Tag Archives: oil

Energy Proves Vital in MENA Economic and Political Outlook

A recent IMF report outlining the economic outlook of MENA states painted a positive but cautious portrait of North African states after the Arab Spring, with both potential and obstacles linked to the fortunes of the region’s energy sector.

From Rabat to Cairo, the post-Arab Spring region will depend heavily on energy use and production plans to get them through the next year, according to the IMF’s biannual Regional Economic Outlook Update for the Middle East and Central Asia report.

The Producers

Unsurprisingly, the IMF report painted a rosier picture for oil and gas exporting states in the region, though they were quick to add that significant obstacles to growth and economic stability remained, mostly in the form of political uncertainties, periphery conflicts and the lingering impact of the European debt crisis.

In the case of countries like Algeria, Spain’s second recession in four years does little to help the government’s ability to keep natural gas revenues in line with public spending needed to keep an increasingly agitated population happy. For government officials in Algiers, oil revenues would need to stay at least above $100 a barrel to cover the expense of the country’s subsidy programs and state spending, according to a Financial Times report.

Instead of reducing government support systems, Algeria has moved to expand them with this week’s announcement that they would introduce legislation outlining new incentive programs for the country’s burgeoning shale industry. Pointing to projects in the US and Poland, Algeria have outlined a plan to increase revenue and expand domestic production through tax incentives and a pledge on the part of the state-backed firm Sonatrach to invest up to $80 billion over five years, with 60 percent going towards shale exploration and production, according to a Bloomberg report.

Shared Concerns

“Oil-importing, especially Arab Spring, countries will need to set out on their own paths toward economic modernization and transformation,” read the report. “But they will also need to rely on financial assistance and technical and policy advice from the international community to support homegrown reform agendas. “

Ensuring such outside funding has emerged as the most glaring challenge for both importing and exporting countries due to lingering instability and its impact on

foreign investment and other financial support coming from international institutions. Without political stability across a region heavy with new governments, investors and financing agencies remain cautious, slowing the process of infrastructure recovery in Libya. According to a regional energy analyst at CIDOB, a Barcelona-based foreign policy think tank, the lingering uncertainty about North Africa has forced a “wait and see” approach on the part of European and US investors, as well as funding institutions.

In Egypt, a lack of political consensus has hindered the new government’s ability to ensure a $3.2 billion development loan from the IMF and threatened much largr potential agreements from Gulf state funds. For their part, the IMF cited a lack of a clear direction as reason for pause. This political instability has been most evident in Libya as interest from much needed foreign oil and gas partners is being tested by an interim government seen as dragging its feet on providing opportunities and access to Africa’s second largest proven reserves.

Unfortunately, that stability is not restricted to whether political coalitions can organize in time or ensure safe and effective elections. Across the region, questions about violence and safety have plagued governments, making the prospect of attracting needed foreign investment all the more difficult. Most recently, tension between Sudan and the newly autonomous Southern Sudan boiled over into violence as a result of conflicting claims about oil reserves. The potential for the Sudanese conflict to spread has demanded the diplomatic attention of regional neighbors, including the Egyptian government who sent representatives to help ease tensions.

To the west, the potential threat of the Northern Mali separatist movement spilling over into the Southern Sahara areas of Libya and Algeria have kept officials and investors on edge in those countries.

Seeking Solutions

In the case of Morocco, leaders in Rabat were able to boast one of the North Africa’s only steady increase in per capita income, but pitfalls remain, especially in light of the country’s weak domestic potential and heavy dependence on foreign resources. During a recent conversation with Forbes, Fouad Douiri, Morocco’s newly appointed Minister of Energy, Mines, Water and the Environment said the country will address development and energy issues by targeting renewable projects in favor of shale, offshore or traditional drilling operations. Outlining plans to install more than 2000 MW of solar, wind and hydro power, Douiri said that the government intends to « reduce Morocco’s annual imports of fossil fuels by 2.5 million tons of oil equivalent and to prevent the emissions of 9 million tons of carbon dioxide.”

While confident that they will be able to continue funding such efforts, the Moroccan government face significant fiscal shortfalls thanks to an increase in subsidies and public work jobs offered to calm growing political opposition last year.

Originally Distributed by Newsbase. All Rights Reserved.

