July 2010 Archives

Some random musings on a Friday, halfway through the summer:

• It is truly astounding just how fast the noose is tightening around Iran's gasoline supplies. Sanctions are not even fully implemented by the west; the details remain murky; conventional wisdom holds that sanctions are always futile; and yet the reports continue roll in that Iran's supply of gasoline continues to get squeezed. Platts reported today that Turkish refiner Tupras, one of the few remaining visible companies in the world to keep supplying gasoline to Iran, has had to offer for sale on the open market gasoline earmarked for Iran because it has been unable to fix vessels to take the oil to the Islamic Republic. As we reported Friday, "Tupras has encountered reluctance from shippers to call at Iranian ports and has had to put to tender several cargoes that were to have been delivered to Iran. One shipping source said, 'The majority of shipowners are refusing to go to Iran at the moment.'" A small trading company with little concern about international sanctions might often be a company likely to break any sort of ban, but shipping companies are different. They need their boats to be able to call in ports all over the world, and do not need to be seen as sanctions-busters.

During the heyday of socialism in Bollywood, movies would deal with the basic human needs -- food, clothing and shelter. In fact, one of the blockbusters of the 1970s was called just that: Roti, Kapda aur Makan, which translates into Bread, Clothing and Shelter. 

To fulfill those basic needs, man needs a job. And the travails suffered by man as he tries to get that elusive job so that he can buy food, wear clothes and have a roof over his head transformed him from a common man to a hero and ultimately let him win the girl, rich or poor.

Retail gasoline marketers are taking on a new mantra these days, "to ethanol or not to ethanol," as consumers decide whether the renewable fuel is best for anything from a Mini Cooper to a tractor.

While the US government mandates ethanol blending requirements up to 10%, some retailers -- who can still get non-blended gasoline - are giving their customers options.

The success of oil producing companies in Nigeria in ramping up production over the past year can be seen in the rise in the country's crude exports to the US, which averaged 945,000 b/d in the first quarter of this year compared with just 606,000 b/d in the same quarter of 2009.

Nigeria's crude production has been steadily rising since an amnesty last year brought a sustained period of peace to the oil-producing Niger Delta region, allowing foreign oil companies to repair damaged oil infrastructure and increase production.

OPEC crude output fell by 160,000 b/d in June according to the latest Platts survey of OPEC and oil industry officials and analysts.

But this drop isn't the result of a genuine concerted effort to boost quota compliance. Rather, it's due to circumstances beyond the control of Iraq, which doesn't have a quota and whose exports were hit by weather, and Nigeria, whose oil installations are still subject to sabotage by militant groups.

The State Department announced last week that the US will accept offers of assistance from 12 countries and international bodies in cleaning up the Gulf of Mexico oil spill. Twenty-seven countries had offered assistance from (alphabetically) Belgium to Vietnam.

Absent from the list is Iran, prompting a Platts colleague to suggest that the US was "pathetic" for at least not acknowledging the offer from its long-time adversary.

The world water market will grow twice as fast as oil between now and 2030, but traders
looking to branch out into the potentially lucrative business of moving water to where it will be needed the most will face massive challenges getting into the space, according to experts at a special seminar organized for Singapore International Water Week.

(This update corrects the estimated size of water market and recasts the lead)

The startling headlines regarding China's urban population growth this past weekend will likely lead to yet another microscopic analysis of the Asian economic powerhouse.

China's population is already the world's largest at 1.3 billion, according to Li Bin, director of the National Population and Family Planning Commission.

How can China meet its energy-efficiency targets as it faces the huge demand growth expected to meet the requirements of 700 million urbanites by 2015?

An even bigger question is, can China cope with its seemingly unending thirst for fossil fuels?

"From the relative comfort of a large square deck with a cold bottle of water always at hand and an air conditioned TV room with a comfy sofa a level below, I witnessed beauty preparing to face the beast."

That is two shrimp boats and a Navy skimmer craft off the Alabama coast, practicing laying boom as witnessed by BP employee and blogger Paula Kolmar.

"Gently caressing the sea surface, the three vessels circled and swirled, guiding the boom without changing the [V-shape] design," Kolmar swooned. "A ballet at sea as mesmerizing as any performance in a concert hall and worthy of an audience in its own right."

The US House of Representatives approved a wide reaching US financial reform bill June 30, after a $19 billion fee on banks was removed on opposition primarily from Massachusetts Republican Senator Scott Brown.

The Senate is expected to vote on the bill following its July 4 recess, but whether the bill is approved depends on the success of Democrats to defeat a Republican filibuster.

The 2,300-page bill contains plenty for the oil industry to chew on. The legislation may end up requiring that most over-the-counter swaps be cleared on an regulated exchange and impose position limits on those trades.

The responsibility for carrying those provisions out would lie primarily with the Commodity Futures Trading Commission, which could be a problem, as the CFTC is short on funding.