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Seven of ten top companies in oil; World’s top 10 companies richer than Egypt

June 10, 2010 1 comment

The world’s four largest companies are richer than all but two of the Middle East’s leading economies. Turkey and Saudi Arabia are the only exceptions to this case.

Of the top 10 largest global companies in 2009, 7 are in the business of energy and hydrocarbons, 4 of them are from the USA, and 2 from the Netherlands.

Here they are in ranking by revenues (source: CNNMoney.com’s Fortune magazine):

  1. Royal Dutch Shell, revenues of: $458.4 billion (Netherlands) Hydrocarbons 
  2. Exxon Mobil: $442.9 billion (USA) Hydrocarbons
  3. Wal-Mart: $405.6 billion (USA)
  4. BP: $367.1 billion (Britain) Hydrocarbons
  5. Chevron: $263.2 billion (USA) Hydrocarbons
  6. Total: $237.7 billion (France) Hydrocarbons
  7. ConocoPhillips: $230.8 billion (USA) Hydrocarbons
  8. ING Group: $226.6 billion (Netherlands)
  9. Sinopec: $207.8 billion (China) Hydrocarbons
  10. Toyota Motor: $204.4 billion (Japan)

Here are some of the Middle East’s top economies by GDP (2008, from the World Bank):

Turkey: $734.9 billion

Saudi Arabia: $468.8 billion

Iran: $286.1 billion (2007)

Israel: $202.1 billion

Egypt: $162.3 billion

And now for the top 10 world economies by GDP (2008, from the World Bank):

  1. USA: $14,093.3 billion
  2. Japan: $4,910.8 billion
  3. China: $4,327.0 billion
  4. Germany: $3,649.5 billion
  5. France: $2,856.6 billion
  6. UK: $2,674.1 billion
  7. Italy: $2,303.1 billion
  8. Russian Federation: $1,679.5 billion
  9. Spain: $1,604.2 billion
  10. Brazil: $1,575.2 billion

The world’s prime oil route: The Strait of Hormuz

April 23, 2010 3 comments

The Strait of Hormuz is one of the world’s most important waterways. Some 40% of all seaborne oil passes through this narrow passageway, which is equivalent to about 20% of total oil traded worldwide. This amounts to 16.5 to 17 million barrels per day, according to the US Energy Information Administration. The strait is vital to the international economy; it is the access point to the heart of the world’s largest producers of oil, such as Saudi Arabia, Iran, the UAE, and Iraq.

This very narrow waterway lies between Iran and Oman. It is about 34 km (21 miles) wide at its narrowest point. The strait is so shallow that oil tankers can effectively navigate only some 9.7 km (6 miles) of the width. According to Finian Cunningham, writing for Globalresearch.ca, 2 miles are reserved for traffic into the Gulf, 2 miles for traffic leading out, and 2 miles as a buffer zone between the two lanes.

Cunningham writes that “[u]nder international maritime law, Iran (along with Oman) has sovereign territorial rights over these waters. Iran has under United Nations law agreed to grant ‘innocent passage’ to ships through its waters provided there is no infringement of its security.”

In comparison to the Strait of Hormuz, other significant seaborne chokepoints for the transit of oil include the Suez Canal (4.5 million barrels per day), and the Strait of Malacca (15 million barrels per day). The Strait of Hormuz does not only see more transit of oil, but it is also the passage on which the other straights depend for much of their own traffic since most oil exported from the the energy abundant Gulf states are overwhelmingly reliant on Hormuz to access global markets.

More from the US Energy Information Administration:

In 2007, total world oil production amounted to approximately 85 million barrels per day (bbl/d), and around one-half, or over 43 million bbl/d of oil was moved by tankers on fixed maritime routes. The international energy market is dependent upon reliable transport. The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs.

The bulk of the Middle East oil passing through the Strait of Hormuz makes its way to Asia, the US, and Western Europe.

3/4 of Japan’s consumption of oil passes through the strait.

China, the world’s second largest oil consumer, sources over 70% of its imported oil from the Middle East, according to the People’s Daily.

India depends on the Middle East for nearly 74% of its imports of crude oil (2007-8).

South Korea received over 80% of its imported crude oil from the Middle East for the greater part of 2009.

The US imports about 24% of its crude oil from the Gulf (2008).

Iran’s former ambassador to China on China’s view of sanctions

January 22, 2010 Leave a comment
China's oil consumption (1980-2006)

China's oil consumption (1980-2006)

Mohammad Hossein Malaek, Iran’s former ambassador to China, has written a short article for Iranian Diplomacy on China’s strategic and tactical view of US-backed sanctions on Iran.

He mentions that China has in fact managed to take some advantage of sanctions against Iran by improving its own access to Iranian energy relative to competing consumers.

