Christopher Helman writes: The idea that Saudi Arabia could become an oil importer by 2030 is laughable. But that’s the scenario outlined in a report this week by Citigroup analyst Heidy Rehman. Looking at the Kingdom’s growth in power demand (much of which is generated by burning oil), Saudi Arabia’s domestic demand is on track to suck up ever more of its oil production to the point that there’s nothing left for export.

That sounds hard to believe given that the Kingdom produced 9.9 million bpd last month, the most in the world, and more than 10% of global demand. But developing countries usually grow electricity demand faster than population growth, and in Saudi Arabia air conditioning is not an option. Compounding the problem, writes Rehman is that Saudi power generators only pay $5 to $15 per barrel for the oil they burn.

To assuage civic unrest in the wake of the Arab Spring, Saudi King Abdullah has granted his 30 million subjects a host of new social handouts. He’s not about to yank subsidized electricity or gasoline now — but eventually it will probably have to happen.

It’s unlikely that by the time the Saudis need to import oil that there would be enough available on global markets to meet their needs. What’s more, considering that the $600 billion Saudi economy is based almost entirely on energy exports, if the Kingdom were to be able to afford to buy oil from the rest of the world it would have to sufficiently diversify to the point that it made enough other products for export that it could offset its oil import bill. This is highly unlikely for a country with no tradition of entrepreneurship, few rights for women and a reliance on indentured laborers brought in from the likes of Sri Lanka and Malaysia to do any kind of manual labor.

Rather if the Saudis are going to be able to make their energy ends meet in the decades to come they will have to rely on gleaning a different kind of energy out of the desert: solar power. [Continue reading…]

Toby Craig Jones writes: Middle Eastern oil has enchanted global powers and global capital since the early twentieth century. Its allure has been particularly powerful for the United States. The American romance began in earnest in the 1930s, when geologists working for Standard Oil of California discovered commercial quantities of oil on the eastern shores of Saudi Arabia. In the years that followed, enchantment turned into obsession. Shortly after World War II it became clear that oil was more than merely a coveted industrial commodity. The most visible and celebrated event in that history occurred when Franklin D. Roosevelt hosted ‘Abd al-‘Aziz Ibn Saud, the founding monarch of Saudi Arabia, aboard the USS Quincy on Egypt’s Great Bitter Lake in February 1945. The meeting permanently linked Middle Eastern oil with American national security. It also helped forge one of the twentieth century’s most important strategic relationships, in which the Saudis would supply cheap oil to global markets in exchange for American protection. A bargain was made. And so too was a future tinderbox.

Over the course of the twentieth century, preserving the security not just of Saudi Arabia but of the entire Persian Gulf region and the flow of Middle Eastern oil were among the United States’ chief political-economic concerns. The pursuit of American power in the Gulf has been fraught with peril and has proved costly in terms of both blood and treasure. Oil has flowed, although not without difficulty. Since the late 1970s the Gulf has been rocked by revolution and almost permanent war. Security, if measured by the absence of conflict, has been elusive, and safeguarding the Persian Gulf and the region’s oil producers has meant increasingly more direct and dearer forms of U.S. intervention.

The U.S.-led invasion of Iraq in 2003 and the American military occupation there represented only the latest stage of American militarism in the Middle East. While more considerable in scale, duration, and devastation than previous military misadventures in the region, the Iraq War was the outgrowth of several decades of strategic thinking and policy making about oil. It is true, of course, that terrorism and especially the attacks of September 11, 2001, helped accelerate the drive to war in 2003, but to focus too much on 9/11 is to overlook and discount the ways that oil and oil producers have long been militarized, the role oil has played in regional confrontation for almost four decades, and the connections between the most recent confrontation with Iraq and those of the past. Oil and war have become increasingly interconnected in the Middle East. Indeed, that relationship has become a seemingly permanent one. This outcome was not inevitable; the United States has not only been mired in the middle, but its approach to oil has also abetted the outcome.

