morsi supporters gather for cairo rally

Tom Whipple, Editor

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MORSI SUPPORTERS GATHER FOR CAIRO RALLY

Security has been tightened around Cairo ahead of this weekend's planned demonstrations [AFP]

Global Developments

1. OIL PRICE STAYS ABOVE $97 ON IMPROVING US DATA BANGKOK (Reuters Friday, June 28, 2013) -- The price of oil rose Friday as the U.S. economic outlook brightened and concerns eased about a credit crunch in China. Benchmark oil for August delivery was up 45 cents to $97.50 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to finish at $97.05 on Thursday after the U.S. government released data showing an increase in in consumer spending and home sales while jobless claims fell. "The truth to these markets are that they are lacking any good reason to go down," said Carl Larry of Oil Outlooks and Opinions. "We're starting to settle into a fair value and it's hard to argue lower." The number of Americans seeking unemployment benefits fell by 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly. Steady job gains could help the economy expand later this year and thus increase energy consumption. The U.S. Commerce Department said consumers spent more in May as their income rose, although spending was weaker in April, February and January than previously estimated. The number of pending home sales jumped in May to the highest level in more than six years, the National Association of Realtors said. Fears of a cash crunch in China, which could cripple small- and medium-sized businesses, were eased after the country's central bank indicated it would not allow an all-out crisis to unfold. [more]

Association for the Study of Peak Oil & Gas USA

Friday, June 28, 2013

2. CRUDE FUTURES ON THE REBOUND (Dow Jones, Friday, June 28, 2013) -- Crude oil futures were up in London trading Friday, with some analysts pointing to a lessening of fears over Federal Reserve plans to end quantitative easing, while other analysts warn that such optimism may be unfounded. At 0935 GMT, Brent crude for August delivery was up 52 cents, or 0.51%, at $103.34 a barrel. Nymex August crude was up 61 cents, or 0.63%, at $97.66 a barrel. Tamas Varga, an analyst at PVM, said the rise in prices stems from lessening fear that the U.S. Federal Reserve will put a stop to quantitative easing. "The market expects that there will be cheap money available for the foreseeable future," he said. But not everyone agrees. Petromatrix analysts wrote: "This morning we read many comments that crude oil was fueled higher yesterday [Thursday] by lower fears that the Fed would ease QE. We consider this to be an ex-post justification given that the main move higher in crude oil was in tandem with an intra-day move higher in the US dollar, and that is not really a typical QE trade." The analysts note that while Fed officials have said that the market is misreading Bernanke's comments, none have actually denied that tapering of the bond-buying program is coming. [more]

3. WTI CRUDE OIL HEADS FOR LONGEST GAIN SINCE APRIL (Bloomberg, Friday, June 28, 2013) -- West Texas Intermediate rose for a fifth day, its longest increase since April, on that signs of economic recovery in the U.S. and Germanywill support fuel consumption. WTI futures climbed as much 0.8 percent, and were poised for a second quarterly advance. German retail sales rose more than forecast in May, adding to signs that a recovery in Europe's largest economy has gathered pace this quarter. Fewer Americans filed claims for weeklyunemployment benefits and consumer spending rebounded in May, U.S. government data showed yesterday. Brent's premium to WTI shrank after closing at the narrowest since January 2011. "Oil trading is mostly macro-driven today," said Andrey Kryuchenkov, an analyst at VTB Capital in London who sees WTI meeting "very strong resistance" next month at $99 a barrel. "Refinery runs in the U.S. are very healthy, but the upside for crude will still be limited by the long-term comfortable cushion of supply." WTI for August delivery increased as much as 77 cents to $97.82 a barrel in electronic trading on the New York Mercantile Exchange, the highest since June 20, and was at $97.59 at 9:56 a.m. London time. The contract rose $1.55, or 1.6 percent, to $97.05 yesterday, the biggest gain since May 3. The volume of all futures traded was 35 percent higher than the 100-day average. Futures are up 6.1 percent this month and little changed in the second quarter. [more]

4. NATURAL GAS FUTURES SLIDE TO 3-MONTH LOW AS STOCKPILES CLIMB --Natural gas slides to three-month low amid steep stockpile rise

--EIA: Inventories rise 95 bcf, above expectations for 89 bcf

--Mild summer keeps lid on gas prices NEW YORK (Dow Jones, Friday, June 28, 2013) -- Natural gas futures tumbled to their lowest level in three months, after a bigger-than-expected rise in U.S. gas stockpiles signaled demand for the fuel remains sluggish. Gas prices typically rise this time of year, as temperatures climb and homeowners and businesses flip on air conditioners and consume more electricity derived from natural gas. But prices have been sliding the last several weeks, as a relatively mild start to summer has kept demand weak for cooling. The trend showed little sign of letting up after the Energy Information Administration on Thursday said U.S. inventories last week rose 95 billion cubic feet to 2.533 trillion cubic feet during the week ended June 21. The rise was well above the 89-bcf injection called for by analysts in a Dow Jones Newswires survey. "We are having a very mild start to summer," said Matt Smith, analyst at Schneider Electric. "That's been reflected not just in this number, but in the previous weeks' numbers." Natural gas for August delivery settled 15.5 cents, or 4.2%, lower at $3.582 a

million British thermal units on the New York Mercantile Exchange. That's the lowest front-month settlement for the commodity since March 7. [more]

5. OPEC TO BOOST SHIPMENTS AS DEMAND PEAK NEARS (Business Week, Friday, June 28, 2013) The Organization of Petroleum Exporting Countries will raise shipments by 1.9 percent through the middle of July as summer demand for driving fuels in the northern hemisphere nears its highest point, Oil Movements said. The group that supplies about 40 percent of the world's oil will ship 24.03 million barrels a day in the four weeks to July 13, up 450,000 a day from 23.58 million in the previous period to June 15, the tanker tracker said in an e-mailed report. The figures exclude two of OPEC's 12 members, Angola and Ecuador. "This is heading into the point where refinery runs peak and therefore crude demand peaks," Roy Mason, the company's founder, said today by phone from Halifax, England. "Quite a bit of the increase is going west. Sometime in the next three weeks we'll get that peak and then its downhill until the winter." Middle Eastern shipments will jump by 2.4 percent to 17.69 million barrels a day, compared with 17.27 million in the month to June 15, according to Oil Movements. That figure includes non-OPEC nations Oman and Yemen. Crude on board tankers will increase by 2.7 percent to 482.23 million barrels versus 469.67 million, data from Oil Movements show. The researcher calculates the volumes by tallying tanker bookings. Its figures exclude crude held on vessels for storage. [more]

6. EIA: OPEC JUNE OIL OUTPUT DOWN 300,000 BARRELS A DAY VS MAY NEW YORK (Dow Jones, Friday, June 28, 2013) -- Crude-oil output from the Organization of the Petroleum Exporting Countries fell by 300,000 barrels a day in June from May, to 30.1 million barrels a day, the Energy Information Administration estimated in a report released Thursday. The EIA figure would put the group near its committed level of 30 million barrels a day, which OPEC ministers reinforced at an end-May policy meeting. Output from Libya dropped 200,000 barrels a day in the month, to 1.4 million barrels a day, while Nigeria's flow slowed by 100,000 barrels a day, to 1.9 million barrels a day, the EIA data show. Iraq's production rose by 100,000 barrels a day in the month, to 3.2 million barrels a day, while Saudi Arabia, oil's de facto leader and the world's biggest oil exporter, kept output steady at 9.4 million barrels a day. The estimates are contained in a report which EIA is required to file to Congress every two months on the oil market in response to stricter sanctions on Iran. The EIA report shows Iran's output was steady at 2.8 million barrels a day in May and June, but was 200,000 barrels a day below the May-June 2012 average. It also indicates sanctions on oil trade with Iran have resulted in Iran falling behnd in Iraq as OPEC's second-biggest oil producer. [more]

7. IEA: SLOWER NATURAL GAS GROWTH IN POWER GENERATION OVER NEXT 5 YEARS (The Oil & Gas Journal, Friday, June 28, 2013) -- Natural gas will grow at 2.4% per year between now and 2018, the International Energy Administration said in its Medium-Term Gas market report issues on June 20. The growth estimate was revised downwards from 2.7% last year, due to continuous demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa. Agency analysts expect gas will emerge as a transportation fuel, driven by a supply boom in North America and air pollution concerns, especially in China. Amid more stringent environmental policies, China is expected to account for 30% of the global gas demand growth. In the next 5 years, China is expected to absorb the entire production increase from Central Asia as well as one-third of the global increase in LNG supply. Russia, in the longer term, is expected to maintain its position in gas markets by developing the resources and infrastructure for large-scale Asia exports. "Once the infrastructure barriers are tackled, natural gas has significant potential for clean-

energy use in heavy-duty transport where electrification is not possible," said IEA Executive Director Maria van der Hoeven. [more]

Middle East & North Africa

8. LOST IN THE OIL BOOM

Near the super-giant Majnoon oil field, a resident of the marshes transports bales of reeds to the shore for sale to local farmers. (BEN VAN HEUVELEN/Iraq Oil Report/Metrography) (Iraq Oil Report, Friday, June 28, 2013) When international oil companies started arriving in Basra in 2010, a farmer named Abu Adel was given an offer he couldn't refuse. He was summoned to a government office in Basra city, handed a check, and told to sign an agreement to leave his farm, which sat above the super-giant West Qurna 2 oil field. "Of course I didn't want to sign, but if you refused… there was no explicit threat, but it was understood," Abu Adel said. "Either from the beginning you agree, or the police will take you. [more]

9. IRAQI KURDS UPBEAT ON OIL EXPORT POTENTIAL ERBIL, Iraq, June 27 (UPI) -- Production from an oil field in the northern Kurdish region of Iraq will help meet export targets of 1 million barrels per day, the regional government said. The semiautonomous Kurdistan Regional Government said it supported a development plan for the Shaikan oil field as proposed by Gulf Keystone Petroleum Ltd. Gulf Keystone, a company with headquarters in London, said last week it started drilling its first exploration well in the Shaikan oil field. It said the entire field could hold as much as 10.5 billion barrels of oil. The KRG said the first phase of production under the plan, which starts in a few weeks, will yield 40,000 bpd. That level will increase gradually and reach 250,000 bpd by 2018. "Production from the Shaikan block will play a crucial role in helping the Kurdistan region to achieve its overall oil export targets of 1 million barrels per day by the end of 2015, and 2 million barrels per day by the end of the decade," the government said in a statement Wednesday. The central and Kurdish governments in Iraq are at odds over legal issues related to oil. The central government says some of the unilateral action taken by its counterparts may be illegal. [more]

10. MORSI SUPPORTERS GATHER FOR CAIRO RALLY Supporters gathering in Egyptian capital to express their support for president, as political tensions continue to rise.

Security has been tightened around Cairo ahead of this weekend's planned demonstrations [AFP] (Al Jazerra, Friday, June 28, 2013)Supporters of Egyptian President Mohamed Morsi have begun to gather in a Cairo neighbourhood for a rally, in response to opposition plans for a major anti-government demonstration over the weekend. Witnesses on Friday said that Morsi supporters have started gathering at the Rabaa mosque in Nasr City to assert that "[the government's] legitimacy is a red line". Some anti-Morsi supporters are also expected to gather in Tahrir Square during the day, demanding the president's resignation, ahead of a separate major planned demonstration on Sunday. Deepening divisions among ruling Islamist and the largely secular opposition have heightened tensions in Egypt. Ahead of Friday's demonstrations, clashes in the north of the country between Islamists and opposition protesters left one person dead and 434 injured, the Egyptian Health Ministry said. [more]

11. EGYPT PREPARES LEAP IN THE DARK. AGAIN

CAIRO (Reuters Friday, June 28, 2013) -- Egypt is heading for a "dark tunnel", says the head of its armed forces. How he and his generals respond to a political showdown in the streets may determine whether its new democracy survives to see the light. The warning at the start of the week from General Abdel Fattah al-Sisi was presented as a wake-up call to the rival factions, President Mohamed Mursi and his Islamist allies on one side, a disparate coalition of liberals and a mass of Egyptians simply frustrated by economic stagnation on the other. But the velvet glove of Sisi's language, urging politicians to find consensus and avert bloodshed, could not conceal an iron-fist of possible intervention, even if he was widely believed when he said the generals, secure and prosperous in their new role, have no wish to go back to running the country. One thing is clear. The "consensus" Sisi urged politicians to reach this week is absent. A vague offer from Mursi of collaboration was met with disdain from the opposition. So whether the generals step in, with their half million men, U.S.-funded hardware and a 60-year-old sense of entitlement, now depends on how the next few days play out at flashpoints like Tahrir Square and Mursi's palace in Cairo and on the streets of a dozen other major cities across the country. The numbers on the street will matter. So too will violence. [more]

12. JORDAN SEEKS ENERGY SECURITY WITH SHALE OIL PLANT AMMAN, Jordan, June 27 (UPI) -- Jordan is pushing ahead with plans to build the Middle East's first shale oil-fired power plant, a major step toward achieving energy security by the resource-poor Hashemite kingdom. Its fragile economy had long been shackled by dependence on imported energy, a problem sharply accentuated by high oil prices during the past three years and the turmoil in the Arab world since early 2011. The kingdom, whose economy has largely survived on hefty handouts from the United States and the petro-monarchies of the Persian Gulf, sits on top of an estimated 100 billion barrels of shale oil -- the fourth-largest shale oil reserves in the world after the United States, China and Russia. Moves to develop the deposits began in 2006, but the high price of extraction was a major drawback. The steep rise in oil prices in 2008 and the political convulsions of the Arab Spring in 2011 hit Jordan hard. The loss of low-cost Egyptian natural gas via a pipeline across the Sinai Peninsula, totaling about 80 percent of Jordan's electricity generating fuel needs, meant Amman had to rely on expensive oil imports for power generation. That cost the equivalent of about 25 percent of the kingdom's gross domestic product. [more]

13. SYRIA PEACE CONFERENCE: DON'T HOLD YOUR BREATH

UNITED NATIONS (Reuters Friday, June 28, 2013) -- How deep is the divide separating Russia and the United States on Syria? A photo from the recent G8 summit in Northern Ireland says it all - two grim-faced leaders slouched in their chairs, Barack Obama biting his lip and Vladimir Putin staring at the floor. The awkward photo opportunity, which went viral on the Internet, highlights the increasingly tense relationship between the former Cold War foes who find it difficult to agree on a series of high-profile issues, including Syria and a fugitive U.S. intelligence contractor whom Putin refuses to extradite. Washington and Moscow have been trying since May to organize an international peace conference to bring an end to the violence. But hopes that such a conference will take place anytime soon - if at all - are fading quickly. U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov originally announced that they would try to hold the conference, which is intended to bring rebels and representatives of Syrian President Bashar al-Assad's government to the negotiating table, by the end of May. But the date keeps slipping. First it was bumped to June, then July. Earlier this week U.N.-Arab League peace mediator Lakhdar Brahimi, who held talks with senior U.S. and Russian officials in Geneva, ruled out a peace conference before August. [more]

14. REBELS IN SYRIA MOVE TO SHOW MODERATION A top Syrian rebel leader said his forces were drawing new recruits away from extremist groups like Jabhat al Nusra. PARIS (Dow Jones, Friday, June 28, 2013) -- A top Syrian rebel leader said his forces were counting on arms shipments from the U.S. to reverse momentum in the country's civil war and draw new recruits away from extremist groups like Jabhat al Nusra. In an interview with The Wall Street Journal, Brig. Gen. Mithkal Albtaish—a leader of the Free Syrian Army, or FSA—said he has recently persuaded 60 fighters to shift allegiance from al Nusra, a radical Islamist group aligned with al Qaeda, to the forces under his command.

