to the border with Turkey.

There are reports of heavy gunfire outside the town, and Kurdish

commanders have again called for coalition air strikes on IS positions in the

area.

Mark Lowen, on Turkey-Syria border:

"[Syrian refugees] don't want to be here"

IS had besieged Kobane for several days, taking control

of the surrounding villages and forcing more than 140,000

Syrian Kurds to flee into Turkey.

The BBC's Mark Lowen, who is on the Syria-Turkey

border, says some of those Kurds are now trying to return

to Kobane to fight with the Kurdish militia.

Turkey has been overwhelmed by an estimated 1.5 million

Syrian and Iraqi refugees since the conflict in Syria

between opposition forces and Syrian President Bashar

al-Assad began three years ago.

A US Navy F-18E Super Hornet receiving fuel from a KC-135 Stratotanker over north Iraq this week

Residents collect goods in Tel Abyad, a Syrian town close to the Turkish border, as an Islamic State flag flutters from a post

Syrian refugees wait at the Syrian-Turkish border near Sanliurfa

A Syrian refugee family load their belongings on to a lorry near the Syrian-Turkish border in Sanliurfa

On Wednesday, the UN Security Council adopted a binding resolution

compelling states to prevent their nationals joining jihadists in Iraq and Syria.

The US says more than 40 countries have offered to join the anti-IS coalition.

Barack Obama: IS "must be degraded and then ultimately destroyed"

UK Prime Minister David Cameron has said the British military is ready to

"play its part" in the fight against IS and the UK Parliament has been

recalled to discuss plans for air strikes.

Who are Islamic State (IS)?

In 60 seconds: What does Islamic State

want?

Formed out of al-Qaeda in Iraq (AQI) in 2013, IS first captured Raqqa in

eastern Syria

It captured broad swathes of Iraq in June, including Mosul, and declared a

"caliphate" in areas it controls in Syria and Iraq

Pursuing an extreme form of Sunni Islam, IS has persecuted non-

Muslims such as Yazidis and Christians, as well as Shia Muslims, whom it regards as heretics

Known for its brutal tactics, including beheadings of soldiers, Western

journalists and aid workers

The CIA says the group could have as many as 31,000 fighters in Iraq and

Syria

NATO’s Reaction to Ukraine Conflict

NATO decided to carry out exploration and monitoring activities on land

and at sea regularly across Eastern Europe and the Baltic states that are

believed to be under Russian threat.

Anticipated field of activity will remain limited within NATO territories.

In the solution of the Ukraine problem which drew attention as the priority

issue of the summit, NATO preferred to develop a series of military and

diplomatic precautions, communicating a harsh warning letter to Moscow

for now.

In a meeting with the President of the European Commission José Manuel

Barroso, President of Russia Vladimir Putin said, “I can conquer Kiev in two

weeks if I want to.”

This statement was an alarm bell for NATO allies.

In that regard, Rasmussen underlined that they were faced with a dramatically changed security environment by Russian attacks to Ukraine.

In Wales Summit Declaration, it is clearly stated that ‘Russia’s aggressive actions against Ukraine have fundamentally challenged our vision of a whole, free and peaceful Europe.’

Additionally, the joint statement released by the heads of state and government officially condemns Russia’s escalating and illegal military intervention in Ukraine and urge Russia to stop and withdraw its forces from Ukraine and along the Ukrainian border.

According to NATO, “the violence and insecurity in the region caused by Russia and the Russian-backed separatists are resulting in a deteriorating humanitarian situation and material destruction in Eastern Ukraine.”

Violation of Ukraine’s sovereignty and territorial integrity is a serious breach of international law and a major challenge to Euro-Atlantic security.’

Rasmussen clearly stated that, as long as Kremlin continued on its current path, a seven-point peace plan introduced by Putin was meaningless.

Rasmussen also noted that Russia was called to step back and take the path to peace.

Among the members of the alliance, it is possible to observe a general consensus on Russia’s role in destabilizing the region.

Crimea case in March 2014 could seem as the first land grab in Europe by a major power since the end of the Cold War.

Even though this ‘illegitimate occupation’ which raised legitimate concerns among the members of the alliance seemed as the most serious crisis in Europe after the fall of the Berlin Wall, NATO’s response was mostly rhetorical.

Nevertheless, as a response to the annexation in April 1, the alliance has suspended all its practical cooperation with Moscow for the second time since Russia’s invasion of Georgia.

In the 2014 summit, NATO has once again underlined that they do not and will not recognize Russia’s illegal and illegitimate ‘annexation’ of Crimea.

It is important to highlight that, Crimea’s annexation has demonstrated the effectiveness of unconventional warfare tactics.

Nevertheless, the alliance noted in the Article 23 that NATO does not seek a confrontation and poses no threat to Russia.

However, they added, “we cannot and will not compromise on the principles on which our alliance and security depend, and we see a concerted campaign of violence by Russia and Russian-backed separatists at destabilizing Ukraine as a sovereign state.”

For instance, we consider that the developments in Eastern Europe bring a strong wake up call to NATO for reevaluating the plans towards giving meaning to the strategic relation with Russia.

For the alliance, Ukraine seems as a long-standing and distinctive partner.

It is clearly stated by the alliance that they value Ukraine’s past and present contributions to current operations and NATO’s response force.

Also the alliance declared that they will continue to encourage and support the reforms in Ukraine through the Annual National Program.

It is expressed that additional efforts will be launched to support the reform and transformation of the security and defense sectors and to promote greater interoperability between Ukraine’s and NATO’s forces.

At the end of the summit, NATO recognized Ukraine’s intention to expand its Distinctive Partnership with NATO and strategic consultations in the NATO-Ukraine Commission.

However, this approach and Ukraine’s attempts to establish closer relations with the alliance is strongly criticized by Russia.

As stated by Russia’s Foreign Minister Sergei Lavrov, the West and NATO are warned against offering any kind of membership to Ukraine and not supporting Kiev’s desire for establishing closer relations with the alliance, saying that it threatens the attempts to reach a cease-fire.

Lavrov underlined the importance to curb such attempts and stop provoking such approaches from abroad to ensure national unity in Ukraine.

Another centerpiece of NATO summit was the announcement of a more robust rapid response force on Ukraine’s eastern flank, which would aim to serve as a deterrent to Russian aggression.

In the joint statement of Obama and Cameron, it is underlined that “We must use our military to ensure a persistent presence in Eastern Europe, making clear to Russia that we will always uphold our Article 5 commitments to collective self-defense”.

At that point, it is important to add that NATO has agreed on a new Readiness Action Plan which means the alliance will update its defense planning and increase its presence on Central and Eastern Europe with additional equipment, training, exercises and troop rotations.

U.S will contribute $1 billion to support this plan.

Consisting of 4,000 NATO troops, it will initially deploy in the Baltics this fall.

Clearly, NATO does not view such a deployment as a violation of the 1997 NATO-Russia Founding Act, in which NATO had promised not to place combat forces on the territory of new member states.

In any event, that deployment will be followed by two weeks of joint NATO-Ukrainian military exercises outside of L’viv in September followed in a short order by bilateral UK-Polish military exercises in October.

In the Wales Declaration, it is expressed that while Russia’s military intervention, armed separatists and instability continue in Ukraine, NATO continues to support sanctions imposed by the European Union and G7 to address the destabilizing behavior of Russia to arrive at a political solution.

Amongst these are the measures taken by allies including Canada, Norway and the United States, as well as the EU’s decisions to limit access to capital markets for Russian state-owned financial institutions, trade in arms, establish restrictions for export of goods for military purposes, curtail Russian access to sensitive defense and energy sector technologies and other measures.

Syria and Islamic State Terrorism Threat in the Middle East

Discussions among NATO allies at the summit raised new arguments about the crisis in Syria and Iraq due to ISIL terrorist organization.

Indeed, US President Obama declared that several NATO states were forming a “new coalition of the willing” to combat ISIL in Middle East.

President Obama says “strong regional partnerships” are the cornerstone of any comprehensive strategy to confront Islamic State militants in Iraq and Syria.

The rise of the Islamic State in the Middle East and limited success of NATO’s operations in Afghanistan and Libya are other actors that will determine NATO’s future direction.

On that subject, Rasmussen told that international community has an obligation to stop the Islamic State from advancing further.

The alliance accepted that the Islamic State of Iraq and Levant (ISIL) poses a grave threat to Iraqi and Syrian people and beyond.

It is also indicated that, if the security of any ally is threatened, NATO will not hesitate to take all necessary steps to ensure collective security.

As a response to the threat posed by ISIL, ‘a core coalition’ has declared that key allies stand ready to confront the terrorist threat through military intelligence, law enforcement and diplomatic efforts.

Afghanistan Problem and DefenseBudgets of the Allies

NATO’s mission in Afghanistan will end in December 2014 and the alliance requested Afghanistan to sign relevant Security Agreements that will enable NATO troops to remain in the country in 2015 onwards.

Unlike Iraq, Afghanistan has specifically been a NATO mission and during 2014 the alliance is committed to withdraw fully from combat operations which will be the end of the longest and most expensive mission in NATO history.

In the Wales statement, it is declared that the nature and scope of NATO’s engagement will change the alliance’s estimation on a period of transmission.

According to the statement, three parallel activities are being provided: in the short period NATO allies and partners will be ready to continue to exercise, train and assist the Afghan Security Forces; in the medium term, they will reaffirm the financial sustainment; and in the long term, the alliance is planning to establish a stronger partnership with Afghanistan.

NATO allies and partner nations stand ready to continue to train, advice and assist the ANSF after 2014.

For this purpose, a new, non-combat mission will be established depending on the signing of the US-Afghanistan Bilateral Security Agreement and NATO-Afghanistan Status of Forces Agreement.

The Resolute Support Mission should be in consultation with the Government of Afghanistan and it should be supported by a United Nations Security Council Resolution.

NATO and its allies are committed to the NATO-Afghanistan Enduring Partnership.

Under this partnership, both the political and practical elements of the partnership should be jointly owned and strengthened through regular consultation on issues of strategic concern.

NATO is ready to work with Afghanistan to develop this partnership in line with NATO’s Partnership Policy, possibly including the development of an Individual Partnership Cooperation Program at an appropriate time.

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NATO and it`s partners

Another key discussion topic of the summit was the defense budgets of the alliance’s members, underlining that one of the key objectives is to reverse the ongoing downward trend in defense spending.

North America and Europe agreed to increase their defense expenditure in real terms as GDP grows and will direct their defense budgets as efficiently and effectively as possible.

Allies agreed to reverse the declining defense budgets and aim to limit their defense spending to 2% of GDP within a decade, as the alliance’s goal is 2% of GDP on defense.

In 2013, total spending of NATO’s European allies was around 1.6% of GDP.

On the contrary, Russia has increased its defense spending by about 50% since 2008.

However, many analysts do not expect European allies to substantially increase their defense spending in short to medium term.

Reaffirmation of transatlantic solidarity, – “Welfare instead of warfare” –

For the first time, NATO is prepared to deploy forces at new military installations along Russia’s western border that would include the bases in Poland, Lithuania, Estonia and Latvia to host NATO troops.

Leaders will agree to modernize their military might, creating a “spearhead” rapid-response force of 4,000 troops.

At this point, US Secretary of Defense Chuck Hagel addresses that these forces are formed by the USA, UK, Australia, Canada, Denmark, France, Germany, Italy, Poland and Turkey.

At the NATO summit in Newport, Wales, the United States announced that Turkey, as an ally in the US-led NATO military alliance, is the only Muslim nation in a "core coalition" of 10 countries committed to battle IS militants in Iraq.

"Everybody understands that the Turks are in a special category," said a US official.

Turkey attended the NATO Summit under the presidency of President RecepTayyip Erdoğan.

Erdoğan met with US President Barack Obama, Prime Minister of Germany Angela Merkel, President of France François Hollande and the leaders of other allied countries.

Erdoğan pointed out that Turkey has a different position both within NATO and similar new entities.

Obama told, "I want to express my appreciation for the cooperation between US and Turkish military and intelligence services in dealing with the issue of foreign fighters, an area where we still have more work to do."

During the summit, Erdoğan said, “Illegal annexation of Crimea will not be recognized”, and emphasized that Crimean Tatar Turks who are exposed to pressure should be isolated and the efforts for finding a solution to the crisis should be supported.

With an intervention at the session, Erdoğan asserted that NATO should fulfill its commitments for Azerbaijan and solve the Karabakh problem within the framework of Azerbaijan’s territorial integrity.

But after the summit, despite the increasing pressure on Turkey, a surprising development occurred.

The hostages captured by ISIL from the Turkish Embassy building in Mosul, Iraq on September 20 were saved by the National Intelligence Service of Turkey (MIT) and brought to Turkey.

President Erdoğan recorded that 49 embassy personnel who were detained by ISIL were saved by means of “a local operation”, which is crucial for indicating Turkey’s level.

Ankara is expected to make arrangements for a new road map in the Syria phase of the fight against ISIL.

Turkish government is wary of Syrian Kurds and their YPG militia, which is believed to be affiliated with the Kurdish PKK movement in south-east Turkey that has waged a long insurgency.

Just after the summit, the US central command said warplanes from the United States, Saudi Arabia and the United Arab Emirates launched airstrikes on four locations in Syria on Saturday and Sunday, including three on Kobani that destroyed an ISIL fighting position and staging area.

The Obama administration had been pressing Ankara to play a larger role against the extremists, who have taken control of large swaths of Syria and Iraq, including territory on Turkey’s border.

US defense officials said that Turkey agreed to let US and coalition forces use its bases, including a key installation within 100 miles of the Syrian border, for operations against Islamic State (ISIL) militants in Syria and Iraq.

Beyond training and bases, there are other issues that US expects Turkey to agree upon.

US officials have not said which issues they are because of ongoing discussions.

CONCLUSION

Lessons from the past twenty-five years put forward the need for NATO with a more global outlook, which can only be achieved by a stable Europe.

As its principal outcome, the Wales Summit had an assurance of enduring credibility of NATO, and sent a powerful message which guarantees the collective security of 28 members and Euro Atlantic partnership.

NATO must continue to serve both as an indispensable guarantor of transatlantic bond and our collective defense, and as an essential tool for crisis management.