It is also important to understand the U.S. emphasis on security, and the contradictions of its approach to it, in a broader regional context. While this essay does not dwell on the U.S.-Israeli relationship, U.S. Persian Gulf policy and America’s relationship with the region’s oil producers were often at odds with the alliance between the United States and Israel. The tensions created by American policies in the Gulf have undermined U.S. claims about pursuing regional security more generally. This contradiction played out most spectacularly during the 1973 oil crisis. [Continue reading…]

Wired reports: The Navy’s ambitious renewable-energy plans aren’t sunk quite yet. But they took a major hit Thursday, when the Senate Armed Services Committee voted to all-but-ban the military from buying alternative fuels.

The House Armed Services Committee passed a similar measure earlier this month. But the House is controlled by Republicans, who are generally skeptical of alternative energy efforts. Democrats are in charge of the Senate Armed Services Committee. And if anything, the Senate’s alt-fuel prohibition goes even further than the House’s. If it becomes law, if would not only sink the Navy’s attempt to sail a “Great Green Fleet,” powered largely by biofuels. It would also sabotage a half-billion-dollar program to shore up a tottering biofuels industry.

Like their counterparts in the House, senators prohibited the Pentagon from buying renewable fuels that are more expensive than traditional ones — a standard that biofuels may never meet. In addition, the committee blocked the Defense Department from helping build biofuel refineries unless “specifically authorized by law” – just as the Navy was set to pour $170 million into an effort with the Departments of Energy and Agriculture to do precisely that.

The measures — amendments to the Pentagon’s budget for next year — were pushed by two Republicans. Sen. James Inhofe has long been one of the Republican’s fiercest critics of renewable energy efforts; Sen. John McCain has in recent years turned away from long-held eco-friendly positions.

“Adopting a ‘green agenda’ for national defense of course is a terrible misplacement of priorities,” McCain told National Journal Daily on Tuesday, calling it “a clear indication that the president doesn’t understand national security.”

Which Democrats joined McCain in passing the amendments is unclear; the vote was held in a closed session of the committee.

The Washington Post reports: In a desertlike stretch of scrub grass and red buttes, oil companies are punching holes in the ground in search of what might be one of the biggest recent discoveries in the Americas: enough gas and oil to make a country known for beef and the tango an important energy player.

The environment is challenging, with resources trapped deep in shale rock. But technological breakthroughs coupled with a feverish quest for the next major find are unlocking the door to oil and natural gas riches here and in several other countries in the Americas not traditionally known as energy producers.

That is quickly changing the dynamics of energy geopolitics in a way that had been unforeseen just a few years ago.

From Canada to Colombia to Brazil, oil and gas production in the Western Hemisphere is booming, with the United States emerging less dependent on supplies from an unstable Middle East. Central to the new energy equation is the United States itself, which has ramped up production and is now churning out 1.7 million more barrels of oil and liquid fuel per day than in 2005.

“There are new players and drivers in the world,” said Ruben Etcheverry, chief executive of Gas and Oil of Neuquen, a state-owned energy firm that is positioning itself to develop oil and gas fields here in Patagonia. “There is a new geopolitical shift, and those countries that never provided oil and gas can now do so. For the United States, there is a glimmer of the possibility of self-sufficiency.”

The Guardian reports: A network of ultra-conservative groups is ramping up an offensive on multiple fronts to turn the American public against wind farms and Barack Obama’s energy agenda.

A number of rightwing organisations, including Americans for Prosperity, which is funded by the billionaire Koch brothers, are attacking Obama for his support for solar and wind power. The American Legislative Exchange Council (Alec), which also has financial links to the Kochs, has drafted bills to overturn state laws promoting wind energy.

Now a confidential strategy memo seen by the Guardian advises using “subversion” to build a national movement of wind farm protesters.

The strategy proposal was prepared by a fellow of the American Tradition Institute (ATI) – although the thinktank has formally disavowed the project.

The proposal was discussed at a meeting of self-styled ‘wind warriors’ from across the country in Washington DC last February.

“These documents show for the first time that local Nimby anti-wind groups are co-ordinating and working with national fossil-fuel funded advocacy groups to wreck the wind industry,” said Gabe Elsner, a co-director of the Checks and Balances, the accountability group which unearthed the proposal and other documents.

