Daily Archives: November 17, 2011

North Korea to Reap Gas Transit Fees

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North Korea is likely to receive $100 million per year if it becomes a transit country for Russian gas supplies to South Korea, a Russian official said on Thursday.

In August, Russia and North Korea had reached an agreement to draw up a project to build a gas pipeline to South Korea. The pipeline will cost an estimated $6 billion.

The expected volume of Russian gas exports to South Korea was raised to 12 billion cubic meters from 10 bcm.

Supplies of Russian gas to South Korea are expected to begin in 2017.

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Obama’s Indefensible Pipeline Punt

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CARPE DIEM

Professor Mark J. Perry's Blog for Economics and Finance

Some excerpts from Vaclav Smil‘s article in the American.com:

“With a total length of close to 3,000 kilometers, the new [Keystone XL] pipeline would add just over 1 percent to the already existing network of crude oil and refined products lines that crisscross the United States and parts of Canada. Why, if pipeline safety is a key concern, have we not seen waves of civil disobedience focused on more than a quarter million kilometers of existing pipelines?

Long-term statistics show convincingly that there is no safer way to transport large masses of liquids over long distances than a pipeline. Moving the same amount by trucks or rail would be much more risky, in addition to being vastly more expensive. So would be moving the oil from Alberta to British Columbia and then shipping it by tankers via the Panama Canal to Texas.

Here comes the craziest twist: if the opponents of the XL succeed and prevent its construction, there is a strong possibility that Alberta’s oil sand-derived oil will be piped westward to Canada’s Pacific coast and loaded on supertankers going to Asia, to feed China’s grossly inefficient industries.

By preventing the oil flow from Canada, the United States will thus deliberately deprive itself of new manufacturing and construction jobs; it will not slow down the increase of global CO2 emissions from fossil fuel combustion; it will almost certainly empower China; and it will make itself strategically even more vulnerable by becoming further dependent on declining, unstable, and contested overseas crude oil supplies. That is what is called a spherically perfect decision, because no matter from which angle you look at it, it looks perfectly the same: wrong.”

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U.S.-China tensions risk spilling over into Asia summit

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By Caren Bohan and Laura MacInnis
NUSA DUA, Indonesia | Fri Nov 18, 2011 6:12am IST

(Reuters) – Tensions between the United States and China threaten to spill over into meetings of Asia-Pacific leaders from Friday, with U.S. President Barack Obama declaring his intention on the eve of the gathering to assert U.S. influence in the region.

Obama said in Australia on Thursday, on his last stop before jetting to the meetings in neighboring Indonesia, that the U.S. military would expand its Asia-Pacific role despite budget cuts, declaring America was “here to stay” as a Pacific power.

And days earlier, as host of the Asia Pacific Economic Co-Operation forum in Hawaii, Obama had voiced growing frustration at China’s trade practices and pushed for a new Asia-Pacific trade deal with some of Beijing’s neighbors.

The Indonesia meetings, on the resort island of Bali, bring together the 10-member Association of South-East Asian Nations (ASEAN) and eight dialogue partners, including the United States, China, Russia and Japan. Bilateral meetings are held on Friday before a full East Asia summit on Saturday.

Earlier this week, U.S. Secretary of State Hillary Clinton urged claimants to the South China Sea not to resort to intimidation to push their cause in the potentially rich waters, an indirect reference to China ahead of the Bali summit.

China and several ASEAN countries have clashed over sovereignty of the waters, believed to be rich in natural resources and straddling vital trade lanes.

Clinton called for candid discussion of the maritime dispute at the summit, which could embolden some Southeast Asian countries with maritime claims, though China says it does not want such talks to take place and that the issue should be resolved via bilateral negotiations.

“Introducing a contentious subject into the meeting would only affect the atmosphere of cooperation and mutual trust, damaging the hard-won setting of healthy development in the region,” Chinese Foreign Ministry spokesman Liu Weimin said on Wednesday. “That’s is beyond any doubt.”

Obama has declared that U.S. engagement in the Asia-Pacific region was “absolutely critical”, feeding China’s longstanding fears of being encircled by the United States and its allies.

“As we end today’s wars, I have directed my national security team to make our presence and missions in the Asia Pacific a top priority,” Obama said on Thursday in a major speech on Washington’s vision for the Asia-Pacific region.