NATO is the ultima ratio guardian of liberty and security.

NATO is part of democratic peace and stability as well as a high-politics institution, and must therefore engage far more effectively.

For the defense of our security capacity and our common democratic values, North America and Europe are the backbones of our alliance.

NATO is the democracy and human rights keeper in Europe; the continent would not be united, free, or peaceful without its power.

For today and tomorrow, NATO may continue to be our collective democratic defense club, which guards the way for prosperity and development.

But in a wider perspective on partnership and cooperation principle, there is a highly important transition in world affairs and ongoing developments; NATO is entering a new and unpredictable era as the alliance shifts from operations to contingencies.

The Syrian and Ukrainian crises demonstrate the danger of several threats.

There is a new balance today, which necessitates the ability and capability of NATO to conduct operations across the full spectrum of missions from stabilization and reconstruction to high-end war fighting.

In this regard, allies have to sharpen NATO’s decision making processes as well as its ability to deploy immediately.

NATO’s New Readiness Action Plan aims to provide the capability to rapidly deploy a force in an even shorter timeframe.

Also, the alliance’s existing Standing Naval Forces should be reorganized with a focus on the model of co-operation and interoperability within the same rapid response capability against possible sudden problems.

In conclusion, today NATO is entering the new-missions age, and allied states want to increase NATO’s collective firepower and to achieve reasonable deterrence credibility as a collective security phenomenon that deals with the aggression and threats of today.

SIGNIFICANCE OF UZBEKISTAN

Located at the heart of Central Asia, Uzbekistan has an indispensable position in terms of peace and stability in the region with its approximately 30 million population, geostrategic location, rich cultural values and growing industry.

Uzbekistan is also the only country to have borders with all of the Central Asian Republics, including Afghanistan.

Uzbekistan is strategically located at the midpoint of the Modern Silk Road, thus attracting the interest of Turkey.

Uzbekistan’s location facilitates the connection of Turkey, Azerbaijan and Georgia to the Far East, which brings significant opportunities.

Furthermore, Uzbekistan has the youngest and most intense population in the region.

The Uzbek population constitutes 46 percent of the total population of the Central Asian countries.

While about 2 million Tajiks are living in Uzbekistan, Uzbeks constitute 2 percent of Kazakhstan’s total population; 9.2 percent of Turkmenistan’s total population; 12.9 percent of Kyrgyzstan’s total population; and 25 percent of Tajikistan’s total population.

For this reason, Uzbekistan’s growth has a direct impact on the other Central Asian countries.

NATURAL RESOURCES OF UZBEKISTAN

A total of 600 million barrels of oil and 3 trillion cubic meters of natural gas

reserves are available in Uzbekistan.

Oil and natural gas make up 16 percent of Uzbekistan’s GDP compared to

other energy-rich countries in the Caspian region.

In addition, energy items comprise 25 percent of the country’s exports.

This also shows that Uzbekistan’s economy is more diversified in comparison

to other energy-rich countries in the region—its industry has developed

while its dependence on energy has declined.

Oil

Most of the oil reserves in Uzbekistan are located in Bukhara-Khiva, Surhan-Darya and Ferghana regions.

As a net oil importer, the country’s oil production has declined in recent years.

Oil produced in Uzbekistan covers only 80 percent of its need, and the remaining amount is imported from Kazakhstan.

Uzbekistan is planning to overcome its dependence on foreign oil resources by producing shale oil.

The country holds 10 billion tons of proven and 47 billion tons of potential shale oil, which corresponds to 2.5 percent of the total proven shale oil reserves in the world.

Shale oil in Uzbekistan has been explored in the Uchkyr, Urtabulak and Sangruntau fields.

Feasibility studies have started particularly in the Sangruntau field and production is expected to commence in 2018.

This development has the potential to decrease Uzbekistan’s oil dependence in the medium and long term and eventually make it self-sufficient.

Moreover, there are 3 oil refineries in Uzbekistan: Ferghana, Altyaryk and Bukhara refineries.

Total capacity of these refineries is approximately 225,000 barrels per day.

However, due to the recent decline in oil production, Uzbekistan can only use 60 percent of this capacity.

The country imports crude oil, and exports processed oil through Kazakhstan and other neighboring countries by railway or land. It also produces naphtha, gasoline and diesel at current refineries.

Uzbekistan

Natural Gas

Uzbekistan holds around 3 trillion cubic meters proven and 6.7 trillion cubic meters potential natural gas reserves.

In the Caspian region, the country has the third highest natural gas production rate after Russia and Turkmenistan.

About 61 bcm of natural gas is produced in the country per year, and only 20 bcm is exported.

Due to its insufficient oil resources, natural gas constitutes 85 percent of total energy consumption in the country.

This rate is well beyond the average natural gas consumption in the world, which is around 24 percent.

In order to overcome this problem, Uzbekistan is planning to increase its natural gas production by 20 percent and decrease the consumption by the same rate until 2020.

That means production is expected to increase to 73 bcm, whereas consumption decline to 32 bcm.

In this case it will be able to export 41 bcm annually.

Furthermore, there are 100 different mineral resources throughout the country.

These resources include gold, copper, uranium, potassium salts, kaolin, etc.

Uzbekistan has the 4th largest gold reserves, 7th largest uranium reserves and 10th largest copper reserves in the world.

These rich resources have also attracted foreign investors to Uzbekistan.

Transport

Regarded as the Project of the Century, Marmaray’s opening on October

29, 2013 was a vital step in reviving the Modern Silk Road.

After the Baku-Tbilisi-Kars Railway becomes operational in 2015, an

uninterrupted railway route will be created from the Far East to Europe.

Uzbekistan has a key location in this regard. As the leading supplier of Asian

countries in the market and a high trade capacity with industrialized

European countries, the Modern Silk Road will offer new economic

opportunities for Central Asian countries.

Tourism

Uzbekistan has a great potential for an expanded tourism industry in Central Asia.

Located on the Great Silk Road, linking Europe and Asia, Uzbekistan offers both historical and cultural attractions.

Turkish tourists are attracted to its ancient cities like Bukhara, Samarkand, Tashkent, Khivaand Ferghana.

Uzbekistan is among the top 10 countries globally with the highest number of historical artifacts in the world.

Uzbekistan’s mineral-rich natural resources are also widely used to treat different diseases.

Conversely, Turkey is the most frequently visited country by Uzbek tourists.

The positive improvement in bilateral relations and Turkey’s visa-free regime for Uzbek citizens led to a significant increase in the number of Uzbek tourists coming to Turkey.

Where to Go in Oil Prices

Oil prices have declined by more than $15 over the last three months and

have dipped slightly below $100.

The recent movement in oil prices is good news for countries that are

largely dependent on imported oil whereas countries that mostly rely on oil

revenues are concerned whether this decline in prices will continue.

It seems that the factors that affect the oil prices in the short-run and in the

long-run are quite different and therefore we need take into account these

differences when making projections about the future movements in oil

prices.

In the short-run news about demand and supply dynamics are largely

speculated in the market and oil prices are significantly affected from this

speculation.

We should look at the recent price movements in that way and make our

forecasts based on that.

When northern Iraq city of Mosul was seized by ISIS at the beginning of

June, markets started to make a speculation that this might create a cut in

oil supply and prices have increased by more than 5% in two weeks’ time.

Later it was seen that developments in Iraq did not give a harm to oil

production and prices started to decline.

Investors who have taken a position by expecting an increase in prices probably closed their positions and this has played a significant role in the recent decline in oil prices.

Another important factor that could explain the recent movement in prices is the euro/dollar exchange rate.

One can easily see that over the last three months there emerged a very high correlation (0.84) between euro/dollar exchange rate and oil prices.

It seems that in the short-run oil prices will continue to be affected from the developments in euro/dollar exchange rate.

European Central Bank has recently reduced the interest rates and has announced that they will buy more asset backed securities.

Accompanied by a slow economic growth in European Union, this means that the downward pressure on Euro might continue for the next couple of months and this might reflect itself as a decline in oil prices.

The slowdown in global economic growth and news related with this might also be speculated in the market and this may also lead to a decline in prices in the short-run.

Although developments in financial markets are very important in

understanding and predicting oil prices in the short-run, market

fundamentals, that is demand and supply, play a bigger role in affecting oil

prices in the long-run.

In Asia-Pacific which accounts for one third of the total oil consumption in

the world demand has significantly slowed down in 2013.

While in 2011 and 2012 the whole increase in world’s total consumption has

come from Asia-Pacific, in 2013 this ratio has declined to 34%.

On the other hand in North America which is the second largest consumer

in the world, oil demand which has been declining since 2010, has shown a

large increase in 2013.

In Europe the economic recovery is still very slow and demand stays stagnant.

In Middle East demand has been steadily increasing as it is in Asia-Pacific.

However as the share of this region in total consumption is only 9.2% the increase in oil demand has a limited impact in prices.

In the long-run it seems that there will not be a rapid economic growth in Asia-Pacific as it was the case over the last decade.

Besides that many developing countries are facing lower economic growth rates.

Therefore, we will probably not see huge increases in oil demand for the next couple of years.

On the supply side we need to watch the developments about two very important countries for oil markets.

These are Iran and Iraq.

The total proved reserves of Iraq and Iran is around 307 billion barrels and this number is more than three times the reserves that Russia owns.

However, when we look at the actual production the total oil supply of Iran and Iraq is only 62% of Russian supply.

These numbers reveal that Iraq and Iran has a huge potential in terms of meeting the future increase in oil demand.

If the embargoes on Iran are loosened and the political stability is achieved in Iraq they can easily produce up to 7-8 million barrels per day.

Especially Iraq could reach these levels in a very short period of time. These developments on the supply side might put a downward pressure in oil prices in the long-run.

Both the short-run and long-run dynamics reveal that the downward trend in oil prices might continue for a while.

However, we should take into account that fossil fuels, particularly oil and natural gas, will continue to be a major source of energy for the world and large price declines will not be possible.

Gas Transmission Network in Uzbekistan and

Turkmenistan

Turkmenistan, rather than Uzbekistan, has been the chief exporter of natural

gas via the Central Asia-Centre pipeline.

In the past over 90% of Turkmenistan's natural gas exports have been

directed through the eastern branch of the pipeline, mainly because the

majority of Turkmen natural gas production is in the eastern part of the

Qara Qum desert, but also because the western branch of the pipeline is in

poor technical condition.

Turkmenistan has had a supply agreement with Russia’s Gazprom for some

years and has been exporting a growing volume of gas to Russia,

exceeding 40 billion cubic metres in 2005.

Gazprom has a separate agreement with Uztransgaz for the transmission of

Turkmen gas through the Uzbek pipeline network for delivery to Russia.

That Iranian Equation

In Beijing, they take the matter of diversifying oil supplies very, very seriously.

When oil reached $150 a barrel in 2008 – before the U.S.-unleashed global

financial meltdown hit – Chinese state media had taken to calling foreign

Big Oil “international petroleum crocodiles,” with the implication that the

West’s hidden agenda was ultimately to stop China’s relentless

development dead in its tracks.

Twenty-eight percent of what’s left of the world’s proven oil reserves are in

the Arab world.

China could easily gobble it all up.

Few may know that China itself is actually the world’s fifth largest oil

producer, at 3.7 million barrels per day (bpd), just below Iran and slightly

above Mexico.

In 1980, China consumed only 3 percent of the world’s oil.

Now, its take is around 10 percent, making it the planet’s second largest

consumer.

It has already surpassed Japan in that category, even if it’s still way behind

the U.S., which eats up 27 percent of global oil each year.

According to the International Energy Agency (IEA), China will account for over 40 percent of the increase in global oil demand until 2030.

And that’s assuming China will grow at “only” a 6 percent annual rate which, based on present growth, seems unlikely.

Saudi Arabia controls 13 percent of world oil production.

At the moment, it is the only swing producer – one, that is, that can move the amount of oil being pumped up or down at will – capable of substantially increasing output.

It’s no accident, then, that, pumping 500,000 bpd, it has become one of Beijing’s major oil suppliers.

The top three, according to China’s Ministry of Commerce, are Saudi Arabia, Iran, and Angola.

By 2013-2014, if all goes well, the Chinese expect to add Iraq to that list in a big way, but first that troubled country’s oil production needs to start cranking up.

In the meantime, it’s the Iranian part of the Eurasian energy equation that’s really nerve-racking for China’s leaders.

Chinese companies have invested a staggering $120 billion in Iran’s energy sector over the past five years.

Already Iran is China’s number two oil supplier, accounting for up to 14 percent of its imports; and the Chinese energy giant Sinopec has committed an additional $6.5 billion to building oil refineries there.

Due to harsh U.N.-imposed and American sanctions and years of economic mismanagement, however, the country lacks the high-tech know-how to provide for itself, and its industrial structure is in a shambles.

The head of the National Iranian Oil Company, Ahmad Ghalebani, has publicly admitted that machinery and parts used in Iran’s oil production still have to be imported from China.

Sanctions can be a killer, slowing investment, increasing the cost of trade by over 20 percent, and severely constricting Tehran’s ability to borrow in global markets.

Nonetheless, trade between China and Iran grew by 35 percent in 2009 to $27 billion.

So while the West has been slamming Iran with sanctions, embargoes, and blockades, Iran has been slowly evolving as a crucial trade corridor for China –as well as Russia and energy-poor India.

Unlike the West, they are all investing like crazy there because it’s easy to get concessions from the government; it’s easy and relatively cheap to build infrastructure; and being on the inside when it comes to Iranian energy reserves is a necessity for any country that wants to be a crucial player in Pipelineistan, that contested chessboard of crucial energy pipelines over which much of the New Great Game in Eurasia takes place.

Undoubtedly, the leaders of all three countries are offering thanks to whatever gods they care to worship that Washington continues to make it so easy (and lucrative) for them.

Few in the U.S. may know that last year Saudi Arabia – now (re)arming to

the teeth, courtesy of Washington, and little short of paranoid about the

Iranian nuclear program – offered to supply the Chinese with the same

amount of oil the country currently imports from Iran at a much cheaper

price.

But Beijing, for whom Iran is a key long-term strategic ally, scotched the deal.

