Thomko Petro Chemical Blog

Thanks to all who sent e-mail from our last post about soaring oil prices. From analysts, politicians and just about everybody weighing in, there are many opinions about the cause and ways to solve our dependency on oil. Here's my personal thoughts on some of the major causes of why oil has risen to all time highs
 . . . CT

For the past 20-25 years, this country has obviously neglected to find other sources of energy and fuel, and instead opted to stay dependent on foreign oil. Now we come to a time when as Thomas Friedman's book title "The World Is Flat" hits us squarely in the face.

This is a global economy - and the rest of the world wants what we have. We are no longer the driving force on the oil & gasoline prices worldwide. Even if we cut back on gasoline consumption - drivers in the rest of the world (China, India, etc) will continue to consume more gasoline. So the answer lies not just in finding more oil, the big pill to swallow is a real alternative energy policy.

While we have been living the "American Dream", much of the rest of the global world is catching up. They want the cars, homes and a lot of the technology we have become accustomed to. There are just not enough resources to supply the demand. Actually from my point of view they are falling into the same trap we now find ourselves - but that's another story . . .  

The facts are crude oil production has remained rather flat - while the need for oil continues to rise - especially from developing countries. The American dollar is at an all time low, and let me state once again that oil is priced worldwide in dollars.

Terrorist activity around the world can send oil souring at any time as we have seen in Nigeria, and threats remain throughout the Middle East. 

Oil speculators also have to be figured into the equation of the rising oil prices. Many institutions playing the market for their investors own far too many oil contracts - and when they announce oil price expectations - prices continue to rise. It's easy to control the price when you own most of the contracts!

And the war in Iraq has dramatically cut their pre-war production of approximately 4 million barrels per day to less than 2 million barrels per day. So in reality this war has also added to the reduction of the global oil supply - and I won't even go into what the threat of war with Iran will do to the world oil market prices.

But there's more bad news . . . Russia, the world's second largest oil exporter is having production problems. Russia's lack of investment in their infrastructure and many aging oil fields has led to their first production decline in 10 years.   

At the end of the day, it's all of us who pull up to the gas pump each week who are the losers. Obviously the elected politicians for the past two decades have not had the country or our best interests at heart. So, it's up to us to make changes in our lives, and try to ride out this economic chaos.

I certainly don't have all the answers, but I do know that we are facing a very bad economic time in this country. It's going to take sacrifice, and hopefully this time we will come out this with a new outlook on alternative energy - but it's not going to happen overnight. 

That's my take . . .

Since the beginning of the 20th century Russia has claimed the polar region, and while the U.N. rejected Russia's "Law of the Sea" claim in 2002, the Russians plan to resubmit their claim in 2009. Russia claims that nearly 460,000 square miles of the Arctic shelf belong to them, which by the way may contain 10 billion tons of oil and gas deposits. Last August the Russian's planted their flag at the bottom of the North Pole.

But now evidence proves that a retired American Navy submariner helped plan the expedition dive for the Russians last year - and he's not happy that he wasn't given credit - Charles

From the NY Times - Last August, a team of Russian scientists and legislators trekked to the North Pole and plunged through the ice pack into the abyss, descending more than two miles through inky darkness to the bottom of the ocean.

There, explorers planted Russia’s flag and, upon surfacing, declared that the feat had strengthened Moscow’s claims to nearly half the Arctic seabed. The ensuing global headlines fueled debate over polar territorial claims.

But that wasn’t the whole story. The heroes of the moment did not mention that the dive had American origins - Alfred S. McLaren, 75, a retired Navy submariner, would like to set the record straight and, as he puts it, “acquaint the Kremlin with the realities” of recent history and international law.

A major figure of Arctic science and exploration who spent nearly a year in operations under the ice, Dr. McLaren says he developed the polar dive plan and repeatedly shared his labors with the Russians and their partners — a claim he supports with numerous e-mail messages and documents.

The Russians, for their part, acknowledge that Dr. McLaren played a central role in the dive’s origins. But they say he took no part in substantive planning and logistics.

Dr. McLaren’s plan drew on federal polar data and recommended specific sensors and methods to ensure a safe return. “I wrote the procedures for the dive,” he said in an interview. The Russians, he added, “went for the territorial claim.” Don Walsh, a pioneer of deep ocean diving who worked on the Arctic plan with the Russians, backed the account.

