Archive for the ‘Financial’ Category

You really can’t begin to understand conflicts in the Middle East without this specific issue — Oil. See my previous posts about the Caspian Sea.

PM Davutoglu calls TANAP project ‘dream come true’
World Bulletin online
19 September 2014

tanap-nabucco
Davutoglu describes the Trans Anatolian Natural Gas Pipeline as a peace project connecting Caucasus to Balkans. The Trans Anatolian Natural Gas Pipeline, TANAP – a pipeline that will transport gas from Azerbaijan’s Shah Deniz field to Europe through Turkey – will be a dream come true, Turkey’s Prime Minister Ahmet Davutoglu said Thursday ahead of his official visit to Azerbaijan.

Following Davutoglu’s upcoming talks on Friday on bilateral relations and regional and international developments with Azerbaijani officials, the TANAP project foundations will be laid Saturday which Davutoglu described as a ‘peace project’ that will connect the Caucasus with the Balkans.

An estimated 6 billion cubic meters of gas will be delivered to Turkey and 10 billion cubic meters to Europe via the TANAP pipeline which is projected to be opened in 2018 and in which Turkey has a 30 percent share in the project.

Turkey’s Minister of Energy and Natural Resources Taner Yildiz and Azerbaijan’s Minister of Industry and Energy Natig Aliyev signed the memorandum of understanding on the TANAP on 26 May, 2014.

http://www.worldbulletin.net/news/144684/pm-davutoglu-calls-tanap-project-dream-come-true

For more indepth, historical and detailed information, please see:

Turkey and the new energy politics of the Black Sea region
Black Sea News
25 February 2013

Eurasia-s-tit

Mitat CELIKPALA,
Associate Professor of International Relations at Kadir Has University, Istanbul

Turkey signed two significant energy agreements at the end of 2011. As a consequence, these accords set off a new competition for natural gas-centered energy projects around Turkey. Russia, Azerbaijan, Ukraine, Iran and the European Union are the main actors in this contest. This paper aims to assess all the related and ensuing developments in the Black Sea Region through the lenses of Turkey’s role, strategy and priorities….

BotasProjeE-s

central asian pipelines 3

Conclusion

In sum, the Turkey-centric energy game in the region embracing the Black Sea, the Caspian Sea, the Middle East and Europe is reminiscent of the 2004- 2008 period, during which energy prices and the competition for constructing alternative pipelines peaked.

transportation-final-s

http://www.blackseanews.net/en/read/57572

Here’s an update to an earlier post (US power grid problems from multiple threats) from June 10, 2011: https://tapister.wordpress.com/2011/06/10/us-power-grid-problems-from-multiple-threats/ Read that post first for more background and links.

 A view of the U.S. power grid from inside of the Electric Reliability Council of Texas's command center in Taylor, Texas. REUTERS

A view of the U.S. power grid from inside of the Electric Reliability Council of Texas’s command center in Taylor, Texas. REUTERS

Small-scale power grid attack could cause nationwide blackout, study says
FoxNews.com online
Published March 13, 2014

The U.S. could suffer a national blackout if attackers knocked out just nine of the country’s electric-transmission substations on a hot summer day, according to a previously unreported study by the Federal Energy Regulatory Commission.

The study concluded that coordinated attacks in each of the nation’s three separate electric systems could cause the entire power network to collapse, The Wall Street Journal reported Wednesday, citing people familiar with the agency’s research.

The commission concluded that the three electrical systems that serve the entire nation could go dark if as few as nine of the country’s 55,000 electric-transmission substations were knocked out in the East, the West and in Texas, according to the report.

“This would be an event of unprecedented proportions,” Ross Baldick, a professor of electrical engineering at the University of Texas at Austin, told the newspaper.

According to Wall Street Journal, study’s results have been known for months by the White House, Congress and officials at federal agencies, who were briefed by then-FERC Chairman Jon Wellinghoff and others at the commission.