A top Syrian rebel leader said his forces hope to use new arms shipments from the US to reverse momentum on the battlefield and draw new recruits away from extremist groups like Jabhat al Nusra. Inti Landauro reports. The recruitment drive highlights a crucial part of the Syrian opposition's strategy: Leveraging fresh support from the administration of President Barack Obama and other nations to drain local backing from

http://online.wsj.com/article/SB10001424127887324328204578571672589371996.html

http://topics.wsj.com/person/O/Barack-Obama/4328

extremist groups that currently dominate the front lines in the fight against the regime of Syrian President Bashar al-Assad. [more]

15. IRAN, RUSSIA AND CHINA PROP UP ASSAD ECONOMY

Syrian troops celebrate as they take control of a rebel-held village (Financial Times, Friday, June 28, 2013) -- Iran, Russia and China are propping up Syria’s war-ravaged economy, with President Bashar al-Assad’s regime doing all its business in rials, roubles and renminbi as it seeks to beat western sanctions, according to the country’s senior economics minister. Syria’s three main allies are supporting international financial transactions, delivering $500m a month in oil and extending credit lines, Kadri Jamil, deputy prime minister for the economy, said in an interview with the Financial Times. He added that its allies would also soon help with a “counter-offensive” against what he called a foreign plot to sink the Syrian pound. Mr Jamil’s combative remarks on the deepening economic crisis highlight a wider show of regime assurance, founded on recent military gains and a belief that its biggest international supporters remain solidly behind it. [more]

East Asia

16. CHINESE APPARENT FUEL OIL DEMAND MORE ROBUST THAN ACTUAL CONSUMPTION (Platts, Friday, June 28, 2013) -- China's apparent demand for fuel oil has registered significant double-digit growth this year, although this is unlikely to be reflective of actual consumption by end users, traders and analysts said this week. According to Platts' calculations, apparent demand for fuel oil in China rose 11.9% year on year from January to May this year, totaling 17.66 million mt, or close to 760,000 b/d using a conversion factor of 6.5 barrels to 1 mt of fuel oil. Growth in May was more pronounced, surging 27.3% year on year to 3.67 million mt. China does not publish demand or consumption data. Platts calculates apparent demand for a particular oil product by taking into account net imports plus domestic production in refineries. It does not include inventories, which are not officially reported by companies or the government. China remains a net importer of fuel oil, although import growth has been muted, at just 3.9% year on year to 12.51 million mt of

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gross imports from January to May this year. Exports rose 4.4% to 5 million mt, bringing net imports over the period to 7.51 million mt, a 3.4% increase year over year. The rise in apparent demand was therefore due to a spike in domestic output, which jumped 19% year on year to 10.14 million mt from January to May. In May alone, fuel oil production rose 31.5% year on year to 2.16 million mt. [more]

South Asia

17. INDIA APPROVES DOUBLING OF NATURAL GAS PRICE NEW DELHI (Dow Jones, Friday, June 28, 2013) -- India's cabinet on Thursday agreed to double natural gas prices to industrial and retail consumers to help fund investment in exploration and reverse declining domestic output, which would ultimately help in reducing the hefty energy import bill.

Engineers inspect a newly-officiated Oil & Natural Gas Corporation well near Kalol, some 35 kms. from Ahmedabad, in this file photo. The price boost is also expected to help improve power generation and support efforts to revive India's flagging gross domestic product growth which sank to a decade's low of 5% in the financial year ended March 2013. The cabinet allowed natural gas prices to rise to $8.4 per million British thermal unit, the first such revision in three years, following recommendations by the prime minister's economic advisory panel, according to two senior oil ministry officials, who didn't want to be identified. The price increase will be effective from the next financial year beginning April 1, 2014, they added. This is up from earlier plans to raise natural gas prices to $6.775 per mBtu from about $4.20 now. [more]

18. INDIA APPROVES SETTING UP OF COAL REGULATOR NEW DELHI (Dow Jones, Friday, June 28, 2013) -- India's cabinet on Thursday agreed to set up a coal regulator that will monitor the supply and pricing of the fuel in a bid to further liberalize the sector long-dominated by

state-run monopoly, Coal India Ltd., a senior government official said. The proposal will ultimately need parliament's approval to become law. Under the proposal, Coal India-the world's biggest coal company by output-will have to adopt a formula for price fixing, based on the quality of the fuel, outlined by the regulator. The regulator is also expected to oversee coal supplies from Coal India to consumers such as power producers. It could also independently monitor the progress made by state-run and private companies in extracting coal under government allocated mining licenses. The initiative is part of a set of reform measures the coalition government led by Prime Minister Manmohan Singh has undertaken to further liberalize the energy sector and revitalize economic growth. Coal India, meets more than 80% of domestic need, but has been missing its output and supply targets in recent years. The state-monopoly says this is mainly due to delays in getting government environmental clearance for new projects and local opposition to land acquisitions. [more]

North America

19. EIA: U.S. APRIL CRUDE OIL OUTPUT UP 16.9% ON YEAR; EXPORTS HIT RECORD NEW YORK (Dow Jones, Friday, June 28, 2013) -- U.S. crude oil output rose 16.9% from a year-earlier in April, to 7.353 million barrels a day, the highest level since February 1992, government data released Thursday show. The rise of 1.063 million barrels a day was the biggest since December and led to a 10% year-on-year drop in crude oil imports, which dropped to their lowest April level since 1995, data from the Energy Information Administration show. As U.S. domestic crude oil output has surged with increased use of hydraulic fracturing and horizontal techniques to extract crude from shale deposits in North Dakota and elsewhere, more crude oil exports have been trickling across the border to Canada, which is the U.S.'s biggest source of oil imports, the data show. Crude oil exports climbed to a record 132,000 barrels a day in April, with all of the oil going to Canada, EIA data show. Exports are broadly forbidden and allowed only under government license. U.S. crude oil imports averaged 7.726 million barrels a day, up 3.6% from March, but 865,000 barrels a day below the year-earlier level. The U.S. imported 2.517 million barrels a day of Canadian crude in April, near the March level and 4% more than in April 2012. [more]

20. GOP-LED HOUSE TO DRIVE OIL AGENDA WASHINGTON, June 27 (UPI) -- Congressional action is needed to unlock the full potential of energy production in U.S. coastal waters, a House energy committee leader said. U.S. Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, said President Obama's speech on climate action Tuesday was tantamount to a "war" on conventional resources like coal and crude oil. Obama proposed tighter measures on carbon emissions and more renewable energy use in the United States. Hastings said the president's plans would harm the economy, instead proposing more exploration offshore. "It's time to take action to create over a million new American jobs and generate $1.5 billion in new revenue," he said in an article published Wednesday by The Hill. "This would significantly boost our economy and help to further remove us from the grip of foreign oil." Hastings said House leaders this week will vote on a series of bills aimed at opening up acreage offshore. [more]

21. MORE TO TEXAS OIL THAN EAGLE FORD SHALE HOUSTON, June 27 (UPI) -- A financial analyst assessing the shale oil potential in Texas said there may be emerging regions that could eclipse the lucrative Eagle Ford reserve area. A study published in March by the University of Texas at San Antonio's Institute for Economic Development said the Eagle Ford shale reserve area could generate around $62 billion worth of oil output, support more than 80,000 full-time jobs and add about

$1.6 billion to state revenues by 2021. Ray Perryman, director of financial analysis company The Perryman Group, told energy reporting website Rigzone the Cline shale reserve areas in western Texas could be more lucrative than Eagle Ford. "The information coming out on the Cline shale indicates up to 30 billion barrels of recoverable oil, which is substantially larger than other large plays," he said in an interview published Wednesday. The U.S. Energy Department estimates Eagle Ford may hold as much as 10 billion barrels of oil. [more]

22. POLL: SUPPORT FOR RENEWABLE FUELS GROWING WASHINGTON, June 27 (UPI) -- U.S. consumers are warming to alternative fuel sources in higher numbers as frustration with the oil industry grows, a renewable energy advocate says. The U.S. Energy Department this week reported average retail gasoline prices for the summer were moving toward an expected seasonal average of $3.53 per gallon. The weekly average price of $3.57 per gallon is 14 cents higher than the same time last year. An online survey of 1,000 U.S. adults conducted in early June for renewable energy advocacy group Fuels America found 75 percent of the respondents wanted more renewable fuel options at refueling stations. It found support for renewable fuel and renewable fuel standards crossed political lines. Most of the respondents taking part in the survey said they blamed the oil industry for high gasoline prices. An RFS program outlined by the U.S. Environmental Protection Agency calls for a steady increase in the amount of renewable fuels blended into transportation fuel through 2022. The American Petroleum Institute, which represents the oil industry, said Wednesday it wants the RFS standards repealed. API argues increases in oil production in the United States make the standard moot because it was enacted as a buffer against disruptions in overseas energy markets. [more]

23. US COAL PRODUCTION FALLS 0.9% YEAR ON YEAR IN WEEK THAT ENDED SATURDAY: EIA (Platts, Friday, June 28, 2013) -- US coal production totaled about 19.4 million st in the week that ended Saturday, the Energy Information Administration said Thursday. The production estimate, based on railcar loadings, is 1.6% lower than the previous week's estimate and 0.9% below the output estimate for the comparable week in 2012, EIA said. Coal production east of the Mississippi River in the week that ended Saturday totaled 8.3 million st and output west of the Mississippi totaled 11.1 million st, it said. US year-to-date coal production totaled 466.3 million st, 4.5% lower than comparable year-to-date total in 2012, the agency said. [more]

24. STUDY CLAIMS EROEI OF FRACKED GAS HIGHER THAN COAL (New Energy and Fuel, Friday, June 28, 2013) Hydraulic fracking has been studied with a published paper showing the energy return on investment (aka EROI) with a total input energy compared with the energy in natural gas expected to be made available to end users is similar to or better than coal.

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The news for the natural gas industry, consumers and landowners lucky enough to get a well on their land is tremendously helpful. It’s also a huge and crushing disappointment for the anti fracking crowd. Hydraulic fracturing pays off in a very big way. The analysis indicates that the EROI ratio of a typical well is likely between 64:1 and 112:1, with a mean of approximately 85:1. This range assumes an estimated ultimate recovery (EUR) of 3.0 billion cubic feet per well. This is similar but significantly higher to the EUR of coal, which falls between 50:1 and 85:1. Obviously the coal folks are less than thrilled, too. For now though over 75% of our current electricity needs come from a mix of gas and coal, and 83% of our homes are heated by gas. Luckily they are the low cost leaders except for nuclear. U.S. utilities have ordered 20 reactors shut, the most in a three-year span since Chernobyl’s aftermath, saddling the industry with a possible $26 billion in costs to pass along to consumers. The nuclear fraction of power generation is going to shrink – a massive cost instead of a savings due to the political environment built up over two presidential election cycles. And the technology remains stalled in bureaucratic red tape machine and a paper blizzard. [more]

Europe

24. SHAH DENIZ PROJECT SELECTS TAP AS EUROPEAN GAS PIPELINE BAKU, Azerbaijan (Dow Jones, Friday, June 28, 2013) -- The Shah Deniz group developing new gas reserves in Azerbaijan said Friday that it selected the Trans-Adriatic Pipeline, or TAP, as its delivery route to Europe. The choice of TAP over rival pipeline Nabucco West capped the battle to deliver Azerbaijan's gas to the European Union, a key part of the region's plans to diversify gas supplies away from dependence from Russia. "For over two years now we have been working closely with and evaluated a number of pipeline projects to select the best option that will become part of the planned southern corridor," said Gordon Birell, BP PLC's (BP) regional president. BP is part of the Shah Deniz consortium, which also includes Azerbaijan's state energy company, SOCAR, and Norwegian state oil company Statoil ASA (STO). "I'm privileged to announce on behalf of the consortium that Azerbaijan's first gas to Europe will go via the Trans-Adriatic Pipeline," Mr. Birell said. The 500-mile TAP--backed by Swiss energy company Axpo, Statoil and Germany's E.ON SE (EOAN.XE)--will run through northern Greece and southern Albania before traveling under sea to Italy. TAP will connect with a pipeline carrying the gas through Turkey. The first supply of gas should reach Europe by 2019. Initially 10 billion cubic meters each year will be exported through TAP. [more]

25. EUROPEAN PIPELINE LOSES BID TO SHIP GAS Setback for EU Quest to Diversify Energy Supply Away from Russia BRUSSELS (Dow Jones, Friday, June 28, 2013) -- A centerpiece of the European Union's push to limit its reliance on Russian natural gas came to an unsuccessful conclusion Wednesday after the Nabucco West pipeline consortium lost a contest to ship gas from Azerbaijan into the heart of Europe. Austrian oil and gas company OMV AG, one of the Nabucco partners, said that the Shah Deniz consortium-which is developing Azerbaijan's Caspian Sea gas with plans to begin shipping it in 2019 through Turkey-has rejected Nabucco as the preferred onward link to Europe. This leaves the rival Trans Adriatic Pipeline, or TAP, as the only other candidate. But TAP, which people close to the matter said would be awarded the contract on Friday, plans to initially ship just a third of the gas that was originally intended for Nabucco. Control of gas deliveries to Europe will now rest with the Shah Deniz consortium rather than with European customers. Nabucco's defeat was the latest high-profile EU energy initiative to flounder, underscoring the continent's difficulty in forging a coherent package of energy policies. The EU is also struggling to fix its carbon dioxide emissions trading system, in which an oversupply of permits to emit the gas has driven prices too low to be a strong incentive to invest in clean energy. Several nations, notably Spain and Germany, are also questioning the affordability of plans to subsidize wind and solar power to hit an EU-wide target of getting 20% of energy from renewable sources by 2020. [more]