President Vladimir V. Putin has made the most of the divers’ feat, personally greeting them upon their return and announcing last month that Dr. Sagalevitch and two other team members would be named Heroes of Russian Federation, the nation’s highest honorary title.

Dr. McLaren first got to know the Russians through the lens of a periscope. As a submariner, he conducted more than 20 secret missions during the cold war, mainly in nuclear attack submarines.

Three of his voyages ventured beneath the Northern ice pack, gauging its thickness, probing the dark waters below and bouncing sound waves off the bottom to map the craggy seabed. An important goal was to find safe submarine routes near the Soviet Union in case the cold war turned hot. Over all, he spent nearly a year under the polar ice.

In 1972, he won the Distinguished Service Medal, the military’s highest peacetime award. He left the Navy in 1981 and earned a Ph.D. in polar studies from the University of Colorado in 1986.

After the cold war, Dr. McLaren began working with his former enemies, lecturing aboard Russian icebreakers that carried tourists to the North Pole. He did so repeatedly while president of the Explorers Club, a post he held from 1996 to 2000.

The idea for a polar dive arose in early 1997 when a television journalist, Jack McDonald, had dinner with Dr. McLaren and asked if anyone had ever gone to the bottom. The two decided to explore the possibility.

The polar dive was part publicity stunt and part symbolic move to enhance the Kremlin’s disputed claim to nearly half the Arctic seabed. It made global headlines, with much comment on Moscow’s new swagger. Time Magazine’s cover article asked, “Who Owns the Arctic?”

After the dive, many nations sharpened their claims. Denmark mapped icy regions. The United States mounted a polar expedition. And Canada unveiled plans for an Arctic military base.

Source: NY Times

Iraqi debt will be written off in exchange for access to oilfields

Russia has agreed to write off $900 million of Iraqi debt built up by the regime of former leader Saddam Hussein to buy military supplies.

In return, Russian companies, including oil giant Lukoil, will be given access to oil, and the outstanding debt will be repaid over a 17 year period.

Lukoil plans to develop one of the largest oil fields in West Qurna. The Russian oil giant previously had a deal to develop oil deposits in Iraq, but the cointract ended right before Saddam Hussein's government was removed from power back in 2003.

Russia said the deal was meant to help rebuild Iraq's economy following the US-led invasion, which it opposed. The deal was signed by the Russian Finance Minister, Alexei Kudrin, and the Iraqi Foreign Minister, Hoshyar Zebari, who is currently visiting Moscow.

DuPont™ Tychem® F, a chemical barrier garment, is protecting workers at a leading petrochemical company in Russia.

To protect employees and meet recently renewed safety standards, the Russian petrochemical company uses Tychem® F to protect its employees when they come in direct contact with oil and petroleum derivatives during reservoir cleaning and maintenance.

“Our extensive knowledge and rich experience have enabled us to provide reliable and effective solutions. As a result, Tychem® F coveralls have successfully passed wear trials at Tomskneftekhim and now are in common use,” said Ivan Sedykh, manager, DuPont Personal Protection, Western Siberia and the Far East.

Source: AZOM

There are more untapped oil and gas reserves in the Arctic than almost anywhere else in the world—and with the ice melting, the race to get to them is about to turn ugly.

By James Ridgeway -  

It's estimated that one quarter of the world's untapped oil and gas reserves lie in the Arctic. The region has become the center of an international skirmish, with Russian interests going so far as to plant an underwater flag in order to at least symbolically claim reserves presumed to exist beneath the North Pole's Lomonosov Ridge (which, they say, is connected to Russian territory by a submerged shelf).

Even the U.S. government, which for decades has resisted signing an international treaty called the U.N. Convention on the Law of the Sea—which establishes rules for national sovereignty over portions of the earth's oceans and seas, along with the resources beneath them—suddenly supports ratifying the treaty.

Read the full article

The new Iraqi Sharing Oil Law is expected to pass next month - under lots of pressure from the U.S. government.

The world oil giants have been waiting for this day. All the major players - and a NEW CARTEL are lined up to attend next month's conference in Dubai. The purpose of the conference is to develop the framework for investing in, and dividing up Iraq's oil sector business.

