Alternative energy simply means energy that is produced from sources other than our primary energy supply: fossil fuels. Coal, oil and natural gas are the three kinds of fossil fuels that we have mostly depended on for our energy needs, from home heating and electricity to fuel for our automobiles and mass transportation. The problem is, fossil fuels are non-renewable .

The importance of renewable energy is indisputable. Developed countries and even oil & gas based economies are focusing and evidencing its importance. An example of this was the commitment reached by the G-20 leaders in 2009 (Pittsburgh Meeting) to rationalize and phase out over the medium term inefficient fossil-fuel subsidies that encourage wasteful consumption (these subsidies totalized US$ 312 billion in 2009) . Well known is also the commitment declared by the European Union to reach a 100 percent renewable energy supply by 2050.

In Latin America, renewable energy use raises to an impressive 30 percent of the total primary energy supply in comparison with the 6 percent share of renewables in the OECD countries (and the less than 1 percent in Middle East). But the numbers are not as good as they seem as generation is mostly dominated by large hydro generation plants and bio-fuel: the first heavily depending on the changing water levels (and particularly affected by droughts due to climate changes) and the second highly criticized due to its failure in reducing greenhouse gases.

Latin America is in a state of continuing progress in the investment and use of renewable energy. From a very timid start we can now see various renewable projects which would soon provide more sources of energy to our countries. The technology and know-how has also been imported to Latin America and we can now see agreements with more advanced countries (in this particular field) like the one entered into between Portugal and Venezuela and the United Kingdom with Cuba.

However, the market of alternative energies is far from perfection. There are a number of barriers and difficulties to overcome and therefore there is still work to be done. In this context, we will analyze other realities and some examples and cases in Latin American countries. We will finally, examine the coexistence between renewable projects, mining and hydrocarbons where their relationship is sometimes pacific and collaborative and -in some occasions- hostile and conflicting.

Although President Mahmoud Ahmadinejad uses every opportunity to defend and praise his economic policies, Iran’s ailing economy has even led the president’s allies, including conservative members of parliament, to harshly criticise the government and even suggest the possibility of impeaching the president, according to Aftab-e Yazd daily on December 7. But how did Iran end up here?

A combination of bureaucracy, wrong foreign policies, sanctions and corruption have brought Iran’s energy industry to its knees, making it hard for foreign investors. The roller-coaster of bureaucracy in Iran, bottlenecks that a contract has to go through before being signed, inconsistency and officials’ indecisiveness are just parts of the diseased contract system in Iran. Politics plays its own key role in what contract should be awarded to which favoured company.

When Ahmadinejad took power four years ago, foreign investment, particularly by European-based international oil companies, was on the rise. Under the previous reformist administration of Mohammad Khatami, the French oil giant Total, then TotalFinaElf, defied United States sanctions and became the first of many European and foreign companies to come to rescue Iran’s war-hit oilfields.

Although not a big investment boom, the positive trend promised to maintain a flourishing energy industry to allow Iran to retain its position as the second largest Organisation of the Petroleum Exporting Countries, OPEC, producer. But with the major shift of policy in Iran’s foreign relations and economy under Ahmadinejad’s hardline administration, Iran may find it hard to keep on the same track.

Ahmadinejad’s “look to the east” policy brought about rather sudden changes and, in less than four years, the country’s energy sector has become a playground for Russian and Chinese oil companies while their western counterparts are growing cautious over investment.

However, it would be untrue to say that Iran had suddenly turned to Chinese companies with the arrival of Ahmadinejad. Indeed, less than a year before he came to power, the country signed a major memorandum of understanding with Beijing promising investments of up to 100 billion dollars by Chinese firms in Iran.

In line with the memorandum, China’s Sinopec was awarded a multi-billion-dollar deal in November 2009 to develop Iran’s Yadavaran oil field.

The presence of Chinese firms in Iran’s oil and gas industry has significantly increased in recent years. Russian, Turkish, Indian and Belarus companies have also joined the European firms that were already in Iran prior to Ahmadinejad’s arrival.

In 2005, after a long chase for a major oil contract, British Petroleum ended its Iran programme citing the high risks attached to investment there, such as US sanctions. The company was followed by British Gas and, most recently, by Brazilian Petrobras and Norwegian StatoilHydro.

Alongside the policy shift by the Iranian government, its bureaucracy and oil apparatus have caused the country to suffer considerably. Whether western or eastern, oil companies will have to go back and forth in a maze of Iranian departments, ministries and the parliament in order to kick-start a project. And even then, they are not safe from contractual hiccups, as could be the case with any other country.