26. U.K. INCREASES ESTIMATE OF SHALE-GAS RESERVES LONDON (Dow Jones, Friday, June 28, 2013) -- The U.K.'s hopes of replicating the U.S. shale-gas boom received a boost as an estimate of the country's reserves increased significantly, although how much of it can be produced remains uncertain. A new study from the British Geological Survey estimated that 1.3 quadrillion cubic feet of natural gas lie trapped in shale rock beneath northern England, significantly more than current proven U.K. gas reserves. Combined with other measures to support renewable and nuclear energy announced Thursday, the shale-gas resources will help the U.K. "unleash the energy revolution our country needs," Danny Alexander, chief secretary to the Treasury told lawmakers. The U.K. is promoting the development of its shale-gas reserves in the hope that it can replicate the success achieved in the U.S., where prices of gas have tumbled amid a boom in production. Britain also needs to offset a rapid decline in output from its existing natural-gas fields. Gas production in the first quarter fell 15% from a year earlier, continuing a long slide as the aging North Sea became increasingly depleted Mr. Alexander didn't comment on how much of the U.K.'s shale-gas resources would be recoverable. [more]

Discussion & Analysis

27. "The U.S. Shale Oil Boom: Potential Impacts and Vulnerabilities of an UNCONVENTIONAL ENERGY SOURCE" Policy Brief, Belfer Center for Science and International Affairs, Harvard Kennedy School June 2013 Author: Leonardo Maugeri, Roy Family Fellow, Geopolitics of Energy Project Belfer Center Programs or Projects: Environment and Natural Resources; The Geopolitics of Energy Project. This policy brief is based on the discussion paper “The Shale Oil Boom: A U.S. Phenomenon” by Leonardo Maugeri, published by the Belfer Center in June 2013. BOTTOM LINES

http://belfercenter.ksg.harvard.edu/index.html

http://belfercenter.ksg.harvard.edu/experts/2510/leonardo_maugeri.html?back_url=%2Fpublication%2F23193%2Fus_shale_oil_boom.html%3Futm_source%3DSilverpopMailing%26utm_medium%3Demail%26utm_campaign%3DMaugeri_The%2520Shale%2520Oil%2520Boom%2520%281%29%26utm_content%3D&back_text=Back%20to%20publication

http://belfercenter.ksg.harvard.edu/project/43/environment_and_natural_resources.html

http://belfercenter.ksg.harvard.edu/project/68/geopolitics_of_energy_project.html

Increased Shale Oil Production may Significantly Alter the U.S. Energy Outlook: The United States may produce five million barrels of shale oil per day by 2017 and may become the largest global oil producer with up to 16 million barrels of oil (shale, conventional, LNG, and biofuels) per day in just a few years.

U.S. Shale Oil Production has Unique Characteristics: The nature of shale oil production makes it particularly suited for the United States’ industrial, financial, demographic, and geologic landscape. These same characteristics make the expansion of the shale phenomenon to other parts of the world improbable – at least in the short term.

Sustained Shale Oil Production Requires Dramatic Drilling Intensity: No other country in the world has ever experienced even a fraction of the overall U.S. drilling intensity for oil and gas. Shale oil wells exhibit their peak production rates during the first weeks of operation then dramatically decline. Oil companies intensively drill for new wells that offset the loss of production from older wells.

Production will be Price Sensitive: There are two scenarios depending on oil prices: If the price of oil holds steady or slightly decreases, production could still reach 5mbd by 2017; if the oil price drops to below $65 per barrel, production could drop off substantially.

The U.S. will Still Import Oil from the Middle East: Conventional wisdom says that if the United States drops its oil imports to 25 percent of demand, the oil will come from North American sources. This scenario is price dependent. If the marginal price of oil drops, the cheapest oil will be from the Middle East, and oil from Venezuela and Canada will be more expensive. [more]

28. MUSINGS: THREE CHEERS FOR THE US OIL INDUSTRY! HOLD THE PREDICTIONS

This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. (Rigzone, Friday, June 28, 2013) -- The United States experienced the largest increase in annual oil production ever for the industry last year. According to the annual review of world energy markets prepared by BP plc, the one-million barrels a day increase in output was the largest in the history of the United States going back to the oil industry’s beginning in 1859. BP also cited the country’s strong growth in natural gas production, too. But maybe more significant was the 2.8% decline in energy demand last year, which has certainly helped the country reduce its balance of payments due to lower oil imports. The problem, however, is that the strong performance of the domestic oil and gas industry has forecasters making aggressive predictions about its future production growth and the resulting impact on global energy markets and the political environment.

[more]

Alternatives

29. LA METRO TO PURCHASE UP TO 25 NEW BYD ELECTRIC BUSES AS PART OF $30M PILOT PROJECT (Green Car Congress, Friday, June 28, 2013) The Los Angeles County Metropolitan Transportation Authority (Metro) Board of Directors approved a contract with BYD Motors for the manufacture and delivery of up to 25 new all-electric buses as part of a $30-million clean air bus technology pilot project. This marks the first time that all-electric transit buses will be purchased and placed into Metro revenue service. Metro's Advanced Transit Vehicle Consortium (ATVC), a partnership with LA City, LA County and South Coast Air Quality Management District, will initially purchase five low-floor, 40-foot all-electric buses. After an initial period of testing and evaluation, Metro may then choose to purchase up to 20 additional buses. Metro will also initiate a new solicitation to convert six existing Metro gasoline electric hybrid buses to Super Low Emission Bus standards. The BYD contract contains a local jobs component that stipulates that the firm implement a local jobs program. BYD will comply by performing final assembly of bus components at its new manufacturing facilities in LA County. A Lancaster, California plant, which opened in May, is the international firm's first manufacturing facility in the United States. Metro already operates the nation's largest compressed natural gas bus fleet, but this initiative sets Metro on a new course for transitioning to even cleaner electric buses that will be assembled right here in Los Angeles County at the BYD manufacturing plant in Lancaster. [more]

Full Stories

1. OIL PRICE STAYS ABOVE $97 ON IMPROVING US DATA BANGKOK (Reuters Friday, June 28, 2013) -- The price of oil rose Friday as the U.S. economic outlook brightened and concerns eased about a credit crunch in China.

Benchmark oil for August delivery was up 45 cents to $97.50 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to finish at $97.05 on Thursday after the U.S. government released data showing an increase in in consumer spending and home sales while jobless claims fell. "The truth to these markets are that they are lacking any good reason to go down," said Carl Larry of Oil Outlooks and Opinions. "We're starting to settle into a fair value and it's hard to argue lower." The number of Americans seeking unemployment benefits fell by 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly. Steady job gains could help the economy expand later this year and thus increase energy consumption. The U.S. Commerce Department said consumers spent more in May as their income rose, although spending was weaker in April, February and January than previously estimated. The number of pending home sales jumped in May to the highest level in more than six years, the National Association of Realtors said. Fears of a cash crunch in China, which could cripple small- and medium-sized businesses, were eased after the country's central bank indicated it would not allow an all-out crisis to unfold. Analysts at Bank of America Merrill Lynch said in a commentary that "it is time for markets to calm down now and that the worst is probably behind us" and that a hard economic landing would be avoided, since no Chinese policymaker would want to shoulder the blame for that. Brent crude, which is used to set prices for oil used by many U.S. refineries to make gasoline, rose 18 cents to $103 a barrel. In other energy futures trading on the Nymex: - Heating oil rose 1.1 cent to $2.899 a gallon. - Natural gas rose 2.9 cents to $3.611 per 1,000 cubic feet. - Wholesale gasoline fell 0.1 cent to $2.727 a gallon.

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2. CRUDE FUTURES ON THE REBOUND (Dow Jones, Friday, June 28, 2013) -- Crude oil futures were up in London trading Friday, with some analysts pointing to a lessening of fears over Federal Reserve plans to end quantitative easing, while other analysts warn that such optimism may be unfounded. At 0935 GMT, Brent crude for August delivery was up 52 cents, or 0.51%, at $103.34 a barrel. Nymex August crude was up 61 cents, or 0.63%, at $97.66 a barrel. Tamas Varga, an analyst at PVM, said the rise in prices stems from lessening fear that the U.S. Federal Reserve will put a stop to quantitative easing.

"The market expects that there will be cheap money available for the foreseeable future," he said. But not everyone agrees. Petromatrix analysts wrote: "This morning we read many comments that crude oil was fueled higher yesterday [Thursday] by lower fears that the Fed would ease QE. We consider this to be an ex-post justification given that the main move higher in crude oil was in tandem with an intra-day move higher in the US dollar, and that is not really a typical QE trade." The analysts note that while Fed officials have said that the market is misreading Bernanke's comments, none have actually denied that tapering of the bond-buying program is coming. The difference in price between Brent and WTI crude is narrow, at just $5.64 compared with over $20 in February. Mr. Varga said that a contributing factor is the restart of a crude distillation unit at BP PLC's Whiting refinery on the southeast shore of Lake Michigan. Mr. Varga said that the restart could be supportive of the WTI price, because it will help to clear the glut of oil at Cushing, Okla. At 0936 GMT, ICE gasoil for July was up $5.00, or 0.57%, at $887.75, while gasoline for July was up 35 points, or 0.13%, at $2.7461.

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3. WTI CRUDE OIL HEADS FOR LONGEST GAIN SINCE APRIL (Bloomberg, Friday, June 28, 2013) -- West Texas Intermediate rose for a fifth day, its longest increase since April, on that signs of economic recovery in the U.S. and Germanywill support fuel consumption. WTI futures climbed as much 0.8 percent, and were poised for a second quarterly advance. German retail sales rose more than forecast in May, adding to signs that a recovery in Europe's largest economy has gathered pace this quarter. Fewer Americans filed claims for weeklyunemployment benefits and consumer spending rebounded in May, U.S. government data showed yesterday. Brent's premium to WTI shrank after closing at the narrowest since January 2011. "Oil trading is mostly macro-driven today," said Andrey Kryuchenkov, an analyst at VTB Capital in London who sees WTI meeting "very strong resistance" next month at $99 a barrel. "Refinery runs in the U.S. are very healthy, but the upside for crude will still be limited by the long-term comfortable cushion of supply." WTI for August delivery increased as much as 77 cents to $97.82 a barrel in electronic trading on the New York Mercantile Exchange, the highest since June 20, and was at $97.59 at 9:56 a.m. London time. The contract rose $1.55, or 1.6 percent, to $97.05 yesterday, the biggest gain since May 3. The volume of all futures traded was 35 percent higher than the 100-day average. Futures are up 6.1 percent this month and little changed in the second quarter. Brent Gains Brent for August settlement climbed 44 cents to $103.26 a barrel on the London-based ICE Futures Europe exchange. While Brent prices are up 3 percent in June, they are poised for a third quarterly decline. The European benchmark crude was at a premium of $5.67 to WTI futures, from $5.77 yesterday.

German economic data today from the Federal Statistics Office showed sales adjusted for inflation and seasonal swings climbed 0.8 percent in May from April. Economists had predicted an increase of 0.4 percent, according to the median of 23 estimates in a Bloomberg News survey. Sales gained 0.4 percent from a year earlier. WTI was set for the first monthly advance this quarter, partly on renewed concern unrest in Syria will spread, threatening Middle East crude supplies. The region accounted for 33 percent of global production last year, according to BP Plc (BP/)'s Statistical Review of World Energy. U.S. Economy Crude gained yesterday after Commerce Department data showed U.S. consumer spending rebounded 0.3 percent in May following the biggest drop in more than three years. Weekly claims for jobless benefits slid for the third time in a month, according to a Labor Department report. The U.S. accounted for 21 percent of global oil consumption last year, compared with 11 percent for China, the second-largest user, according to BP's Statistical Review. "Right now it seems like the bulls are in control," said Victor Shum, the vice president at IHS Energy Insight, a consultant in Singapore. "Oil futures appear to be trading with the broader market." Prices may retreat next week on speculation U.S. oil and fuel inventories remain sufficient, a Bloomberg News survey showed. Thirteen of 33 analysts and traders, or 39 percent, forecast crude will decrease through July 5. Eleven respondents, or 33 percent, predicted an increase and nine saw no change. Last week, 65 percent projected a fall. WTI has long-term technical support at $89.83 a barrel, according to data compiled by Bloomberg. That's the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Buy orders tend to be clustered near chart-support levels.

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4. NATURAL GAS FUTURES SLIDE TO 3-MONTH LOW AS STOCKPILES CLIMB --Natural gas slides to three-month low amid steep stockpile rise

--EIA: Inventories rise 95 bcf, above expectations for 89 bcf

--Mild summer keeps lid on gas prices NEW YORK (Dow Jones, Friday, June 28, 2013) -- Natural gas futures tumbled to their lowest level in three months, after a bigger-than-expected rise in U.S. gas stockpiles signaled demand for the fuel remains sluggish. Gas prices typically rise this time of year, as temperatures climb and homeowners and businesses flip on air conditioners and consume more electricity derived from natural gas. But prices have been sliding the last several weeks, as a relatively mild start to summer has kept demand weak for cooling. The trend showed little sign of letting up after the Energy Information Administration on Thursday said U.S. inventories last week rose 95 billion cubic feet to 2.533 trillion cubic feet during the week ended June 21. The rise was well above the 89-bcf injection called for by analysts in a Dow Jones Newswires survey.

"We are having a very mild start to summer," said Matt Smith, analyst at Schneider Electric. "That's been reflected not just in this number, but in the previous weeks' numbers." Natural gas for August delivery settled 15.5 cents, or 4.2%, lower at $3.582 a million British thermal units on the New York Mercantile Exchange. That's the lowest front-month settlement for the commodity since March 7. Natural gas prices have fallen sharply from their recent high near $4.40 in early May, amid weak demand. Underscoring tepid demand for natural gas, Thursday's inventory jump was well above the usual level for this time of year. Last year, natural gas stockpiles rose just 58 billion cubic feet. The five-year average build for the week is 79 billion cubic feet. Stockpiles are still 17.1% below their level a year ago, when an unusually hot summer spurred heavy demand. They are 1.2% below the five-year average level for the week. Brokerage Tradition Energy said that the EIA has now reported eight consecutive weeks of above-average injections of natural gas into storage. Meanwhile, supply has held steady for several months, suggesting that producers have little appetite for ratcheting up output with prices still well below historical levels. Weather forecasts Thursday suggested that gas demand may remain constrained in the coming weeks. Commodity Weather Group, a private forecaster, called for below-normal temperatures across the Midwest and portions of the South over the next six to 10 days, though portions of the West will see above-normal temperatures. Texas could see temperatures above 100 degrees in the next few days. "Short of a major storm event into the Gulf of Mexico or a dramatic shift in short-term temperature views, we will look for continued soft pricing environment with our $3.55 target likely to be tested again in tomorrow's session," said Jim Ritterbusch, head of Ritterbusch and Associates, a trading advisory firm.