BP, Shell, Exxon Mobile and Chevron are all geared up to do business in the one place in the world where there is a chance for large oil discoveries.  115 billion barrels of oil have been discovered in Iraq, however only 40 billion have been developed - and there are many unexplored parts that could hold more billions.

Russia has made a bold move in setting up an energy cartel to rival OPEC, and the cartel includes the country that is becoming the biggest consumer of oil - no guess as to who that is - China! And Iran has also made it clear they will have a place at the table in Dubai.  

September is the big month. The General's war progress report is due in Washington, the oil law is expected to pass, and all the major players are set to make a fortune.

The backdrop to all this is our American soldiers who are bravely fighting to stay alive and return home, the soldiers who have returned home badly injured, and the weekly death toll of Iraqi citizens. I heard somewhere that over a million Iraqi's have been killed - but no one seems to know the exact number - and it appears few even care.

An unratified treaty is the one thing standing between the United States and access to the huge oil deposits far off the coast of Alaska.

Russia is trying to prove that a big chunk of the Arctic Ocean, and the billions of tons of oil beneath it, belong to them. The U. S. could counter this claim, but it doesn’t have standing to do so because this nation hasn’t ratified the U.N. Convention on the Law of the Sea.

As the polar ice continues to melt, the oil resources beneath it become available for drilling. Russia has rushed in, and no doubt more nations will follow Russia's lead.

By leaving the treaty unratified, the U.S. denies itself the ability to contest Russia’s claims in the Arctic Ocean.

Russia's energy reserves are classified, however BP's statistical review of world energy has put Russia's reserves at 74.4 billion barrels.

In fact Russia's oil reserves shrank by 7.3 billion barrels during the past 11 years, and the proportion of reserves that can be extracted has fallen from 42% in 1990 to currently 27%. At the current rate, there will not be enough reserves to keep pace.

Prior to the fall of the Soviet empire, the state run companies pumped as much oil from every field as possible, and ruined the opportunity to make the most of future reserves. Currently these same fields now produce more water than oil. The present government is implementing a new law that encourages tax breaks and more rational oil extraction.

And to make matters worse, Russia's gas reserves are also in the tank - down 2.4 trillion cubic meters in the last decade with two fields completely depleted.

Source: The Moscow Times

U.S. oil giant Chevron Corp. has expressed interest in acquiring assets of Russia’s Yukos, which raises the prospect of a U.S. company participating in the liquidation of a business whose downfall rattled investor confidence in Russia. 

Russian prosecutors have charged jailed the former CEO of Yukos, once Russia's biggest oil company, with money-laundering and embezzlement of $20 billion in company revenues

A spokesman for the bankrupt Yukos told The Associated Press that several international companies had inquired about participating in any auction or sale of the assets of Yukos. 

“The receiver’s office has received letters expressing interest in acquiring certain Yukos assets from a number of large international companies, including from the U.S. company Chevron,” stated the spokesman. 

A spokeswoman for Chevron in Moscow, refused to comment on the statement.

Chevron, based in San Ramon, Calif., is the second-biggest U.S. oil company after Exxon Mobil Corp.

Strange colored snow that fell in three different Siberian regions is not toxic and may have been caused by dust and soils blown into the atmosphere from neighboring Kazakhstan, a Russian emergency official said on Friday.

The snow, which fell Wednesday afternoon, was yellow, green and orange and covered more than 40 square miles in at least three provinces, according to the Emergency Situations Ministry. 

Initial tests in three main cities in the region showed the multicolored now was not harmful and emergency officials refuted earlier reports that said the snow was oily or foul-smelling.

Officials said it appeared the coloration came from clay and sandy soils common in northern regions of Kazakhstan, and that preliminary results have found no dangerous chemical or radioactive materials. 

The 27,000 residents who live in the region, which is about 1,400 miles east of Moscow, were warned not to use the snow for drinking water or other purposes, and to keep themselves and domestic animals from walking in or touching it.

The U.S. administration may introduce sanctions against Russia for the recent delivery of Tor-M1 missile system to Iran.

The State Department said Wednesday that such measures were likely to follow because the Bush’s administration harshly criticized Russia’s defense contract with Iran and urged the Kremlin to terminate it.