But sometimes the stalling does not come from the Iranian government; indecision by European firms in the face of increasing global pressure and sanctions can cost them lucrative contracts. The most recent example was the elimination in December 2009 of France’s Total from South Pars gas field’s Phase 11 development, which Tehran said was being delayed “excessively”. Total and Iranian officials had been discussing the corporate development of Phase 11 and production of liquefied natural gas from produced gas since 2004. After almost five years, the contract was eventually awarded to another contract-hungry Chinese firm, China National Petroleum Corporation, CNPC, and Total has been told that it would be “welcome” to cooperate with the Chinese side if interested.

It is too early to decide whether the Iranian romance with the east has been affected by both China’s and Russia’s vote against Iran at the United Nations nuclear agency in late November and Russia’s failure to deliver on time the Bushehr nuclear power plants and S300 missiles to Iran. So far, Tehran has not taken a strong position against the two countries, with Ahmadinejad describing Russia’s vote against his country as a “mistake”.

What is clear, however, is that the Iranian government is in dire need of investment, whether foreign or domestic, in its oil and gas industry.

But under current pressures and sanctions and with Ahmadinejad facing a legitimacy crisis after the June 2009 presidential elections, the prospect of further western investment in Iran becomes less and less likely. Whether Iran’s change in its foreign policy will pay off and whether it will efficiently manage its dwindling energy resources, dilapidated oil industry and increasing energy demand in the near future remains to be seen.

Source: www.english.globalarabnetwork.com

This privately funded event is worth about £25m in revenue to cash-strapped Aberdeen City and Shire, which makes it especially discreditable that the trade union T&G Unite threatened the event with transport chaos via a bus strike. This could only have damaged the international reputation of Aberdeen and Scotland; a subject of more importance to their own community than their 4% pay claim.

The industry would no doubt have managed to overcome this deliberate obstruction, just as it has overcome somewhat more formidable natural ones on the UK continental shelf (UKCS), and manage to get there in time to hear star corporate and academic speakers debate “energy at a crossroads”.

This year’s programme will reflect the industry’s movement towards greener technologies like carbon sequestration, as well as addressing the traditional questions of where the next trillion barrels of oil are going to come from.

As a curtain-raiser for OE, Robert Gordon University’s Riding the Rapids is a useful and vivid snapshot of top-level industry opinion compiled by Professor Rita Marcella of RGU’s business school, in collaboration with PSN and McGrigors. Its findings, that the “tough” half of the industry considers this recession to be no big deal, was published last week.

What is most striking about the report is that it shows the energy sector centred on Aberdeen to be in far better heart than might be expected, given the combination of collapse, global recession and unprecedented volatility over price. In fact, despite the worst recession for 60 years and the most extreme fluctuations in the oil price, this “qualitative” (ie opinion-tasting) report shows a striking degree of equanimity within the sector, with over half (51%) of the 31 global bosses consulted reporting their companies to be either immune or relatively unaffected by the crisis.

Of the “vulnerable” rest, only 22% considered themselves to be “very badly affected” by the crisis. Also worth noting, given the calibre of information available to these elite respondents, is that 53% of the industry leaders consider current talk of green shoots to be overoptimistic to the point of being “delusional”. That is bad news for the government – held in generally low regard by the oil and gas industry – given Brown’s green shoots-or-bust electoral strategy.

Riding the Rapids concludes with the slightly circular argument that recessions are necessary to allow restructuring to prepare the economy for longer term recovery.

More meaningfully, it celebrates the resilience of an industry whose fundamentals are sound enough, unlike those of hocus pocus-prone “innovators” in certain other major Scottish industries, to withstand global shocks without recourse to the begging bowl.

It is not that the oil industry has shrugged off the crisis. Of all those addressed in the survey, 69% said they had restructured themselves, used fewer contractors, slowed down graduate recruitment, laid people off, cut pay when demand slowed and frozen salaries and bonuses as a pragmatic response to income and margin shrinkage.

Tom Smith, the businessman chair of Aberdeen’s model private-public economic development forum ACSEF, said last week: “This time the oil industry held its nerve in the face of crisis.” If anything, this seems an understatement. This survey points up some not undeserved self-congratulation in the oil and gas supply chain, whose products are in demand and well diversified, and whose management practices and finances are exceptionally sturdy and sound. Although there is some dispute about how much companies learn from these inevitable reversals of fortune, this is an industry which is confident enough, even in the face of unprecedented scares, to operate with “determined buoyancy and sassy chutzpah”.

It has been remarked before that the Aberdeen-based oil and gas industry – “the silicon valley of the global supply chain” as Smith puts it – has never been embraced in the UK and Scotland to an extent remotely equal to the technological and commercial accomplishment it represents. Now that Scotland’s other big two industries – finance and the public sector – are under different sorts of cloud, these grudging attitudes should change.

One legacy of the recent financial crisis that should benefit the sector is that it should have engendered a greater political appreciation of the solid value represented by the £250 billion’s worth of oil and gas still to be produced from the UKCS. And how remiss it was of successive governments to see the industry as a cash cow rather than as an industry worthy of a central, highlighted place in a coherent economic policy.