Image: Energyboom.com

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Southern European Energy Looks for Footing in New Economic Environment

As governments across Southern Europe struggle to adjust to a new and limited political reality, many state energy policies are reflecting a more conservative planning approach. While most attention has been paid to how these new policies stand to affect renewable sectors in Spain, Italy and Greece, state strategies to conventional energy resources will also be influenced by fiscal limitations and new political leadership.

At the heart of most energy policy decisions from Madrid to Athens is the effort for new governments to reign in spending and reduce budget deficits to meet goals laid out in conjunction with stakeholders on the European and international market level. This environment has increased uncertainty among foreign investors, a sharp reduction in the amount of government funding available for any new energy endeavors and an almost across the board increase in energy prices for consumers.

In the case of Spain, a precarious energy landscape and daunting 27 billion euro sector budget deficit has been met with a pledge by industry minister José Manuel Soria that the financial burden will be shared across the industry. While that pledge has so far only affected renewable and coal subsidies and an increase of consumer prices of 7 percent for electricity and 5 percent for gas, there is worry that it could soon spread to more traditional efforts. Heavily dependent on foreign resources, Spain has seen new domestic exploration projects in the form of shale efforts in the north and offshore drilling near the Canary Islands.  

Similarly dependent on foreign resources, Italy and its technocrat government led by Mario Monti has pledged a wide-array of cuts to existing traditional and unconventional energy endeavors, though they have so far not seen a spike in consumer prices thanks to a steady decline in demand brought on by economic pressures. Having faced a steady decline in available energy resources as a result of both foreign challenges (Iran, Libya) and those closer to home (offshore bans, the failure of nuclear resurgence), Italy has signaled a focus to shift support towards less traditional energy support as opposed to revisiting conventional options. Last week saw the Monti government introduce the idea of a carbon tax aimed at providing funding for sustained support for green energy options.

In Athens, the government’s aim of debt reduction has spurred a move away from state-backed energy endeavors with a host of privatization efforts planned for this summer. After signaling a willingness to seek investment for a sprawling 20 billion euro solar farm project, the appointed Greek government announced an effort to sell off state holdings in Hellanic Petroleum and the state natural gas firm DEPA. The move comes as many in the region have expressed strong interest in further investment in natural gas discoveries in the Eastern Mediterranean.

In all cases, such privatization efforts come at the very real risk of losing out on significant future revenues in favor of short-term fiscal relief.

David Parker, Emeritus Professor of Privatization and Regulation at the Cranfield School of Management told Reuters, “We are certainly going to have a risk that the government sells off industries without really thinking about the long-term implications.”

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Repsol’s Year Just Keeps Getting Worse

Despite winning approval from Spain’s government to pursue offshore exploration efforts near the Canary Islands, Repsol appear to have few allies in the company’s efforts to kick-start domestic production.

Since receiving the support of the government of Maraino Rajoy on March 16 to restart offshore efforts 70 km off the coast of the islands of Lanzarote and Fuerteventura, Repsol have faced a steady stream of legal challenges and protest movements from across Spain. Spain’s Socialist opposition party has joined residents of the islands to oppose the project on the grounds that it could threaten the archipelago’s most important source of revenue – tourism.

Originally initiated in 2001, the Repsol effort – a consortium with Australia’s Woodside Petroleum Ltd. and RWE AG of Germany – has been stalled as a result of an earlier court ruling. Now equipped with the encouragement of Rajoy and Spain’s new Minster of Industry, José Manuel Soria López, the effort will move forward, but not without its challengers.

Since mid-March, protest movements have grown both in the Canary Islands and on the Spanish Peninsula aimed at reversing the decision. These efforts come

despite claims by Soria that the project could help ease the country’s energy needs to the tune of 10 percent of Spain’s oil overall demand with an estimated 140,000 bpd.

Soria’s support for the exploration effort and reference of the impact a successful discovery could have on the country’s energy needs comes as the new minister struggles to deal with a daunting financial deficit. Facing a 24 billion euro energy deficit, accrued over the last few years thanks to poor subsidy planning and domestic energy prices that did not reflect new pressures, Soria has been charged with reducing this amount through any means necessary, insisting that the weight of it must be shared throughout the country.

Further complicating the issue is the proximity of the project to the maritime border with Morocco, whose government has also launched exploration efforts in the area. As the border is not officially set, the two countries could see conflicting claims to possible discoveries.