Wellinghoff has voiced concerns about an April 2013 attack on Pacific Gas & Electric’s transmission substation in Metcalf, Calif., that lasted 52 minutes and knocked out 17 transformers.

The attack started when at least one person entered an underground vault to cut telephone cables, then attackers fired more than 100 shots, causing millions in damage. Workers were able to avert a blackout but it took them 27 days to repair the damage.

No arrests have been made in the case.

A memo prepared at the commission for Wellinghoff before he briefed senior officials last year said “the entire United States grid would be down for at least 18 months, probably longer” if attackers knocked out just nine substations.

The California attack “demonstrates that it does not require sophistication to do significant damage to the U.S. grid,” according to the memo, which was written by Leonard Tao, FERC’s director of external affairs, and reviewed by The Journal.

The memo suggested that an attack-induced blackout could be particularly long, in part because each of the three regional electric systems—the West, the East and Texas—have limited interconnections, limiting their ability to assist each other in the event of an emergency, The Journal reported.

Executives at several utility companies told the newspaper they are boosting security at their facilities. Virginia-based Dominion Resources Inc., said it planned to spend $300 million to $500 million within seven years to improve security capabilities.

Cheryl LaFleur, acting chairwoman of the FERC, said in a statement released late Wednesday that The Journal’s publication of “sensitive material about the grid crosses the line from transparency to irresponsibility, and gives those who would do us harm a roadmap to achieve malicious designs.”

“We take seriously our obligation to the American people to protect the reliability and security of our nation’s energy infrastructure and to enhance its resilience,” LaFleur said.

http://www.foxnews.com/politics/2014/03/13/us-risks-national-blackout-from-power-grid-attack-study-says/

https://tapister.wordpress.com/2011/06/10/us-power-grid-problems-from-multiple-threats/

I’m still interested in the Caspian Sea. (See https://tapister.wordpress.com/category/caspian-sea-oil/) While oil and gas are still my primary interests, today I’m also curious about water. Who owns the water in the Caspian Sea? Can Iran just siphon it off, without getting permission from the other littoral states? Or the major gas/oil conglomerates operating there? I’ve done an internet search about it and really didn’t find anything that addresses that question. Here’s some of what I did find today.

Its Great Lake Shriveled, Iran Confronts Crisis of Water Supply
New York Times online
JAN. 30, 2014

LakeUrmiaIranLAKE URMIA, Iran — An abandoned ship rusts in the mud on the south shore of Lake Urmia, where only 5 percent of the water remains, Iranian environmental officials say. Morteza Nikoubazl for The New York Times.

After driving for 15 minutes over the bottom of what was once Iran’s largest lake, a local environmental official stepped out of his truck, pushed his hands deep into his pockets and silently wandered into the great dry plain, as if searching for water he knew he would never find.

Just an hour earlier, on a cold winter day here in western Iran, the official, Hamid Ranaghadr, had recalled how as recently as a decade ago, cruise ships filled with tourists plied the lake’s waters in search of flocks of migrating flamingos.

Now, the ships are rusting in the mud and the flamingos fly over the remains of the lake on their way to more hospitable locales. According to figures compiled by the local environmental office, only 5 percent of the water remains.

Iran is facing a water shortage potentially so serious that officials are making contingency plans for rationing in the greater Tehran area, home to 22 million, and other major cities around the country. President Hassan Rouhani has identified water as a national security issue, and in public speeches in areas struck hardest by the shortage he is promising to “bring the water back.”

http://www.nytimes.com/2014/01/31/world/middleeast/its-great-lake-shriveled-iran-confronts-crisis-of-water-supply.html?_r=0

Iran’s parliament approves project on transfer of water from Caspian Sea
Trend online magazine
Jan 23, 2014

Iranian parliament has approved the project on transfer of water from the Caspian Sea to the deserts in the country’s central parts, Iranian Energy Minister Hamid Chitchian said, Mehr News Agency reported on Jan. 23. The minister noted that funds have been allocated from Iran’s state budget for this project.