“As a result, reductions in U.S. defence spending will not — I repeat, will not — come at the expense of the Asia Pacific.”

Nervous about China’s growing clout, U.S. allies such as Japan and South Korea have sought assurances from the United States that it would be a strong counterweight in the region.

A first step in extending the U.S. military reach into Southeast Asia will see U.S. Marines, naval ships and aircraft deployed to northern Australia from 2012.

That deployment to Australia, which by 2016 will reach a taskforce of 2,500 U.S. troops, is small compared with the 28,000 troops stationed in South Korea and 50,000 in Japan.

But the presence in Darwin, only 820 km (500 miles) from Indonesia, will allow the United States to quickly reach into Southeast Asia and the Indian Ocean.

Obama acknowledged China’s unease at what it sees as attempts by Washington to encircle it, pledging to seek greater cooperation with Beijing.

He added: “We’ll seek more opportunities for cooperation with Beijing, including greater communication between our militaries to promote understanding and avoid miscalculation.”

The new de facto U.S. base in Australia expands the direct U.S. military presence in Asia beyond South Korea and Japan and into Southeast Asia, an area where China has growing economic and strategic interests.

It will also put more U.S. troops, ships and aircraft much closer to the South China Sea.

CHINA QUESTIONS U.S. DEPLOYMENT TO AUSTRALIA

China has questioned the new U.S. deployment, with a foreign ministry spokesman raising doubts about whether strengthening such alliances helped the region pull together at a time of economic gloom.

But overall its official reaction has been restrained, with an impending leadership succession preoccupying the ruling Communist Party and leaving Beijing anxious to avoid diplomatic fireworks.

Reaction from some state media was harsher.

“It wouldn’t come as a surprise if the United States is trying to seek hegemony in the region, which would be in line with its aspirations as a global superpower,” China’s state news agency Xinhua said in a commentary.

Obama said the increased focus on the Asia-Pacific region was essential for America’s economic future.

“As the world’s fastest-growing region – and home to more than half the global economy – the Asia Pacific is critical to achieving my highest priority: creating jobs and opportunity for the American people,” he said.

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UK: Aker Solutions to Supply Subsea Modules for Western Isles Project

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Aker Solutions in Aberdeen that it has received an order to manufacture and deliver a number of subsea control modules and topside power units as part of an 12,6 million contract with Dana Petroleum plc.

The company has signed a contract for the project management, engineering, procurement and construction of a number of subsea systems for the Western Isles Development Project on the UK continental shelf. It marks the first contract agreement between the two companies.

A total of nine subsea control modules will be delivered by Aker Solutions’ Aberdeen facility. The full scope of work will also see one master control system, one electrical power unit, one hydraulic unit, one subsea isolation valve panel, two topside umbilical termination units, two subsea distribution units, five electrical distribution boxes and 11 mounting bases delivered.

The work will also include offshore installation and commissioning support of all subsea control system equipment and Aker Solutions expects final deliveries will be made in second quarter of 2011.

Paul Griffin, Dana Petroleum’s UK Managing Director said “This is an exciting time for Dana as we strive to grow our business in the UK and internationally. The Western Isles development is a significant project for us and we’re pleased to be working with Aker Solutions to bring the field online, with first production expected in late 2014.”

The Western Isles Development Project is located 500 kilometres north east of Aberdeen and comprises the Harris and Barra reservoirs.

“We are very pleased to be awarded this important contract with Dana Petroleum. Not only does this contract allow us to utilise the full strength of our subsea offering, it also reinforces our position as a leading name in the subsea technology sector. We look forward to building a relationship with this new customer,” said Alan Brunnen, EVP Subsea within Aker Solutions.

Aker Solutions’ contract party is Aker Subsea Ltd.

Aker Solutions is one of the largest employers in the north-east of Scotland, employing around 2,500 people at bases across Aberdeen City, Dyce and Portlethen.

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USA: Cal Dive Secures Well Intervention Contract for Uncle John Vessel

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Cal Dive International’s multiservice vessel Uncle John is currently undergoing an upgrade to the vessel’s dynamic positioning and derrick systems, which will enable the vessel to perform light well intervention work in water depths up to 3,500 feet.

Uncle John is DNV Classified multipurpose vessel with, 16-man Comex dive system with hyperbaric lifeboat capable of carrying 16 divers and 3 crews.