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5. OPEC TO BOOST SHIPMENTS AS DEMAND PEAK NEARS (Business Week, Friday, June 28, 2013) The Organization of Petroleum Exporting Countries will raise shipments by 1.9 percent through the middle of July as summer demand for driving fuels in the northern hemisphere nears its highest point, Oil Movements said. The group that supplies about 40 percent of the world's oil will ship 24.03 million barrels a day in the four weeks to July 13, up 450,000 a day from 23.58 million in the previous period to June 15, the tanker tracker said in an e-mailed report. The figures exclude two of OPEC's 12 members, Angola and Ecuador. "This is heading into the point where refinery runs peak and therefore crude demand peaks," Roy Mason, the company's founder, said today by phone from Halifax, England. "Quite a bit of the increase is going west. Sometime in the next three weeks we'll get that peak and then its downhill until the winter."

Middle Eastern shipments will jump by 2.4 percent to 17.69 million barrels a day, compared with 17.27 million in the month to June 15, according to Oil Movements. That figure includes non-OPEC nations Oman and Yemen. Crude on board tankers will increase by 2.7 percent to 482.23 million barrels versus 469.67 million, data from Oil Movements show. The researcher calculates the volumes by tallying tanker bookings. Its figures exclude crude held on vessels for storage. OPEC's members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. It will next meet in Vienna on Dec. 4.

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6. EIA: OPEC JUNE OIL OUTPUT DOWN 300,000 BARRELS A DAY VS MAY NEW YORK (Dow Jones, Friday, June 28, 2013) -- Crude-oil output from the Organization of the Petroleum Exporting Countries fell by 300,000 barrels a day in June from May, to 30.1 million barrels a day, the Energy Information Administration estimated in a report released Thursday. The EIA figure would put the group near its committed level of 30 million barrels a day, which OPEC ministers reinforced at an end-May policy meeting. Output from Libya dropped 200,000 barrels a day in the month, to 1.4 million barrels a day, while Nigeria's flow slowed by 100,000 barrels a day, to 1.9 million barrels a day, the EIA data show. Iraq's production rose by 100,000 barrels a day in the month, to 3.2 million barrels a day, while Saudi Arabia, oil's de facto leader and the world's biggest oil exporter, kept output steady at 9.4 million barrels a day. The estimates are contained in a report which EIA is required to file to Congress every two months on the oil market in response to stricter sanctions on Iran. The EIA report shows Iran's output was steady at 2.8 million barrels a day in May and June, but was 200,000 barrels a day below the May-June 2012 average. It also indicates sanctions on oil trade with Iran have resulted in Iran falling behnd in Iraq as OPEC's second-biggest oil producer. OPEC's output is off 1 million barrels a day from the May-June 2012 average of 31.1 million barrels a day, on declines from Saudi Arabia, Libya, Nigeria and Iran. The group's spare production capacity stands at 2.4 million barrels a day, up from the year-earlier average of 2.1 million barrels a day. Global fuel supply averaged 89.9 million barrels a day in May and June and topped demand by 200,000 barrels a day. The EIA said U.S. inventories rose 2% from a year earlier in the period, but commercial stocks in other major industrialized nations that make up the Organization for Economic Cooperation and Development were unchanged, the EIA said.

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7. IEA: SLOWER NATURAL GAS GROWTH IN POWER GENERATION OVER NEXT 5 YEARS

(The Oil & Gas Journal, Friday, June 28, 2013) -- Natural gas will grow at 2.4% per year between now and 2018, the International Energy Administration said in its Medium-Term Gas market report issues on June 20. The growth estimate was revised downwards from 2.7% last year, due to continuous demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa. Agency analysts expect gas will emerge as a transportation fuel, driven by a supply boom in North America and air pollution concerns, especially in China. Amid more stringent environmental policies, China is expected to account for 30% of the global gas demand growth. In the next 5 years, China is expected to absorb the entire production increase from Central Asia as well as one-third of the global increase in LNG supply. Russia, in the longer term, is expected to maintain its position in gas markets by developing the resources and infrastructure for large-scale Asia exports. "Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible," said IEA Executive Director Maria van der Hoeven. However, despite the growing role of gas in the global primary energy mix, gas face challenges in all the major geographic regions. In the US, gas is losing some of its share of the power market due to low coal prices and the absence of policy constraints on coal-fired plants. Gas demand in Europe is hindered by weak economic conditions and low carbon prices. "The persistent tightness of LNG markets is a major concern as it limits the contribution of gas to sustainable energy security," Van der Hoeven said. "'It also highlights the need to tackle energy subsidies and improve energy efficiency in major producing countries as well as to adopt supportive policies for LNG investment."

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8. LOST IN THE OIL BOOM

Near the super-giant Majnoon oil field, a resident of the marshes transports bales of reeds to the shore for sale to local farmers. (BEN VAN HEUVELEN/Iraq Oil Report/Metrography) (Iraq Oil Report, Friday, June 28, 2013) When international oil companies started arriving in Basra in 2010, a farmer named Abu Adel was given an offer he couldn't refuse. He was summoned to a government office in Basra city, handed a check, and told to sign an agreement to leave his farm, which sat above the super-giant West Qurna 2 oil field. "Of course I didn't want to sign, but if you refused… there was no explicit threat, but it was understood," Abu Adel said. "Either from the beginning you agree, or the police will take you. ---------------------------------

9. IRAQI KURDS UPBEAT ON OIL EXPORT POTENTIAL ERBIL, Iraq, June 27 (UPI) -- Production from an oil field in the northern Kurdish region of Iraq will help meet export targets of 1 million barrels per day, the regional government said. The semiautonomous Kurdistan Regional Government said it supported a development plan for the Shaikan oil field as proposed by Gulf Keystone Petroleum Ltd. Gulf Keystone, a company with headquarters in London, said last week it started drilling its first exploration well in the Shaikan oil field. It said the entire field could hold as much as 10.5 billion barrels of oil. The KRG said the first phase of production under the plan, which starts in a few weeks, will yield 40,000 bpd. That level will increase gradually and reach 250,000 bpd by 2018. "Production from the Shaikan block will play a crucial role in helping the Kurdistan region to achieve its overall oil export targets of 1 million barrels per day by the end of 2015, and 2 million barrels per day by the end of the decade," the government said in a statement Wednesday. The central and Kurdish governments in Iraq are at odds over legal issues related to oil. The central government says some of the unilateral action taken by its counterparts may be illegal.

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10. MORSI SUPPORTERS GATHER FOR CAIRO RALLY Supporters gathering in Egyptian capital to express their support for president, as political tensions continue to rise.

Security has been tightened around Cairo ahead of this weekend's planned demonstrations [AFP] (Al Jazerra, Friday, June 28, 2013)Supporters of Egyptian President Mohamed Morsi have begun to gather in a Cairo neighbourhood for a rally, in response to opposition plans for a major anti-government demonstration over the weekend. Witnesses on Friday said that Morsi supporters have started gathering at the Rabaa mosque in Nasr City to assert that "[the government's] legitimacy is a red line". Some anti-Morsi supporters are also expected to gather in Tahrir Square during the day, demanding the president's resignation, ahead of a separate major planned demonstration on Sunday. Deepening divisions among ruling Islamist and the largely secular opposition have heightened tensions in Egypt. Ahead of Friday's demonstrations, clashes in the north of the country between Islamists and opposition protesters left one person dead and 434 injured, the Egyptian Health Ministry said. Morsi's Muslim Brotherhood group said one of its supporters was killed in the clashes. The opposition accuses Morsi, who is Egypt's first democratically elected president, of failing to fulfill the objectives of the revolution that forced Hosni Mubarak from power in 2011. They accuse the ruling Islamists of focusing on consolidating power and failing to address Egypt's economic and social problems.

Morsi's supporters have vowed that he will complete his four-year term, which ends in 2016. On Wednesday, Morsi defended his performance in his first year in office. He admitted that mistakes had been made, but offered no concessions for his opponents.

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11. EGYPT PREPARES LEAP IN THE DARK. AGAIN CAIRO (Reuters Friday, June 28, 2013) -- Egypt is heading for a "dark tunnel", says the head of its armed forces. How he and his generals respond to a political showdown in the streets may determine whether its new democracy survives to see the light. The warning at the start of the week from General Abdel Fattah al-Sisi was presented as a wake-up call to the rival factions, President Mohamed Mursi and his Islamist allies on one side, a disparate coalition of liberals and a mass of Egyptians simply frustrated by economic stagnation on the other. But the velvet glove of Sisi's language, urging politicians to find consensus and avert bloodshed, could not conceal an iron-fist of possible intervention, even if he was widely believed when he said the generals, secure and prosperous in their new role, have no wish to go back to running the country. One thing is clear. The "consensus" Sisi urged politicians to reach this week is absent. A vague offer from Mursi of collaboration was met with disdain from the opposition. So whether the generals step in, with their half million men, U.S.-funded hardware and a 60-year-old sense of entitlement, now depends on how the next few days play out at flashpoints like Tahrir Square and Mursi's palace in Cairo and on the streets of a dozen other major cities across the country. The numbers on the street will matter. So too will violence. Both sides say they take heart from Sisi's promise to defend the "will of the people". For the Islamists, that means the president and government freely chosen in a series of elections at which they defeated a rudderless opposition. But Mursi's rivals believe they can bring millions more out to demonstrate, especially on Sunday, the anniversary of Mursi's inauguration, to show that the popular will lies elsewhere - much as they did when the Arab Spring uprising of early 2011 persuaded the army that Hosni Mubarak's days in power were over. Few believe Sisi and a new generation of leaders elevated by Mursi want to grab long-term control in a full coup by a military that is held in high regard by almost all Egyptians. But many of the Islamists' adversaries, from hardline Mubarak nostalgists to liberal idealists, seem ready to welcome a short-term shove by the army to abort the direction the revolution has taken and give a second chance to efforts to agree an institutional framework to end the polarized deadlock. TRIGGERS

Whether the army will do so, and how far it might push Mursi, probably depends on two potential triggers: The first, Sisi spelled out explicitly, is violence. If there is blood on the tarmac, perhaps gunplay, the generals who already have troops deployed in the background, could invoke "national security" and a government failure to keep order. "The army has made its position clear: it will not allow violence and won't stand by if things seem to be getting out of control," one military source told Reuters on Thursday after the opposition rejected Mursi's overtures. Leaders on neither side seemed fully capable of controlling their supporters, he added. The second, less explicit trigger, is how the military may interpret the popular will. While their financial sponsors in Washington have angered the opposition by urging them not to overturn the result of Mursi's election, the army listened to the voice of the street before, in ousting Mubarak. A number of protest movements since the uprising have fizzled out quickly. That cannot be ruled out again. Although a petition against Mursi claiming to have 15 million signatures lends weight to anecdotal evidence that many will show up. The military source who spoke to Reuters said a turnout at opposition protests on the scale of 2011 - many millions drawn from across society and prepared to stay on the streets for days or weeks - could see Mursi obliged to relent: "If the protesters' numbers exceed those seen during the revolution, then everybody's position will have to change," he said. "No one will be able to oppose the will of the people," he added. "At least, not for long." Veteran commentator Mohamed Hassenein Heikal, who has close ties to the military, told a television interviewer the army was concerned at a lack of vision for the future among politicians: "The army will always side with the people," he said. "Whether their will is expressed at the ballot box or in some other way." CONFRONTATION Few independent observers can assess with much certainty how the showdown between the factions will play out. Both seem unwilling to flinch: Mursi and his Muslim Brotherhood insist on their electoral legitimacy and tell opponents just to fight another election in due course; the opposition coalition demands Mursi resign and make way for an interim authority to reset all the rules before new elections. "The two sides' demands are pretty maximal so I see possibilities for real confrontation," said Nathan Brown, an expert on Egypt's transition at George Washington University who was in Cairo this month. "Significant violence is a possibility. "Even if you have military intervention it's not clear of what kind or whether it would solve anything." Opponents accuse the Brotherhood of feigning interest in democracy while aiming to entrench themselves deep in the state as Mubarak's people did. Mursi and his allies in turn accuse many in officialdom, and the media, of sabotaging their efforts.

Anti-Islamist sentiment in the police and other security organs that led Mubarak's fight against them for decades adds an element of doubt to the government's ability to staunch the kind of violence that might trigger an intervention by the army. One source inside one of the domestic security agencies told Reuters this week that many in his organisation were hoping that a violent confrontation could bring down Islamist rule: "There's a battle coming between us and the jihadists," he said. "We need to cleanse the country of them. "More state agencies will join us once they see the violence those terrorists inflict - as they will in the days to come." Such talk, while impossible to verify how widespread it is, somewhat supports allegations by Mursi's government that agents provocateurs from the old regime are behind recent clashes. MILITANTS How easily the army could quell violence is also unclear. Mursi has relied increasingly on support from more militant Islamists, including al-Gamaa al-Islamiya, a movement that spent years fighting the old regime and had ties with al Qaeda. Its leaders, many freed from jail after the revolution, speak openly of taking up arms again to defend the president. They fear a return to army rule would mean prison again for them, or death. Nathan Brown said an army move that tried to shut the Islamists back out of the system could prove bloody: "If it came to denying the Islamists political power, the Brotherhood, probably with the support of al-Gamaa, will fight," he said. "That's what could be very very nasty ... but I don't think a full-scale military takeover is the most likely intervention. There's all kinds of other things they could do short of that." Yasser El-Shimy, Egypt analyst at the International Crisis Group in Cairo, said he believed that the most the army was likely to do was use its strength to force both sides toward the sort of compromise Sisi spoke about in his warning on Sunday: "Even if the protests are massive and there is really bad violence," he said, "If the army is to intervene, it will not be to pressure Mursi to resign, or call for presidential elections, but rather to try and make some compromises on the constitution and the government, in order to appease all parties." Yet those compromises are unlikely to get any easier, especially if more blood is spilt, leaving Egyptian democracy in peril: "It is getting more and more complicated to find a political solution," said a senior Western diplomat in Cairo. "And the more active the army becomes, the weaker civilian institutions will be. It will be a loss of legitimacy."