Commenting on the Lake Urmia revival project the minister added that a committee was created for saving the lake. The committee will be chaired by Iranian First Vice President, Eshaq Jahangiri.

In April 2012 the former president of Iran, Mahmoud Ahmadinejad attended the foundation-laying of an irrigation system designed for transferring of water from the Caspian Sea. However Iranian MPs and some economic experts considered this project ineffective and demanded suspension of its implementation, after which construction was delayed.

The project for transfer of the Caspian Sea waters to the central regions of Iran includes: construction of hydroelectric power stations, a desalination plant, pumping stations, power lines, water pipes and tanks, according to the message.

The headquarters of Khatam-ol-Anbia, affiliated with the Islamic Republic of Iran Guard Corps (IRGC) will control the project’s realization, according to the message.

http://en.trend.az/news/politics/2233429.html

Deputy FM in Astana to Participate in Caspian Sea Working Group
Tasnimnews.com
January 29, 2014

TEHRAN (Tasnim) – Deputy Foreign Minister for Asian and Pacific Affairs Ebrahim Rahimpour left Tehran for Kazakhstan capital city, Astana, Wednesday to participate in the 35th meeting of the special working group of the Caspian Sea.

The working group session on the Convention on the legal status of the Caspian Sea will be held in Astana for two days with the special representatives and deputies minister of the five littoral countries of the Caspian Sea.

The deputy foreign ministers of Iran, Russia, Turkmenistan, Kazakhstan, and Azerbaijan will in the meeting discuss the latest developments regarding the legal regime of the Caspian Sea and prepare a report for the upcoming ministerial meeting due to be held in Russia this spring. Moscow will also host The Caspian Sea Littoral States Summit late in summer.

The Caspian Sea is the largest enclosed water body on earth by area, variously classed as the world’s largest lake or a full-fledged sea.

The Caspian Sea Convention will determine the territorial rights of littoral states- Iran, Russia, Kazakhstan, Turkmenistan and Azerbaijan – as well as other matters related to the world’s largest landlocked body of water.

The Caspian Sea legal regime is based on two agreements signed between Iran and the former Union of Soviet Socialist Republics (USSR) in 1921 and 1940. The three new littoral states, established after the collapse of the Soviet Union, have not recognized the prior treaties, triggering a debate on the future status of the sea.

http://www.tasnimnews.com/English/Home/Single/263554

BP Starts Production at West Chirag in Caspian Sea
Wall Street Journal online
Jan. 29, 2014

CaspianOilFieldsLONDON—Oil major BP PLC said Wednesday that production has started at the West Chirag platform of the Azeri-Chirag-Gunashli field in the Azerbaijan sector of the Caspian Sea, completing the Chirag oil project which was sanctioned in 2010.

West Chirag production began from a pre-drilled well called J05 on Jan. 28 and will increase throughout this year as other pre-drilled wells are brought on line, BP said without indicating volumes. However, BP said the new platform has a capacity for 183,000 barrels a day with a gas export capacity of 285 million standard cubic feet a day.

“The startup of Chirag oil project marks a major milestone in the development of the super-giant ACG [Azeri-Chirag-Gunashli field],” Gordon Birrell, BP’s Regional President for Azerbaijan, Georgia and Turkey said.

“To date the ACG field has produced over 2.3 billion barrels of oil and with future continual major investments in new technologies and facilities, like the one we have today started up, it will continue to produce as a world-class reservoir for many decades,”, Mr. Birrell added.

BP is operator of the field with a 35.8% interest. Partners in the field include SOCAR with 11.6%, Chevron CVX -4.14% Corp with 11.3%, Inpex Corp with 11%, Statoil AS STL.OS -1.46% A with 8.6%, Exxon Mobil Corp with 8%, TPAO with 6.8%, Itochu 8001.TO +0.56% Corp with 4.3% and ONGC Videsh Ltd. with 2.7%.

http://online.wsj.com/news/articles/SB10001424052702304428004579350491065104568

BP Seeks ACG Extension to Maintain Output at Largest Azeri Field
Bloomberg News
Jan 29, 2014

BP Plc (BP/) is seeking to extend its oil contract on the Azeri-Chirag-Guneshli field beyond 2024 to allow more investment and sustain output at the largest Azeri deposit after its local partner last year said there weren’t such plans.

