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September 3, 2015 / 19 Elul, 5775
At a Glance

Posts Tagged ‘oil’

Report: Israel Buying Most of Its Oil from Iraqi Kurdistan

Monday, August 24th, 2015

For a number of months, Israel has quietly been importing more than three quarters of its crude oil from the semi-autonomous northern region of Iraq still controlled by the Kurds, despite some unhappiness from Baghdad.

The remainder is purchased from Azerbaijan, Kazakhstan and Russia, its long-time suppliers.

News of the deals was made public early Monday in a report on the international Financial Times website.

Refineries and oil firms in Israel imported more than 19 million barrels of Kurdish oil between May 1 and August 11, according to satellite tanker tracking data, trade sources and shipping data. Among the trading companies involved in these quiet transactions have been Vitol, Petraco and Trafigura, FT reported.

Total sales for the period at this volume, using international prices, are worth (Israel may have paid) close to $1 billion.

Other customers for Kurdish oil during this period have included Italy, Greece and Turkey. In addition, some 17 percent of exports were shipped to Cyprus, where the oil is then transferred from one ship to another for export “elsewhere.”

But the export of northern Iraqi oil begins with shipping through Turkey’s Mediterranean port of Ceyhan. From May 1 to August 11, more than a third of that was sent to Israel, although some may have subsequently been exported elsewhere.

However, Israel’s domestic consumption levels out at approximately 240,000 bpd (barrels per day).

There have been three benefits to the move, if not more.

First and most obvious, Israel has been able to obtain the crude at a reasonable price due to its geographic proximity. Some industry sources say Israel is receiving a discount from the Kurds, although Kurdistan Regional Government (KRG) officials denied the report.

Second, because Israel invests so much of its consumer dollars in Iraqi Kurdish product, the Kurds have better resources with which to fund their war against Da’esh (ISIS). This is especially important, since it seems that only the Kurds have been able to present a consistent, long-haul effective fighting force against the Da’esh terror machine.

Third, every dollar invested with Iraqi Kurdistan is a dollar that frays the ties between Erbil and Baghdad – or perhaps, the ties between Erbil and Iran. For decades, Baghdad has feared the Kurdish yearning to carve out a free and sovereign state of Kurdistan.

But today one can quite legitimately ask who exactly is in control in Baghdad. Most regional analysts believe the Iraqi government no longer exists, other than to provide a fig leaf for Tehran.

Israel is one of the biggest customers of northern Iraqi / Kurdistani oil at this time. Baghdad still does not recognize the State of Israel. Cash-strapped Kurds, however, are much less concerned about who is buying the oil; their concern is getting money to pay for survival.

“We do not care where the oil goes once we have delivered it to the traders,” a senior Kurdish official was quoted as saying to FT. “Our priority is getting the cash to fund our Peshmerga forces against Da’esh (ISIS) and to pay civil servant salaries.”

Iran Banks on End to Sanctions, Will Raise Oil Production to 1M bpd

Sunday, August 2nd, 2015

Iran is already banking on the passage of the nuclear deal it signed with the U.S. and world powers last month in Vienna. Its government plans to raise its output of oil to one million barrels per day within months after sanctions are lifted, according to Oil Minister Bijan Zanganeh.

In remarks broadcast on Sunday, Zanganeh said, “We are already doing the marketing, and within a day after the lifting of sanctions, we will raise [production] by 500,000 barrels per day.” Within months, he said, production would double to one million bpd.

Much of the current oil production in the Middle East is flowing from Iraqi Kurdistan through Turkey into Europe and elsewhere, although some of the oil still comes from Iran. There may soon be competition from another quarter, however.

Recently the executive director of Russia’s Union of Gas and Oil Industrialists told RIA Novosti, however, that as soon as the situation in Syria is stabilized, Russian oil and gas companies are likely to revive their contracts with that government.

Gissa Guchetl told the newspaper the companies held contracts worth a total of $1.6 billion, that froze their work because of the civil war that has since destroyed that country.

Nevertheless, he said, “If military actions cease and the situation becomes stable … [they] will be ready to renew their activity within a short period of time.” A week ago Guchetl met in Damascus over the issue with Syrian Prime Minister Wael Nadr Halqi and Petroleum and Mineral Resources Minister Suleiman Abbas.