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12. JORDAN SEEKS ENERGY SECURITY WITH SHALE OIL PLANT

AMMAN, Jordan, June 27 (UPI) -- Jordan is pushing ahead with plans to build the Middle East's first shale oil-fired power plant, a major step toward achieving energy security by the resource-poor Hashemite kingdom. Its fragile economy had long been shackled by dependence on imported energy, a problem sharply accentuated by high oil prices during the past three years and the turmoil in the Arab world since early 2011. The kingdom, whose economy has largely survived on hefty handouts from the United States and the petro-monarchies of the Persian Gulf, sits on top of an estimated 100 billion barrels of shale oil -- the fourth-largest shale oil reserves in the world after the United States, China and Russia. Moves to develop the deposits began in 2006, but the high price of extraction was a major drawback. The steep rise in oil prices in 2008 and the political convulsions of the Arab Spring in 2011 hit Jordan hard. The loss of low-cost Egyptian natural gas via a pipeline across the Sinai Peninsula, totaling about 80 percent of Jordan's electricity generating fuel needs, meant Amman had to rely on expensive oil imports for power generation. That cost the equivalent of about 25 percent of the kingdom's gross domestic product. "Energy is the Achilles heel of the Jordanian economy, it's a huge vulnerability for Jordan," Nemat Shafik, deputy head of the International Monetary Fund observed during a recent visit to Amman. The energy issue has assumed even greater political importance in recent months as unrest within Jordan has grown. About 400,000 refugees from the civil war in neighboring Syria have flooded into the country, overwhelming its already stretched resources, and engendering domestic discontent and demands for democratic reform that are increasingly posing a challenge to the Hashemite monarchy. There are increasing signs Jordan may be dragged into the Syrian conflict on the side of rebels seeking to topple the Damascus regime of President Bashar Assad. The United States has sent a Patriot missile battery and a squadron of F-16 combat jets to Jordan, and U.S. forces are training Syrian rebels in the kingdom. Abdullah II, whose great-grandfather founded the Hashemite kingdom set up by the British after World War I, has a lot riding on the shale oil operation, in which Royal Dutch Shell and British Petroleum are helping out. The Middle East Economic Digest reports the Amman government has set a target of meeting 14 percent of the kingdom's energy needs from shale deposits by 2020. The proposed shale-fired power plant is scheduled to be operational by 2017, with a planned capacity of 500 megawatts, cutting the cost of Jordan's electricity generation by nearly $500 million a year. The power scheme will be operated by Estonia's Enefit and Jordan's Ministry of Energy and Mineral Resources. More power plants are likely.

Amman has increasingly focused on the shale oil exploration. Along with the go-ahead on the power plant, several exploration contracts were signed in 2012. "The success of the exploration program is not guaranteed," said Gulf-based analyst Andrew Roscoe. "The cost of extracting shale oil means that it is only feasible when oil prices are high. However, the vulnerability of Jordan's economy to external events has made the decision to tap its natural resources an easy one to take. "With the kingdom's overall fiscal deficit reaching 8.8 percent of gross domestic product in 212, Amman must ensure proposed schemes to reduce its energy bills come to fruition," said Roscoe. The Energy Ministry signed an agreement with Canadian Global Oil Shale Holdings in September 2012 to assess oil shale resources across 86 square miles of the Attarat Um Ghudran and Isphere al-Mahatain regions of southern Jordan. Another possible source of energy may be opening up through neighboring Israel, with which Abdullah's late father King Hussein, signed a peace treaty in 1996. The first of Israel's offshore gas fields in the eastern Mediterranean began production in March and Prime Minister Binyamin Netanyahu's cabinet approved exporting 40 percent of all gas produced. The Israelis have a strategic interest in maintaining the Hashemite monarchy, even though the peace treaty is not popular with most Jordanians, so supplying Jordan via a relatively short pipeline would seem to be in the cards.

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13. SYRIA PEACE CONFERENCE: DON'T HOLD YOUR BREATH

UNITED NATIONS (Reuters Friday, June 28, 2013) -- How deep is the divide separating Russia and the United States on Syria? A photo from the recent G8 summit in Northern Ireland says it all - two grim-faced leaders slouched in their chairs, Barack Obama biting his lip and Vladimir Putin staring at the floor. The awkward photo opportunity, which went viral on the Internet, highlights the increasingly tense relationship between the former Cold War foes who find it difficult to agree on a series of high-profile issues, including Syria and a fugitive U.S. intelligence contractor whom Putin refuses to extradite. Washington and Moscow have been trying since May to organize an international peace conference to bring an end to the violence. But hopes that such a conference will take place anytime soon - if at all - are fading quickly.

U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov originally announced that they would try to hold the conference, which is intended to bring rebels and representatives of Syrian President Bashar al-Assad's government to the negotiating table, by the end of May. But the date keeps slipping. First it was bumped to June, then July. Earlier this week U.N.-Arab League peace mediator Lakhdar Brahimi, who held talks with senior U.S. and Russian officials in Geneva, ruled out a peace conference before August. Diplomats at the United Nations in New York say it is unclear whether the peace conference will take place at all. "It's not looking too good," a senior Western diplomat said. The point of the conference was to revive a plan adopted last year in Geneva. At that time, Washington and Moscow agreed on the need for a transitional Syrian government, but left open the question of whether Assad could participate in the process. The United States, like the Syrian rebels, says Assad and his family should play no role in a transitional government, though Russia says there should be no conditions on the talks. Kerry and Lavrov will discuss Syria again next week on the sidelines of an Association of Southeast Asian Nations conference in Brunei, the United Nations said on Tuesday. ASSAD WON'T HAND OVER POWER There are other sticking points in discussions on how to make what U.N. diplomats have been calling "Geneva 2" take place at all - who will represent Assad's government and the Syrian opposition at the negotiating table. There is still no agreement on the lineup of potential negotiators. Then there is the issue of whether Assad's other key ally Iran should participate, as Russia wants but Western governments dislike. Recently, Assad's forces have enjoyed some military successes. They recaptured two towns near the Lebanese border, while rebels complain about insufficient arms and ammunition. This, diplomats say, makes both Assad's government and the opposition more reluctant to seek a compromise and diplomacy in Geneva - Assad because he thinks he can win the war militarily, and the opposition because it does not want to negotiate from a position of weakness and is holding out for more weapons. Assad's foreign minister, Walid al-Moualem, told a news conference earlier this week that authorities were ready to form a broad-based government of national unity. But he made clear that they were not planning to give up control of Syria. "We head to Geneva not to hand over power to another side," he said. "Whoever on the other side imagines this, I advise them not to go to Geneva." Some diplomats say the ebbing hopes for a serious peace conference highlights the impotence of the United Nations and Brahimi, who for months has threatened to quit the post like his predecessor, former U.N. Secretary-General Kofi Annan.

Annan quit the job last year out of frustration at the way the dispute between Russia, Assad's main arms supplier, and the United States, which supports the rebels and recently announced it would begin providing them with arms, has left the Security Council in a state of paralysis on the Syrian issue. Russia and China long ago ruled out sanctioning Syria and have vetoed three Western and Gulf Arab-backed resolutions condemning Assad's government for an increasingly sectarian war that the United Nations says has killed more than 90,000. GRIM PROSPECTS FOR DIPLOMACY Richard Gowan of New York University predicted that a collapse of Kerry's peace conference plan will increase pressure on Obama to send more and heavier weapons to the Syrian rebels. "If the Geneva proposal fails, there will be pressure on the U.S. to move beyond its current offer of light weapons to the rebels, especially if Assad's forces score more victories," Gowan said. "Kerry's bet on Geneva may backfire by demonstrating that diplomacy is really a lost cause, but perhaps Kerry, who has reportedly argued for air strikes, is fine with that," he said. Washington's cautious move to begin arming moderate Syrian rebels - not Islamist militants who are increasingly present in the conflict - came after it said Assad's forces had crossed a "red line" by using chemical weapons. The Syrian government denies the charge and says the rebels have used chemical arms. It also accuses Western and Gulf Arab governments of arming the opposition. U.N. Secretary-General Ban Ki-moon, now in his second and final term, is increasingly worried that he may be remembered as the man who failed in Syria, U.N. diplomats told Reuters. He has even considered stepping in himself to try to broker a peace deal if Brahimi throws in the towel, the envoys added. Outgoing U.S. Ambassador Susan Rice, who will soon take up the post of Obama's national security adviser, said earlier this week that the council's failure to take decisive action on Syria was a "moral and strategic disgrace." "The repeated failure of the Security Council to unify on the crucial issue of Syria I think is a stain on this body and something that I will forever regret - even though I don't believe that outcome is the product of the action of the United States," Rice said. British Ambassador Mark Lyall Grant echoed Rice's unusually strong words, which were clearly aimed at Russia and China. He also defended the United Nations against suggestions that the organization itself was somehow responsible for the Security Council's failure to act on Syria. "People talk about it being a stain on the United Nations but you can't blame the United Nations," he said, adding that the responsibility lies with its member states. "We have tried very hard over the last two years to secure some leverage for the Security Council in this crisis as it's unfolded," he said. "Unfortunately we've had three resolutions vetoed by Russia and China ... Events on the ground might have unfolded very differently had those resolutions been adopted."

A March 2011 council resolution authorized military intervention in Libya and gave a green light for NATO to mount an operation to protect civilians that led to Libyan leader Muammar Gaddafi's ouster and death at the hands of rebel forces. No Western nations have called for something similar in Syria, and Russia has vowed to prevent a similar move in Syria. There may be no swift end to the war. And even if the opposition were to prevail, it is unlikely to bring stability. "The Syrian civil war is likely to go on for years," said Richard Haass, president of the Council on Foreign Relations. "It is not just that it is proving harder and taking longer to oust the Assad regime than many expected," he told Reuters. "It is also that even if the regime were to be removed, what would follow would be a prolonged round of fighting among opposition forces who disagree on just about everything except their opposition to the current regime."

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14. REBELS IN SYRIA MOVE TO SHOW MODERATION A top Syrian rebel leader said his forces were drawing new recruits away from extremist groups like Jabhat al Nusra. PARIS (Dow Jones, Friday, June 28, 2013) -- A top Syrian rebel leader said his forces were counting on arms shipments from the U.S. to reverse momentum in the country's civil war and draw new recruits away from extremist groups like Jabhat al Nusra. In an interview with The Wall Street Journal, Brig. Gen. Mithkal Albtaish—a leader of the Free Syrian Army, or FSA—said he has recently persuaded 60 fighters to shift allegiance from al Nusra, a radical Islamist group aligned with al Qaeda, to the forces under his command.

A top Syrian rebel leader said his forces hope to use new arms shipments from the US to reverse momentum on the battlefield and draw new recruits away from extremist groups like Jabhat al Nusra. Inti Landauro reports. The recruitment drive highlights a crucial part of the Syrian opposition's strategy: Leveraging fresh support from the administration of President Barack Obama and other nations to drain local backing from extremist


http://topics.wsj.com/person/O/Barack-Obama/4328

groups that currently dominate the front lines in the fight against the regime of Syrian President Bashar al-Assad. "We are trying to attract fighters from Jabhat al Nusra," said Gen. Albtaish, speaking in an interview in Paris where he met for talks with Iranian opposition leaders. Although Gen. Albtaish says he hails from a relatively moderate FSA faction that supports democracy and opposes Islamists, the loosely organized group is itself dominated by Islamist groups that are in close coordination with al Nusra, which U.S. officials say has about 6,000 fighters. In recent months, the FSA has lost ground within the heavily factionalized Syrian opposition, where extremists who use brutal tactics seem to becoming more prevalent. On Thursday, Syrian state media said a suicide bomber blew himself up in Damascus, killing four people and wounding eight others who had gathered outside a Christian charity. On Wednesday, a video circulated on the Internet—which the U.K.-based Syrian Observatory for Human Rights said it authenticated—purports to show a public beheading of two alleged Assad regime loyalists in Syria's rebel-dominated north. In an effort to bolster moderate rebel forces, the Central Intelligence Agency has begun moving arms to Jordan and plans to start arming small groups of vetted Syrian rebels within a month, say diplomats and U.S. officials. The deliveries could also possibly include antitank missiles. The FSA, a group led by officers like Gen. Albtaish who defected from Mr. Assad's regime, say weapons shipments from the U.S. and its allies form a crucial plank in their efforts to counter the Assad regime, which is wielding its air force to pound rebel-held areas. At the same time, the FSA has been at pains to reassure the West that arms sent to their ranks won't end up in the hands of al Nusra or any other Islamist militants.

Rebel forces linked to the Free Syrian Army manned a checkpoint near Kefraya town on Wednesday. The FSA is losing ground to extremist groups Gen. Albtaish said the new recruits were being weaned off al Nusra's anti-Western ideology, but he offered no specifics as to how that process was undertaken. "We retrain them to make sure they no longer support jihadist ideas," said Gen. Albtaish, who is based in Aleppo, Syria's biggest city and the site of heavy fighting in recent months. Gen. Albtaish defected from the Syrian army a year ago to join the FSA, and he is now a senior member of the Joint Command, an umbrella group of rebel leaders who have at times struggled to maintain control over their disparate ranks. FSA troops make up two-thirds of the 12,000 fighters that report to the Joint Command while the rest are drawn from a patchwork of Islamist groups that Gen. Albtaish said are relatively moderate. The ability of rebel leaders to closely monitor their forces—and the weapons they use—are crucial to whether West and its allies ultimately decide to send them weapons that are far more powerful than the arms they are already due to receive. Saudi Arabia is expected to provide shoulder-fired antiaircraft missiles, known as Manpads, to a small number of handpicked fighters, as few as 20 at first, officials and diplomats said. French officials say they have also been in talks with the FSA about possible Manpad deliveries. "What we really need is antiaircraft missiles, a lot of them. It sometimes takes three missiles to down a plane," Gen. Albtaish said. The general added that tracking devices and observers were ways to ensure the weapons weren't diverted to Islamist groups. The FSA has struggled to keep apace with extremist groups that boast formidable skills on the battlefield and access to funds and weapons from well-heeled backers. Al Nusra has drawn civilian support in the areas it controls by setting up governing bodies that have restored basic services. "The situation between al Nusra and us is difficult," Brig. Gen. Albtaish said, adding that his forces in Aleppo "stopped cooperation" with al Nusra after it aligned with al Qaeda this year. Videos showing executions and mutilations underscore how the Syrian civil war has become a magnet for Islamic extremists from across the world. In the video that emerged Wednesday, fighters dressed in Afghan-style salwar kameez and hats and black skull caps, are shown standing around men seated in a field. Their hands are tied to their backs and their heads are covered. Onlookers, including children, gather around as a fighter speaking in foreign-accented Arabic says that two of the men were captured in the town of Khan al-Assal on the outskirts of Aleppo, because they were allegedly transporting weapons and ammunition for Syrian regime forces. "Brother I did not transport weapons," pleads one of the men on the ground. A bearded man with long hair, wielding what looks like a meat cleaver, approaches one of the men on the ground and begins to cut off his head to cheers from the mob. He then holds up the man's severed head. "God is our lord, they have no lord," the crowd shouts. A second man is then killed the same way.