The Caspian Sea field produced 32.5 million tons of oil in 2013, down from 32.9 million tons. While the new $6 billion West Chirag platform that started output yesterday will help offset natural decline, BP said at least one more is needed by 2021.

“We are talking to State Oil Co. of Azerbaijan about the next phase,” Gordon Birrel, Azerbaijan, Georgia and Turkey manager, said in Baku, the Azeri capital. “But we have no fixed and agreed plans at this point. This field needs investment and at least one more platform to maintain production.”

West Chirag is estimated to produce about 60,000 barrels a day, or 3 million tons, this year, he said. The platform will have at least 14 wells, with six running this year, Birrel said. It’s the largest and most technologically advanced of the eight current platforms in Azerbaijan’s section of the Caspian Sea, he said. The site has a capacity of 183,000 barrels of oil a day.

http://www.bloomberg.com/news/2014-01-29/bp-seeks-acg-extension-to-maintain-output-at-largest-azeri-field.html

From Time U.S.
12 October 2012

Defense Secretary Leon Panetta issued what he said is a “clarion call” Thursday for Americans to wake up to the growing threat posed by cyber war.

“The whole point of this is that we simply don’t just sit back and wait for a goddamn crisis to happen,” Panetta told Time. “In this country we tend to do that, and that’s a concern.”

Panetta came to the nation’s financial hub – New York City – to issue his battle cry. The city is the brightest bulls-eye on the American target for foes wishing to cripple the U.S. economy with computerized “worms” and “malware” that can infect computer networks via the Internet or insider sabotage.

“It is the kind of capability that can basically take down a power grid, take down a water system, take down a transportation system, take down a financial system,” he told Time editors. “We are now in a world in which countries are developing the capability to engage in the kind of attacks that can virtually paralyze a country.”

Aware his alarm might be drowned out by Thursday night’s vice presidential debate, Panetta stopped by the magazine’s midtown offices Thursday afternoon to detail his concerns to a Time editorial board gathering.

“Everybody knows what their iPhone can do, everybody knows what their computer can do, but I think there are too few people out there who understand the potential for the kind of attack that could cripple this country,” Panetta said. “The American people just have to be made aware of that.”

Panetta cited a series of “disruptive” attacks against U.S. companies, and detailed the far more serious so-called “Shamoon” virus attack on the Saudi Arabian state oil company, Aramco. That August strike wiped out 30,000 of the companies computers. It created the image of a U.S. flag in flames on the infected computers and “it basically burned [the computers] up,” Panetta said. It marked, he said, a significant escalation in cyber warfare.

In the hour-long session with the magazine’s editors, he also said:

— “We are facing the threat of a new arena in warfare that could be every bit as destructive as 9/11 — the American people need to know that. We can’t hide this from the American people any more than we should have hidden the terrorism-attack threat from the American people.”

— “The three potential adversaries out there that are developing the greatest capabilities are Russia, China, Iran.

— “Out of a scale of 10, we’re probably 8 [in cyber-war skills. But potential foes] are moving up on the scale – probably the others are about a 3, somewhere in that vicinity, but they’re beginning to move up.”

— He also said the U.S. military is stepping up its offensive cyber war capability: “I think we have to develop the ability to conduct counter-operations against a country we know, or anticipate, that they’re going to launch that kind of attack. So we have to have both defensive and offensive capabilities.”

Beyond merely shutting down enemy systems, the U.S. military is crafting a witch’s brew of stealth, manipulation and falsehoods designed to lure the enemy into believing he is in charge of his forces when, in fact, they have been secretly enlisted as allies of the U.S. military. The U.S. already has deployed a cyber-war offensive technology against Iran’s nuclear program, the New York Times has reported.