Similar fears led to the delay of another Repsol project off the coast of Cuba earlier this year, requiring lengthy inspections and environmental reviews by U.S. political leaders amid fears that a potential spill could harm local coastlines.

For now, Repsol appear intent on moving forward despite the opposition, thanks mostly to the support of Rajoy’s Partido Popular and will work towards the next step by completing a necessary environmental impact study.

Image: PressTV

 

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Egyptian Energy Sees Some Return to Stability but Challenges Remain

In the months since the collapse of the long-standing government of Hosni Mubarak, Egypt has struggled to stabilize their energy sector amid widespread shortages and a seemingly endless series of attacks on vital transport lines. Despite the uncertainty these setbacks have provided, Egypt’s oil and gas industries have seen some progress, making a needed return to stability an achievable, if still difficult goal.

Egypt’s energy sector began experiencing delays almost as soon as public protests forced military attention away from the Sinai Peninsula and towards volatile city centers. The military exit allowed rebel groups in the region to mount a series of attacks on natural gas pipelines serving customers in Israel and Jordan, halting exports and much needed revenue for the Egyptian government. The natural gas sector received another setback as allegations emerged detailing below-market deals for Israeli and Jordanian customers in exchange for payments to Mubarak officials. Both counties have begun exploring import alternatives as rising tension and repeated shutdowns have made Egyptian natural gas unsustainable.

Making matters more difficult, Egypt has experienced two massive fuel shortages brought on by panicked purchasing amid reports that the government will soon slash fuel subsidies to help deal with a mounting budget deficit.  Currently, about two-thirds of Egypt’s total subsidies go towards fuel costs – an amount that is expected to increase 40 percent this year to reach $16 billion, according to the Council on Foreign Relations.

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However, despite the steady stream of bad news, many oil and gas actors in the country are making strides towards sustaining and even expanding operations in Egypt’s new political and economic environment.

According to Market Watch, Houston-based Apache announced a 3 percent increase in production in Egypt’s Western Desert, reaching 203,000 barrels of oil and 880 million cubic feet of gas per day thanks to the development of seven new leases in the Faghur Basin.

Last week, Ukrainian Minister of Energy and Coal Industry Yuriy Boiko announced the country’s intention to boost production efforts in Egypt with the signing of two concession agreements for the development and operation of oil and gas fields in the Wadi El Mahareeth and South Wadi El Mahareeth oil blocks in the Eastern Desert in Egypt, according to a government release.

Meanwhile, the PetroSinai joint venture, which operates on behalf of the Egyptian Petroleum Company and MENA, announced the successful re-entry in the Lagia 6 oil field. The move is a part of a proposed development plan that will include up to 55 wells aimed at developing the Lagia Development Lease. Australia’s Beach also recently announced their intention to expand their Egyptian footprint with the development of oil finds in the country.

Challenges Remain

However, further progress in Egypt, especially among larger energy investors, could be hampered by an ongoing struggle over hydrocarbon E&P authority, which is currently under the control of the country’s military. According to Lebanon’s Daily Star, a holdover system from the Mubarak government places the final authority over exploration and production efforts in hands of generals and “military permits” that dictate when, where and how projects move forward.

The existing system was at the center of a meeting held late last month between the country’s oil ministry and representatives of companies active or interested in Egyptian projects, including BP and Enap Sipetrol.

“Egypt is investor friendly, but army restrictions make the lives of people harder,” said Marwan al-Ashaal of Enap Sipetrol, according to The Daily Star.

The meeting saw company representatives call for an overhaul of what they saw as dated production sharing agreements in order to spur needed investment and foreign partnerships.

Revising such dated systems related to the country’s energy sector could be vital to ensuring public support, but will also require a demonstration of shared benefits to the general public, not just select government officials, remarked a UN official close to energy development in Egypt last week.

In an effort to cope with the loss of revenue from severed ties with Jordan and Israel, the Egyptian government has pushed for greater trade cooperation with Sudan. Originally built on an export agreement signed in October of last year, this effort now requires Egyptian officials to take on a diplomatic role in hopes of calming tensions between Sudan and South Sudan over the disputed Heglig oilfield.