A diplomat from the State Department, who wished to remain anonymous, stated that punitive measures could be applied against the direct seller of the above-mentioned missile complexes and probably the buyer, but not the Russian government.

Russia fulfilled the arms contract with Iran at the end of December 2006. The announcement made by Russia’s Defense Minister Sergei Ivanov raised serious concerns with the U.S. and Israeli administration. U.S. officials emphasized that Russia had sold modern weapons to the country supporting international terrorism.

When Russia signed the contract with Iran for the delivery of 29 missile complexes Tor-M1 in December 2005, the U.S. administration officials said that the contract could not comply with interests of both the USA and the region. Sergei Ivanov responded that it was a legitimate deal between the two countries, no matter if someone liked it or not.

The Tor-M1 is a fifth-generation integrated mobile air defense system designed for operation at medium, low and very low altitudes against fixed/rotary wing aircraft, UAVs (unmanned aerial vehicle), guided missiles and other high-precision weapons.

Source: Pravda

It's good to be back. I've been under the weather, and so much has happened in the past week I'm not sure where to start.

(1) President Bush signed the military tribunals bill and for the first time in the history of this country the right of habeas corpus is no longer in existence

(2) North Korea has the whole world talking - and we're depending on China to help fix this mess

(3) Venezuela didn't get enough votes on the first round at the U.N.

(4) Republicans are really worried about the upcoming election - and have resorted to racial advertising

(5) Russia drove the Dollar down by their move to add the Yen to their currency reserves - but not to worry - the stock market is at a record high

(6) And we can only wait on OPEC to meet on the price of oil . . .

And of course there's so much more - I'll try to tackle each one - CT

Kazakhstan has questionable human rights records, and their last election was deemed flawed by European officials - but they have oil - and that's the bottom line - CT

U.S. Secretary of State Condoleezza Rice met the foreign minister of Kazakhstan on Monday to cement closer ties with the oil-rich former Soviet state which opposition groups say blocks democratic reforms.

Kazakhstan stretches from the Caspian Sea to China and is bigger than Western Europe.

The meeting laid the ground for a visit to Washington by President Nursultan Nazarbayev, who will meet President George W. Bush on Friday and spend time with the president's father at their holiday home in Maine. Nazarbayev was elected for a third presidential term last December in a vote judged to be flawed by the Organization for Security and Cooperation in Europe.

Rice stated that Washington wants a multi-dimensional relationship with Kazakhstan, and is encouraging continuing reforms. The U.S. has been only mildly critical of Kazakhstan's human rights record, not wanting to upset its government as Washington competes with Russia for influence in Central Asia, a key gas and oil producing region.

The opposition in Kazakhstan accuses the West of putting their oil before democracy. When restrictions were imposed on the media this year, Washington issued a weak rebuke of the action.

Condi Rice also met with the foreign minister of Kazakhstan, and discussed efforts to integrate Afghanistan into regional Central Asian economies. The minister pledged to continue his country's help to both Iraq and Afghanistan.

Rice visited Kazakhstan nearly a year ago and Vice President Dick Cheney went there in May to promote new oil export routes that bypass Russia. He praised Kazakhstan's democratic developments while attacking Russia's record.

Another reason why Russia's President Putin is upset with Washington - See our previous posting - CT

Soon after Cheney's visit, Kazakhstan officially joined a U.S.-backed project to transport Caspian oil to Mediterranean markets.

Russia's President Vladimir Putin says his country may re-direct natural gas supplies from the huge Shtokman field it is developing in the Barents Sea from the U.S. to Europe, to guarantee stable energy exports to its traditional market.

Putin made the statement in France, and further stated a decision will be made soon on this issue. Putin's statement was later posted on the Kremlin official web site.

The Shtokman field, with reserves of 3.7 trillion cubic meters, has been targeting (LNG) liquefield natural gas production to be supplied primarily to the U.S. starting from 2011.

However, the decision who will be the partner in the field developement has been repeatedly postponed. The list of potential candidates include: Norway's Norsk Hydro and Statoil, France's Total, and U.S. companies ConocoPhillips and Chevron Texaco. 

The problem is that strained relations with the U.S., including differences with Washington on Russia's entry into the World Trade Organization might narrow the U.S. companies to get a stake in this project. 

Source: Platts