As if Iran’s structural problems weren’t enough, the country has done little to diversify its economy beyond oil and natural gas exports in the past 30 years; inflation’s running at more than 20 percent; unemployment at more than 20 percent; and young, well-educated people are fleeing abroad, a major brain drain for that embattled land.

And don’t think that’s the end of its litany of problems.

It would like to be a full member of the Shanghai Cooperation Organization (SCO) – the multi-layered economic/military cooperation union that is a sort of Asian response to NATO – but is only an official SCO observer because the group does not admit any country under U.N. sanctions.

Tehran, in other words, would like some great power protection against the possibility of an attack from the U.S. or Israel.

As much as Iran may be on the verge of becoming a far more influential player in the Central Asian energy game thanks to Russian and Chinese investment, it’s extremely unlikely that either of those countries would actually risk war against the U.S. to “save” the Iranian regime.

The Great Escape

From Beijing’s point of view, the title of the movie version of the intractable U.S. vs. Iran conflict and a simmering U.S. vs. China strategic competition in Pipelineistan could be Escape From Hormuz and Malacca.

The Strait of Hormuz is the definition of a potential strategic bottleneck.

It is, after all, the only entryway to the Persian Gulf and through it now flow roughly 20 percent of China’s oil imports.

At its narrowest, it is only 36 kilometers wide, with Iran to the north and Oman to the south.

China’s leaders fret about the constant presence of U.S. aircraft carrier battle groups on station and patrolling nearby.

With Singapore to the North and Indonesia to the south, the Strait of Malacca is another potential bottleneck if ever there was one – and through it flow as much as 80 percent of China’s oil imports.

At its narrowest, it is only 54 kilometers wide and like the Strait of Hormuz, its security is also of the made-in-USA variety.

In a future face-off with Washington, both straits could quickly be closed or controlled by the U.S. Navy.

Strait of Hormuz

Iran, Oil and Strait of Hormuz

CHOKEPOINTS: STRAIT OF HORMUZ

Located between Oman and Iran, the Strait of Hormuz connects the

Persian Gulf with the Gulf of Oman and the Arabian Sea.

The Strait of Hormuz is the world’s most important oil chokepoint due to its

daily oil flow of about 17 million bbl/d in 2011.

Flows throught the Strait in 2011 were roughly 35 percent of all seaborne oil,

or almost 20 percent of oil traded worldwide.

More than 85 percent of these crude oil exports went to Asian markets, with

Japan, India, South Korea and China reprensenting the largest destinations.

In addition, Qatar exports about 2 trillion cubic feet per year of liquefied

natural gas (LNG) through the Strait of Hormuz, accounting for almost 20

percent of global LNG trade.

At its narrowest point, the Strait is 21 miles wide, but the width of the

shipping lane in either direction is only two miles, separated by a two-mile

buffer zone.

The Strait is deep and wide enough to handle the world’s largest crude oil

tankers, with about two-thirds of oil shipments carried by tankers in excess of

150,000 deadweight tons.

Most potential options to bypass Hormuz are currently not operational.

Only Iraq, Saudi Arabia and the United Arab Emirates (UAE) presently have

pipelines able to ship crude oil outside of the Gulf, and only the latter two

countries currently have additional pipeline capacity to circumvent

Hormuz.

At the start of 2012, the total available pipeline capacity from the two

countries combined, which is not utilized, was approximately 1 million bbl/d.

The amount could potentially increase to 4.3 bbl/d by the end of this year,

as both countries have recently completed steps to increase standby

pipeline capacity to bypass the Strait.

Iraq has one major crude oil pipeline, the Kirkuk-Ceyhan Pipeline (Iraq-

Turkey) that transports oil from the north of Iraq to the Turkish Mediterranean

port of Ceyhan.

This pipeline pumped about 0.4 million bbl/d in 2011, far below its

nameplate capacity of 1.6 million bbl/d and it has been the target of

sabotage attacks.

Moreover this pipeline cannot send additional volumes to bypass the Strait

of Hormuz unless it receives oil from southern Iraq via the Strategic Pipeline,

which links northern and southern Iraq.

Currently portions of the Strategic Pipeline are closed and renovations to

the Strategic Pipeline could take several years to complete.

Iraq War

Gulf war

20th Century Battlefields - Gulf War (1991)

Iraq War 2003-2011

Iraq War - Full Documentary

The Mark of Cain - Full War Movie - British Army & War in Iraq

Iraq War 2015 - Insane Heavy Intense Clashes Fighting

And Firefights During The Battle For Mosul

Kurds launch massive offensive against ISIS in Iraq (22-01-

2015)

Energy Security and Transition Nature of the

New Radical Religious Terrorism Threat in the

Middle East Different than Cold War era, energy security nature lives an untraditional transformation in the Middle East.

From the international relations picture, our planet is being shaken, but the persistence of religion is more a symptom than a cause.

In each of these conflicts in Iraq and Syria, it is a clash among Sunnis, Shiites, Kurds, Turkmen, and others; in Nigeria, amongMuslims, Christians, and assorted tribal groupings; in South Sudan, between the Dinka and Nuer.

Indeed, radical groups can control energy and water resources including pipelines with economic dimensions.

Iraq’s political crisis worsened, NATO declared a “high probability” of Russian military intervention in Ukraine and Gaza remained on a knife edge.

Just after Israel’s Gaza Operation, the two remains a cause of concern and the Syrian civil war is spilling over to the wider region, what has dominated international headlines in recent days has been the sudden flare-up in Iraq.

Jihadist groups around the world are growing ever more dangerous.

The UN Security Council warned that ISIS posed a threat not only to Iraq and Syria but to “regional peace, security and stability.”

Also, from the Vatican, side, Pope Francis renewed his appeal for peace and the "end of the humanitarian tragedy taking place in Iraq".

These critical developments described by the US Secretary of Defence Chuck Hagel “The world is exploding all over.

Initially we look from the American perspective in Iraq and main arguments of the USAF operations.

Of course it is a difficult matter giving legitimized military support to Washington different than 2003 Iraq operation that Iraq government has authorized the US to conduct against ISIS fighters in Iraq.

Also UN Security Council criticises ISIS attack from humanitarian perspective and international law perspectives.

Pentagon has started the deepest American engagement in Iraq since US troops withdrew in late 2011.

US President Barack Obama has authorized targeted air strikes against Islamic militants in Iraq, as the US military began an airborne operation to bring relief to thousands of minority Iraqis driven to a grim, mountain-top refuge.

Describing the threats against stranded Yazidi refugees as holding the potential for “genocide”, the president said he had authorized limited air strikes to help Iraqi forces.

Although the joint US-Turkish air base at İncirlik appears to have been used in the delivery of humanitarian relief, the US has launched air strikes from the USS George HW Bush carrier in the Gulf, possibly without the consideration of Turkey's hostage situation.

Obama said he would “not allow the United States to be dragged into fighting another war” but added that strikes would continue “if necessary”.

Obama has deployed humanitarian terms ("to prevent a potential act of genocide") as well as self-interest ("to protect our American personnel").

American armed drones currently patrol the skies above Baghdad.

Not only are they carrying out terrorist attacks with virtual impunity, as events in Iraq have shown, they are capable of controlling ever more territory and recruiting ever more fighters.

The struggle over energy resources has been a conspicuous factor in many recent conflicts, including the Iran-Iraq War of 1980-1988, the Gulf War of 1990-1991, and the Sudanese Civil War of 1983-2005.

At first glance, the fossil-fuel factor in the most recent outbreaks of tension and fighting may seem less evident.

But look more closely and we can discriminate that each of these conflicts is, at heart, an energy and water war.

The current conflict also affects the price of a barrel of Brent crude rose slightly as fighting intensified before steadying below $115.

Now let us discuss why the nature of terrorism is under transition in Iraq and

Syria.

Of course, it is a reality that new waves of terrorism have endorsed a

complex threat to peace and security in Iraq, the entire region and

beyond.

Sectarian tensions in the region, particularly those emanating from the crisis

in Syria, and domestic Iraqi politics provide background drivers for the

strengthening of local militant groups.

Attacks by these groups are increasing, but not as rapidly as the al-Qaeda

stream.

The radical Islamic terrorist organization has unleashed using violence, mass murder, and destruction over nearly one-third of Iraq.

Thus, terrorist groups have targeting incentives including intimidation levels, symbolism, attack feasibility, and concerns for stakeholders.

We argue that terrorists in general have comparatively few incentives to attack energy supply infrastructures based on our assessment of these factors.

On the other hand, the Islamic State of Iraq and al-Sham (ISIS) continues to strengthen its position, making unprecedented territorial gains.

The group, which has declared a caliphate in parts of Iraq and Syria to rule over all Muslims, poses the biggest challenge to the stability of OPEC member Iraq since the fall of Saddam Hussein in 2003.

The United Nations Security Council met in an emergency session to discuss the crisis in Iraq, calling on the governments of the international community to assist Baghdad in dealing with the humanitarian crisis caused by the jihad offensive in the north of the country.

The UN Security Council notes with concern that any oilfields and related infrastructure controlled by terrorist organizations could generate material income for terrorists, which would support their recruitment efforts, including foreign terrorist fighters, and strengthen their operational capability to organize and carry out terrorist attacks.

In Syria, the degradation of the state has been the consequence of a civil war in which the government of Bashar al-Assad has turned its fire on its own people.

In Iraq, the explanation comes in two parts. First, the US-led invasion of 2003 smashed the Saddam state.

Second, the current prime minister, Nouri al-Maliki, has hollowed out what was left, eviscerating national institutions lest they pose a challenge to him and his narrow Shia ruling circle.

Most importantly, he orders the Iraqi army, seeing a body of one million men under arms as a personal threat rather than a national asset.

The weakening of ISIS in Syria may provide an opening for the regime of Bashar al-Assad to strengthen its position.

But most importantly, the ISIS offensive comes at a time when global oil markets could soon look tight due to supply disruptions in a number of big producers, and it could have important knock-on effects on Iraqi oil production over the medium term.

ISIS has realized sudden, short-term disruptions seriously endangering the energy security.

ISIS fighters have seized the control of Iraq's electricity-generating Mosul’s biggest dam, Ain Zalah oilfield and three more towns since sweeping across much of northern Iraq.

In some respects, it is a fanatical, sectarian religious organization, seeking to reproduce the pure, uncorrupted piety of the early Islamic era.

At the same time, it is engaged in a conventional nation-building project, seeking to create a fully functioning state with all its attributes.

ISIS seeks both to deny petroleum supplies and oil revenue to the Baghdad government and enhancing its capacity for nation-building and further military advances.

ISIS also have seized Iraq's largest oil refinery at Baiji, which was previously under the control of Sunni militants who used to siphon off crude and petroleum products to finance their operations.

However, as it now occupies the key oil-producing areas of Syria and oil-refining facilities in Iraq, it is in a unique position to do so.

Oil, then, is absolutely essential to the organization’s grand strategy.

It appears that ISIS sells oil from the fields it controls to shadowy middlemen who in turn arrange for its transport — mostly by tanker trucks — to buyers in Iraq, Syria, and Turkey.

ISIS deal in Iraq's energy supply region has resulted more than % 12 increase.

These sales are said to provide the organization with the funds needed to pay its troops and acquire its vast stockpiles of arms and ammunition.

Many observers also claim that ISIS is selling oil to the Assad regime in return for immunity from government air strikes of the sort being launched against other rebel groups.

They are very well organized, very well equipped, they coordinate their operations and they have thus far shown the ability to attack on multiple axes.

Conclusion

If Iraq continues down its current path, a meltdown will probably occur which brings us to the new aspect of the geopolitical landscape.

It relates again to the absence of power, this time at the global level.

What is clear is that this will be a very long and difficult risk now that without a political strategy, a limited strike will validate ISIS propaganda and mobilize its audience.

The Obama administration continues to insist on maintaining the unity of Iraq.

In this picture, US Military air campaign to Iraq is about to take a step towards preserving Iraq’s unity and status quo.

Are there other alternates for Iraq than US and Western Allies or heavily depends on to Russia-Iran for military and logistical and economic assistance?

The coalition government is throwing its weight behind US-led efforts to stabilize the region, assist refugees and contain the insurgency of the ISIS attacks.

The UK is involved in delivering Jordanian military equipment to the Iraqi Kurdistan, while Australia and Germany are weighing military options for helping the Kurds in their battles against the ISIS.

London declared by Prime Minister David Cameron that will help to transport ammunition and arms to Kurdish forces in Iraq but will not supply weapons directly.

France began supplying weapons directly to Kurdish forces in northern Iraq.

Also France has decided to join the club of Western nations directly assisting Iraqi Kurds.

Paris said the Kurds are in “urgent need” of support to fight against the ISIS.

As a result above mentioned sharp developments in Iraq, international community have to decide the time for correct action also need an urgent deeper understanding of ISIS and other radical groups’ goals, strategy, and tactics that negatively impact on energy security in mid and long term in the Middle East.

Because, we must remember that from military strategy side, without enough land forces operations support only air strikes may help, but on their own they will not turn the tide against ISIS.

On the other hand, new and different energy security policies need to regenerate without time is too late…

Bear vs. Dragon: Beyond the Russia – China

gas deal

On 21st of May 2014 Russian Gazprom and Chinese CNPC signed a treaty

for 30 years that includes annual export of 38 Bcm of Russian gas to China.

Total price for Russian gas according to treaty will make 400 billion USD.

Different experts argue that according to such benchmarks the

approximate price for Russian gas exported to China will make about 350

USD per thousand cubic meters.

Though some suppose that the price will be seriously reduced.

For example, why China shall pay much more than the gas price for

Turkmenistan that makes a bit more 200 USD per thousand cubic meters?

One of the most sensitive moments of the new gas deal for Russia is the

financing for the construction of new pipeline from Siberia.

Considering current soft international isolation of Russia and Western

sanctions for Gazprom it will be extremely hard to find any western loans for

the Russian – Chinese gas project.

So the biggest and the only hope of Russia are on Chinese money. But

Beijing promised to help with finances for the project in unclear

perspective.

Chinese 25 billion dollars are supposed to come to Russia in next coming

years but no one knows when. Without this loan Gazprom is incapable of

real start of gas pipeline construction called “Power of Siberia”.