As for the capital’s struggle to deal with the now 14 attacks on natural gas pipelines in the Sinai, the government has announced a series of military efforts, stepping up their presence in the region to combat rebel groups and even collaborating with Israeli troops to address rocket attacks across the two countries’ border. The dual effort is especially difficult, as public sentiment has turned against stronger ties with Israel due to the natural gas controversy and the rise of political leaders strongly opposed to diplomatic ties of any kind between the two countries.

Despite these efforts, this week saw another attack on an oil facility in the town of El-Arish, resulting in the death of two policemen and injuring a third, according to the Associated Press.

Image: CNN Money

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Egypt Seeks Pipeline Solutions but Little Official Support

As Egyptian security and political forces have sought ways to combat attacks in the Sinai Peninsula that have led to 13 pipeline delays since the fall of Hosni Mubarak last year, it has become clear that ensuring the transport line or finding ways to ensure existing deliveries may not be as important as once thought – at least in terms of trade with Israel.

This month saw the country’s People’s Assembly vote to cut off natural gas exports to Egypt’s neighbor in response to allegations that the outgoing Mubarak government had sold to Tel Aviv at under-market prices, angering a government body that has already expressed their intention to review and revise all existing relations with their neighbor.

The move comes following a months-long deterioration of the security situation in the Sinai region of the country attributed to Bedouin groups, which has included both attacks on the pipeline and a third case of kidnapping last week. While unlikely to signal a wider halt to energy exports, some analysts have pointed to the shutdowns and lack of political will as a signal of greater internal use of Egypt’s energy resources.

So far, according to an off the record comment from a state official, the attacks have caused upwards of $160 million in losses for the Egyptian government, according to the country’s Al-Ahram newspaper.

Opened in 2008, the pipeline in question was meant to provide for 20 to 25 percent of Israel’s energy needs, but the country has so far expressed little concern for the long-term consequences of a prolonged or complete halt in deliveries, pointing to the potential of offshore reserves to make up the difference. However, according to a USA Today report, the pipeline shutdown could do much to damage relations between the two countries.

Emerging as the unintended victim of both the attacks and the lack of Assembly support for the situation, Jordan has been left to find viable alternatives to the loss of imports. Recent shutdowns due to the now 13 attacks have resulted in widespread energy shortages. Even efforts to curb their dependence on the pipeline have resulted in spikes in costs as the country’s shifts away from natural gas towards electricity plants that use diesel or crude.

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Algeria Eyes Expanded Position Thanks to Relative Stability

After a steady decline in foreign interest thanks to fluctuating development terms and volatile tax agreements, Algeria is eyeing their relative stability in the region as key to both encouraging a return of international partners and a strengthening of their position in energy marketplace.

Currently the seventh largest provider to the US and the third largest provider of natural gas to the European market, behind just Russia and Norway, Algeria has witnessed a significant decrease in interest in foreign investment and partnerships in the last few years thanks to a steady flow of new government regulations and financial demands on the part of the state and its official energy arm Sonatrach. The result has been viewed as increasingly hostile to firms from outside Algeria, despite the country hosting the third largest proven oil reserves in Africa, behind Libya and Nigeria, with about 12.2 billion barrels.

According to a report released by the Eurasia review, the decline in interest and overall production has arisen from, “the frequent delays involved in Algerian projects, stringent financial terms, and a windfall tax on foreign oil producers whenever the price of oil exceeds $30 per barrel have dampened international companies’ interest in bidding rounds.” Last March, Algeria awarded just 2 of 10 oil and gas permits in a licensing round that marked a third such decline and further hindering the country’s overall production levels.

However, as much of the North African and Middle Eastern region has suffered from bouts of instability, Algeria has remained relatively stable and calm. The country experience only modest protests from student and labor groups last years as neighboring Libya and Tunisia experienced sweeping shifts in political leadership. Resulting production and output delays in these countries and the lingering threat of further shutdowns of oil and gas deliveries resulting from tensions with Iran have pushed leaders in the United States and Europe to reevaluate the country’s place as an energy actor in the region and as an increased producer for the global market.

Writing in the Financial Times earlier this month, Stephen Snyder of Ergo intelligence services suggested that amid security concerns, Algeria’s growing importance as a provider of natural resources had allowed greater acceptance of the country as a regional energy actor and production partner, even in light of questionable domestic actions. Citing a visit by U.S. Sec. of State Hillary Clinton to Algiers, where she met with President Abdelaziz Bouteflika, Snyder said that the volatility seen across the region and the uncertainty about the Iranian situation and the Gulf of Hormuz allowed for new view on the country’s potential.