The two Syrians told Guchetl they are interested in Russian companies supplying crude and other oil products to Syria, and in cooperation with Chinese firms to increase oil exploration in Syrian fields that are safe from “rebel attacks.”

Obama Let 40-Year-Old Oil Supply Guarantee to Israel Expire in November 2014

Tuesday, March 17th, 2015

Originally published at Liberty Unyielding

The Obama administration should give lessons in passive aggression.

Eying the impending Israeli election as a political influence operation wasn’t the only thing it was doing in November 2014. It was also letting a 40-year-old strategic guarantee to Israel expire.

The guarantee, which says the U.S. will ensure that Israel has access to oil in case of security emergencies, dates originally to September 1975, when Israel and Egypt were negotiating elements of an Israeli withdrawal from the Sinai after the 1973 War. Throughout those negotiations, which culminated in the 1979 peace treaty, the status of the Sinai oil fields was a core issue. Israel had obtained oil from them since occupying the Sinai after the 1967 War, when an Arab coalition attacked, and Israel seized territory to maintain a defensive perimeter.

The U.S. oil guarantee was instrumental in giving the Israelis a secure basis for withdrawing from the Sinai. The use of the oil fields was one aspect of that dynamic; another was Egypt’s closure of the Suez Canal from 1967 to June 1975. The Canal closure affected trade of all kinds, and specifically had the potential to disrupt Israel’s energy supplies – as effectively, by driving prices up, as they would be disrupted by an actual cut-off.

Because of this dual vulnerability, the U.S. guarantee looks not only at whether Israel is able to obtain oil, but how much it costs her to. The guarantee can kick in for either reason. (It entails ensuring that Israel can buy oil; it’s not a guarantee that the U.S. will supply oil for free.)

A Congressional Research Service study done early in 2014, before the most recent agreement expired, can be found here. It outlines the history of the guarantee. The agreement was formalized in 1979, with an initial period of 15 years, ending on 25 November 1994. It was extended twice after that, each time for 10 years, and most recently expired – without renewal – on 25 November 2014.

Interestingly, Reuters cited an unnamed State Department official on that date claiming that State was “working on” renewing the agreement. It never happened, however, and on 12 March, Senators Lisa Murkowski (R-AK) and Mark Warner (D-VA) sent a letter to John Kerry requesting that he attend to the matter immediately.

It’s not clear what “work” would have to be done to renew this agreement. It is clear, on the other hand, that it’s an agreement that was made for important reasons, and that those reasons are not only still valid: they are more of a concern today than they were 10 years ago. Since the last renewal in November 2004, Israel has pulled out of Gaza; the Arab Spring has thrown the region into tremendous turmoil; the threat of terrorism and guerrilla action in the Sinai has increased; and Iran’s navy has extended its operations dramatically, into the Red Sea and even the Eastern Mediterranean. The potential threats to Israeli trade, and specifically to Israel’s energy imports, have increased significantly since 10 years ago.

Israel has huge reserves of natural gas, but remains dependent on foreign sources for oil. The U.S. guarantee has never had to be invoked, but keeping it in place is far from an academic exercise. The Globes report quotes an Israeli source:

Israel has never invoked the agreement, but Israel sources say that its importance lies in its very existence. An Israeli source compared the oil supply agreement to the loan guarantee agreement between the two countries that enables Israel to obtain commercial loans at low rates of interest. “Israel used the loan guarantee agreement very sparingly, but it is important that the loan guarantees agreement should exist, and the same applies to the energy agreement that guaranteed a regular supply of oil,” the source said, “We never used it, but it’s important that it should lie signed in a drawer.”

PA Arabs Call On Abbas To Kill Israeli Gas Deal, Saying It Will Cement A Future Without Statehood

Wednesday, February 18th, 2015

Originally posted on Jewish Business News.

Palestinian Authority Arab civil society leaders and politicians are calling on Palestinian Authority Chairman Mahmoud Abbas to pull its backing from a $1.2 billion deal providing Israeli gas to the PA for the next 20 years, Middle East Eye reports.