China and Russia Sign Second Mega Gas Deal

Monday, 10 November 2014

President Vladimir Putin and Chinese leader Xi Jinping have signed a memorandum of understanding on the so-called “western” gas supplies route to China. The agreement paves the way for a contract that would make China the biggest consumer of Russian gas.

Russia’s so-called “western” or "Altay" route would supply 30 billion cubic meters (bcm) of gas a year to China.The new supply line comes in addition to the “eastern” route, through the “Power of Siberia” pipeline, which will annually deliver 38 bcm of gas to China. Work on that pipeline route has already begun after a $400 billion deal was clinched in May.

Russia and China Just Signed A $400 Billion

Gas Deal. What Does It Mean For Global

Affairs?

Both moves will hugely boost Russia’s energy industry (which has

been suffering from low gas prices), and inject some life into an economy

that has been struggling under sanctions imposed by the U.S. and other

members of NATO as a result of the ongoing conflict in Ukraine.

These recent deals are sure to have widespread consequences on global

politics and economics.

The declining value of the Russian ruble since January 2014

Analyse the potential for conflict over oil reserves to

increase during the next 20 years, including discussion

of potential flashpoints, likely adversaries and types of conflict.

[P]etroleum is unique among the world’s resources— …it has

more potential than any of the others to provoke major crises

and conflicts in the years ahead.

Oil is part of [national] security, considered in a broader

sense than simply physical security, and a very vital part.

Oil and conflict have a long and robust relationship, stretching back to the eve of the First World War.

This relationship has its roots in oil’s vital status as an industrial commodity, based on the fundamental role that oil plays within modern society.

With very few exceptions, every person in the world is affected by oil, and usually in a beneficial way.

Even the world’s poorest people can benefit from oil-powered agricultural machinery and transport.

Human civilisation is now based on a plentiful supply of fossil fuel energy, but especially on that of oil; currently 84 million barrels a day (mbd).

Oil’s importance is such that ethnic groups and states are prepared to go to war for it if this is deemed necessary.

As long as production continues to meet demand, the possibility of conflict over oil reserves is limited, or at least reduced.

But when such a vital commodity begins to run short, a commodity that underpins so many of the social, political and economic systems that make up our civilisation, then that possibility for conflict increases greatly.

The aim of this paper is to assess the potential for conflict over oil reserves to increase during the next 20 years.

Historically, oil has consistently served as a source of conflict, but will this continue to be the case?

They may begin to separate, if oil’s importance as a strategic commodity wanes, meaning states expend less effort to secure it than they have in the past.

Or oil might become even more important, prompting a greater degree of conflict.

Studying these issues has merit, as they may give some insight into the conflicts of the future; where they might be, who they might involve, and how they might develop.

To achieve this, I will discuss the history of oil and conflict, and demonstrate the link that has existed between the two since 1914.

Having established this link, I will then outline the vital importance of oil to the international political economy.

The phenomenon of Peak Oil will then be investigated, and its likely effect on petroleum’s price and availability.

Following this I will look at who supplies oil, who consumes it, and critical transport chokepoints, demonstrating that most of these suppliers are dangerously unstable, and under increasing political, social and environmental stress.

This will also show that the major consumers are completely dependent on imported oil.

The potential for conflict arising from this situation will be discussed in the last part of the essay, who might be involved and where, and what potential forms this conflict may take.

As a whole, this will paint a grim picture of what might happen when oil begins to run short. This paper will not attempt to provide answers to the issues raised, partly for reasons of space, but also because not all problems have answers. The problems that a shortfall in global oil supply will pose may fall into this category.

This paper is based primarily on an environmentalist perspective.

Of the various perspectives in international relations, environmentalism focuses most on the effects of resource depletion and how endless economic growth is impossible in a finite system (such as the Earth).

A key assumption examined in this paper is whether the global oil supply will fail to keep up with rising demand and peak in production.

The effects of any shortages are analysed from a neo-realist perspective.

Critical shortages of vital commodities will often lead to conflicts, as each group seeks to gain sufficient access to secure their own futures, often at the expense of other groups.

Neo-realism, with its wider interpretation of the sources of power, is more appropriate than classical realism.

The neo-liberal and socialist perspectives, with their assumptions of unlimited economic and social growth, are not considered in this paper, as both perspectives discount the possibility of resource constraints inhibiting human progress.

This paper will look at examples of the potential for conflict at the

international and national levels.

My aim is to link these together to give a comprehensive analysis of the

effect oil-based conflict will have.

When a fundamental and vital commodity causes conflict, it does not do

so in a narrow and sector-specific way; its effects spill over into all parts of

society.

Therefore this paper may sacrifice depth of analysis in order to achieve the

necessary breadth of scope.

This paper is looking at events over the next 20 years for three reasons.

The first is that there are a number of authoritative predictions that the global production of oil will peak within the next 5-15 years, and then inexorably decline.

A key assertion in this paper is that the conflict for oil will increase as it becomes increasingly scarce, and so a peak in global production is relevant.

Secondly, a 20 year timeframe sets limits on the scope of this paper.

Finally, forecasting future events is always difficult at best.

Events over the next 20 years can be broadly extrapolated, using current data on energy consumption and supply trends, but becomes increasingly tenuous after that.

The History of Oil and Conflict

Conflict is commonly conflated with military action and war.

Yet it transcends more than just the military dimension of human relations.

“Conflict encompasses not only warfare, but also activities that do not

necessarily involve physical violence, e.g., litigation.”

The New Zealand Defence Force defines conflict as;

The essence of conflict is a violent clash between opposing human wills,

each trying to impose its own will on the other. In interstate and even

intrastate conflict, the means to impose will on an adversary may include

diplomatic, economic and political mechanisms, as well as the application

or threat of violence by military force.

The military definition of conflict is well understood, but economic conflict -

whether between states, corporations or social groups - also has a

profound impact on human affairs.

Differences in energy policy between the US and the EU have affected

relations, and may be a factor in an economic conflict between them.

Conflict between different groups within a society is also worthy of

examination, especially during a time of increased tension brought on by a

lowering of living standards and economic recession.

The literature on the subject of resource conflict is increasing, particularly as

it has become obvious that certain critical resources, such as water and oil,

are under increasing strain.

Resources (particularly oil) will be a key factor in conflicts of the future

The issues that come from a shortfall in the oil supply; increased conflict,

economic recession and depression, falling food production and increased

mortality.

This is a very dark issue, but a necessary one to address, and the Peak Oil

literature does that.

Oil became a focus of conflict and a significant contributor to wartime victory on the eve of the First World War.

Britain had begun to convert its warships from coal to oil, which gave the Royal Navy an important operational advantage, but meant that Britain was now reliant on foreign energy sources to maintain her maritime supremacy.

Britain’s supplies came from the Persian Gulf, but these fields were threatened by the Ottoman Empire.

The first military campaign to protect oil supplies was launched in November 1914, when Indian and British troops landed in Basra to seize the Mesopotamian oilfields.

The First World War was the first to see widespread mechanisation.

While horses were vitally important throughout the war, the use of aircraft, tanks, trucks and oil-powered warships increased exponentially as the war progressed.

The British began the war with 50 aircraft; by June 1918 they had over 2,600.

The British Army’s truck fleet went from 10,000 to 60,000 over the same period.

This was made possible by the huge production advantage the Allies had; at the time, the US was the world’s main producer and exporter of oil.

During the war, the Allies produced approximately 151 million tonnes, while the Central Powers produced less than 10 percent of this.

After the war, Lord Curzon of Britain declared that the Allies had “…floated to victory upon a wave of oil.”

The Second World War reinforced oil’s importance as a strategic resource.

Japan launched the attack on Pearl Harbour and its invasion of Southeast Asia largely in response to a US oil embargo.

One of Japan’s main strategic objectives was the capture of the Indonesian oilfields.

Germany’s war aims included seizing the oilfields of the Caucasus, a campaign that led to the disaster at Stalingrad.

Allied oil production was just as dominant in the Second World War as it had been in the First; total production topped a billion tonnes, compared to Axis production of some 67 million tonnes.

By 1945 the German and Japanese militaries had become almost immobilised as their supply sources- inadequate to begin with- were cut off.

German and Japanese attempts to secure sufficient oil reserves for themselves failed disastrously, and were major contributors to their defeat.

Oil and conflict remained linked after 1945.

Iran’s democratically elected government was overthrown and replaced

by the Shah in a CIA-backed coup when it threatened to nationalise

Western oil assets in 1953.

In 1961, Iraq threatened to annex Kuwait, but was blocked by British

intervention.

Then in 1973 the Arab members of OPEC embargoed the West, following

western support for Israel in the Yom Kippur War.

This was the first successful use of the ‘oil weapon’ by OPEC, following two

abortive attempts in 1956 and 1967.

Those attempts had been defeated by US surplus production, but this had gone by 1973, and the way was open for OPEC to impose its embargo.

This created an artificial oil shortage that sent the price of oil from US$2.48 per barrel in 1972 to US$11.58 in 1974.

This price rise wreaked havoc on the world economy, raising unemployment and inflation and plunging the world into recession.

In 1979 a second oil shock followed the overthrow of Iran’s Shah, and in the subsequent turmoil, Iran’s production (8 percent of the world’s total) was temporarily cut off.

The price again skyrocketed, from US$13.68 in 1978 to US$35.69 in 1980, causing further economic and social disruption around the globe.

The Iranian Revolution, combined with the concurrent Soviet invasion of Afghanistan, led President Carter to declare that Washington would use- “…any means necessary, including military force…”- to ensure access to Middle Eastern oil.

This declaration (known as the Carter Doctrine) led to the formation of the US military’s Central Command, tasked with controlling US units in the Middle East and Central Asia.

It currently controls operations in Iraq, Afghanistan and the Persian Gulf.

The Iran-Iraq War of 1980-88 was caused by an Iraqi attempt to seize Iranian

oilfields and transport routes.

As the longest conventional war of the 20th century, it cost a million lives

and spilled over into the rest of the Gulf, leading to attacks on oil tankers.

The newly formed US Central Command intervened, escorting tankers

through the Straits of Hormuz, in accordance with the Carter Doctrine.

When the war ended, Iraq again attempted to annex Kuwait, invading in

late 1990.

A US-led international coalition pushed the Iraqis out, ensuring that Iraq

(and Saddam Hussein) did not gain the 9 percent of the world’s oil held by

Kuwait.

While the coalition stopped short of toppling Saddam, sanctions were imposed that severely weakened Iraq.

The result was that when the US and its allies invaded Iraq in 2003, the Iraqis were unable to mount an effective conventional defence.

While the US government has consistently denied that oil was a major factor in the campaign, Dick Cheney himself has linked the two.

Oil forms 95 percent of Iraq’s exports, and its reserves are the third largest in the world.

Coalition forces especially targeted oil infrastructure during their advance.

One example that stood out was the immediate seizure of the Iraqi Oil Ministry, which was then heavily guarded, while other essential administrative buildings were looted and destroyed.

Outside of the Middle East oil has also had a hand in the development of conflict at all levels.

Nigeria in particular is beset by struggles over control of its oil revenues, while oil plays a major part in the civil wars and political unrest in the Caspian region, Venezuela, Columbia, Angola and the Sudan.

At the other end of the conflict spectrum was the unrest caused in Europe in 2000 by widespread protests over the price of fuel.

Protestors brought traffic to a halt throughout Britain, France and Spain, as they agitated for lower fuel taxes.

While these conflicts did not result in the use of force, the protestors were clearly seeking to impose their will on their governments, and they used a wide variety of means to accomplish this, the blockading of oil installations being the most effective.

While oil has only been used by humans for a relatively short period of time,

it has sparked a large number of conflicts.

These have ranged from peaceful demonstrations through guerrilla

insurgencies to full-scale conventional wars.

Oil has become so important to human civilisation that conflict is often

considered necessary to gain access and control over it.

That critical importance continues to this day, and is likely to increase if

current trends continue.

The Importance of Oil

Oil is unique in that it is so strategic in nature. We are not talking about

soapflakes or leisurewear here. Energy is truly fundamental to the world's

economy… It is the basic, fundamental building block of the world's

economy. It is unlike any other commodity.

Oil is vital to the functioning of the world economy, and this section will

analyse the essential role it plays in transport, agriculture, chemicals and

the military.

Oil completely dominates the world’s transport systems.

It provides 97 percent of the US’ transport fuel; in 2003 this was 14.1 million

barrels a day, 66 percent of total US oil consumption, powering some 200

million vehicles.

Oil provides 98 percent of Europe’s transport energy, and in New Zealand

85 percent of oil use is in the transport sector.

Worldwide there are an estimated 800 million cars, with this number

expected to quadruple by 2050.

Every commercial plane in the world uses petroleum-derived fuel.

The bulk of the world’s trade move on oil-powered ships, trucks and trains.

Without oil these vehicles would be idle, and the world’s trade system would be impossible.

Even simple domestic life as it is currently lived in the West would be impossible.

The development of suburbs has resulted in a low-density sprawl around cities that is difficult to service with public transport.

The only effective way for most people to socialise, shop or work is by car. Globally, commuting times are rising, as people live further away from their workplaces.

The way modern societies and economies are arranged makes oil’s role in transport essential.

The second vital use for petroleum is in food production, which has allowed

the human population to increase almost three-fold since 1950.

The mechanisation of farming during the 20th century resulted in a dramatic

increase in crop yields.

Since 1940, the productivity of US farmland has grown by approximately 2

percent a year, in line with increasing fuel consumption.

In addition to oil-powered machinery, this increase in food production has

been based on fertilisers created with natural-gas, oil-based pesticides and

diesel-powered irrigation pumps.

The result is that modern food production is heavily reliant on oil, and that

the energy put into food is much greater than the energy within that food.

Every calorie of food produced has used 15-70 calories of fossil fuel energy.

In the US, it takes 3/4 of a gallon of oil to make a pound of steak.

This situation is also true of fishing, which is even more energy intensive than farming; fuel makes up to 30 percent of the operating costs for New Zealand fishing companies.

Without plentiful and cheap fuel, the world’s farmers and fishers will be unable to feed a growing population.

This food production system is also reliant on a huge and comprehensive transport system to move produce from the farm to the shops, and from there to people’s homes.