For their part, Algeria and their state-backed firm Sonatrach have moved towards greater cooperation with foreign firms, opening up the possibility of repairing existing partnerships and easing the restrictions that kept interested parties at bay over the last few years. In December of last year, the country announced a plan to introduce revisions to their Hydrocarbon law that would amend profit sharing agreements and exceptional profit taxes first introduced in 2006.

Speaking in December, Minister of Energy and Mines, Youcef Yousfi stated that the review was aimed directly at garnering much-needed support from international partners with the experience and technological know-how to adequately exploit the country’s reserves. That technical knowledge will be pivotal to the country’s ability to pursue a planned shale campaign in the coming years. Already linked with Italy’s Eni to explore Algeria’s deep-set, shale potential, the country and Sonatrach must first dedicate significant funds to the costly infrastructure and tools required of shale extraction efforts.

“We hope to develop partnerships with all interested stakeholders who have the required technological expertise to develop these resources in our country,” said Algerian Minister of Energy and Mines, Youcef Yousfi at a shale workshop held in Oran in late February, according to Al Monitor. He added that, “this is why we would like to work with companies that have demonstrated expertise in this field.”

In a more specific example of mending fences, earlier this month, US-based Anadarko, announced an amicable end to a long-standing conflict with Sonatrach stemming from the 2006 tax. With the US company insisting that their existing contract required the Algerian firm to bear the brunt of the tax burden and Sonatrach seeking to restructure profit structures originally agreed upon when crude prices were lower, according to the Wall Street Journal, one of the country’s largest foreign operators found themselves at odds with local officials and their production plans. With arbitration initiated in 2009, the two parties finally came to an agreement this month with a plan that would provide about $4.4 billion in funds over the next few years and include stipulations protecting the US company’s tax and profit sharing status. According to the Financial Times, Anadarko is responsible for about quarter of all oil production in Algeria.

The Algerian government’s push and seemingly new willingness to ease restrictions on profit-sharing and tax regulations with foreign firms appears to be part of a larger push to open the country to international cooperation. This past week saw Algiers open the country’s modest stock exchange to foreign buyers for the first time, though they are still required to partner with local buyers for the purchase.

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Greece Eyes Options As Iranian Deadline Looms

Presenting a significant threat to Greece’s energy needs and overall economic well being, the looming EU-backed sanctions on Iranian crude has Athens struggling to find viable alternatives. Earlier this year, Greece joined countries like Spain and Italy in expressing their concern about the sanctions’ impact on their energy needs and were successful in winning a delay until this summer to find other producers. However, even with extra time, credit and production has presented a challenge to finding such options.

The country’s dependence on Iranian crude was highlighted in late February when state media outlets began reporting that a local refinery had been denied the delivery of 500,000 barrels. Ultimately, the reports were cast into doubt by government representatives, including Greece, Greek Environment, Energy and Climate Change Minister George Papaconstantinou who told Reuters that “we have contracts with Iran that are being executed normally.” However, with the July 1st sanctions deadline fast approaching, the reality of going without Iranian crude is becoming all the more pressing.

To make up for the coming crude deficit, leaders in Athens have begun openly exploring increasing deliveries from countries like Libya, though the exact of impact of such a shift has some worried. In the case of Libya, questions have emerged about Libya’s ability to overcome infrastructure deficits to reach pre-conflict goals for existing consumers, not to mention new ones.

For their part, Greek refiners have pointed to options in Russia, Iraq and Saudi Arabia as perfectly viable alternatives to Iranian oil, though funding might still be a stumbling block. Making up roughly a third of Greece’s energy needs, Iranian crude is currently sold under favorable credit circumstances; a situation Athens fears may change under new agreements, adding stress the country’s current economic standings. According to a Reuters report, concerns about access to credit have led some potential providers to avoid new agreements with Greek importers due to worries about national firms and their access to credit.

Reports from Eurostat have suggested a possible increase of Iranian imports ahead of the July 1st deadline, making the stockpiling of reserves ahead of such a significant drop off a possibility.