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15. IRAN, RUSSIA AND CHINA PROP UP ASSAD ECONOMY

Syrian troops celebrate as they take control of a rebel-held village (Financial Times, Friday, June 28, 2013) -- Iran, Russia and China are propping up Syria’s war-ravaged economy, with President Bashar al-Assad’s regime doing all its business in rials, roubles and renminbi as it seeks to beat western sanctions, according to the country’s senior economics minister. Syria’s three main allies are supporting international financial transactions, delivering $500m a month in oil and extending credit lines, Kadri Jamil, deputy prime minister for the economy, said in an interview with the Financial Times. He added that its allies would also soon help with a “counter-offensive” against what he called a foreign plot to sink the Syrian pound. Mr Jamil’s combative remarks on the deepening economic crisis highlight a wider show of regime assurance, founded on recent military gains and a belief that its biggest international supporters remain solidly behind it. “It’s not that bad to have behind you the Russians, the Chinese and Iranians,” Mr Jamil told the FT. “Those three countries are helping us politically, militarily – and also economically.” Mr Jamil said Syria had an unlimited credit line with Tehran for food and oil-product imports. Damascus, he said, had also corrected its pre-crisis “mistake” of trading in western currencies and had switched transactions to Russian, Chinese and Iranian currenciesinstead. “Now we have a straight line between the Syrian pound and those three currencies, and we have got out of the circle of euros and dollars,” he said.

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The minister, who studied in Moscow and has been closely involved with the Assad regime’s discussions with the Kremlin during the conflict, said ships “under the flag of the Russians” were delivering oil products to Syria’s government-controlled coast, although he declined to give details. “We are waiting for someone to attack them,” he said. Russia and Iran have both been very public in their support for Mr Assad’s regime; China has been less open. Mr Jamil accused the regime’s international opponents of waging a financial war as well as a military campaign, through western sanctions ranging from a ban on imports of Syrian oil to prohibitions on financial transfers via credit cards and banks. Imports of oil products were now costing Syria half a billion dollars a month, he said, while the regime had been further hit by the rebel occupation of Syria’s oilfields. He described the economic situation as “complicated and very difficult”, but added: “Still we have not reached the point of no return.” Syria’s crisis of more than two years has savaged entire industries and sent gross domestic product plunging, but the economy’s resilience to total implosion has led analysts to speculate about the amount of international help the regime is receiving. It is only in the past few weeks that the gradual slide in the Syrian pound from its pre-crises levels of about 45 Syrian pounds to the dollar has turned into something more severe, with the rate topping S£200 some days. Mr Jamil accused Saudi Arabia, the US and Britain of orchestrating a plot to undermine the Syrian currency by flooding pounds into neighbouring Lebanon and Jordan. Asked if he had evidence for this, he said only that he had “historical proof”. Mr Jamil said Syria was now co-ordinating with Russia, China and Iran to defend the pound and bring it down to the government target price of 100 to the dollar. “We are preparing for a counter-offensive,” he said, although he declined to give details. He added that once a political resolution to the war had been achieved, the Syrian government would be seeking compensation from world powers that had opposed it, just as Germany had to give reparations after the second world war. “If England feels like paying something, we don’t mind,” he said.

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16. CHINESE APPARENT FUEL OIL DEMAND MORE ROBUST THAN ACTUAL CONSUMPTION (Platts, Friday, June 28, 2013) -- China's apparent demand for fuel oil has registered significant double-digit growth this year, although this is unlikely to be reflective of actual consumption by end users, traders and analysts said this week. According to Platts' calculations, apparent demand for fuel oil in China rose 11.9% year on year from January to May this year, totaling 17.66 million mt, or close to 760,000 b/d using a conversion factor of 6.5 barrels to 1 mt of fuel oil. Growth in May was more pronounced, surging 27.3% year on year to 3.67 million mt.

China does not publish demand or consumption data. Platts calculates apparent demand for a particular oil product by taking into account net imports plus domestic production in refineries. It does not include inventories, which are not officially reported by companies or the government. China remains a net importer of fuel oil, although import growth has been muted, at just 3.9% year on year to 12.51 million mt of gross imports from January to May this year. Exports rose 4.4% to 5 million mt, bringing net imports over the period to 7.51 million mt, a 3.4% increase year over year. The rise in apparent demand was therefore due to a spike in domestic output, which jumped 19% year on year to 10.14 million mt from January to May. In May alone, fuel oil production rose 31.5% year on year to 2.16 million mt. The increase in output last month was partly attributed to some refinery units returning to operations following seasonal maintenance. For example, state-owned PetroChina's 10 million mt/year Qinzhou refinery in southwest China's Guangxi province was shut completely for two months from March and resumed operations last month. WEAK BUYING ACTIVITY ON STAGNANT DEMAND Despite the relatively higher supply compared with last year, traders say buying activity for fuel oil has been slow in the last two months given stagnated demand. "Nobody is buying and we have reduced our imports," said one fuel oil trader with Chinese state trader ChinaOil, the trading unit of China National Petroleum Corp. "Stocks everywhere are high," he added. Last month, although China saw unusual sources of fuel oil -- Iran, Malaysia, Kazakhstan, Indonesia and Turkey -- which helped boost total import volumes by 19.9% year on year to 2.83 million mt, it reduced fuel oil imports from top suppliers Russia and Venezuela by 23.9% and 34.8% respectively, to 632,078 mt and 389,276 mt, compared with May 2012. Imported fuel oil in China is used mainly by small, independent teapot refineries. Shandong province in eastern China has the highest concentration of these refineries, with capacity totaling about 104 million mt/year, according to Beijing-based information provider JYD Commodities Hub. The small refineries can crack domestic crude and straight-run fuel oil, but due to the limited availability of these feedstocks, they rely on imports. They buy crude from state-owned Sinopec, PetroChina, China National Offshore Oil Corp. as they do not have crude import licenses themselves, topping up their feedstock with straight-run fuel oil, primarily from Russia and Venezuela. But traders say poor appetite for gasoil -- where apparent demand has contracted by 2.5% year on year so far this year due to weak economic growth -- has dampened teapot refiners' appetite for fuel oil feedstock in the past two months. "Domestic demand for oil products, especially gasoil, has been bad in China, resulting in lower prices and higher stocks. Independent refineries' margins have been squeezed, discouraging their buying interest for imported feedstock," said one East China fuel oil trader.

HIGH INVENTORIES Much of the excess supply has ended up in storage. According to data from JYD, fuel oil inventories in major storage facilities in eastern China's Yangtze River Delta rose 35.2% from April to 730,000 mt in May. Fuel oil inventories in Shandong also totaled 2.49 million mt last month, rising 35.3% from April and 76.6% year on year, the data also showed. "[The contraction of demand for] diesel is [a] reflection of industrial demand linking to the Chinese economy... and for fuel oil, the [apparent demand] trend is against what the general economy is suggesting," said Horace Tse, analyst at Credit Suisse. He added however that it was still too early to determine if there was structural demand weakness in fuel oil as overall oil demand typically picks up in the second half of the year because of summer grain harvesting and winter heating needs later in the year. "For this year, capacity utilization by independent teapot refiners will be lower than last year and the strong fuel oil apparent demand growth seen in May will not be sustained," said Guo Chaohui, analyst at investment bank China International Capital Corp, adding that it does not have a specific growth forecast for fuel oil. FACTS Global Energy expects demand for the fuel to grow on expansion of teapot refining capacity, which is expected to increase by 200,000-300,000 b/d this year from 2.5 million b/d. Analyst Wendy Yong said China's fuel oil import appetite going forward will depend on how demand for other oil products fare going forward. "They [independent teapot refiners] might need more imports to crack into higher-value products... it's still dependent on the economic situation," she said. In late May, the China Petroleum and Chemical Industry Federation released a joint report with the Beijing Petroleum Exchange forecasting a 13% growth in fuel oil demand to 52 million mt this year. Units: '000 mt Sources: China's National Bureau of Statistics, General Administration of Customs

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17. INDIA APPROVES DOUBLING OF NATURAL GAS PRICE NEW DELHI (Dow Jones, Friday, June 28, 2013) -- India's cabinet on Thursday agreed to double natural gas prices to industrial and retail consumers to help fund investment in exploration and reverse declining domestic output, which would ultimately help in reducing the hefty energy import bill.

Engineers inspect a newly-officiated Oil & Natural Gas Corporation well near Kalol, some 35 kms. from Ahmedabad, in this file photo. The price boost is also expected to help improve power generation and support efforts to revive India's flagging gross domestic product growth which sank to a decade's low of 5% in the financial year ended March 2013. The cabinet allowed natural gas prices to rise to $8.4 per million British thermal unit, the first such revision in three years, following recommendations by the prime minister's economic advisory panel, according to two senior oil ministry officials, who didn't want to be identified. The price increase will be effective from the next financial year beginning April 1, 2014, they added. This is up from earlier plans to raise natural gas prices to $6.775 per mBtu from about $4.20 now. The change comes in the wake of state companies—Oil & Natural Gas Corp. and Oil India Ltd.--agreeing Tuesday to pay $2.48 billion for a 10% stake in a huge Mozambique gas field, with an eye on future liquefied natural gas deliveries to India to meet its energy needs. Domestic output of natural gas has been declining for the last two years, with few private companies venturing into the sector because of low state-fixed prices. This has crimped power generation and hurt fertilizer units, which need the fuel as a raw material. About 9% of India's electricity generation capacity is based on natural gas. The boost to revenues would benefit both state-owned ONGC and private operators such as Reliance Industries Ltd., which operates the country's biggest gas field, located in the Krishna Godavri basin on the east coast. India currently imports about three-fourths of its energy needs.

http://online.wsj.com/public/quotes/main.html?type=djn&symbol=500312.BY




Experts say the policy reform will likely be strongly opposed by opposition political parties because it will inevitably lead to higher electricity prices and costlier fertilizer for farmers. According to a new pricing policy proposed by the prime minister's panel, prices of natural gas would be revised every quarter until March 2017. Thereafter, the government would dismantle all controls on pricing of the fuel. The oil ministry expects that the rise in gas prices won't only attract private-sector investments but also strengthen state-run ONGC's ability to invest in new projects. Every dollar increase in gas prices would result in $128.5 million in additional royalties and profits for the government, according to oil ministry officials. India Ratings & Research, a ratings agency, said in a report that the gas price increase will raise costs for power utilities by about 78 billion rupees ($1.3 billion) annually for power utilities, potentially pushing up electricity tariffs by more than 50%. "The Indian power industry, a major consumer of natural gas, mostly operates on the principle of pass-through of fuel costs to consumers," the report underscored. ---------------------------------

18. INDIA APPROVES SETTING UP OF COAL REGULATOR NEW DELHI (Dow Jones, Friday, June 28, 2013) -- India's cabinet on Thursday agreed to set up a coal regulator that will monitor the supply and pricing of the fuel in a bid to further liberalize the sector long-dominated by state-run monopoly, Coal India Ltd., a senior government official said. The proposal will ultimately need parliament's approval to become law. Under the proposal, Coal India-the world's biggest coal company by output-will have to adopt a formula for price fixing, based on the quality of the fuel, outlined by the regulator. The regulator is also expected to oversee coal supplies from Coal India to consumers such as power producers. It could also independently monitor the progress made by state-run and private companies in extracting coal under government allocated mining licenses. The initiative is part of a set of reform measures the coalition government led by Prime Minister Manmohan Singh has undertaken to further liberalize the energy sector and revitalize economic growth. Coal India, meets more than 80% of domestic need, but has been missing its output and supply targets in recent years. The state-monopoly says this is mainly due to delays in getting government environmental clearance for new projects and local opposition to land acquisitions. However, critics say the state-run company is run inefficiently and slow to decide on new projects.

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19. EIA: U.S. APRIL CRUDE OIL OUTPUT UP 16.9% ON YEAR; EXPORTS HIT RECORD NEW YORK (Dow Jones, Friday, June 28, 2013) -- U.S. crude oil output rose 16.9% from a year-earlier in April, to 7.353 million barrels a day, the highest level since February 1992, government data released Thursday show. The rise of 1.063 million barrels a day was the biggest since December and led to a 10% year-on-year drop in crude oil imports, which dropped to their lowest April level since 1995, data from the Energy Information Administration show. As U.S. domestic crude oil output has surged with increased use of hydraulic fracturing and horizontal techniques to extract crude from shale deposits in North Dakota and elsewhere, more crude oil exports have been trickling across the border to Canada, which is the U.S.'s biggest source of oil imports, the data show. Crude oil exports climbed to a record 132,000 barrels a day in April, with all of the oil going to Canada, EIA data show. Exports are broadly forbidden and allowed only under government license. U.S. crude oil imports averaged 7.726 million barrels a day, up 3.6% from March, but 865,000 barrels a day below the year-earlier level. The U.S. imported 2.517 million barrels a day of Canadian crude in April, near the March level and 4% more than in April 2012. Imports from Saudi Arabia, the world's biggest oil exporter, dropped 13.8% in April from March and were 30% below the year-earlier level, at a two-month low of 1.107 million barrels a day. Crude imports from the Persian Gulf were 19% below a year earlier, at 1.795 million barrels a day, and accounted for 23.3% of total crude imports, down from 25.8% a year earlier. Imports from the Organization of the Petroleum Exporting Countries fell 13.8% from a year earlier, to 3.517 million barrels a day. OPEC accounted for 45.5% of U.S. crude imports, down from 47.5% a year earlier. Crude Oil Imports (Top 10 Countries)

(million barrels per day)

April March January-April April January-April

2013 2013 2013 2012 2012

CANADA 2.517 2.518 2.633 2.421 2.464

SAUDI ARABIA 1.107 1.284 1.098 1.587 1.447

MEXICO 0.905 0.608 0.845 0.953 0.976

VENEZUELA 0.811 0.742 0.755 0.835 0.835

IRAQ 0.455 0.426 0.456 0.395 0.362

COLOMBIA 0.440 0.447 0.393 0.430 0.425

NIGERIA 0.320 0.376 0.336 0.424 0.391

ECUADOR 0.310 0.213 0.235 0.201 0.177

KUWAIT 0.232 0.367 0.313 0.234 0.326

ANGOLA 0.154 0.085 0.156 0.233 0.244

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20. GOP-LED HOUSE TO DRIVE OIL AGENDA WASHINGTON, June 27 (UPI) -- Congressional action is needed to unlock the full potential of energy production in U.S. coastal waters, a House energy committee leader said. U.S. Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, said President Obama's speech on climate action Tuesday was tantamount to a "war" on conventional resources like coal and crude oil. Obama proposed tighter measures on carbon emissions and more renewable energy use in the United States. Hastings said the president's plans would harm the economy, instead proposing more exploration offshore. "It's time to take action to create over a million new American jobs and generate $1.5 billion in new revenue," he said in an article published Wednesday by The Hill. "This would significantly boost our economy and help to further remove us from the grip of foreign oil." Hastings said House leaders this week will vote on a series of bills aimed at opening up acreage offshore. The U.S. Office of Management and Budget said early this week it was opposed to one of those bills, a transboundary agreement with Mexico for offshore work, because it had transparency concerns. Another bill would open acreage off the East Coast, where scientists are uncertain about the reserve potential.

