Tag Archives: Oil

The Superpowers Battling Over Iraq’s Giant Oil Field, by Simon Watkins

Both the Chinese and Russians have designs on a huge Iraqi oil field. From Simon Watkins at oilprice.com:

Ever since the U.S. signalled through its effective withdrawal from Syria that it now has little interest in becoming involved in military actions in the Middle East, the door has been fully opened to China and Russia to advance their ambitions in the region. For Russia, the Middle East offers a key military pivot from which it can project influence West and East and that it can use to capture and control massive oil and gas flows in both directions as well. For China, the Middle East – and, absolutely vitally, Iran and Iraq – are irreplaceable stepping stones towards Europe for its era-defining ‘One Belt, One Road’ project. Earlier this week an announcement was made by Iraq’s Oil Ministry that highlights each of these factors at play, through a relatively innocuous-sounding contract award to a relatively unknown Chinese firm.

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Fracking Blows Up Investors Again: Phase 2 of the Great American Shale Oil & Gas Bust, by Wolf Richter

Fracking may be the greatest thing to ever happen to US oil and gas production, but it’s having a hard time paying for itself, especially when the cost of copious amounts of debt is thrown into the calculations. From Wolf Richter at wolfstreet.com:

Including billionaires who thought they’d picked the bottom in 2016.

In 2019 through third quarter, 32 oil and gas drillers have filed for bankruptcy, according to Haynes and Boone. Since the end of September, a gaggle of other oil and gas drillers have filed for bankruptcy, including last Monday, natural gas producer Approach Resources. This pushed the total number of bankruptcy filings of oil and gas drillers since the beginning of 2015 to over 200. Other drillers, such as Chesapeake Energy, are jostling for position at the filing counter.

Chesapeake has been burning cash ever since it started fracking. To feed its cash-burn machine, it has borrowed large amounts and has been buckling under its debt for years, selling assets to raise cash and keep drilling for another day. But its debt is still nearly $10 billion. Its shares [CHK] closed on Friday at 59 cents.

On November 5, in an SEC filing, it warned of its own demise unless oil and gas prices surge into the sky asap: “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.”

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US Troops Staying in Syria to ‘Keep the Oil’ Have Already Killed Hundreds, by Ben Norton

The US is essentially stealing Syria’s oil. From Ben Norton at consortiumnews.com:

Hundreds of American soldiers are remaining in Syria, not to ensure to safety of any group of people, but to occupy the country’s oil reserves and block the Syrian government from revenue needed for reconstruction, reports Ben Norton.

U.S.  President Donald Trump has reassured supporters that he is “bringing soldiers home” from the “endless” war in Syria. But that is simply not the case.

While Trump has ordered a partial withdrawal of the approximately 1,000 American troops on Syrian territory — who have been enforcing an illegal military occupation under international law — U.S. officials and the president himself have admitted that some will be staying. And they will remain on Syrian soil not to ensure to safety of any group of people, but rather to maintain control over oil and gas fields.

The U.S. military has already killed hundreds of Syrians, and possibly even some Russians, precisely in order to hold on to these Syrian fossil fuel reserves.

Washington’s obsession with toppling the Syrian government refuses to die. The United States remains committed to preventing Damascus from retaking its own oil, as well as its wheat-producing breadbasket region, in order to starve the government of revenue and prevent it from funding reconstruction efforts.

The Washington Post noted in 2018 that the U.S. and its Kurdish allies were militarily occupying a massive “30 percent slice of Syria, which is probably where 90 percent of the pre-war oil production took place.”

Now, for the first time, Trump has openly confirmed the imperialist ulterior motives behind maintaining a US military presence in Syria.

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Kurds face stark options after US pullback, by Pepe Escobar

The Kurds have little choice but to deal with the Syrian government and support Russian mediation in northern Syria. From Pepe Escobar at asiatimes.com:

Kurds face stark options after US pullback

Syrian Arabs and Kurdish civilians arrive to Hassakeh city after fleeing bombardment on Syria’s northeastern towns along the Turkish border on October 10, 2019 amid fears of a new humanitarian crisis. Photo: AFP / Delil Souleiman
Forget an independent Kurdistan: They may have to do a deal with Damascus on sharing their area with Sunni Arab refugees
In the annals of bombastic Trump tweets, this one is simply astonishing: here we have a President of the United States, on the record, unmasking the whole $8-trillion intervention in the Middle East as an endless war based on a “false premise.” No wonder the Pentagon is not amused.
Trump’s tweet bisects the surreal geopolitical spectacle of Turkey attacking a 120-kilometer-long stretch of Syrian territory east of the Euphrates to essentially expel Syrian Kurds. Even after Turkish President Recep Tayyip Erdogan cleared with Trump the terms of the Orwellian-named “Operation Peace Spring,” Ankara may now face the risk of US economic sanctions.