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Libya’s Production Back on Track but Foreign Partners Could Still Be Frozen Out

As oil and gas production levels continue to rise in post-Gadaffi Libya, government officials have grown more confident that the country’s best chance for economic growth is back on track to meeting and exceeding pre-conflict levels. However, mixed messages to foreign partners and a lack of progress dealing with vital structural and stability issues threaten to derail the energy sector’s return before it can take hold.

By the end of February, members of the country’s appointed transitional government reported that oil production had reached 1.4 million bpd and would likely reach pre-war levels of 1.6 million by mid-summer. The country’s natural gas output also increased to 2.3 billion cubic feet during the same period from 2.2 billion at the end of January. Adding to the good news, Libyan officials have reported that new exploration efforts have finally become possible again.

However, reports detailing a national energy infrastructure unprepared to cope with a return to service and certainly unable to host the sort of production expansion the country has set as an overall goal have cast doubt on Libya’s production future. Even before being damaged in the violence that halted most energy activity last year, Libya’s energy infrastructure was viewed as out of date and insufficient for modern operations, causing an unrepresentative contribution to global markets despite hosting the continent’s largest proven reserves. Attributed to the country’s economic isolation under the leadership of Muammar Gadaffi, the infrastructure deficit had seen some signs of improvement since sanctions were lifted in 2004, but not nearly enough.

Attracting foreign investors and project partners has emerged as pivotal to Libya’s ability to return to adequately exploit their energy potential, but a series of mixed-messages about requirements has continued to hurt that process. While the country’s transitional government stated energy efforts would favor those firms from countries that had supported their anti-Gadaffi campaign, the actual approach has been more scattered. While both China and Germany did not initially vote in support of international military action in the country, Chinese firms have recently received a series of new contracts while many arriving from Berlin and Frankfurt have found themselves frozen out, according to a recent report in Der Spiegel.

Still, the progress thus far has been heralded by government representatives, like Deputy Minister Omar Shakmak, as proof of the country’s progress, adding in local press reports, that the production return had come with the help of local staff.

“All oil and gas facilities are now being managed by Libyan engineers and workers, a remarkable achievement by Libyan work force which has proved to be well trained and without technical assistance from outside the country,” Shakmak told the Tripoli Post. Shakmak has also told a number of media outlets that he too expects the country to reach 2010 levels by mid to late summer, though with elections planned for June, it’s unclear just how many current leaders will be around to answer for such an estimate.

The minister’s assertion comes as several international firms continue to weigh the risks of the country’s political and security uncertainties and returning their staff and overall presence to pre-conflict levels – a development seen as necessary to helping Libya get production levels back to form.

In addition to questions of overall security and repairs to the country’s energy infrastructure, which experienced damage during Libya’s civil war last year, foreign firms have expressed caution about the country’s political future.

“It is a question of what framework we are going to have. We are waiting for a long-term sustainable situation in the country. How long it would take, I don’t know,” Wintershall Chief Executive Rainer Seele told Reuters. The German firm represents the country’s largest foreign partner until violence forced the company to halt operations at the end of last year. Since returning, Wintershall has tripled production levels since last fall but has said that it could easily reach 90,000 bpd if not for the country’s out of date infrastructure.

Meanwhile, Libya’s largest foreign partner, Italy’s Eni, has steadily worked to return to their pre-conflict production levels after a slight, early misstep when it appeared uncertain whether anti-government forces would succeed in ousting Gadaffi.

When asked about progress last week, Eni press officer Fabio Cesaro stated that since the conclusion of the internal conflict, and the gradual return to political and social normality in the country, “we have stepped up our efforts to fully resume production at our Libyan sites and facilities and gas exports through the Greenstream pipeline on the back of our stable contacts with the Interim Transitional National Council and continued collaboration with the NOC.”

Citing major milestones achieved in the final part of the year, including the restarting of oil production at the Wafa and Bu Attifel fields in September, the reopening of the Greenstream and gas production at the Wafa field in October, and the return to production of the Sabratha gas platform at the Bahr Essalam field in November, Cesaro said the company was aiming to reach pre-conflict goals by the second half of this year.

Still, the country’s overall economic and political uncertainty has kept other foreign firms at bay. Previously, BP press representatives expressed caution to suggesting that they would return when security for all company staff, both foreign and local, could be assured. So far, this level of confidence has not been reached.