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21. MORE TO TEXAS OIL THAN EAGLE FORD SHALE HOUSTON, June 27 (UPI) -- A financial analyst assessing the shale oil potential in Texas said there may be emerging regions that could eclipse the lucrative Eagle Ford reserve area. A study published in March by the University of Texas at San Antonio's Institute for Economic Development said the Eagle Ford shale reserve area could generate around $62 billion worth of oil output, support more than 80,000 full-time jobs and add about $1.6 billion to state revenues by 2021. Ray Perryman, director of financial analysis company The Perryman Group, told energy reporting website Rigzone the Cline shale reserve areas in western Texas could be more lucrative than Eagle Ford.

"The information coming out on the Cline shale indicates up to 30 billion barrels of recoverable oil, which is substantially larger than other large plays," he said in an interview published Wednesday. The U.S. Energy Department estimates Eagle Ford may hold as much as 10 billion barrels of oil. The U.S. Energy Department's Energy Information Administration reported onshore oil production rose more than 2 million barrels per day from February 2010 to February 2013. Much of that gain came from Texas and North Dakota.

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22. POLL: SUPPORT FOR RENEWABLE FUELS GROWING WASHINGTON, June 27 (UPI) -- U.S. consumers are warming to alternative fuel sources in higher numbers as frustration with the oil industry grows, a renewable energy advocate says. The U.S. Energy Department this week reported average retail gasoline prices for the summer were moving toward an expected seasonal average of $3.53 per gallon. The weekly average price of $3.57 per gallon is 14 cents higher than the same time last year. An online survey of 1,000 U.S. adults conducted in early June for renewable energy advocacy group Fuels America found 75 percent of the respondents wanted more renewable fuel options at refueling stations. It found support for renewable fuel and renewable fuel standards crossed political lines. Most of the respondents taking part in the survey said they blamed the oil industry for high gasoline prices. An RFS program outlined by the U.S. Environmental Protection Agency calls for a steady increase in the amount of renewable fuels blended into transportation fuel through 2022. The American Petroleum Institute, which represents the oil industry, said Wednesday it wants the RFS standards repealed. API argues increases in oil production in the United States make the standard moot because it was enacted as a buffer against disruptions in overseas energy markets. The U.S. Supreme Court ruled in favor of renewable energy this week in a debate over biofuel mandates. The Fuels America survey had a margin of error of plus or minus 3.1 percentage points.

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23. US COAL PRODUCTION FALLS 0.9% YEAR ON YEAR IN WEEK THAT ENDED SATURDAY: EIA (Platts, Friday, June 28, 2013) -- US coal production totaled about 19.4 million st in the week that ended Saturday, the Energy Information Administration said Thursday. The production estimate, based on railcar loadings, is 1.6% lower than the previous week's estimate and 0.9% below the output estimate for the comparable week in 2012, EIA said.

Coal production east of the Mississippi River in the week that ended Saturday totaled 8.3 million st and output west of the Mississippi totaled 11.1 million st, it said. US year-to-date coal production totaled 466.3 million st, 4.5% lower than comparable year-to-date total in 2012, the agency said.

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24. STUDY CLAIMS EROEI OF FRACKED GAS HIGHER THAN COAL (New Energy and Fuel, Friday, June 28, 2013) Hydraulic fracking has been studied with a published paper showing the energy return on investment (aka EROI) with a total input energy compared with the energy in natural gas expected to be made available to end users is similar to or better than coal.

The news for the natural gas industry, consumers and landowners lucky enough to get a well on their land is tremendously helpful. It’s also a huge and crushing disappointment for the anti fracking crowd. Hydraulic fracturing pays off in a very big way. Related article: Frackers Under Scrutiny for Buying Silence The analysis indicates that the EROI ratio of a typical well is likely between 64:1 and 112:1, with a mean of approximately 85:1. This range assumes an estimated ultimate recovery (EUR) of 3.0 billion cubic feet per well. This is similar but significantly higher to the EUR of coal, which falls between 50:1 and 85:1. Obviously the coal folks are less than thrilled, too. For now though over 75% of our current electricity needs come from a mix of gas and coal, and 83% of our homes are heated by gas. Luckily they are the low cost leaders except for nuclear.



http://oilprice.com/Energy/Natural-Gas/Frackers-Under-Scrutiny-for-Buying-Silence.html

U.S. utilities have ordered 20 reactors shut, the most in a three-year span since Chernobyl’s aftermath, saddling the industry with a possible $26 billion in costs to pass along to consumers. The nuclear fraction of power generation is going to shrink – a massive cost instead of a savings due to the political environment built up over two presidential election cycles. And the technology remains stalled in bureaucratic red tape machine and a paper blizzard. Lead author Michael L. Aucott said in the Wiley press release about the study, “Our analysis indicates that gas can be extracted from shale efficiently, from an energy perspective. The energy return on (energy) investment ratio (EROI) does seem to be at least as favourable as coal. However, a comparison with coal is difficult. There appear to be large amounts of coal still available. Estimates of the amount of gas available from the shale plays vary widely. It is not clear yet whether there is anywhere near enough to rival coal over the long haul.” Aucott concluded with, “There are concerns about water pollution and other environmental impacts associated with shale gas production. With the assumption that these can be managed, and that production quantities remain consistent with initial production data, the favourable EROI suggests that shale gas will be a viable energy source for quite some time.” The value of a fuel’s long-term usefulness and viability is judged through its EROI. The EROI had been for a few years the darling of the peak oil enthusiasts. Now it’s come full circle for consumers, business and policy makers to use productively again. Related article: Shale, Gales, and Tipping the Scales There is sure to be some blowback from the opposition. But to temper things right at the start Aucott and his coauthor Jacqueline M. Melillo used natural gas records obtained from horizontal, hydraulically fractured wells in only in the Marcellus Shale region commonly identified as of Pennsylvania and New York. The study was conducted using net external energy ratio methodology and available data and estimates of energy inputs and outputs. The Marcellus Shale is only one of several fields in active development and not necessarily with the best economics, but certainly is close to a huge hungry market. The curious part of the back-story is Aucott and Melillo aren’t claiming a university association. That comes as no surprise as the results are going to be quite a political “hot potato”, right or wrong, for years to come. Still, a little googling will reveal the pair is worthy of the peer-reviewed paper getting published. Your humble writer will respect their privacy. The last point from here is noting the study illustrates why the board of directors at Chesapeake Energy ran off co-founder, retired chief executive officer and former chairman Aubrey McClendon. And shows thegrounding of the latest news that McClendon is pitching Wall Street on his new energy company for taking another shot at the US energy boom with perhaps $1 billion of startup funds. The only way – the only way possible to screw up the U.S. energy economy is for politics and bureaucrats to get further involved.

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24. SHAH DENIZ PROJECT SELECTS TAP AS EUROPEAN GAS PIPELINE

http://www.eurekalert.org/pub_releases/2013-06/w-hui061713.php

http://oilprice.com/Energy/Energy-General/Shale-Gales-and-Tipping-the-Scales.html




BAKU, Azerbaijan (Dow Jones, Friday, June 28, 2013) -- The Shah Deniz group developing new gas reserves in Azerbaijan said Friday that it selected the Trans-Adriatic Pipeline, or TAP, as its delivery route to Europe. The choice of TAP over rival pipeline Nabucco West capped the battle to deliver Azerbaijan's gas to the European Union, a key part of the region's plans to diversify gas supplies away from dependence from Russia. "For over two years now we have been working closely with and evaluated a number of pipeline projects to select the best option that will become part of the planned southern corridor," said Gordon Birell, BP PLC's (BP) regional president. BP is part of the Shah Deniz consortium, which also includes Azerbaijan's state energy company, SOCAR, and Norwegian state oil company Statoil ASA (STO). "I'm privileged to announce on behalf of the consortium that Azerbaijan's first gas to Europe will go via the Trans-Adriatic Pipeline," Mr. Birell said. The 500-mile TAP--backed by Swiss energy company Axpo, Statoil and Germany's E.ON SE (EOAN.XE)--will run through northern Greece and southern Albania before traveling under sea to Italy. TAP will connect with a pipeline carrying the gas through Turkey. The first supply of gas should reach Europe by 2019. Initially 10 billion cubic meters each year will be exported through TAP. The selection of TAP "will provide further momentum to the full and rapid realization of the entire Southern Gas Corridor as a direct and dedicated link from the Caspian Sea to the European Union, which should be expanded over time," EU Commission President Jose Manuel Barroso in a statement. Rovnaq Abdullayev, president of Azerbaijan's SOCAR, said the Shah Deniz consortium would also consider other routes for transporting gas to other parts of Europe. The capacity of the TAP pipeline can expand to 20 billion cubic meters per year, according to TAP. Russia's monopoly OAO Gazprom supplied 140 billion cubic meters of gas to Europe in 2012, according to IHS Energy data. "The need for diversification remains a challenge for the European market, in particular in the countries of Central and South Eastern Europe," Nabucco said in a statement after the decision. "We remain convinced that the Nabucco route offers the only possibility to answer these needs. Nabucco is confident of developing opportunities based on alternative gas sources," it said. Nabucco shareholders plan to discuss the next step for the project, the statement said. The pipeline would have run from the Turkish border through Bulgaria, Romania, and Hungary to Austria. TAP was officially announced as the winner Friday, although on Wednesday one of the Nabucco partners, Austrian oil and gas company OMV AG, said its project had been rejected.

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25. EUROPEAN PIPELINE LOSES BID TO SHIP GAS Setback for EU Quest to Diversify Energy Supply Away from Russia

BRUSSELS (Dow Jones, Friday, June 28, 2013) -- A centerpiece of the European Union's push to limit its reliance on Russian natural gas came to an unsuccessful conclusion Wednesday after the Nabucco West pipeline consortium lost a contest to ship gas from Azerbaijan into the heart of Europe. Austrian oil and gas company OMV AG, one of the Nabucco partners, said that the Shah Deniz consortium-which is developing Azerbaijan's Caspian Sea gas with plans to begin shipping it in 2019 through Turkey-has rejected Nabucco as the preferred onward link to Europe. This leaves the rival Trans Adriatic Pipeline, or TAP, as the only other candidate. But TAP, which people close to the matter said would be awarded the contract on Friday, plans to initially ship just a third of the gas that was originally intended for Nabucco. Control of gas deliveries to Europe will now rest with the Shah Deniz consortium rather than with European customers. Nabucco's defeat was the latest high-profile EU energy initiative to flounder, underscoring the continent's difficulty in forging a coherent package of energy policies. The EU is also struggling to fix its carbon dioxide emissions trading system, in which an oversupply of permits to emit the gas has driven prices too low to be a strong incentive to invest in clean energy. Several nations, notably Spain and Germany, are also questioning the affordability of plans to subsidize wind and solar power to hit an EU-wide target of getting 20% of energy from renewable sources by 2020. European policy makers, and several of the continent's largest energy companies, had strongly backed Nabucco for years as a cornerstone of EU efforts to diversify energy sources away from Russia, which meets around one-quarter of the EU's natural gas needs. Brussels was concerned about the strategic impact of having some member states nearly wholly reliant on Russian gas. Supporters of Nabucco-which was originally intended to carry gas from Azerbaijan, through Turkey to Bulgaria, Romania, Hungary and finally Austria-said the pipeline would have eased such concerns. But the consortium had a difficult time securing enough gas to fill the pipeline and key countries along the route, such as Bulgaria and Romania, struggled to finance their share of the investment in the wake of the global economic crisis. The original scope of the project was cut dramatically in May 2012, when the consortium decided only to proceed with the western half of the pipeline, running from Austria to the Turkish border. One of the pipeline's principal backers, German utility RWE AG, quit the consortium in spring this year. The Azerbaijan gas will now be transported through Turkey to the European border in a pipeline controlled by Shah Deniz, whose main owners are BP PLC, Azerbaijan's state energy company SOCAR, and its Norwegian counterpart Statoil ASA. The TAP consortium-owned by Swiss energy company Axpo, Statoil and Germany's E. ON SE -plans to ship the gas from the Turkish border through Greece and Albania, then under the Adriatic Sea to Italy. The Shah Deniz consortium is due to announce the winner of its tender Friday in Baku, the capital of Azerbaijan. BP, TAP and Nabucco declined to comment following OMV's announcement Wednesday. The European Commission declined to comment ahead of Friday's announcement, but said it didn't favor either project.

While the TAP project will still enable Europe to diversify its energy supplies away from Russia, the volume of gas that it will transport, 10 billion cubic meters per year initially, "is but a drop in the bucket of Europe's overall gas imports," said Andrew Neff, principal energy analyst at IHS Energy in Moscow. Russia's monopoly OAO Gazprom supplied 140 billion cubic meters of gas to Europe in 2012, Mr. Neff said. Nabucco, as originally conceived, would have shipped 31 billion cubic meters of gas a year to Europe.

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26. U.K. INCREASES ESTIMATE OF SHALE-GAS RESERVES A drilling rig at the Bowland formation, northwest England, in January 2011 LONDON (Dow Jones, Friday, June 28, 2013) -- The U.K.'s hopes of replicating the U.S. shale-gas boom received a boost as an estimate of the country's reserves increased significantly, although how much of it can be produced remains uncertain. A new study from the British Geological Survey estimated that 1.3 quadrillion cubic feet of natural gas lie trapped in shale rock beneath northern England, significantly more than current proven U.K. gas reserves. Combined with other measures to support renewable and nuclear energy announced Thursday, the shale-gas resources will help the U.K. "unleash the energy revolution our country needs," Danny Alexander, chief secretary to the Treasury told lawmakers. The U.K. is promoting the development of its shale-gas reserves in the hope that it can replicate the success achieved in the U.S., where prices of gas have tumbled amid a boom in production. Britain also needs to offset a rapid decline in output from its existing natural-gas fields. Gas production in the first quarter fell 15% from a year earlier, continuing a long slide as the aging North Sea became increasingly depleted Mr. Alexander didn't comment on how much of the U.K.'s shale-gas resources would be recoverable. The British Geological Survey said that it didn't have enough information to predict how much shale gas could be commercially produced from the Bowland shale formation in northwest England. The U.K. Department of Energy and Climate Change said in a report last year that typically around 10% of shale-gas resources have proved to be recoverable in the U.S., where the industry is most advanced. Britain consumed three trillion cubic feet of gas last year, according to government figures, so 130 trillion cubic feet of recoverable shale gas would be equivalent to more than 40 years of current consumption. The U.K. government also unveiled plans Thursday to stimulate investment in renewable energy by offering guaranteed prices for electricity produced from wind, wave, tidal and biomass. The U.K. aims to get 30% of its electricity from renewable sources by 2020 to cut carbon-dioxide emissions and reduce dependence on imported fossil fuels.