Among its main recommendations, the proposal calls for a national PR campaign aimed at causing “subversion in message of industry so that it effectively because so bad that no one wants to admit in public they are for it.”

It suggests setting up “dummy businesses” to buy anti-wind billboards, and creating a “counter-intelligence branch” to track the wind energy industry. It also calls for spending $750,000 to create an organisation with paid staff and tax-exempt status dedicated to building public opposition to state and federal government policies encouraging the wind energy industry.

Steve Coll talks to Foreign Policy about his new book on ExxonMobil, Private Empire.

SC: This company was born of a merger closed in late 1999 between Exxon and Mobil, two “Baby Standards” — two independent decedents of the breakup of Standard Oil in 1911 that was ordered by the United States Supreme Court. Essentially it was a merger of equals when there were a lot of combinations of big oil companies in the late 1990s when prices fell and the whole industry was confronted with structural problems. They combined to better manage their positions and also to compete with the state-owned companies that were rising in Russia and Brazil and elsewhere, but the merger was really Exxon buying Mobil.

When Exxon bought Mobil, however, it bought a company whose overseas holdings were in far more adventurous places than Exxon’s were. So they basically bought a bunch of wars and they bought a lot of Africa and they ended up with a map that had geopolitical risk in it to a much greater degree than Exxon alone had been forced to confront.

Probably the most important property they bought in 2000 was this giant gas field in Aceh, Indonesia, and some liquefied natural-gas facilities next door to the field. At that time, this Aceh field accounted for about a quarter of Mobil’s overseas profits; it was an enormous cash cow due to some contracts they had set up with the Japanese and South Koreans. So Exxon buys this thing, and somehow their investment bankers didn’t do full due diligence to report to the board of directors, “Oh yes, you’re also buying a war.”

Their separatist movement really ramped up and started attacking ExxonMobil’s gas fields directly, and the Indonesian military, which did not want to see Aceh go after losing East Timor, was determined that that was it — they were going to draw the line at Aceh. At that point, they were essentially under contract with ExxonMobil to defend these gas fields and they undertook a pretty brutal campaign to put down the Acehnese rebellion. This included setting up detention centers on the perimeter of Exxon’s gas fields where they detained Acehnese men and tortured them, and also conducted sweep operations in local villages that could also be violent and menacing.

This presented Exxon with a series of dilemmas that they frankly hadn’t had to reckon with in the previous 10 years when they were operating on their own in places like Australia and or in Europe. They had entered Angola but it had settled down; they had a field in Chad but they hadn’t developed it yet. They had a few of these dilemmas in places like Yemen, but nothing of this scale. And the records from the lawsuits that were eventually filed claiming human rights violations that ExxonMobil either had known about or should have known show that the company was pretty much over its head, at least initially and really didn’t know quite what to do about this.

FP: So how does a massive company like ExxonMobil set itself up to absorb a significantly higher degree of risk? These are the same sorts of problems that got Chevron in trouble in South America, Shell in Nigeria. How do they reconfigure corporate culture to absorb an entirely different type of business?

SC: They have basically a political risk department that is central to their corporate planning and to their annual strategy discussions at headquarters. It’s run by a woman named Rosemarie Forsythe who used to be on the National Security Council, and she basically goes into the management committee — which is the top group of executives that’s looking out over the world from quarter to quarter and year to year — and she presents political risk analysis, both regional and global. I spoke to her a little bit about what her PowerPoint show sounds like, and basically she describes a world in which more and more of the oil that ExxonMobil is going to be interested in or already owns is in unstable places; that’s what the basic map looks like. They color code it and they divide the world into different groups and so forth, but fundamentally the oil they can access is in unstable places. Now an academic might also point out that the oil is in unstable places because oil can be destabilizing in weak countries, but I’m not sure ExxonMobil does that analysis.

Greg Palast writes: Two years before the Deepwater Horizon blow-out in the Gulf of Mexico, another BP off-shore rig suffered a nearly identical blow-out, but BP concealed the first one from the U.S. regulators and Congress.

This week, EcoWatch.org located an eyewitness with devastating new information about the Caspian Sea oil-rig blow-out which BP had concealed from government and the industry.