Punitive measures targeting Iran’s energy industry in recent years have been a blessing for Beijing. They have given it a rare opportunity to invest in Iran’s lucrative fields. China has now actually become Iranian Oil Ministry’s first option.

…In negotiations, Beijing tries to persuade Iranians replace Western technology with Chinese technology.

He mentions that China pays for its oil in cash:

In the recent years, China has purchased an annual estimated value of 9 billion dollars of oil from Iran, the price of which it in pays in cash.

The former ambassador briefly touches on the logistical and legal headache associated with cash payments, existing sanctions against Iran, and the possibility of future sanctions.

U.S-supported sanctions could not freeze the trade partnership between Iran and China, but they add to the already existing problems. Tehran can still supply its demands through cash purchase and Beijing won’t cut THE economic ties. Things will be the same, only with more courts and legal obstacles.

…To keep up their exchanges with American fiscal institutes, Chinese banks have agreed not to issue letters of credit for Iranian traders and organizations and stop dollar-based transactions. Nevertheless, the stronger economic ties between Iran and China, the more difficult it gets for them to carry out financial proceedings.

Energy pipelines in Eurasia: maps of the New Silk Road

April 21, 2009 1 comment

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I quickly gathered a series of maps of oil and natural gas pipelines that criss-cross Eurasia. Notice that some of the maps, though similar, don’t outline the same routes. This is because, some of the established routes are newly constructed and were not built at the time of the map’s inception. Also, some of the proposed lines vacillate between quite possible to unlikely to ever happen. This energy network is not yet fully established and is undergoing fairly rapid changes over the years. I hope, however, that these maps can provide a sense of the energy routes that span this multi-continent network.

A general view of existing and proposed pipelines based on geostrategic parties

oil-pipelines-east-and-west

Central Asia

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Central Asia and surroundings

central_asia1

Eastern Europe and Caucasus

pipelines_russia_eu_zg_4

From the US government’s Energy Information Administration

iea_oilmap

Railway network

tarmap_latest

Categories: Asia-Pacific, Energy Tags: , , ,

Iraq’s oil, the economy, and the war

April 21, 2009 Leave a comment

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I found these videos at the Iraq Oil Report.

Oil expert Faleh Al-Khayat presents at the European Parliament on 18 March 2009.

Part 1:

Part 2:

The New Great Game or the Long War Across Europe and Asia

March 25, 2009 Leave a comment

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A growing network of energy pipelines are criss-crossing Eurasia, giving form to the political instability, military tension, and wars erupting in the large expanse of territory touching eastern Europe to eastern regions of Asia. The war in Afghanistan, the brewing civil war in Pakistan, and international intervention in these and neighbouring countries are increasingly being viewed as outbursts and maneuvers in what is called the New Great Game over the existing and developing arteries — oil and natural gas pipelines — that will transit much of the world’s energy.

The largest players in this battle have been the USA, with its Western allies increasingly under the instrument of NATO, and a China-Russia entente primarily under the auspice of an economic and increasingly security cooperative called the Shanghai Cooperation Organization (SCO). Iran and India are also emerging as significant players in this Great Game that has very concrete material, economic, and security implications for Eurasia and for the globe in terms of the alignment of political powers and destination of economic wealth determined by the flow of the great part of the world’s energy reserves.

The existing and proposed pipelines will tap into the vast energy reserves in Central Asia, Iran, and Iraq. Their destination will be the major consumers and distributors in India, Europe, Turkey, China, Russia, and Pakistan. The cheapest pipelines cost billions of US dollars to construct, the sometimes ad-hoc network as a whole costs hundreds of billions simply to construct along sometimes competing pipelines and short sea routes with varying capacity, each tied to a general NATO or SCO alliance of interests.

The point is not simply to deliver energy to an end point, but rather by a dominant political alliance to directly control or at least overwhelming influence the access to energy. This determination will provide economic advantage to the carriers, permit them to exert political pressure by controlling access to energy and even threatening to or actually cutting off supply.

Prior to the late 1990s, the US had become supportive of cooperation with the Taliban because Afghanistan had almost entirely been united under that group’s rule, bringing harsh rule and some level of security stability to the country. In that period, those regions of Afghanistan under Taliban control were under a unified control that made it possible for the US to examine the potential for an energy pipeline running through Afghanistan into Pakistan. The US actively negotiated with the Taliban in order to make this a reality and was keen to apply political players to push out other countries’ corporate energy conglomerates. Of course, the plan did not succeed, the Taliban did not deliver a pipeline to the US energy interest, the civil war in Afghanistan kept re-erupting, and hostilities between the US and the Taliban grew until full war broke out between them.