Opposition to the deal comes a month after Jordanian officials have suspended talks over a $15 billion gas deal with U.S.-based Noble Energy and Israel’s Delek Group, which are partners in Israel’s largest offshore gas field, Leviathan.

The PA deal was signed last month by the same two companies, with the privately-owned Palestine Power Generation Company (PPGC).

The gas will fuel a $300 million electric power plant PPGC says it is developing in Jenin, which will be the first Palestinian Authority power plant in the Judea and Samaria.

But on Tuesday, PA politicians and activists at a Boycott, Divestment and Sanctions press conference in Ramallah, said the deal is lacking in consideration for alternative providers—e.g. not the Jews.

The group also warned about the absence of clear Palestinian Authority laws on natural resource and energy governance—which means they expect their leaders to steal most of the money, like they usually do.

“I think there is corruption because there is no law that would monitor and regulate this sector,” said Azmi Shuaibi, commissioner of Aman, a PA anti-corruption watchdog. “This sector is hugely corrupt.”

They also questioned the need to lock down a 20-year deal, when gas deals in the past were kept to two years, and why Israel is a better trading partner than, say, Qatar or Venezuela.

“This deal will put burdens on the Palestinian people for a long period,” said Khalida Jarrar, a member of the Palestinian Authority Legislative Council. “The people are not partners in this agreement.”

Jarrar argued that the gas deal is not a path to peace, but a premature normalization of relations between Israel and PA Arabs, cementing the abandoning of any future final status agreement.

Dr Mamdouh Akar, Commissioner General for Human Rights in the Palestinian Authority Territories who also spoke on Tuesday, recommended that, in addition to boycotting Israeli gas, PA Arabs should keep the gas they have underground until the laws governing natural resources are clear.

“We have to keep our gas for the next generation,” Akar said.

Saudi King Hands Out $32.2 BILLION in Bonuses to Government Workers

Friday, February 13th, 2015

Saudi Arabia’s new King Salam has handed out $32.2 billion in gifts to government employees despite the drastic dip in the price of oil the past six months.

Saudi kings have a tradition of marking their arrival to the throne by dipping into the kingdom’s vault and handing out a few shekels.

“The bonuses are the usual practice when there’s a succession,” Steffen Hertog, associate professor at the London School of Economics, told the Financial Times.

Saudi Arabia’s reserves stand at approximately $730 billion, give or take a penny, King Salam’s gifts reduce the reserves to a paltry $698 billion, which perhaps explains why there is not enough money to subsidize driving lessons for women.

 

More Western Defense Workers Targeted in Saudi Arabia

Monday, February 2nd, 2015

Two American defense contractors were targeted by gunfire last Friday in Saudi Arabia, according to their employer, Vinnell Arabia, a firm which provides training for the Saudi National Guard.

It’s the second time in recent months the contractor’s workers have been targeted, according to the AFP news agency.

Saudi Arabia is in transition at the present time, with a new monarch, King Salman, having taken over for his late half-brother, King Abdullah, who died a week ago. Salman is also not likely to rule for very long, inasmuch as he is already ill himself; he has already named his youngest half-brother Muqrin as Crown Prince to follow him, as advised by the late monarch.

Abdullah had been seriously ill for months prior to his death, and the kingdom was facing some instability as its iron fisted ruler grew weaker.

“We can confirm… they were shot by assailants in the al-Ahsa province of Saudi Arabia,” the company said Monday in a statement via its public relations firm. “Both employees were injured but are in stable condition at a local hospital.”

Saudi police reportedly claimed that only one employee was wounded in the shooting, which took place just wast of a National Guard base near Hofuf city, in the east, near Saudi Arabia’s oil fields.

Several rounds were fired at the Vinnell vehicle from a white car, a source close to the incident told AFP. The employee driving the vehicle was hit several times. His passenger took over driving and raced to the hospital.

An American defense subcontractor for the Israel-based Elbit Systems firm died under mysterious circumstances in the kingdom on January 15 of this year as well. Saudi authorities are still trying to untangle the cause of death in that case, and have not yet released the body to the family of the victim.

Not counting that death in January, this is the fourth attack on Westerners in the kingdom since October 2014, when the U.S. began its coalition air strikes against the Islamic State in Iraq and Syria (ISIS).