The witness, whose story is backed up by rig workers who were evacuated from BP’s Caspian platform, said that had BP revealed the full story as required by industry practice, the eleven Gulf of Mexico workers “could have had a chance” of survival. But BP’s insistence on using methods proven faulty sealed their fate.

One cause of the blow-outs was the same in both cases: the use of a money-saving technique—plugging holes with “quick-dry” cement.

By hiding the disastrous failure of its penny-pinching cement process in 2008, BP was able to continue to use the dangerous methods in the Gulf of Mexico—causing the worst oil spill in U.S. history. April 20 marks the second anniversary of the Gulf oil disaster.

There were several failures in common to the two incidents identified by the eyewitness. He is an industry insider whose identity and expertise we have confirmed. His name and that of other witnesses we contacted must be withheld for their safety.

The failures revolve around the use of “quick-dry” cement, the uselessness of blow-out preventers, “mayhem” in evacuation procedures and an atmosphere of fear which prevents workers from blowing the whistle on safety problems. [Continue reading…]

Steve Horn and Allen Ruff report: December 16, 2011, should have been, at minimum, a fairly bright day for the people of Kazakhstan marking the country's Independence Day and 20th birthday.

But rather than being a moment of celebration, it became a day of brutal repression and death, a bloody scene in the regional center of Zhanaozen paralleling those that occurred at the hands of US-supported dictatorial regimes during the uprisings now commonly referred to as the Arab Spring.

The victims of the state's crackdown were striking oil workers protesting subsistence wages and poor working conditions in the city of 51,000 citizens 75 miles east of the Caspian Sea.

Kazakhstan's state media reported police shot and killed ten workers, wounding more than 80 strikers. Independent journalist Mark Ames translated an account of a Russian reporter who estimated approximately 70 dead, with 500 to 800 wounded. Scores more were jailed, likely the victims of beatings and torture.

Following the shootings and arrests, Zhanaozen, home to the state-owned oil company, KazMunaiGas (KMG), was placed under a state of emergency. Authorities cut off Internet and communications access nationwide and the city was inundated with additional thousands of police. KMG has ongoing business ownership partnerships with the US-based multinational energy giants Chevron and ExxonMobil, which hold significant concessions in the country.

EurasiaNet's Joshua Kucera reported the attacks on the strikers were carried out by police armed with US-supplied weaponry. Some of the 114 Humvees given to Kazkahstan since 2002 as part of the US-funded  Kazakhstan Peacekeeping Brigade (KAZBRIG) were filmed on the streets during the height of the repression.

That same cold, dark December day at Aktau, 75 miles to the west, police cracked down on rallies held in solidarity with the Zhanaozen workers. Human Rights Watch documented that, "police detained about 100 protesters and took them to a temporary detention center … Workers in Aktau reported heavy police surveillance at the protest, which was held in front of the regional mayor's office."

Human Rights Watch responded to the abuse of civil liberties by calling for an investigation into the use of state violence and called for the restoration of telecommunications services.

The repression was conducted by a police apparatus built up under the dictatorial reign of President Nursultan Nazarbayev, the country's leader and "winner" of fixed election after election since the Central Asian Republic became independent following the break-up of the Soviet Union in 1991.

Later, parliamentary elections took place on January 15, with Nazarbayev initially barring those living in Zhanaozen from participating. He later revoked that decision, but that didn't matter, since the elections are consistently rigged to begin with under what is essentially a one-party state.

The December repression of oil workers, and the political situation at large in Kazakhstan, call for a deeper examination into the geopolitical situation of a country located at the heart of what has long been referred to as the historic Silk Road trade route and what investigative journalist Pepe Escobar refers to as Pipelineistan.

Four times the size of Texas and larger than western Europe, a massive country of over 16 million at the heart of Central Asia, resource-rich Kazakhstan has increasingly become a vital centerpiece of US strategic interest, "soft power" and "hard power" regional influence.

The country has become case study for US deployment of the so-called "three D's": diplomacy, development and defense – as part of the broader ongoing long-war effort delineated in the Pentagon's April 2011 National Strategic Narrative and elsewhere. [Continue reading…]