The upgrade is part of the Company’s original capital expenditure budget for 2011. Completion of this upgrade is anticipated during the middle of the first quarter of 2012. Following this upgrade and upon completion of 45 days of work for a major oil and gas operator, the Uncle John will commence a P&A Support Contract for two deepwater wells for Apache Corporation . This awarded work is expected to keep the Uncle John utilized late into the second quarter of 2012.

Quinn Hébert, President and Chief Executive Officer of Cal Dive, stated, “We are pleased to announce the upgrade of the Uncle John and the award of our first light well intervention contract by Apache utilizing the vessel’s upgraded capability. We are excited about the opportunities available to Cal Dive in entering this new market segment where we have received significant interest from our customers. This will allow Cal Dive to further diversify our market reach beyond our traditional diving and integrated construction services.”

Cal Dive International, Inc., headquartered in Houston, Texas, is a marine contractor that provides an integrated offshore construction solution to its customers, including manned diving, pipelay and pipe burial, platform installation and platform salvage services to the offshore oil and natural gas industry worldwide with a fleet of 29 vessels, including 19 surface and saturation diving support vessels and 10 construction barges.

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Niko Spuds Stalin Well, Offshore Trinidad

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Niko Resources LTD, an offshore exploration company with headquarters in Calgary, Canada, announced today that it has commenced drilling operations on its first well offshore Trinidad.

The Rowan Gorilla III rig is on location at the Stalin prospect, which is the first of three wells planned for Block 2ab located off Trinidad and Tobago’s eastern continental shelf. The Stalin-1 well is named after the popular calypso great, Black Stalin.

Niko is the operator of the block and has a 35.75% working interest. Partners in the well are Petrotrin with 35% and Centrica Plc with 29.25%. The well is being drilled in 100 feet of water to a total depth of 8800 feet and will test a large anticlinal feature made up of multiple thrust sheets. The reservoir targets are the Oligocene age Angostura sands which are producing in the Angostura field located approximately 23 miles east of the Stalin location.

Niko’s best estimate is a target of 600 to 800 million gross unrisked in-place barrels of oil equivalent.

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China: Third West-East Gas Pipeline to Start Operation in 2013

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China’s third West-to-East gas pipeline, mainly carrying gas from Central Asia to southeastern Fujian province, is expected to become operational by the end of 2013 , China Daily reported on Thursday, citing a source with the country’s dominant gas supplier.

The 5,200-kilometre project, with annual shipment capacity of about 30 billion cubic metre (bcm), will include one artery, six branch lines, three gas storage facilities and a liquefied natural gas (LNG) terminal, the report said.

The pipeline will run from the Xinjiang region to the city of Fuzhou in Fujian province, the source was quoted as saying.

Work on the fourth and fifth pipeline will be initiated some time after 2015, with each pipeline having an annual capacity of about 30 bcm and supplying gas to the country’s industrialized coastal regions, the English newspaper reported.

Turkmenistan, Uzbekistan, and Kazakhstan will be the major sources of supply for all the planned pipelines, the report said.

China National Petroleum Corp (CNPC), parent of China’s largest oil and gas producer PetroChina Co Ltd , has long planned to add more lines across the country to feed booming demand in the eastern and southern coasts.

But its plans have been modified from one time after another due to uncertainties in gas supplies.

Talks with Russia for gas imports of up to 68 bcm per annum have been on and off for years as the sides were far apart on prices.

China’s first West-to-East gas pipeline, pumping domestic gas from Xinjiang to eastern cities including Shanghai, is running at full capacity of 17 bcm per year, and the second line, sending Turkmenistan gas to the east, is scheduled to reach its capacity of 30 bcm by the end of next year.

China’s natural gas imports rose 86.5 percent from a year earlier to some 25 bcm in the first 10 months, of which 12.3 bcm was piped in from Turkmenistan and the remainder shipped in by LNG carriers, according to the National Development and Reform Commission.

The country aims to more than double the current 4 percent share of gas in its overall energy consumption by 2020.

(reuters)

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ASEAN gambles on Myanmar’s regional leadership

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By Ben Blanchard
NUSA DUA, Indonesia

(Reuters) – Southeast Asian nations endorsed Myanmar Thursday for the chairmanship of a key regional grouping, gambling that the isolated country can stick to reforms begun this year that could lead it out of half a century of isolation.