To feed over six billion people, oil is essential.

A third use for oil is as a feedstock in the chemical industry.

Literally hundreds of thousands of products are made using petroleum;

most plastics are oil-based, as are paints, inks, synthetic fibres, medicines,

cosmetics, shoes, hearing aids, contact lenses… the list is seemingly

endless.

Some products can’t be made without oil.

Oil is all around us, even when it isn’t being burnt in vehicle engines.

Militaries around the world depend heavily on oil, especially those in the

developed world.

The US in particular relies heavily on petroleum; the machines at the core of

US combat power are all oil-powered.

A US armoured division will use up to 1,900 tons of fuel a day.

A single US aircraft carrier can use 6,500 barrels of jet fuel in a day.

In Iraq, the US military alone uses over four million gallons of fuel a day.

One analyst noted that “[o]il fuels more than automobiles and aeroplanes.

Oil fuels military power, national treasuries and international politics. …

[Oil] is a determinant of well being, national security and international security for those that possess this vital resource, and the converse for those that do not.”

Without large quantities of fuel, the superiority that modern armies have over their real or potential enemies is negated.

Germany found this out to its cost in two World Wars, and the same situation applies today.

Oil is a vital component of military power, and therefore a vital component of national power.

Some analysts maintain that in the Information Age commodities are of less importance than they have been previously, or suggest that less oil is used per unit of GDP or mile driven than it was in the 1970s.

There has been an improvement in vehicle efficiency, but there has also been a reduction in fleet efficiency, as consumers moved from cars to four-wheel drives.

US drivers are also driving further, from 1.5 trillion vehicles miles in 1982, to 2.5 trillion miles in 1995 (a trend that continues to rise).

‘Energy efficiency’ means that economies are increasingly vulnerable to oil shortages than previously, as the loss of a given quantity of oil means the loss of even more GDP than would have been the case in the 1970s.

The ‘new economy’, based on finance, information technology and telecommunications is also heavily reliant on oil.

The world’s trade flows now include information, software and media packages that can be sent electronically, but the vast bulk of the world’s goods are still physical, and these still require oil-powered transport.

The telecommunications networks that underpin this ‘new economy’ are themselves reliant on oil-powered machines for construction and maintenance of lines.

Finally, the components used to establish these networks are often made from petrochemicals. Without oil, these systems couldn’t operate at the same level and speed as they currently do.

A Shortfall In Supply

Oil’s status as a vital commodity and its historical link with conflict mean that the supply situation over the next 20 years is of some importance.

If supply increases relative with demand, then oil is unlikely to be a leading cause of conflict, as consumers can simply purchase their requirements.

But if supply fails to meet demand, then the reverse is likely to be true.

The price will rise sharply, and some importers will be caught short, as the Japanese were in 1941.

Importers might adapt successfully to their reduced access to oil, as Cuba did in the 1990s; others might fare as badly as North Korea has.

But some importers might seek to ‘impose their will’ on the situation, through economic, diplomatic and military means.

A prolonged shortfall in the supply of oil will almost certainly increase the potential for conflict.

Unfortunately, the outlook for a balanced supply-demand situation is not good.

Demand is increasing by approximately 2 percent a year, and this is expected to continue for the next two decades.

The Energy Information Agency (EIA), part of the US Department of Energy, stated in a case study that “… world oil demand grows from 80 million barrels per day in 2003 to 98 million barrels per day in 2015 and 118 million barrels per day in 2030.”

The supply situation is not so promising.

The EIA and the International Energy Agency (IEA), among others, imply that supply will rise to meet demand, but they do not specify how this will be done; it is always assumed.

It seems incredible that the future supply of this vital commodity is based on unsubstantiated assumptions, but that is the case.

In the last five years there has been a steady decrease in the amount of spare production capacity, which acts as a buffer against market disruptions.

States with spare production capacity are referred to as ‘swing producers’, who can swing this spare capacity back online.

The current assumption is that Saudi Arabia is the ‘swing producer of last resort’, with massive capacity available to supply the market.

But this may not be the case.

Energy expert Matthew Simmons, who methodically analysed Saudi production history, cast strong doubts on its ability to keep this role.

If Saudi Arabia cannot act as the swing producer, no-one can.

Without spare capacity to make up for any production shortfall, the oil market becomes very volatile, as it has over the last three years.

A hurricane in one region, internal conflict in another or terrorist attacks on a third can all lead to price spikes.

This volatility also increases the influence and power of all producers, as can be seen with Russia’s energy dealings or Iranian and Venezuelan defiance of the US.

In recent years there has been an increasingly vigorous debate over the issue of ‘Peak Oil’.

This refers to when global production of ‘conventional’ oil will reach the point where it can no longer increase, and begins to decline.

It will not run out, but the amount able to be produced will inexorably lessen every year.

Conventional oil is that which is readily accessible, easy to produce and of sufficient quality that it is easy to refine into products such as petrol, kerosene and diesel.

It is sometimes called ‘cheap oil’, because compared to other forms of oil it is much cheaper to produce.

‘Unconventional oil’, such as those formed from very deep water, oil sands or coal, are much more difficult and expensive to produce and cannot be produced in the same volumes.

‘Peak Oil’ was first developed as a theory in the 1950s, by a Shell geologist, M. King Hubbert.

He noticed that an oilfield’s production would increase, often for decades, but eventually production would level off, and then begin to decline.

This was usually at the point where the field had produced about half the oil that would be extracted.

Technical improvements might delay this peak, but couldn’t prevent it.

Noting that discovery in the continental US had peaked in the 1930s, in 1957 Hubbert estimated that continental US production would peak in the early 1970s.

At the time, the US was the world’s biggest producer, with production rising every year, and his prediction was ridiculed.

However, Hubbert was validated in 1970, when US production did indeed peak.

Peak Oil theory is based on the assumption that infinite growth is not

possible in a finite system.

It is an example of the environmentalist perspective applied to a specific

subject.

The arguments applied by Peak Oil proponents draw heavily on

environmentalist concepts about the global economy and its long term

sustainability.

Their solutions, based on a planned decline in fossil fuel use, conservation

and localisation of societies, are environmentalist in origin.

Peak Oil is now a common cause among environmentalist groups around

the world.

Subsequent analysts, such as Colin Campbell, have built on Hubbert’s work, and now seek to determine when global production will peak.

As Figure 3 shows, global discovery peaked in the 1960s, and despite forty years of technological advances and hundreds of billions of dollars in investment, humanity is finding less oil each year.

Based on this discovery peak, analysts then estimated how much oil will actually be recovered.

Campbell estimates a total recovery of 1.9 trillion barrels of conventional oil, plus 600 billion barrels of other fluids.

Humanity has used about 970 billion of these barrels already, meaning a peak in conventional oil production is imminent, if it has not happened already.

In addition, the half that has been used is the ‘better half’; the oil that is of higher quality, easily accessible and found in stable polities.

That which is remaining is of lower quality, in more difficult locations (such as the Arctic or deep underwater) and in regions of high political instability.

In 2006, the EIA estimated that there were another 938 billion barrels yet to be discovered, but this is not being borne out by the discovery trend, which continues to fall.

The production of unconventional oil will blur the moment of peak, but won’t prevent it.

Very few analysts, even critics, deny that Peak Oil will occur.

The debate is now over when production will peak and whether there are adequate alternatives capable of replacing oil.

Current oil fields are depleting at a rate of about 4-5 percent a year, which

requires an equal amount of discovery just to maintain current production.

Additional production is needed to meet new demand.

One analyst, looking at the development of ‘mega fields’ has assessed that

the supply situation is covered up until 2007, but from that point, and

especially from 2010, the situation becomes ‘rather problematic’.

One thing is certain; according to the EIA, world production was largely

stagnant in 2006, averaging 84.59 mbd for the first 10 months, versus 84.56

mbd for 2005.

This flattening of the production profile is consistent with Peak Oil theory,

and the world may presently be at or about peak production.

There are a number of arguments against Peak Oil.

Some critics argue that technology or the free market will increase oil supply, or find alternatives.

Critics point to previous incorrect predictions that oil was running short; the US Bureau of Mines predicted in 1914 that supplies would last only ten more years.

A report released in November 2006 stated that global oil production will increase until 2030, to be followed by an ‘undulating plateau’ rather than a peak.

This view is countered by a discovery trend that fails to match production.

With declining production from existing fields and rising demand, oil explorers need to find up to 7 percent every year, something they have been failing to do for years.

If oil production did increase, it must match the rise in demand if it is to prevent recession.

An ‘undulating plateau’ would simply be Peak by another name.

The market is unlikely to respond to Peak Oil in a smooth manner.

It is extremely volatile when supply is cut off or threatened, as the sudden price rises in 1973 and 1979 show.

A rise in the price of oil may lead to more investment in exploration, but if there is not enough oil to be discovered (as the global trend suggests), this won’t increase production.

One report has estimated that it will take 25-30 years for the world to transition to a post-petroleum footing.

However the market will not take action to transform until oil prices rise high enough to make this worthwhile.

This creates a dilemma, because as the price rises, so does the cost of transition, as the new infrastructure will have to be made with oil-powered machinery.

The market’s signals are too short-term to complete a decades-long project.

Table 2 shows that the major oil companies are finding it very difficult to replace reserves despite their huge exploration budgets.

These companies have also failed to build new refineries in the United States since the mid-1970s, despite increasing demand in the world’s single biggest market.

The clear market signal given by historically high prices is being ignored.

Technical advances in oil exploration and production are unlikely to raise production further.

After 150 years, humans are now extremely proficient at finding and producing oil: “…[P]rogress has been going on for a long time, and there is little expectation that something dramatic will come riding to the rescue as world oil production startsto decline.”

This is hard for Westerners to comprehend, as 500 years of technological advancement has left us with a deep conviction that all problems have a technical solution.

Yet, the US, the richest and most advanced of the oil producers, has experienced continually declining production following its 1970 peak, despite higher prices and improving technology, as shown on Figure 4.

Many of the technical developments of the last 40 years are already in use; pumping water or gas into the oil reservoir to raise the field pressure is in widespread use around the world.

Advances in seismic imaging and other exploration techniques have failed to lift the discovery rate since its peak in the 1960s.

The world has now been extensively mapped, and geologists can be certain whether an area may or may not contain oil.

Much effort is being expended on Arctic and deepwater explorations, but the technical and logistic obstacles facing these developments are such that they are not considered to be ‘conventional oil’; they are certainly not cheap oil.

v

What is Fracking? Fracking is shorthand for hydraulic fracturing, a type of drilling that has been used

commercially for 65 years. Today, the combination of advanced hydraulic fracturing and

horizontal drilling, employing cutting-edge technologies, is mostly responsible for surging

U.S. oil and natural gas production.

Horizontal Drilling and Hydraulic Fracturing

Hydraulic fracturing involves safely tapping shale and other tight-rock formations by drilling a mile or more below the surface before gradually turning horizontal and continuing several thousand feet more.

Thus, a single surface site can accommodate a number of wells.

Once the well is drilled, cased and cemented, small perforations are made in the horizontal portion of the well pipe, through which a typical mixture of water (90 percent), sand (9.5 percent) and additives (0.5 percent) is pumped at high pressure to create micro-fractures in the rock that are held open by the grains of sand.

Additives play a number of roles, including helping to reduce friction (thereby reducing the amount of pumping pressure from diesel-powered sources, which reduces air emissions) and prevent pipe corrosion, which in turn help protect the environment and boost well efficiency.

Why Fracking?

Safe hydraulic fracturing is the biggest single reason America is having an

energy revolution right now, one that has changed the U.S. energy picture

from scarcity to abundance.

Fracking is letting the U.S. tap vast oil and natural gas reserves that

previously were locked away in shale and other tight-rock formations.

Up to 80% percent of natural gas wells drilled in the next decade will require

hydraulic fracturing.

Hydraulic fracturing also is being used to stimulate new production from

older wells.

Because of shale and fracking, the International Energy Agency projects

that the U.S. could become the world’s leading oil producer by 2015.

As for natural gas, the United States is the leading producer in the world,

according to the U.S. Energy Information Administration (EIA).

EIA estimates total U.S. gas production from 2012 to 2040 will increase 56

percent, with natural gas from shale the leading contributor.

The shale gas share of total U.S. production will increase from 40 percent in

2012 to 53 percent in 2040, EIA projects.

Simply put, fracking is the engine in the U.S. energy revolution.

Market Trends: International Energy

Range of oil price cases represents uncertainty in world oil markets

In AEO2014 the North Sea Brent crude oil price is tracked as the main

benchmark for world oil prices.

In 2013, the West Texas Intermediate (WTI) crude oil price continued to

trade at a discount relative to other world oil prices.

With refineries running at high levels through August 2013, the discount

narrowed as a result of new oil transportation infrastructure from the market

center for WTI prices in Cushing, Oklahoma.

The discount widened from September to December 2013, however, as

lower 48 production continued to grow and refinery utilization returned to

lower levels after the summer.

EIA developed three oil price cases—Reference, High, and Low—to

examine how alternative price paths could affect energy markets (Figure

MT-4).

The AEO2014 price cases included varying assumptions about:

(1) investment and production decisions by the Organization of the

Petroleum Exporting Countries (OPEC)

(2) development of tight oil and bitumen resources in non-OPEC countries

(including the United States)

(3) demand growth in China, the Middle East, and other

countries outside the Organization for Economic Cooperation and

Development (non-OECD countries)

Relative to the Reference case, the Low Oil Price case assumes lower

economic growth and thus lower liquids demand from non-OECD regions;

and rising production from OPEC countries, which displaces relatively more

expensive crude oil from non-OPEC producers.

In the Low Oil Price case, OPEC supplies 51% of the world’s liquid fuels in

2040, compared with 44% in the Reference case.

In the High Oil Price case, assuming stronger demand growth and fewer

resources developed in OPEC countries, the non-OECD countries account

for 62% of world liquids use in 2040, compared with 60% in the Reference

case and 57% in the Low Oil Price case.

The OPEC share of world liquids production never exceeds 40% in the High

Oil Price case.

Natural gas prices depend on economic

growth and resource recovery rates among

other factors The projection of natural gas prices depends on many factors, including

macroeconomic growth rates and expected rates of resource recovery

from natural gas wells.