But the U.S. is also a target. Panetta said “potential aggressors” are probing for weaknesses in the nation’s cyber defenses. “They’re beginning to exploit transportation systems, power systems, energy systems,” he said. “Our concern is that in doing that kind of exploration, they’re doing it for purposes of determining how could they attack.”

The defense chief added that the Pentagon’s still-fuzzy rules of engagement for waging war in cyber space are being tightened, and will allow the Pentagon to defend other U.S. networks, in and out of government. But such technology isn’t cheap: major defense contractors see cyber defense as the next post-9/11 money pot – annual cyber spending is about $12 billion.

In his speech Thursday night before Business Executives for National Security from the hangar deck of the Intrepid Sea, Air and Space Museum, Panetta warned of cyber terrorists derailing U.S. passenger trains – as well as trains laden with lethal chemicals. He told Time’s editors that both Congress and U.S. businesses have been hesitant to pass legislation – and make the investments necessary – to defend the nation’s critical cyber infrastructure from attack. Part of the reason for speaking out, he said, is to generate public pressure on lawmakers to act.

That’s one reason President Obama designated October as National Cybersecurity Awareness Month. Private-sector companies wonder if the government is exaggerating the threat. They seem willing to wait for an “electronic Pearl Harbor” to justify the investments they would need to make to protect their info-infrastructure. But Panetta and others fear that could be too late.

“Government depends on these networks to defend this country,” Army General Keith Alexander, chief of U.S. Cyber Command , told the U.S. Chamber of Commerce Oct. 4. “And it depends on the power grid to operate. So we have a vested interest in making sure that that works.”

Panetta said his prior job – running the CIA – gave him a close-up look at the damage a cagey cyber-warrior could do to the U.S. “I can tell you from my old job, the level of expertise that I saw – and I don’t consider myself to be schooled in the art of knowing what the hell cyber systems [do] and how it all works –- I’m not close to being there — but I saw people that are extremely bright, extremely able,” he said

“They can develop the kind of malware that has tremendous potential to bring down systems very effectively,” Panetta continued, making clear the U.S. is exploring offensive cyber weapons. ”Frankly, in my past capacity, having seen that potential — and now, as secretary of defense, I’m now beginning to see how that is beginning to get in to the arena of other countries that are saying: `Whoa, this has got some great potential.’”

http://nation.time.com/2012/10/12/panetta-sounds-alarm-on-cyber-war-threat/

Drought sends ‘mighty Mississippi River’ levels near record lows
CNN online 20 July 2012


The “mighty Mississippi” has lost some of its might with the season’s epic drought taking its toll on river levels, which are falling to near historic lows. The U.S. Army Corps of Engineers will spend nearly $7 million dredging in an attempt to keep ports operational and keep the river open for barge traffic in the coming weeks.

River levels in Memphis have dropped to within three feet of their historic lows from the 1988 drought. In just one year, the river has gone through extreme fluctuation. Last May, it was within a foot of its record-high crest because of massive flooding, and today it’s 55 feet lower and experiencing historic lows due to drought.

Last year the expanse of the water was over 3 miles wide in parts of Missouri and Arkansas as levees were blown up in order to help protect the town of Cairo, Illinois from flood waters. This year shows a much different story with the river less than a half mile wide in spots.

New data from U.S. Drought Monitor issued Thursday shows the drought has worsened in the past week, and now ranks as the second worst drought in U.S. history over the lower 48 since records began in 1895.

And the Army Corps said that the shrinking of the Mississippi means that saltwater is beginning to work its way upriver, which could threaten some water supplies.

http://news.blogs.cnn.com/2012/07/19/drought-sends-mighty-mississippi-river-levels-near-record-lows/

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Widespread Drought is Likely to Worsen
The New York Times online
July 19, 2012

The drought that has settled over more than half of the continental United States this summer is the most widespread in more than half a century. And it is likely to grow worse.