But U.S. President Barack Obama cautioned that Myanmar, also known as Burma, must still demonstrate improvements in human rights in his first remarks since the authoritarian regime freed hundreds of political prisoners in October and vowed more reforms in the weeks ahead.

“Some political prisoners have been released. The government has begun a dialogue. Still, violations of human rights persist,” Obama said in a speech to the Australian parliament

ahead of joining Asian leaders in Bali for an East Asia Summit.

“So we will continue to speak clearly about the steps that must be taken for the government of Burma to have a better relationship with the United States.”

The United States has said that freeing political prisoners is one of several preconditions to lifting sanctions that have isolated Myanmar and driven it closer to China. Other conditions include peace with restive ethnic groups after years of unrest.

But Southeast Asia has moved quickly to embrace change in the resource-rich former British colony, whose strategic location between rising powers India and China, and vast, untapped natural-gas resources, have drawn investor interest.

The 10-member Association of South East Asian Nations (ASEAN) — of which Myanmar is a member — formally gave Myanmar the chairmanship of the Southeast Asian regional bloc in 2014, two years ahead of schedule, said Myanmar government officials at an ASEAN summit on the Indonesian resort island of Bali.

“Be assured that we are now growing into a democratic society and we will do all our responsibilities and duties as a responsible government, reflecting the desires of the Myanmar people,” Ko Ko Hlaing, chief political adviser to the Myanmar president, told reporters.

“We will do what we have to do as a democratic government and a democratic society,” he said. “As a family, ASEAN nations have welcomed Myanmar to be a responsible chairman.”

U Sit Aye, a senior Myanmar presidential legal advisor, said more reforms were in store.

“It is . a continuing process,” he said, adding that ASEAN leaders had formally backed Myanmar’s chairmanship at a closed-door meeting in Bali.

Countries across Southeast Asia welcomed the chairmanship as a critical milestone after years frustration over Myanmar’s isolation as the region approaches a European Union-style Asian community in 2015.

“We believe that with the positive improvements in Myanmar right now, this has shown that Myanmar would like to come back to the democratic way,” Thai Foreign Minister Surapong Towijakchaiku told reporters on the sidelines of the ASEAN summit in Bali.

“MOMENTUM FOR REFORMS”

Recent overtures by Myanmar’s government have included calls for peace with ethnic minority groups, some tolerance of criticism, the suspension of an unpopular Chinese-funded dam project and the legalization of labor unions.

President Thein Sein has also reached out to democracy leader Aung San Suu Kyi, who was freed last year from 15 years of house arrest. Her National League for Democracy (NLD) is expected to decide on Friday whether to re-register as a political party to contest imminent by-elections.

An official in Suu Kyi’s party said Myanmar’s expected ASEAN chairmanship would help to drive more political change.

“Their decision is tantamount to encouraging the present Myanmar government to step up the momentum for reforms,” Nyan Win, a senior NLD official, told Reuters. “Myanmar’s political activities will become more vibrant after assuming the chair.”

Indeed, Indonesia’s foreign minister, Marty Natalegawa, said the chairmanship would likely open Myanmar further. “I am quite convinced this will have a huge multiplier effect.”

“REAL CHANGES”

The United States has had strained relations with Myanmar since the former military junta, which took power in a 1962 coup, killed thousands in a crackdown in 1988. The junta was replaced by a military-dominated civilian government in March after the first elections in two decades last year.

U.S. Secretary of State Hillary Clinton said last Friday that Myanmar appeared to be making some “real changes” to its political system but needs to pursue more reform.

Myanmar’s government has responded by urging the United States to lift sanctions, describing its reforms as genuine.

The country, as big as France and Britain combined, is developing ports on the Indian Ocean and Andaman Sea that, if combined with proposed rail and pipeline projects, would allow cargo ships to bypass the Straits of Malacca.

That would open the way for faster delivery of oil from the Middle East and Africa to China and other countries in the region straddling the Mekong River.

India, Japan and Southeast Asia have sought to ramp up engagement, largely to counterbalance China’s influence and to gain a toehold in a country whose proven gas reserves have tripled in the past decade to around 800 billion cubic meters, equivalent to more than a quarter of Australia’s, BP Statistical Review figures show.

(Additional reporting by Michael Perry, James Grubel and Caren Bohan in Canberra and Aung Hla Tun in Yangon; writing by Jason Szep; editing by Neil Fullick.)

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