Higher rates of economic growth lead to increased consumption of natural

gas, primarily in response to their effects on housing starts, commercial

floorspace, and industrial output.

In the High Economic Growth case, higher levels of consumption result in

more rapid increases both in depletion of natural gas resources and in the

cost of developing new production, pushing natural gas prices higher.

The converse is true in the Low Economic Growth case (Figure MT-41). In the

High and Low Economic Growth cases, the price rises by 4.0%/year and

3.5%/year, respectively, compared with 3.7%/year in the Reference case.

Shale gas provides the largest source of

growth in U.S. natural gas supply

The 56% increase in total natural gas production from 2012 to 2040 in the

AEO2014 Reference Case results from increased development of shale gas,

tight gas, and offshore natural gas resources (Figure MT-44).

Shale gas production is the largest contributor, growing by more than 10

Tcf, from 9.7 Tcf in 2012 to 19.8 Tcf in 2040.

The shale gas share of total U.S. natural gas production increases from 40%

in 2012 to 53% in 2040.

Tight gas production and offshore gas production increase by 73% and

78%, respectively, from 2012 to 2040, but their shares of total production

remain relatively constant.

From 2017 to 2022, U.S. offshore natural gas production declines by 0.3 Tcf,

as offshore exploration and development activities are directed primarily

toward oil resources in the Gulf of Mexico.

Offshore natural gas production increases after 2022, growing to 2.9 Tcf in

2040, as natural gas prices rise.

Alaska’s natural gas production also increases during the projection period,

because of Alaska LNG exports to overseas customers, beginning in 2026

and increasing to 0.8 Tcf (2.2 Bcf/d) in 2029.

Alaska’s LNG exports level off at 0.8 Tcf per year over the last decade of

the projec-tion.

Alaska’s total natural gas production in 2040 is 1.2 Tcf.

Although U.S. natural gas production rises throughout the projection, the

mix of sources changes over time.

Onshore nonassociated production (from sources other than tight gas,

shale gas, and coalbed methane) declines from 3.9 Tcf in 2012 to 1.6 Tcf in

2040, and in 2040 it accounts for only about 4% of total domestic

production, down from 16% in 2012.

Expected gains in tight oil production drive

projected growth in total petroleum and

other liquids production Growth in crude oil production from tight oil and shale formations

supported by identification of resources and technology advances have

supported a nearly fourfold increase in tight oil production from 2008, when

it accounted for 12% of total U.S. crude oil production, to 2012, when it

accounted for 35% of total U.S. production.

Total projected U.S. crude oil production in the AEO2014 reference case

reaches 9.6 million barrels per day (MMbbl/d) in 2019—3.1 MMbbl/d more

than in 2012.

Over the same period, tight oil production grows by 2.5 MMbbl/d, to 4.8

MMbbl/d or 50% of the national total.

In the reference case, tight oil production begins to slow after 2021, contributing to a decline in total U.S. oil production through 2040.

However, tight oil development is still at an early stage, and the outlook is uncertain.

Changes in U.S. crude oil production depend largely on the degree to which technological advances allow production to occur in potentially high-yielding tight and shale formations.

They also depend on the assumed estimated ultimate recovery (EUR) for wells drilled in those formations, in addition to assumptions about well spacing and production patterns.

To address these uncertainties, AEO2014 includes High Oil and Gas Resource and Low Oil and Gas Resource cases (Figure ES-1).

In the High Oil and Gas Resource case, tight oil production reaches 8.5 MMbbl/d in 2035 (compared to 3.7 MMbbl/d in the Reference case), with total U.S. crude oil production reaching 13.3 MMbbl/d in the following year (compared to 7.8 MMbbl/d in the Reference case).

A comparison of the Reference case and High Oil and Gas Resource case demonstrates the significant impact that technological development and productivity gains in tight oil plays can have on net imports of crude oil and petroleum products.

In the Reference case, the share of net crude oil and petroleum product imports as a percentage of total U.S. product consumed declines from 41% in 2012 to 25% in 2016, remains close to that level for several years, and then rises to 32% in 2040 (Figure ES-2).

In the High Oil and Gas Resource case, domestically produced crude oil displaces more expensive imported crude at domestic refineries, and U.S. finished petroleum products become more competitive worldwide.

The share of total U.S. product consumed represented by net crude oil and petroleum product imports in the High Oil and Gas Resource case declines to 15% in 2020 and continues to fall through 2040.

The United States becomes a net exporter of crude oil and petroleum products at the end of the projection period.

Among the most uncertain aspects of this analysis are the potential effects

of alternative resource and technology assumptions on the global market

for liquid fuels, which is highly integrated.

Regardless of how much the United States reduces its reliance on imported

liquids, consumer prices will not be insulated from global oil prices set in

global markets for crude oil and petroleum products.

Strategic choices made by leading oil-exporting countries could result in

U.S. price and quantity changes that differ significantly from those

presented in this outlook.

PRICES, TRANSPORTATION DETERMINE FUTURE

FOR CANADIAN OIL AND GAS

Recent reports on the state of

crude oil and natural gas

production in Canada suggest

that the transportation

bottleneck at the border will

have long-ranging effects on

Canada’s energy markets.

Caption: Investment in North America favors tight oil

“First, the narratives based on significant LNG exports (LNG Tsunami, Full

Speed Ahead) combined with a healthy economic recovery saw

substantial short-term increases in Henry Hub gas prices supporting

upstream production.

Increased LNG exports did not support the Western Canadian upstream

industry with the exception of British Columbia, which was able to increase

production dramatically in isolation to the rest of the country,” the report

said.

In all scenarios, CERI found Canadian gas faces limited growth potential in

the United States, crowded out by the Marcellus in the northeastern and

Chicago markets where existing pipeline connectivity directs Canadian

gas.

“Although Canadian shale resources are equally impressive in size and potential [compared to American deposits], the geographical location and associated differential to Henry Hub is a negative factor.

In fact, Canadian drilling activity will remain weak as a result of the Marcellus Shale’s proximity to the premium New York/Boston markets and thus, improvement will only occur if LNG export terminals can be developed on the west coast of British Columbia.”

Should large-scale LNG exports become a reality, the study predicts, Canada’s natural gas production would increase 30% at maximum and it would become a net pipeline importer from the United States.

But with new pipelines under construction to supply Korea and China over land and many competitors in the Asian arena, the study suggests that new LNG facilities in North America would have to come online by 2020 to be economic.

Pipelines Explained: How Safe are America’s

2.5 Million Miles of Pipelines?

Map of major natural gas and oil pipelines in the United States. Hazardous liquid lines in red, gas transmission lines in blue. Source: Pipeline and Hazardous Materials Safety Administration.

At 6:11 p.m. on September 6, 2010, San Bruno, California 911 received an urgent call.

A gas station had just exploded and a fire with flames reaching 300 feet was raging through the neighborhood.

The explosion was so large that residents suspected an airplane crash.

But the real culprit was found underground: a ruptured pipeline spewing natural gas caused a blast that left behind a 72 foot long crater, killed eight people, and injured more than fifty.

Over 2,000 miles away in Michigan, workers were still cleaning up another pipeline accident, which spilled 840,000 gallons of crude oil into the Kalamazoo River in 2010.

Estimated to cost $800 million, the accident is the most expensive pipeline spill in U.S. history.

One of the biggest problems contributing to leaks and ruptures is pretty

simple: pipelines are getting older.

More than half of the nation's pipelines are at least 50 years old.

Last year in Allentown Pa., a natural gas pipeline exploded underneath a

city street, killing five people who lived in the houses above and igniting a

fire that damaged 50 buildings.

The pipeline – made of cast iron – had been installed in 1928.

A fire rages through Allentown, PA, after a gas line explosion in Feb. 2011

Not all old pipelines are doomed to fail, but time is a big contributor to corrosion, a leading cause of pipeline failure.

Corrosion has caused between 15 and 20 percent of all reported “significant incidents”, which is bureaucratic parlance for an incident that resulted in a death, injury or extensive property damage.

That’s over 1,400 incidents since 1986.

Corrosion is also cited as a chief concern of opponents of the Keystone XL extension.

The new pipeline would transport a type of crude called diluted bitumen, or “dilbit.”

Keystone’s critics make the case that the chemical makeup of this heavier type of oil is much more corrosive than conventional oil, and over time could weaken the pipeline.

Operator TransCanada says that the Keystone XL pipeline will transport

crude similar to what’s been piped into the U.S. for more than a decade,

and that the new section of pipeline will be built and tested to meet all

federal safety requirements.

And in fact, none of the 14 spills that happened in the existing Keystone

pipeline since 2010 were caused by corrosion, according to

an investigation by the U.S. Department of State.

A burned out car and charred remains of a home in San Bruno, C.A. after a pipeline explosion in Sept. 2010

BP Gulf of Mexico spill costs could top $90bn after

fresh claims

BP is facing damages claims of more than $34bn (£22bn) from state and

local governments in the US over the Gulf of Mexico disaster, the oil giant

admitted on Tuesday.

BP's results also suffered

from a 5.7pc fall in oil and gas

output over the year as it sold

assets to help pay for costs

related to the Gulf of Mexico

disaster.

The claims push the total possible bill for the Deepwater Horizon disaster

over $90bn, more than double the amount the British company has set

aside for the accident, which killed 11 men and spilled millions of barrels of

oil into the Gulf.

The oil major disclosed the claims as it revealed its profits halved in 2012, to

$12bn, hit by criminal penalties over the disaster, as well as lower oil and

gas output as it sold assets to pay for the spill response.

BP yesterday raised its total provision for the disaster to $42.2bn, reflecting

additional costs from a record $4.5bn criminal settlement in which it

pleaded guilty to the manslaughter of the 11 men who died.

Deepwater Horizon explosion 20. April 2010 Video

BP Stock

Macondo incident 20/4-10

BHP spurns Great Australian Bight for Mexico

and deepwater oil

BHP Billiton is positioning itself to

grab Mexico’s best deepwater

offshore acreage as it tries to reduce

its shale oil exposure, adding to a

recent frontier position off Trinidad

and shunning Australia’s big new

conventional oil hope, the Great

Australian Bight.

Oil and gas pipelines in Mexico

Oil and gas pipelines in Venezuela

Venezuela contains some of the largest oil and natural gas proven reserves in the world.

In 2013, Venezuela was the third-largest exporter of crude oil to the United States.

It consistently ranks as one of the top suppliers of crude oil to the United States.

Venezuela was the world's 9th largest exporter and 12th largest producer of petroleum and other liquids in 2013.

At 2.49 million barrels per day (bbl/d) of petroleum and other liquids produced in 2013, Venezuela is the world's 12th largest producer and the 5th largest producer in the Americas.

Venezuela's Orinoco Belt may contain upwards of 513 billion barrels of crude oil. However, much of the resource is heavy and requires additional capital to bring it to market.

Venezuela was the fourth-largest supplier of imported crude oil and petroleum products to the United States in 2013.

Venezuela's exports to the United States have been declining while U.S. exports of petroleum products to Venezuela have been increasing.

Venezuela maintained 2.8 million bbl/d of total global refining capacity in assets throughout the United States, the Caribbean, Europe, and domestically in Venezuela in 2013.

In 2013, domestic natural gas production accounted for just over a third of the UK's natural gas supply.

Venezuela has the second-largest natural gas reserves in the Americas, behind the United States.

Much of the natural gas is used to bolster production in its mature oil fields.

About 90% of Venezuela's natural gas is found associated with oil but the country is looking to locate and produce more natural gas from non associated fields.

Venezuela depends on hydroelectricity for the bulk of its electricity needs, accounting for 60% or more in the past decade.

Analysis

According to the Oil & Gas

Journal (OGJ), in the beginning of 2014,

Venezuela had nearly 298 billion barrels

of proved oil reserves, the largest in the

world.

The next largest proved oil reserves are

in Saudi Arabia (266 billion barrels)

and Canada (173 billion barrels).

The vast majority of Venezuela’s proved

oil reserves are located in its Orinoco

heavy oil belt.

Exploration and production

At 2.49 million barrels per day (bbl/d) of petroleum and other liquids

produced in 2013, Venezuela is the world’s 12th largest producer and the

5th largest producer in the Americas.

The U.S. Energy Information Administration (EIA) estimates that Venezuela

produced 2.49 million barrels per day (bbl/d) of petroleum and other liquids

in 2013.

Crude oil and condensates represented 2.2 million bbl/d of the total, with

condensates, natural gas liquids, and refinery processing gains accounting

for the remaining production.

This production level marks a significant decrease from production peaks in

the late 1990s to early 2000s, largely owing to human capital losses from the

2002-03 strike and the diversion of revenues to social programs to bolster

the administration rather than being reinvested into petroleum production.

Despite its declines and lack of reinvestment, Venezuela is still one of the

largest producers of petroleum in the world.

In 2013, Venezuela was the fifth largest producer in the Americas, behind the United States, Canada, Mexico, and Brazil.

Estimates of Venezuelan production vary from source to source, partly because of the measurement methodology.

For instance, some analysts directly count the extra-heavy oil produced in Venezuela’s Orinoco Belt as part of Venezuela’s crude oil production.

Others (including EIA) count it as upgraded syncrude, whose volume is about 10% lower than that of the original extra-heavy feedstock.

Venezuela’s conventional crude oil is heavy and sour by international standards.

As a result, much of Venezuela’s oil production must go to specialized domestic and international refineries.

The country’s most prolific production area is the Maracaibo basin, which contains slightly less than half of Venezuela’s oil production.

Many of Venezuela's fields are mature, requiring large investments to maintain current capacity.

Orinoco heavy oil belt

Venezuela’s Orinoco Belt may contain upwards of 513 billion barrels of

crude oil. However, much of the resource is heavy and requires additional

capital to bring it to market.

OIL DISCOVERY ON THE KAROON BLOCKS

OFFSHORE BRAZIL

Oil and gas wells in Brazil: 1939-2000

During late January Pacific Rubiales Energy Corp. confirmed the discovery of light oil at

the Kangaroo-1 exploration well drilling on block S-M-1101, in the Santos basin, offshore

Brazil. March 26, 2013

Brazil Auctions Shale Oil, Natural Gas Blocks

Brazil moved to join the global shale-oil and natural-gas boom that has

revitalized the U.S. energy industry, but interest in an auction of exploration

concessions Thursday was muted as many top companies sat out the sale.