Recently, there has been increasing talk of the possibility that the US may bomb the Baluchistan region of Pakistan in the south west. Attacks of this sort are conducted by drone planes within Pakistan. This is presented as an extension of the War on Terror, aka the Long War, aka the AfPak (Afghanistan-Pakistan) war conducted by the US and its NATO allies.

Pakistani Baluchistan is mainly cooperating with Pakistan’s central government and has not been the hotbed of Islamist militancy that has swept across much of that country’s north west. True, Baluchistan has at various points in Pakistan’s history revolted, but their resistance has nothing to do with a pan-national Islamic movement. They seek better economic conditions, and are pressing for a nationalist movement that articulates their region’s ethnic and cultural difference and marginalisation from the dominant people within the Pakistani state. So, it doesn’t seem to make sense for the US to bomb this region.

A bombing campaign would almost certainly add to long-standing tensions between Baluchistan and the central government, may lead to political instability in the region, and calls for non-cooperation with the government. The worst case would be for the nationalist movement to be reinvigorated and for Pakistan to lose control of yet another province. Instability in Baluchistan would essentially result in all of Pakistan’s western wing breaking away from direct control and turning to open rebellion.

So why would the US consider bombing Baluchistan when there are little to no major Islamist assets in the region and risk further disempowering Pakistan’s government?

Baluchistan is a necessary passage for a proposed pipeline running from Iran, through Pakistan, to India, with a possible splinter carrying oil to China. This Iran-Pakistan-India (IPI) pipeline has already seen much difficulty. With the deepening strategic alliance between India and the US, India has been pressured to disinvest from the project. Despite this, the project keeps rearing its head. India depends on energy imports, and will become increasingly vulnerable to energy supplies as it industrialises at a rapid pace. Furthermore, nearly all of India’s energy supplies are delivered via sea lanes, leaving it open to disruption, explaining much of India’s interest in heading off pirate attacks in north east Africa as well as its increasing monitoring operations there. India feels it needs not only a greater supply of oil but also to diversify points of access.

The permanent infrastructure of an IPI pipelines would require cooperation between Iran, Pakistan, and India. This may well demand some rapprochement between India and Iran, and would offset some of the US ability to isolate the Islamic Republic of Iran. Furthermore, a splinter into China would extend China’s reach and influence into the intensifying New Great Game over energy supplies.

Just as the Russia-Georgia war disrupted the only pro-Western energy supply line from Central Asia to Europe for a short period and risks to undermine its development by scaring investors and government away, the bombing of Baluchistan could well bury the IPI pipeline before it can become a reality.

For more information on the New Great Game read the following:

Liquid war: Welcome to Pipelineistan, by Pepe Escobar.

From Great Game to Grand Bargain, by Barnett R. Rubin and Ahmed Rashid.

Taliban: Islam, Oil and the New Great Game in Central Asia, by Ahmed Rashid.

Roundup of Analysis: Oil, food, authoritarianism, and minorities

October 26, 2007 Leave a comment

Heydemann: Upgrading Arab Authoritarianism. In recent years, a new model of authoritarian governance has emerged in a number of key Arab states. A product more of trial and error more than intentional design, Arab regimes have adapted to pressures for political change by developing strategies to contain and manage demands to democratize. They have expanded political spaces—electoral arenas in particular—where controlled forms of political contestation can occur. They have also tempered their opposition to Islamist political participation. In some instances, notably Egypt, Jordan, and Morocco, Islamist representatives have secured meaningful representation in parliament. (Steven Heydemann, Abu Aardvark)

An Analysis on the Baluchi Minority. The Baluchi minority in southwestern Pakistan and southeastern Iran is increasingly marginalized, discriminated against by the state, and suffers from limited access to the benefits of citizenship, according to political observers and human rights groups. Although the 6 million-8 million ethnic Baluchis in both countries live in a strategic location atop untapped hydrocarbon and mineral deposits and possible trade routes, it looks unlikely that their grim conditions will improve soon. A report released on October 22 by the International Crisis Group argues that only free and fair elections are likely to encourage Baluchi participation in Pakistani politics. The Brussels-based think tank predicts that in the absence of political reconciliation, violence will continue unabated between Pakistan’s military and Baluchi nationalist militants demanding political and economic autonomy. (Abubakar Siddique, Turkish Weekly)

The Connection Between Food Supply and Energy: What Is the Role of Oil Price? I became fascinated with the connection between our food supply and energy when I first learned of the problems that North Korea was having feeding itself. (see here). This data showed me something amazing about modern society, we don’t live in the information age, we don’t live in the industrial age, we live in the agricultural age. Without food, we have no industry or information. Unfortunately many don’t understand this. Nor do they understand that today the modern farming system is merely a means to turn petroleum into food, via mechanized planting and harvesting, and the use of petroleum based insecticides and fertilizers which consume huge amounts of energy in their manufacture. (Glenn Morton, The Oil Drum)