The government hopes that shale gas will reduce dependence on foreign energy, as it has in the U.S. "The search for shale gas gets serious today. Given the scale of its potential, it would be irresponsible of us not to encourage its exploration," said Energy Minister Michael Fallon. The U.K.'s shale-gas industry is still at an early stage, with no commercial production. Of the handful of exploration wells that have been drilled, only one has been hydraulically fractured-the process used to extract shale gas. Most industry experts say the U.K. is years away from commercial production on any great scale. Centrica PLC this month bought a 25% interest in exploration licenses on the Bowland shale for £40 million ($61.3 million) from Cuadrilla Resources Ltd. But Centrica, the U.K.'s largest energy retailer, remains cautious. "In the short term, [shale gas] is not going to be a major source of gas in the U.K.," a spokesman said following the deal. Production challenges are greater than in the U.S. because U.K. land rights are more restrictive and Britain's technology less developed, he said. Shale-gas exploitation in the U.K. has also faced significant opposition from environmental groups. They say that hydraulic fracturing, which involves blasting shale rock with sand, water and chemicals to release the gas, could contaminate groundwater. In 2011, the U.K.'s only fracking operation, run by Cuadrilla in Lancashire, was halted after it caused earth tremors. Cuadrilla was granted permission to resume fracking in that area and expects to do so next year. Cuadrilla last week had to delay drilling an exploratory well in West Sussex, in southern England, after the Friends of the Earth environmental organization complained to the Environment Agency that the company lacked the necessary permits. Other shale-gas developments in Europe have faced setbacks. France has banned fracking. And despite strong government support for shale-gas development in Poland, companies including Marathon Oil Corp., Talisman Energy Inc. and Exxon Mobil Corp. have abandoned exploration after deciding the country's resources weren't commercially viable. The U.S. Energy Information Administration this year cut its estimate for how much shale gas might be present in Poland to 148 trillion cubic feet from 187 trillion cubic feet. Shale gas has transformed energy production in the U.S. since it began to flow in commercial quantities. U.S. natural-gas prices fell sharply as production soared, hitting a greater than 10-year low of $1.95 per million British thermal units in April of last year. Natural-gas prices have recovered since then, trading around $3.70 on Thursday. But the fuel remains far cheaper than in Europe, giving U.S.-based companies an advantage. European companies have even relocated operations to the U.S. Austrian specialty steelmaker Voestalpine AG plans to build a plant in Texas to take advantage of cheap energy. Corrections & Amplifications The new study on U.K. shale gas was released by the British Geological Survey. An earlier version of this article incorrectly said the report was from the British Geological Society.

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27. "The U.S. Shale Oil Boom: Potential Impacts and Vulnerabilities of an UNCONVENTIONAL ENERGY SOURCE" Policy Brief, Belfer Center for Science and International Affairs, Harvard Kennedy School June 2013 Author: Leonardo Maugeri, Roy Family Fellow, Geopolitics of Energy Project Belfer Center Programs or Projects: Environment and Natural Resources; The Geopolitics of Energy Project. This policy brief is based on the discussion paper “The Shale Oil Boom: A U.S. Phenomenon” by Leonardo Maugeri, published by the Belfer Center in June 2013. BOTTOM LINES Increased Shale Oil Production may Significantly Alter the U.S. Energy Outlook: The United States may produce five million barrels of shale oil per day by 2017 and may become the largest global oil producer with up to 16 million barrels of oil (shale, conventional, LNG, and biofuels) per day in just a few years. U.S. Shale Oil Production has Unique Characteristics: The nature of shale oil production makes it particularly suited for the United States’ industrial, financial, demographic, and geologic landscape. These same characteristics make the expansion of the shale phenomenon to other parts of the world improbable – at least in the short term. Sustained Shale Oil Production Requires Dramatic Drilling Intensity: No other country in the world has ever experienced even a fraction of the overall U.S. drilling intensity for oil and gas. Shale oil wells exhibit their peak production rates during the first weeks of operation then dramatically decline. Oil companies intensively drill for new wells that offset the loss of production from older wells. Production will be Price Sensitive: There are two scenarios depending on oil prices: If the price of oil holds steady or slightly decreases, production could still reach 5mbd by 2017; if the oil price drops to below $65 per barrel, production could drop off substantially. The U.S. will Still Import Oil from the Middle East: Conventional wisdom says that if the United States drops its oil imports to 25 percent of demand, the oil will come from North American sources. This scenario is price dependent. If the marginal price of oil drops, the cheapest oil will be from the Middle East, and oil from Venezuela and Canada will be more expensive. Increased Shale Oil Production may Significantly Alter the U.S. Energy Outlook An analysis of more than 4,000 shale wells along with the activities of one hundred oil companies involved in shale oil exploitation suggests that the United States may become the largest global oil producer in just a few years. The large resource size – and the ability of the industry to develop it through steady improvements in technology and cost – may dwarf earlier forecasts. The largest U.S. shale oil formations seem capable of sustaining increased production, with a total capability of more than 100,000 producing wells versus around 10,000 of actual producing wells today. Improvements in knowledge of geology and drilling technology may prolong the productivity of shale formations well after 2030. Shale Oil Production in the United States has Unique Characteristics

http://belfercenter.ksg.harvard.edu/index.html

http://belfercenter.ksg.harvard.edu/experts/2510/leonardo_maugeri.html?back_url=%2Fpublication%2F23193%2Fus_shale_oil_boom.html%3Futm_source%3DSilverpopMailing%26utm_medium%3Demail%26utm_campaign%3DMaugeri_The%2520Shale%2520Oil%2520Boom%2520%281%29%26utm_content%3D&back_text=Back%20to%20publication

http://belfercenter.ksg.harvard.edu/project/43/environment_and_natural_resources.html

http://belfercenter.ksg.harvard.edu/project/68/geopolitics_of_energy_project.html

The United States is uniquely situated for shale oil development, with more than 60 percent of the global availability of drilling rigs. Ninety-five percent of U.S. drilling rigs can perform horizontal drilling that, together with hydraulic fracturing, is essential to liberate shale resources. No other country or area of the world has even a fraction of this drilling capacity and building up this power would require several years. There are other factors that will make the global replication of a U.S. style shale boom difficult, including an lack of private mineral rights in most countries, as well as the absence of the U.S. independent companies whose guerilla-style operational mindset has proven essential to the exploitation of shale formations that, unlike conventional oil and gas fields, require companies to move on a micro-scale, on multiple micro-objectives, and flexibly leverage short-term opportunities. The combination of vast geologic supply of shale oil and low population density in these areas allows for intense, sustained production unique to the United States. Sustained Shale Oil Production Requires Dramatic Drilling Intensity The dramatic drilling intensity of shale oil and gas will likely become the number one obstacle to expand shale activity in densely populated areas of the United States or the world. The U.S. shale oil boom requires bringing as many wells as possible on line, due to the dramatic decline in production that follows the early months of activity with each new well. For example, by December 2012 it took about ninety new producing wells per month just to maintain North Dakota’s Bakken-Three Forks (the largest U.S. shale oil play) oil production of 770,000 barrels per day. In 2012, the United States completed 45,468 oil and gas wells and brought 28,354 of them online – compared to 3,921 wells completed in the rest of the world, excluding Canada. This drilling intensity will most likely be sensitive to a sudden dip in oil prices, resulting in a rapid downward shift in U.S. shale oil production. Production will be Price Sensitive Even if oil prices steadily decrease over the next few years – from $85 per barrel in 2013 to $65 per barrel in 2017 – the United States might reach a shale oil production of about 5mbd by 2017. More than 90 percent of this potential output will come from three big formations: Bakken-Three Forks in North Dakota, and Eagle Ford and the Permian Basin in Texas. It is comparatively easy to stop shale oil production as opposed to conventional oil – especially offshore. Conventional oil production requires a high upfront cost and wells have a long production life (30 years). Shale oil is quick and relatively cheap to start up and has continual costs and a short production life (1 year). New wells come on line all the time and can be brought off line if the price of oil falls. The U.S. will Still Import Oil from the Middle East he U.S. shale oil boom may have paradoxical consequences in terms of U.S. energy security by endangering traditionally safe sources of U.S. oil imports such as Canada and Venezuela. It will also affect the oil production of several African countries (Nigeria, Angola, Libya, Algeria) that, in turn, will have to find room for their production in other export markets. This will create additional strains within the Organization of Petroleum Exporting Countries (OPEC), whose ability to manage an oil production capacity that is growing much faster than demand will rely almost exclusively on the will of Saudi Arabia to increase its unused production capacity. International sanctions against Iran, which impede the country’s ability to export a significant part of its oil, are easing a situation that would otherwise create the conditions for a short-term drop in oil prices. About the Author

Leonardo Maugeri is the Roy Family Fellow at the Belfer Center for Science and International Affairs and a former senior executive at Eni. He is affiliated with the Environment and Natural Resources Program and the Geopolitics of Energy Project. Statements and views expressed in this policy brief are solely those of the author and do not imply endorsement by Harvard University, the Harvard Kennedy School, or the Belfer Center for Science and International Affairs.

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28. MUSINGS: THREE CHEERS FOR THE US OIL INDUSTRY! HOLD THE PREDICTIONS

This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. (Rigzone, Friday, June 28, 2013) -- The United States experienced the largest increase in annual oil production ever for the industry last year. According to the annual review of world energy markets prepared by BP plc, the one-million barrels a day increase in output was the largest in the history of the United States going back to the oil industry’s beginning in 1859. BP also cited the country’s strong growth in natural gas production, too. But maybe more significant was the 2.8% decline in energy demand last year, which has certainly helped the country reduce its balance of payments due to lower oil imports. The problem, however, is that the strong performance of the domestic oil and gas industry has forecasters making aggressive predictions about its future production growth and the resulting impact on global energy markets and the political environment.

On a comparison of oil output growth based on average production for 2011 and 2012, the increase was about 800,000 barrels a day (b/d). On the other hand, if the output change was measured between the final days of the respective years, as reported by the Energy Information Administration (EIA), the increase was 1.139 million b/d. And if we use the four-week averages for December of each year from the EIA, then the increase amounts to 1.069 million b/d. These gains are significant and reflect the collective efforts of the industry to exploit shale deposits across the country and in particular the Bakken and Eagle Ford oil shale formations. The strong performance of the oil and gas industry has caused forecasters, such as the EIA, the International Energy Agency (IEA), and private forecasters, including Citibank, to project the U.S. becoming a net exporter of oil within the next decade and that the U.S. could even out-produce Saudi Arabia by 2020 reclaiming the world’s number-one oil producer ranking once again. The EIA suggests in its Annual Energy Outlook for 2013 that between 2011 and 2020, U.S. oil production will grow by 1.8 million b/d in its Reference case and by four million b/d in its High Resource case. With over a million barrels of net new production in 2012, the industry is well on its way to meeting the Reference projection and a quarter of the way to the High Resource target.

But will production continue to grow at the rate it has for the past two years? That will depend on the trajectory of global oil prices, trends in drilling and production, regulatory policy and the performance of existing reservoirs.

The petroleum industry continues to make progress in reducing the number of days needed for drilling the horizontal wells required to exploit shale resources. It is also advancing completion technology, including hydraulic fracturing, to boost initial well production and increase total reservoir recovery rates. All of these improvements will reduce finding and development costs and improve company financial returns. The key question is whether future technological gains will continue boosting initial production and ultimate recovery rates at a pace similar to that experienced in recent years. If the answer is yes, and government regulation and restrictions on access to land are not inhibitors, then the industry has the potential to further boost output and reduce U.S. oil imports. On the other hand, if the answer to the question is no, then due to the rapid production decline rates for shale wells, the industry will be stepping onto a drilling and fracturing treadmill as the industry will need a steady increase in producing wells merely to hold shale output steady, or to limit its rate of decline. The business scenarios flowing from the answers to our question reflect the two ends of a spectrum, with the likely outcome falling somewhere in between. Just where we land along this spectrum will dictate the level of future petroleum industry activity and thus that of the service companies who perform the work. The more important issue will be how the shale outlook answer impacts the overall U.S. energy balance and global energy and political dynamics. While we remain optimistic for the petroleum industry’s outlook, we are not ready to sign on to energy independence or the return of the U.S. to the number one oil producer in the world. We welcome being proven wrong, however.

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29. LA METRO TO PURCHASE UP TO 25 NEW BYD ELECTRIC BUSES AS PART OF $30M PILOT PROJECT (Green Car Congress, Friday, June 28, 2013) The Los Angeles County Metropolitan Transportation Authority (Metro) Board of Directors approved a contract with BYD Motors for the manufacture and delivery of up to 25 new all-electric buses as part of a $30-million clean air bus technology pilot project. This marks the first time that all-electric transit buses will be purchased and placed into Metro revenue service. Metro's Advanced Transit Vehicle Consortium (ATVC), a partnership with LA City, LA County and South Coast Air Quality Management District, will initially purchase five low-floor, 40-foot all-electric buses. After an initial period of testing and evaluation, Metro may then choose to purchase up to 20 additional buses. Metro will also initiate a new solicitation to convert six existing Metro gasoline electric hybrid buses to Super Low Emission Bus standards. The BYD contract contains a local jobs component that stipulates that the firm implement a local jobs program. BYD will comply by performing final assembly of bus components at its new manufacturing facilities in LA County. A Lancaster, California plant, which opened in May, is the international firm's first manufacturing facility in the United States. Metro already operates the nation's largest compressed natural gas bus fleet, but this initiative sets Metro on a new course for transitioning to even cleaner electric buses that will be assembled right here in Los Angeles County at the BYD manufacturing plant in Lancaster. -Michael D. Antonovich, LA County Supervisor and Metro Board Chair

In 2011 Los Angeles Mayor Antonio Villaraigosa co-authored a motion with Metro board members and County Supervisors Don Knabe and Antonovich to jump-start Metro's Super Low/Zero Emission Bus Program to meet future vehicle emission reduction targets set by the California Air Resources Board. The program seeks to test rapidly evolving electric vehicle technologies that have enhanced operating characteristics including extended range, better integrated subsystems and lighter weight construction. Metro will evaluate whether the new all-electric buses can reduce operating and maintenance costs and lower life cycle costs compared with Metro's current fleet. BYD's electric buses use the company's own Lithium iron phosphate rechargeable batteries which can reportedly travel 155 miles between charges with a full passenger load. The firm has manufactured more than 1,000 electric buses in China and was rated highest in the proposal process for technical compliance, project management and past performance. Metro anticipates receiving the new buses early next year. Following an initial evaluation and testing period, Metro plans to initiate new procurements for additional "next generation" zero-emission and super low emission buses based on technology developments anticipated within the next one to three years. The program is part of a larger effort to test clean air prototype buses prior to the next Metro replacement bus procurement in 2016. Funding for the buses has been made available using Measure R funds dedicated for transit operations. Currently, Metro has a fleet of 2,238 clean air compressed natural gas buses operating on 183 bus routes throughout Los Angeles County.

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