December 2, 2013

Also weighing on the bidding was

the fact that Brazil has yet to

complete rules for hydraulic

fracturing. The process used to

break up rocks containing oil and

natural gas boosted U.S. output

amid concerns about

environmental safety.

UNCONVENTIONAL OIL WINNING

In addition to coal, crude oil and natural gas, oil shale is also a source of

fossil fuels.

It is a sedimentary rock with significant amounts of kerogen which, when

heated at the appropriate temperature, can release hydrocarbons, as gas

or oil.

This non-conventional oil can be burned directly, but it can also be

upgraded after desulphurization and hydrogenation in an oil refinery into

products such as diesel fuel or jet fuel, which can be utilized for common

applications such as fuel for automobiles or airplanes.

Shale gas, oil reshape world energy

landscape

Thanks to the advent of hydraulic

fracturing technology—used to extract oil and gas

locked in sedimentary shale rock—the United States

is on track to become the world-number-one oil

producer by 2017 and a net exporter by 2030,

according to the International Energy Agency (IEA).

Basins with assesed shale oil and shale

gas formations (May 2013)

Shale gas

Tight gas

Coal bed methane

What Is Tight Gas, and How Is It

Produced?

While conventional natural gas streams from the earth relatively easily,

unconventional gas finds are more difficult to develop and more costly to

produce.

As technologies and skills improve, unconventional gas is a variable

concept because some finds may become more easily or economically

produced over time, no longer making them unconventional.

Right now, there are six main types of unconventional gas, including deep

gas, gas-containing shales, coalbed methane, geopressurized zones, Arctic

and subsea hydrates, and tight gas.

Unconventional natural gas deposits are likely to account for much of the world's remaining reserves.

According to the EIA, there is more than 309 Tcf of recoverable tight natural gas deposits in the US, which represents some 17% of the total natural gas reserves in the country.

Helping to boost interest in developing technologies that can overcome the challenges of producing unconventional gas resources in the United States, the Natural Gas Policy Act offers incentives to companies exploring for and producing unconventional gas plays.

What Is Tight Gas?

Tight gas refers to natural gas reservoirs locked in extraordinarily impermeable, hard rock, making the underground formation extremely "tight."

Tight gas can also be trapped in sandstone or limestone formations that are atypically impermeable or nonporous, also known as tight sand.

Impermeable Pores in Tight Gas Formation

While a conventional gas formation can be relatively easily drilled and

extracted from the ground unassisted, tight gas requires more effort to pull

it from the ground because of the extremely tight formation in which it is

located.

In other words, the pores in the rock formation in which the gas is trapped

are either irregularly distributed or badly connected with overly narrow

capillaries, lessening permeability -- or the ability of the gas to travel

through the rock.

Without secondary production methods, gas from a tight formation would

flow at very slow rates, making production uneconomical.

While conventional gas formations tend to be found in the younger Tertiary basins, tight gas formations are much older.

Deposited some 248 million years ago, tight gas formations are typically found in Palaeozoic formations.

Over time, the rock formations have been compacted and have undergone cementation and recrystallisation, which all reduce the level of permeability in the rock.

Typical conventional natural gas deposits boast a permeability level of .01 to .5 darcy, but the formations trapping tight gas reserves portray permeability levels of merely a fraction of that, measuring in the millidarcy or microdarcy range.

In order to overcome the challenges that the tight formation presents, there are a number of additional procedures that can be enacted to help produce tight gas.

Deviating drilling practices and more specific seismic data can help in tapping tight gas, as well as artificial stimulation, such as fracturing and acidizing.

Developing Tight Gas

One of the most important aspects of drilling for any petroleum is

predetermining the success rate of the operation.

Operators do not just drill anywhere.

Extensive seismic data is gathered and analyzed to determine where to drill

and just what might be located below the earth's surface.

These seismic surveys can help to pinpoint the best areas to tap tight gas

reserves.

A survey might be able to locate an area that portrays an improved

porosity or permeability in the rock in which the gas is located.

Should wells directly hit the best area to develop the reserve, costs of

development can be minimized.

Most tight gas formations are found onshore, and land seismic techniques

are undergoing transformations to better map out where drilling and

development of these unconventional plays.

Typical land seismic techniques include exploding dynamite and vibroseis,

or measuring vibrations produced by purpose-built trucks.

While these techniques can produce informational surveys, advancements

in marine seismic technologies are now being applied to land seismic

surveys, enhancing the information available about the world below.

Not only providing operators with the best locations for drilling wells into

tight gas formations, extensive seismic surveys can help drilling engineers

determine where and to what extent drilling directions should be deviated.

While vertical wells may be easier and less expensive to drill, they are not the most conducive to developing tight gas.

In a tight gas formation, it is important to expose as much of the reservoir as possible, making horizontal and directional drilling a must.

Here, the well can run along the formation, opening up more opportunities for the natural gas to enter the wellbore.

A common technique for developing tight gas reserves includes drilling more wells.

The more the formation is tapped, the more the gas will be able to escape the formation.

This can be achieved through drilling myriad directional wells from one location, lessening the operator's footprint and lowering costs.

Production Stimulation

After seismic data has illuminated the best well locations, and the wells

have been drilled, production stimulation is employed on tight gas

reservoirs to promote a greater rate of flow.

Production stimulation can be achieved on tight gas reservoirs through

both fracturing and acidizing the wells.

Fracturing, also known as "fracing," a well involves breaking the rocks in the

formation apart.

Performed after the well has been drilled and completed, hydraulic

fracturing is achieved by pumping the well full of frac fluids under high

pressure to break the rocks in the reservoir apart and improve permeability,

or the ability of the gas to flow through the formation.

Additionally, acidizing the well is employed to improve permeability and production rates of tight gas formations.

Acidation involves pumping the well with acids that dissolve the limestone, dolomite and calcite cement between the sediment grains of the reservoir rocks.

This form of production stimulation helps to reinvigorate permeability by reestablishing the natural fissures that were present in the formation before compaction and cementation.

Furthermore, deliquification of the tight gas wells can help to overcome some production challenges.

In many tight gas formations, the reservoirs also contain small amounts of water.

This water can collect and undermine production processes.

Deliquification is achieved in this instance through artificial lift techniques, such as using a beam pumping system to remove the water from the reservoir, although this has not proven the most effective way to overcome this challenge.

Engineers continue to develop new techniques and technologies to better produce tight gas.

Through their efforts, maybe one day, tight gas will no longer be considered an unconventional play.

Oil and gas pipelines in West Africa

Proved Oil and gas reserves in Africa

Many in Africa are understandably suspicious. Believing,

perhaps, that past is prologue — the majority of countries

are protesting the presence of AFRICOM, as

are many individuals around the world, including some

high-profile activists, such as Danny Glover , who

consider the ongoing U.S.-British militarization of Africa to

be little more than a strategy toward gaining control of

Africa’s natural resources, most notably its oil.

As one critic noted: “Peace operations” and “nation

building” are what the military and the mercenaries call

their activities. But just like Bush’s “healthy forests” and

“clear skies” initiatives, the names mean the opposite of

what they do.

Major natural gas pipelines

Coalbed methane

Coalbed methane (CBM or coal-bed methane), coalbed gas, coal seam

gas (CSG), or coal-mine methane (CMM) is a form of natural gas extracted

from coal beds.

In recent decades it has become an important source of energy in United

States, Canada, Australia, and other countries.

The term refers to methane adsorbed into the solid matrix of the coal.

It is called 'sweet gas' because of its lack of hydrogen sulfide.

The presence of this gas is well known from its occurrence in underground

coal mining, where it presents a serious safety risk.

Coalbed methane is distinct from a typical sandstone or other conventional gas reservoir, as the methane is stored within the coal by a process called adsorption.

The methane is in a near-liquid state, lining the inside of pores within the coal (called the matrix).

The open fractures in the coal (called the cleats) can also contain free gas or can be saturated with water.

Unlike much natural gas from conventional reservoirs, coalbed methane contains very little heavier hydrocarbons such as propane or butane, and no natural-gas condensate.

It often contains up to a few percent carbon dioxide.

Some coal seams, such as those in certain areas of the Illawarra Coal Measures in New South Wales, contain little methane, with the predominant coal seam gas being carbon dioxide.

Fracture permeability

As discussed before, the fracture permeability acts as the major channel for

the gas to flow.

The higher the permeability, the higher the gas production.

For most coal seams found in the US, the permeability lies in the range of

0.1–50 milliDarcies.

The permeability of fractured reservoirs changes with the stress applied to

them.

Coal displays a stress-sensitive permeability and this process plays an

important role during stimulation and production operations.

Coalbed methane producing areas

Australia

Commercial recovery of coal seam gas (CSG) began in Australia in 1996. As of 2013, coal seam gas, from Queensland and New South Wales, made up about ten percent of Australia's gas production. Demonstrated reserves were estimated to be 33 trillion cubic feet as of January 2012.

Canada

In Canada, British Columbia is estimated to have approximately 90 trillion cubic feet (2.5 trillion cubic metres) of coalbed gas. Alberta, in 2013 the only province with commercial coalbed methane wells, is estimated to have approximately 170 trillion cubic feet (4.8 trillion cubic metres) of economically recoverable coalbed methane.

United Kingdom

Although gas in place in Britain's coal fields has been estimated to be 2,900 billion cubic meters, it may be that as little as one percent might be economically recoverable.

United States

United States coalbed methane production in 2011 was 1,76 trillion cubic feet (TCF), 7.3 percent of all US dry gas production that year.

The 2011 production was down from the peak of 1.97 TCF in 2008.

Most CBM production came from the Rocky Mountain states of Colorado, Wyoming, and New Mexico.

Kazakhstan

Kazakhstan could witness the development of a large coalbed methane (CBM) sector over the coming decades, according to industry professionals. Preliminary research suggests there may be as much as 900 billion m3 of gas in Kazakhstan’s main coalfields – 85% of all reserves in Kazakhstan.

Coal bed methane

Oil transportation

Oil tankers

Oil Tankers and Oil Pipelines have routes that allow for oil to travel over seas, over borders, and all around the world.

Oil Shipped Around the World

The Transfer of oil from one country to another is a very large task.

Billions of barrels of oil a day are shipped in Oil Tankers to various destinations all over the world.

There are many different shipping routes, but there are six major transit chokepoints” which deal with the most traffic of oil tankers and are areas of high risk for something to go wrong with the oil transfer.

The Strait of Hormuz, The Strait of Malacca, The Suez Canal, Bab el-Mandab, The Turkish Straits, and The Panama Canal are different areas of the sea that connect large bodies of water and can sometimes create bottleneck situations.

The Strait of Hormuz is an area where tankers from Persian Gulf nations (mainly the Middle East) travel through to get to their destinations in the United States, Japan, China, and Western Europe, connecting the Persian Gulf with the Gulf of Oman.

About 40% of all Oil Tanker traffic passes through The Strait of Hormuz

because (as seen on the graph below) the Middle East is the leader of oil

production, thus making them the lead exporter of oil.

The Strait of Malacca is a smaller area of passage than most chokepoints,

but it is one of the most unsafe passages of any transport route in the

world.

It is the target of many terrorist attacks because of its bottleneck design in

the Singapore Strait.

The area of passage is located in between the island of Malaysia and

Indonesia because it is the shortest route to get Oil into Japan, China, and

other Asian countries.

The Suez Canal in Egypt connects the Red Sea to the Mediterranean Sea, only allowing smaller tankers to pass through, transporting Oil mainly to Europe, but also to the Unites States.

The Oil comes from some revenues in Asia but mainly from Saudi Arabia, again, making this chokepoint an export region for the Middle East.

Bab-el Mandab is a chokepoint between the Red Sea and The Gulf of Aden which begins the only transportation route that transports Persian Gulf Oil exclusively.

Many of the times, the oil the Persian Gulf and Middle Eastern countries export gets sifted in with other country’s oil, which makes the Bab el-Mandab unique.

The oil from this area travels directly to Europe and the Unites States.

Both Bosporus and Dardanelles are canals that make up The Turkish Straits

and basically divide Asian countries on the Black Sea from European

countries that end the Mediterranean Sea.

Oil that is being transported out of Russia and other regions of the Black Sea

first encounter the Bosporus which is a small canal leading into a sort of

mini-sea, which then leads to the Dardanelles canal which carries the

Tankers out into the Mediterranean sea.

These tankers end up in Europe, providing them with much of their oil.

The sixth Chokepoint is The Panama Canal that takes Oil generated in the

United States to other areas of the United States and to Latin American

countries.

All of these transportation routes are listed in order from most barrels

transported per day to the least.

The Strait of Hornez transports the most with about 16.5 billion barrels per

day, while The Panama Canal only transfers about ½ a million.

Oil is transported to and from other various places, but the main producers

and consumers are depicted in the bar graph.

North America, Latin America, the Middle East, Russia (the former USSR),

Europe, and Asia comprise most of the world, creating a situation where

international over-sea transportation of oil via oil tankers is vital and

extremely valuable.

Oil Tanker Shipping Routes

Oil tanker

Oil Tanker

Production and Consumption Determine

Transportation Routes

Strait of Hormuz (The Most Important Transit

Choke point)

Oil pipelines

The Easiest Way to Travel

Oil Pipelines are the most efficient method of transporting oil.

In the maps below, it can be seen that pipeline routes are very intricate

and widespread.

The pipelines are designed to take oil all over the country that they inhibit.

America is the best example of these pipeline routes because America has

the longest cumulative mileage of pipeline in the world.

There are so many pipelines throughout the world that it is nearly impossible to find every single pipeline pump and location, but the major oil consuming and producing countries have the most total mileage of pipeline.

The areas in which oil is produced are generally located far away from main areas of consumption, large market places, cities, and companies that need oil for production.

The routes that these pipelines travel are able to be extremely direct because the quickest way from one point to another is by traveling in a straight line.

Pipelines do not disrupt their surroundings allowing them to be built in the most direct routes possible.