Roundup of Analysis and Investigative Articles: Oil, war, torture, privatization, and politics

October 10, 2007 Leave a comment

Oil and the origins of the ‘War to make the world safe for Democracy’. At first almost unnoticed after 1850, then with significant intensity after the onset of the Great Depression of 1873 in Britain, the sun began to set on the British Empire. By the end of the 19th Century, though the City of London remained undisputed financier of the world, British industrial excellence was in terminal decline. The decline paralleled an equally dramatic rise of a new industrial Great Power on the European stage, the German Reich. Germany soon passed England in output of steel, in quality of machine tools, chemicals and electrical goods. Beginning the 1880’s a group of leading German industrialists and bankers around Deutsche Bank’s Georg von Siemens, recognized the urgent need for some form of colonial sources of raw materials as well as industrial export outlet. With Africa and Asia long since claimed by the other Great Powers, above all Great Britain, German policy set out to develop a special economic sphere in the imperial provinces of the debt-ridden Ottoman Empire. (F. William Engdahl, Geopolitics-Geoeconomics)

Even CATO libertarians say energy deregulation does not work. In an Op-Ed that was published in the Wall Street Journal last month (and is available in full to non-subscribers on CATO’s website) two CATO economists specialised in deregulation and energy markets provide a breath of fresh air in the debates on energy. Their point is to criticize the poorly thought out deregulation in various US States over the past 15 years, and they explain clearly how energy markets work (something which is rare enough in the mainstream media), and what the consequences of various bits of deregulation are on market behavior and thus on electricity prices. (Jerome A. Paris, The Oil Drum)

The Kurdistan Regional Government (KRG) says it supports Iraqi oil unions. The Iraqi Kurds’ oil minister, in contrast to the federal oil minister, says what’s best for Iraq is to embrace the oil unions. Iraqi Oil Minister Hussain al-Shahristani has ordered the ministry’s companies and departments to cease dealings with the oil unions. “The trade unions in Iraq now are illegal till the new law is passed by the Parliament,” Shahristani told UPI, referring to a new labor law called for in the Constitution but that has not materialized. Ashti Hawrami, minister of natural resources for the Kurdistan Regional Government, told UPI his region’s law has incorporated local worker requirements, and unions are key to that. (Ben Lando, UPI)

Torture Endorsed, Torture Denied. Marjorie Cohn of Thomas Jefferson School of Law says that the Bush administration’s repeated insistence that it has not endorsed the torture of prisoners rings hollow in light of newly-disclosed US Department of Justice memos supporting the harshest techniques the CIA has ever used. (Marjorie Cohn, The Vineyard of the Saker)

Hizbollah and the Lebanese Crisis. The Lebanese crisis has receded from the headlines but has not gone away. Today, all eyes are on the presidential election, the latest arena in the ongoing struggle between pro- and anti-government forces. Yet even if a compromise candidate is found, none of the country’s underlying problems will have been addressed, chief among them the status of Hizbollah’s weapons. If the election is to be more than a mere prelude to the next showdown, all parties and their external allies need to move away from maximalist demands and agree on a package deal that accepts for now Hizbollah’s armed status while constraining the ways in which its weapons can be used. (International Crisis Group)

Indian Patents: Doing Just Fine. In early August, the Madras High Court dismissed Swiss pharmaceutical giant Novartis’ claim that a section of Indian patent law was unconstitutional. In the aftermath of the decision, one image stood out: the MNC pharmaceutical lobby, with its tropical agents in tow, raising a big stick to beat an errant country. In a situation rife with speculation, we should know that we have no reason to cower. (Chan Park & Achal Prabhala, Tehelka)

Book Review: Are Diplomats Necessary? Diplomacy is one of the world’s oldest professions, although diplomatic practice as we know it is a relatively recent development. Using ambassadors and envoys, often distinguished personalities of the time (Dante, Machiavelli, Peter Paul Rubens), was an accepted practice throughout recorded history. It was also regarded, in Europe at least, as “a kind of activity morally somewhat suspect and incapable of being brought under any system.” The establishment of the international rules of diplomacy, including the immunity of diplomats, began with the Congresses of Vienna (1815) and Aix-la-Chapelle (1818). The rules were a European creation gradually adopted in the rest of the world. Further international conventions update them from time to time. Diplomats have enjoyed a surprising degree of immunity from criticism for the often violent and disorderly state of international affairs. (Brian Urquhart, New York Review of Books)

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