One Vinnell employee was shot dead and a second was wounded at a gas station in Riyadh in October, allegedly by a U.S.-born Saudi who was fired from the company.

Interior Ministry spokesperson Gen. Mansour al-Turki said, “It was not a terrorist-related incident,” although the Saudi National Guard is intended to, among other things, combat “terrorism.”

A Danish citizen was attacked in a drive-by shooting in November as he was driving away from his workplace. Last month three Saudis were arrested by their own government in connection with that attack, allegedly for acting “in support of” ISIS.

One week after that attack, a Canadian citizen was stabbed at a mall on the Saudi Gulf coast, which the interior ministry again said was “not terrorist related.”

But the government did not hesitate to blame ISIS for the November killing of seven Shi’ite Saudis in the eastern province of the country.

Nearly 1,000 U.S. soldiers are soon to be sent to Saudi Arabia, Turkey and Qatar as consultants to train “moderate” Syrian rebel forces in the effort to fight ISIS. It is still not clear how many troops which go to each country.

Economic Bomb of Plunge in Oil Prices Crippling Hezbollah and ISIS

Tuesday, January 20th, 2015

The plunging price of oil may do the long-term work for Israel and cripple Hezbollah, the Islamic State (ISIS) and other terrorist groups that owe their existence to income from oil.

The price of black gold has plunged by 50 percent in less than half a year, and all signs point to it remaining less than $50 a barrel, and possibly even dropping below $45.

Western sanctions have not harmed Iran enough for it to halt its development towards procuring a nuclear weapon, but a continuing slump on the oil market is more effective and non-negotiable.

Militarily, Israel on several occasions has bombed advanced weapons destined for Hezbollah, and on Sunday the IDF wiped out Iranian and Hezbollah commanders who were planning attacks on Israel.

However, Hezbollah still has approximately 150,000 missiles that its leader Hassan Nasrallah could launch a catastrophe in Israel.

The dizzying drop in the price of oil endangers the capabilities of Hezbollah and the very existence of the Islamic State.

Hezbollah has cut the salaries of some of its members, and one of its commanders told Newsweek, “There are many members…who are now paid their wages much later. Some are getting less money than before.”

Hezbollah uses oil revenues to finance its massive support system that has made it the de facto government in southern Lebanon, a system copied by Hamas in Gaza and in some parts of Judea and Samaria.

One widow in a Beirut suburb told Newsweek, “Our family only gets half of the medical care and medicine that we need. This used to come every month without any problems, but today we are suffering.”

On the political front, Hezbollah no longer can buy off allies the way it once did when oil was selling at $110 a barrel.  At least two politicians said they now receive only half of the former $40,000 a month from Hezbollah.

“Salvaging the regime in Syria and fighting ISIS in Iraq have forced Iran to divert more resources away from Hezbollah at a time when the resource base in Iran is shrinking,” Hezbollah expert Randa Slim, a director at the Washington-based Middle East Institute, told The Christian Science Monitor.

One of the guiding hands behind the drop in the price of oil is none other than Saudi Arabia, which is no less afraid than Israel of Iranian and Islamic State ambitions.

The Saudis are the leading influence in OPEC and has not cut its production of oil to encourage a rise in prices.

Another victim of the dropping oil revenues is Russia, which has poured hundreds of millions of dollars to prop up the Assad regime in Syria, which is still less than Iran’s $1 billion to $2 billion monthly payments for military aid to Assad’s forces and salaries for Iranian Revolutionary Guards in Syria.

“Absent Iranian largesse, Assad would not be financially solvent today,” Karim Sadjadpour, a senior associate of the Middle East program at the Carnegie Endowment for International Peace, told the Monitor.

Although Hezbollah  is far from bankrupt thanks to its huge investments and makes millions of dollars from drug smuggling and other illicit trade, the drop in oil revenues has increased pressure on senior officials to stuff more money in their own pockets.

The Monitor quoted one Lebanese politician as saying, “The whole thing is falling apart. It’s corruption on a cataclysmic scale.”

Printed from: http://www.jewishpress.com/news/breaking-news/economic-bomb-of-plunge-in-oil-prices-crippling-hezbollah-and-isis/2015/01/20/

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