The latest outlook released by the National Weather Service on Thursday forecasts increasingly dry conditions over much of the nation’s breadbasket, a development that could lead to higher food prices and shipping costs as well as reduced revenues in areas that count on summer tourism. About the only relief in sight was tropical activity in the Gulf of Mexico and the Southeast that could bring rain to parts of the South.

The unsettling prospects come at a time of growing uncertainty for the country’s economy. With evidence mounting of a slowdown in the economic recovery, this new blow from the weather is particularly ill-timed.

Already some farmers are watching their cash crops burn to the point of no return. Others have been cutting their corn early to use for feed, a much less profitable venture.

The government has declared one-third of the nation’s counties — 1,297 of them across 29 states — federal disaster areas as a result of the drought, which will allow farmers to apply for low-interest loans to get them through the disappointing growing season.

What is particularly striking about this dry spell is its breadth. Fifty-five percent of the continental United States — from California to Arkansas, Texas to North Dakota — is under moderate to extreme drought, according to the government, the largest such area since December 1956.

http://www.nytimes.com/2012/07/20/science/earth/severe-drought-expected-to-worsen-across-the-nation.html?pagewanted=all

Reuters online 30 Nov 2010

“Sovereign default fears could soon extend to Japan and the United States…” (Bette: The US stock market fell today partly on fears about the Eurozone crisis.)

LISBON/DUBLIN (Reuters) – The euro zone’s debt crisis deepened on Tuesday, with investors pushing the risk premium on Spanish and Italian government bonds to euro lifetime highs amid concern weaker member states may ultimately be forced to default.

European policymakers appeared at a loss to calm markets hell-bent on testing their determination to rescue countries like Portugal and Spain after approving an 85 billion euro ($110.7 billion) bailout for Ireland at the weekend.

The borrowing costs of countries like Belgium and France also rose — and the euro hit a 2-1/2 month low versus the dollar — as investors looked beyond the so-called euro periphery and targeted core founding members of the bloc.

A Reuters survey of 55 leading fund management houses showed U.S. and UK investors had significantly cut back their exposure to euro zone bonds this month, piling into equities instead despite a weakening in global shares.

“The crisis of confidence in Europe can’t be resolved quickly,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York. “No single event can put things back in order.”

Markets are already discounting an eventual rescue of Portugal although the government in Lisbon denies, as Irish leaders initially did, that the country needs outside aid.

While a Portuguese rescue would be manageable, assistance for its larger neighbor Spain would sorely test EU resources, raise deeper questions about the integrity of the 12-year old currency area, and possibly spread contagion beyond Europe.

Citigroup Chief Economist Willem Buiter described the turbulence hitting the euro zone as an “opening act” and predicted that sovereign default fears could soon extend to Japan and the United States. “There is no such thing as an absolutely safe sovereign,” he wrote in a research note.

EURO SLIDES, SPREADS WIDEN

The euro fell as low as $1.2969 and has shed nearly 8 percent of its value against the dollar this month.

The yield spreads of 10-year Spanish, Italian and Belgian bonds over German benchmarks spiked to their highest levels since the birth of the euro in January 1999 and the cost of protecting against a euro zone sovereign default surged.

Jitters also hit European banking shares, which fell 1.2 percent, led lower by French banks BNP Paribas, Societe Generale and Credit Agricole on market rumors Standard & Poor’s might cut France’s outlook.

“There is no reason for concern, no risk,” said Francois Baroin, France’s budget minister and government spokesman.

Italian officials also scrambled to play down the risks for their economy, the euro zone’s third largest, which some economists have labeled “too big to bail.”

http://reut.rs/elr387

For more on the Eurozone crisis: http://www.reuters.com/subjects/euro-zone

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What is the Eurozone? From Wikipedia:

The eurozone, officially the euro area, is an economic and monetary union (EMU) of 16 European Union (EU) member states which have adopted the euro currency as their sole legal tender. It currently consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. Eight (not including Sweden, which has a de facto opt out) other states are obliged to join the zone once they fulfill the strict entry criteria.