The fact that oil travels quickly though the pipelines and their ability to directly provide consumer areas with the needed amount is making pipelines more and more popular, especially in the United States.

American Pipeline Routes

Russian and European Pipelines

Asian Pipeline Network Now and in the

Future

Middle East Pipelines and Proposed

Pipelines

Piracy

Giant oil tankers have always been a target of terrorism in recent years.

However, there have been attacks on vessels and ships in recent times not

because of our war against terrorism.

An old ruthless character has returned to our world; but, this time they do

not come with sabers, they bring guns.

Pirate attacks have been increasing to a new high.

The Gulf of Aden, which has over 21,000 vessels travel through each year

and goes along the coast of Somalia, has had over 80 ships attacked this

year.

Just the other day the ship Sirius Star was hijacked by Somalian pirates.

It was the largest ship ever hijacked and the ransom could be worth more

than $100,000,000.

The largest ransom before this was $30,000,000.

Also, an Iranian cargo ship and Thai fishing ship has been taken for ransom.

The next day the Indian Navy fought off a pirate attack; but, it shows how

hostile the Gulf of Aden is currently.

The pirates in Somalia our getting richer and expanding their operations.

As the pirates became more powerful and continue to become more

advanced, shipping companies panic and demand action.

Norwegian shipping companies are now going through the Cape of Good

Hope, which is costing them much more money.

Action is tough because of many reasons.

One thing is that Somalia has not had a functioning government for over 10

years; thus, the country has no way of stopping the pirates.

Another problem is that Somalia has the longest coast in Africa; therefore, a

long journey for ships until reaching safe waters.

Many sea laws and human rights issues do not allow government or ships to

take much action against the pirates.

The European Union is sending eight ships to the gulf to be a watchful eye

and patrol the area.

The US has been considering attacks on Somalia.

The US may at some point receive the OK to bomb pirate ports along the

coast of Somalia.

The pirates have become a big problem in oil transportation and are

affecting the industry.

Nigerian pipeline attack

After militant attacks on a key pipeline on Thursday

Chevron said they would be declaring a "force majeure"

which freed Chevron from their contract with Nigeria.

Approximately 90,000 barrels were affected in the heist.

Since January 2006 Nigeria's oil production has been

cut down by a quarter falling from 2.6 million barrels to

about 2 million.

In June Chevron was forced to cut 120,000 barrels per

day in June for nearly a month when armed men blew

up a key oil pipeline.

Nigeria is a member of OPEC which pumps 40% of

global crude and relies on oil for 99% of its exporting

earnings and 85% for its government revenues.

Gas shipping

Oil & gas pipelines

Oil Price History and Analysis

Like prices of other commodities the price of crude oil experiences wide

price swings in times of shortage or oversupply.

The crude oil price cycle may extend over several years responding to

changes in demand as well as OPEC and non-OPEC supply.

We will discuss the impact of geopolitical events, supply demand and

stocks as well as NYMEX trading and the economy.

Crude Oil Prices 1947 - October 2011

Crude Oil Prices 1869 - October 2011

Crude Oil Prices 1970 - October 2011

World Events and Crude Oil Prices 1947-1973

U.S. and World Events and Oil Prices 1973-1981

Middle East, OPEC and Oil Prices 1947-1973

OPEC Oil Production 1973 - June 2011

Non-OPEC Oil Production 1973 - June 2011

U.S. Petroleum Consumption

World Events and Crude Oil Prices 1997-2003

World Events and Crude Oil Prices 2001-2005

World Events and Crude Oil Prices 2004-2007

World Events and Crude Oil Prices 2007 - May 20, 2011Recessions and Oil Prices

Per capita oil consumption around the world

Historical Exchange Rates

Global Oil Export

World Crude Oil Exports

All data is in thousand barrels per day.

World Crude Oil Production by Geographical Area

All data is crude + condensate and is in thousand

barrels per day.

North America, which is the USA, Canada and Mexico.

Central & South America has several producers, Venezuela being the largest followed by Brazil, Colombia and Argentina. The spike down in December of 2002 was the Venezuela workers strike.

Europe of course is dominated by the North Sea.

Eurasia is basically the Former Soviet Union with Russia, Azerbaijan and Kazakhstan being perhaps 98 percent of the total.

The Middle East is mostly the OPEC big dogs with Oman, Syria and Yemen thrown in

Africa is mostly OPEC also with a several small Non-OPEC producers. The 2011 dip you see is the Libyan Revolution.

Asia and Oceania is dominated by China with Indonesia, Australia, Malaysia and several other smaller producers.

Without the recent surge in North American production the world is down over 2 million barrels per day.

10 RESPONSES TO WORLD CRUDE OIL

PRODUCTION BY GEOGRAPHICAL AREA

Tying all the curves together in my mind I only come up with questions:

1. How long is a trend? Yes, looking at the past 5 years you can see a world-

wide decrease. But looking back to 2000 there is about a 13% world wide

increase. I’m not sure which is more meaningful.

2. The North American trend is mostly about fracking in the US. So far this

work has, I think, been more productive and do-able at lower cost than

most of us pessimists would have expected.

3. The Eurasian increase suprised me. Is that mostly Russia or are the ‘Stans

on the increase?

1. How long is a trend? Yes, looking at the past 5 years you can see a world-

wide decrease. But looking back to 2000 there is about a 13% world wide

increase. I’m not sure which is more meaningful.

You have to be kidding. You would consider the increase from 2000 to 2005

just as important as what happened in the last five years? Trends in oil

production run from months to a few years, never 10 to 15 years.

The Eurasian increase was most all Russian. Azerbaijan peaked in 09 and 10

and is now in clear decline. Kazakhstan has done little in the last 5 years.

They will likely start to increase slightly in late 2016 or 2017 but their increase

will not offset the decline in Russia. Eurasia is headed for serious decline.

Petroleum

Proven world oil reserves, 2013. Unconventional reservoirs such as natural heavy oil and tar sands are included.

Oil consumption per capita (darker colors represent more consumption, gray represents no data).

According to the US Energy Information Administration (EIA) estimate for 2011, the world consumes 87.421 million

barrels of oil each day.

Production

Export

Import

Alternative fuels

Alternative fuels are often mentioned as a replacement for oil.

Oil is not important in itself, but for its characteristics; as a liquid fuel for machinery, available in massive quantities, affordable, with a high energy-density and tolerance for normal atmospheric conditions.

It also has an established infrastructure to refine, transport and use it.

It has taken decades to establish this infrastructure, costing a vast sum of money.

If these qualities could be reproduced with alternative sources, such as hydrogen or biofuel, then oil’s importance as an energy source would fade, as would its potential for conflict.

Unfortunately the alternatives to oil are unsatisfactory, either individually or collectively; technical solutions will not ‘save the day’.

In the past humanity has transitioned from one energy source to another, but always from a poorer source to a richer one.

A key concept when considering energy sources is that of Energy Returned On Energy Invested (EROEI).

In 1916, 28 barrels were produced in the US for every barrel expended.

By 2004 that ratio was 2:1.

When it takes a barrel of oil to extract a barrel, oil will become useless as an energy source, no matter what the price is in dollar terms.

This is a key question for every alternative energy source; will more energy be gained than it took to produce it?

The case for oil alternatives has been assessed and dismantled by a number of writers.

While it is technically possible to use algae to produce biodiesel, or to extract synthetic oil from coal, whether this is logistically and economically feasible is another matter entirely.

We are unlikely to turn algae, coal or every other alternative source into enough energy to make up for falling oil production.

Alternative energy sources will be useful, and will help to mitigate the impact of a permanent oil shortage, but even together these energy sources cannot replace oil in a seamless transition.

Governments will undoubtedly take action to meet a shortfall in oil production.

After the 1973 oil shock, the OECD nations formed the IEA to manage further crises.

The New Zealand government pursued the ‘Think Big’ programme, which proved to be an expensive failure when oil prices slumped in the 1980s.

The problem with such programmes was the timing.

Governments mistook politically motivated embargoes to mean permanent shortages were immediate.

When prices dropped, governments were caught out.

The effect 30 years later is that many politicians are reluctant to invest large sums to prepare for impending oil shortages.

But unlike the 1970s, future shortages are likely to be imposed by geology, not by reversible political actions.

Some states are aware of this, and are purchasing oil interests and increasing emergency reserve holdings.

Most others, including New Zealand, seem oblivious.

The effect of a peak in global oil production will be negative.

If there is less oil available every year, the global economy will not be able to grow, unless massive and ongoing efficiency gains are made.

Oil is so vital that even a 2-5 percent shortfall is enough to produce a price spike, which in turn usually leads to a recession, as Figure 5 shows.

The price shocks of 1973 and 1979 contributed to the recession and inflation of the 1970s and early 1980s.

Each US$10-increase in the price of oil “[w]ill knock 0.5 percent from world growth, 0.5 percent from New Zealand growth and add 0.8 percent or so to inflation within a year.”

As production and transport costs go up, so do costs for consumers, who therefore consume less.

This affects every sector; agriculture, manufacturing and especially those relying on discretionary income (such as tourism).

Once global oil production peaks, the general trend will be a long and steady increase in the price of oil, unless this is matched by reduction in demand and/or production of alternatives.

Unfortunately, any reduction in demand will be made by reducing energy for transport, agriculture and petrochemicals.

This will lead to a steadily falling standard of living, and a reduction in global food production, with the prospect of increasingly severe famines.

Peak Oil will have a profound effect as the shortfalls in supply it will create will result in ever-increasing economic disruption.

The effects are further highlighted by the role that resource shortages play in creating conflict. “Competition for resources typically lies at the heart of ethnic conflict… Periods of declining growth…, can exacerbate and heighten inter-group tensions”.

As oil becomes more expensive and scarce, it can be expected that ‘inter-group tensions will be exacerbated and heightened’ at all levels, from the international stage down into cities and neighbourhoods.

Oil and Geopolitics

Whatever a given nation’s official take on the crisis may be…all will be players in the ensuing contest for the remaining supplies of oil.

The result of a shortfall in global oil supply will be an increase in geopolitics, “political and economic rivalry among the great powers”.

Conflicts over oil will take all forms.

Importing states will compete for diminishing supplies, or seek to control reserves in exporting countries.

Nations dependent on long supply lines will be drawn into any conflict that threatens those supply lines, whether this is oil related or not.

Intrastate conflicts can be expected to increase in exporting nations as internal tensions increase, exacerbated by outside involvement.

Conflict will occur even in the developed world, as some social groups bear a disproportionate part of the economic costs.

Unless there is a unified international response to this situation, such as that outlined in the Uppsala Protocol, the next two decades can be expected to consist of steadily increasing international, regional and national conflict.

This section will assess the supply, consumption and transport of petroleum

as potential causal factors in conflict.

As global oil production reaches a peak, those regions that can still export

sizable quantities will gain ever greater strategic importance.

This importance will result in increasing attention, and with it, a greater

potential for conflict between importing nations.

Four factors are important in any analysis of future oil suppliers.

These are the location of global reserves, the size of a country’s reserves,

the country’s production rate and ability to increase this, and the country’s

domestic consumption, and capacity to export.

States with large reserves, low domestic consumption and the ability to

increase exports will be the focus of interest for future consumers.

Production, and the ability to increase it, depends on the internal stability of

the nation and its external threats.

These factors will be used to assess the world’s main oil producers.

Table 3 lists the top 15 producers and exporters in 2004.

While China, the US and the UK are major producers, their consumption

exceeds production, making them net importers.

Where are the world`s oil reserves?

As shown on Map 1, oil has a very uneven

distribution.

The greatest proportion is concentrated in the

Middle East, with smaller (though still significant)

concentrations in Russia, the Caspian, the North

Sea, Venezuela/Columbia, Mexico, Canada, and

West Africa.

The Middle East, containing 66 percent of the world’s reserves and 30

percent of its production is the focus point for any geopolitical discussion

concerning oil.

Saudi Arabia in particular dominates the table and any discussion about oil.

Significantly, the Middle East has the theoretical capacity to greatly

increase production, based on its large reserves.

The Gulf States’ share of world production is expected to rise from 27

percent in 2000, to 36 percent in 2025 and 43 percent in 2030.

Most of this oil is available for export due to low domestic consumption.

However, even in the Middle East there are major problems with increasing oil production.

It is estimated that the Gulf States will have to spend some $523 billion dollars by 2030 in order to meet rising demand and make up for falling production elsewhere; from 24 mbd in 1999, to 44.5 mbd in 2020.

Even for the Middle East, this is a prodigious sum.

Allowing foreign investment, an option advocated by the Bush Administration, is strongly resisted.

Oil is the only real asset most of these countries have, and they are not prepared to share their wealth with foreign companies as they did (or were forced to do) in the past.

It may also be physically impossible for them to substantially increase production.

Some of the largest fields, such as Burgan in Kuwait and the Iranian giants, have already passed peak production.

The Saudis may also be struggling to simply maintain current production, let alone to increase it.

Iran’s production is in decline, possibly 10 percent a year, partly because of sanctions and partly because of a lack of investment.

Iraq’s oil production has collapsed since 1989, following three wars and more than a decade of sanctions.

Iraq produced 3.5 mbd in 1979, but only 2.6 mbd in 2000, and has since dropped to between 2.1 and 2.47 mbd.

A primary aim of the Iraqi government and its US supporters is to raise production to 6 mbd by 2012.

Given Iraq’s current chaos, it is difficult to see how this can be achieved.

In addition, the oil reserves in the Gulf may not be as large as

reported.

As Figure 6 shows, in the mid-1980s, there were a number of

jumps in the levels of reported reserves, at a time when oil

prices were low and OPEC quotas were based on reserves

figures.

No major discoveries were announced to explain the 300

billion-barrel-increase, and these numbers have been accepted

by analysts ever since.

Reserves to production

Distribution of proved reserves

Production & Consumption per region

Consumption per capita 2013

Crude oil prices 1861-2013

Yom Kippur War 1973

Iranian Revolution 1979

Persian Gulf War 1990-1991

Asian Financial crisis 1997

Invasion of Iraq 2003-2011

Arab spring 2010-2011

Major trade movements 2013

Natural gas

Distribution of proved reserves

Production and consuption by region

Consumption per capita 2013

Prices

Major trade movements 2013