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Iran Is China’s Secret Weapon for Killing off the US Dollar’s Global Reserve Status, by Federico Pieraccini

The bulwark of the US dollar as the world’s reserve currency is the oil trade, which heretofore has been conducted almost exclusively in dollars. China seeks to change all that. From Federico Pieraccini at strategic-culture.org:

There is a strong current of change affecting the international political arena. It is the beginning of a revolution brought on by the transition from a unipolar to multipolar world order. In practice, we are faced with the combination of several factors, including the application of US tariffs on Chinese exports, Washington’s sanctions on Iran, US energy self-sufficiency, the vulnerability of Saudi industrial facilities, and Iranian capabilities for resisting US attacks, as well as its exportation of large quantities of gas and oil to China. Everything converges on one factor, namely, the looming decline of the US dollar as the global reserve currency

We have recently been witnessing events of considerable importance in the Middle East, almost on a daily basis. The tensions between Washington and Tehran are fueled above all by the Trump administration’s need to placate most of the US deep state, wedded to neoconservativism, who march in lockstep with Trump’s financiers from Wahhabi Saudi Arabia and Israel.

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The G-7 Blues, by James Howard Kunstler

Extended supply lines and the global economy’s dependence on fossil fuels creates an unstable situation prone to dramatic dislocations. From James Howard Kunstler at kunstler.com:

What’s at stake in all these international confabs like the G-7 are the tenuous supply lines that keep the global game going. The critical ones deliver oil around the world. China imports about 10 million barrels a day to keep its operations going. It produces less than 4 million barrels a day. Only about 15 percent of its imports come from next door in Russia. The rest comes from the Middle East, Africa, and South America. Think: long lines of tanker ships traveling vast distances across the seas, navigating through narrow straits. The Chinese formula is simple: oil in, exports out. It has worked nicely for them in recent decades. Things go on until they don’t.

That game is lubricated by a fabulous stream of debt generated by Chinese banks that ultimately answer to the Communist Party. The party is the Chinese buffer between banking and reality. If the party doesn’t like the distress signals that the banks give off, it just pretends the signals are not coming through, while it does the hokey-pokey with its digital accounting, and things appear sound a while longer.

The US produces just over 12 million barrels of oil a day. About 6.5 million of our production is shale oil. We use nearly 20 million a day. (We’re not “energy independent.”) The shale oil industry is wobbling under the onerous debt load that it has racked up since 2005. About 90 percent of the companies involved in shale oil lose money. The capital costs for drilling, hauling a gazillion truckloads of water and fracking sand to the rig pads, and sucking the oil out, exceed the profit from doing all that. It’s simply all we can do to keep the game going in our corner of the planet, but it’s not a good business model. After you’ve proved conclusively that you can’t make a buck at this using borrowed money, the lenders will quit lending you more money. That’s about where we are now.

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Things to Come, by James Howard Kunstler

A dire political and economic confluence will soon put the US in a world of hurt. From James Howard Kunstler at kunstler.com:

“American exceptionalism has led to a country that is exceptionally un-self-aware.” — Peter Thiel

The economic contraction ahead will put this borderline psychotic country through some interesting ch-ch-ch-changes. Mr. Trump now fully owns the Potemkin status quo of record stock markets poised against a withering rot of human capital at the core of an industrial society in sunset mode. Leadership at every corner of American life — politics, business, media — expects an ever-higher tech magical updraft of fortune from an increasingly holographic economy of mere fugitive appearances in which everybody can get more of something for nothing. The disappointment over how all this works out will be epic.

Globalism is wobbling badly. It was never what it was cracked up to be: a permanent new plateau of exquisitely-tuned international economic cooperation engineered to perfection. It was just a set of provisional relations based on transient advantage. As it turned out, every move that advantaged US-based corporations blew back ferociously on the American public and the long-term integrity of the social order. Sinister as it seems, the process was simply emergent: a self-organizing evolution of forces previously set in motion. And, like a lot of things in history, it seemed like a good idea at the time.

“Off-shoring” US industry jacked up corporate profits while it decimated working class livelihoods. In return, that large demographic got “bargain shopping” at Walmart, a life of ever-upward revolving debt, and dead downtowns. The country got gigantic trade deficits and government debt loads. In effect, globalism compelled America to borrow as much as possible from the future to keep running things the way they were set up to run. Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing.

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