Image: Telegraph UK

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Tangiers Terminal Expands Moroccan Reach

Morocco continued its push towards easing its heavy energy dependence with a sharp increase in domestic storage and distribution with the opening of the country’s second oil terminal in the northern coast city of Tangiers. Central to the country’s energy strategy in terms of both capacity and location, the Tangiers terminal will increase Moroccan oil storage abilities by a third and allow greater access to providing fuel to the busy shipping lines through the Strait of Gibraltar. Last week’s opening has positioned the Moroccan port city to compete with similar efforts in Ceuta and Algeciras in competing for the business of the more than 70,000 ships that pass through the Mediterranean gateway each year.

Moreover, the opening of the terminal has moved the Moroccan energy market closer to a goal of greater autonomy and diversification. Currently, Morocco depends on imports for 95 percent of their energy needs and has recently experienced the effect that price fluctuations can have on overall costs. To remedy this situation, political and energy leaders in the country have been pushing for greater storage capabilities and diversification. These have included both efforts to initiate new offshore and shale projects, as well as offering support for renewable projects on a community and large-scale level.

The opening of the Tangiers terminal this month has served to boost the country’s storage abilities, making it less susceptible to the kind of price increases seen over the last year as regional trade partners struggled with economic and political uncertainty. During conversations with a government energy official in Rabat last week, the sharp increase in energy costs in Morocco seen in the last two years was cited as the reason for the country’s new energy strategy.

The product of an effort by a HTT, a group put together by Emirati Horizon Terminals Ltd., Moroccan company Afriquia SMDC and Kuwaiti firm Independent Petroleum Group, the $180 million terminal will hold 3.2 million barrels, with 53 percent dedicated to gas and diesel and 43 percent set aside for fuel oil and fuel additives, according to a Reuters report. The project’s storage capacity will provide enough space to provide for 60 days of Moroccan demand, adding to the capacity of the only other such terminal, located in Mohammedia; home of the country’s single refinery, Samir. The group was awarded a 25-year concession, that included the responsibilities to conduct the design, financing, construction and commissioning of the terminal structure, as well as develop the project’s commercial activity. According to a report in Morocco Tomorrow, the terminal will provide a deep-water post that can host 280 linear meter tankers and boasts 35km of pipeline and 19 storage tanks.

Image: Gulf News

 

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Local Protests Target Med Offshore Drilling

A recently quiet opposition movement against drilling oil and natural gas exploration off Spain’s Andalusian coastline has come alive in 2012 as local communities have begun calling on the new national government to reverse local offshore licenses.  With protests coming from across the political spectrum, including members of the local Green Party as well as the conservative Partido Popular, the projects have been targeted for their potential impact on the region’s tourism and fishing industries. Already weighed down by a near dormant national economy and a real estate market that has all but collapsed since 2008, the Andalusian coastline has become especially sensitive to any perceived threats to the remaining tourism market, which stands as the region’s largest economic factor for jobs and development.

The most recent project to come under fire includes an area of 130,000 hectares off Almuñecar, Salobreña and Motril (Granada) and Nerja and Torrox (Malaga), led by Canadian firm, CNWL. The project is the result of a 2006 appeal for exploration rights by CNWL but was delayed until last year after local opposition slowed the approval process. Local political and environmental groups have begun calling on the new government of Mariano Rajoy’s Partido Popular to reverse the project approval, including calls from members of his own party. The protests follow a similar pushback against exploration efforts on the part of Repsol off the nearby coast, in front of the tourist havens of Mijas and Fuengirola.

CNWL responded to local press queries, stating that they had no firm date to begin exploration efforts, though they were aiming for June of this year and would be pursuing natural gas finds, not oil, according to La Opinion of Malaga.

Although the protests have only occurred at a local level, the opposition to offshore efforts in Andalusia reflects a larger Mediterranean aversion to such efforts. In the months following the Deepwater Horizon spill in the Gulf of Mexico, political and environmental groups rallied behind new legislation and public protests, successfully slowing or halting offshore efforts in Italian and Spanish waters, as well as Libyan waters amid worries related to BP’s safety record. The efforts received a boost of support from European Commissioner for Energy Günter Ottinger, who proposed the idea of a moratorium on offshore efforts in European waters.

Image: Today’s Zaman

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