Oil people are justified in asking why the banking sector should be rewarded with handouts for screwing up, while they struggle to raise cash to raise cash.

As an experiment, readers should monitor the amount of attention that Offshore Europe receives in the mainstream media this week, in the light of the scale and importance highlighted at the start of this article.

A central question for the next UK government will be what can it do for the industry, not what the industry can do for the Treasury? After all, the oil and gas sector pays our bills in the here and now, as opposed to saddling us with debt for our children and grandchildren to pay off.

Source: www.sundayherald.com

The release of the Lockerbie bomber triggered speculation that British energy companies trying to access Libya’s oil wealth could soon hit a bonanza. But in reality, Big Oil is already there, and its interest in Libya is cooling.

The initial enthusiasm that accompanied Libya’s first rounds of oil licensing — held soon after international sanctions were lifted in 2004 — has worn off, a casualty of arbitrary laws, Draconian contractual terms and Byzantine bureaucracy.

Since last week, when the Scottish government released Abdel Baset al-Megrahi, the Libyan convicted eight years ago in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, there has been speculation that it was part of a political deal between London and Tripoli: In exchange for Mr. al-Megrahi’s release, Libya might make life easier for British companies, such as BP PLC and Royal Dutch Shell PLC, that want to do business in Libya. That theory is vehemently denied by both British and Scottish officials.

And industry officials say they doubt the Scottish move could ease the massive bureaucratic obstacles British companies have faced in Libya. “That might prove illusory,” said Mehdi Haroun, a partner at legal firm Herbert Smith LLP in Paris who advises oil firms working in North Africa. Even if Col. Moammar Gadhafi’s government becomes more favorably disposed toward foreign companies, “you still have to face the inertia of the administration,” he said.

Libya has a long tradition of demanding political concessions in exchange for commercial deals. There is a “pattern of using its oil and gas reserves for political ends,” says Samuel Ciszuk, a Middle East analyst at IHS Global Insight, and a tendency to apply “political pressure to influence negotiations” with oil companies or their home governments.

He cites the jailing of the Libyan representative of Russian oil company OAO Lukoil during commercial negotiations with Libya’s national oil company in 2007. The executive, who was detained on suspicion of espionage, was released in July 2008.

Libya has the largest proven oil reserves of any African country, with 43.7 billion barrels, according to BP. Oil companies have piled in since sanctions were lifted, attracted by some of the world’s most promising unexplored oil and gas acreage and its proximity to the huge European energy market.

Libya has held four licensing rounds over the past four years, dishing out contracts to supermajors such as Exxon Mobil Corp. and smaller companies including Petro-Canada, a unit of Suncor Energy Inc. It has also brokered two big bilateral deals — one with Royal Dutch Shell in 2005 and one with BP in 2007. BP’s $900 million agreement was one of the biggest exploration deals in the company’s history.

But Libya has proved a difficult country to operate in. Oil companies often have to pay heavy customs duties on imported equipment, despite the exemptions written into their contracts. Onerous labor laws require them to hire Libyan nationals even when they lack the appropriate skills. Signing a simple rental agreement for an office can be hard, because of the chaos of competing ownership claims.

As oil prices began to soar over the past two years, Libya squeezed more out of foreign investors. Companies like Austria’s OMV AG and ENI SpA of Italy were obliged to renegotiate their contracts to comply with new, tougher fiscal terms. In exchange for extending the length of their licenses, they had to pay huge signing bonuses and agree to a much smaller share of production from the oil fields they operate.

Mr. Ciszuk of Global Insight says Libya put pressure on the companies to agree to the new terms by getting the Libyan parliament to call for full nationalization of the oil and gas sector. The initiative was dropped as soon as the oil companies fell in line, he says.

In the latest licensing round, in December 2007, companies had to bid even lower shares of production to win exploration permits. Most of the victors of that round were big state-owned companies like Russia’s Gazprom and Sonatrach of Algeria, better able to swallow tougher terms than publicly listed majors that require a higher investor rate of return.

Another factor has taken a shine off Libya: the lack of big oil discoveries to underpin companies’ enthusiasm about the country. Since 2008, Occidental Petroleum Corp., StatoilHydro ASA of Norway, British natural-gas producer BG Group PLC and ENI have all drilled dry holes. BG says it has found nothing commercially viable in Libya and is refocusing on other areas.

“Foreign investors no longer see Libya as the new El Dorado it appeared to be after international sanctions were lifted — especially in the current economic climate,” says Herbert Smith’s Mr. Haroun.

 (Source: Wall Street Journal)

http://www.rmmlf.org/confrnce/ARG2news.pdf

http://enrlgp.blogspot.com/2009/05/central-south-americas-leading-oil-and.html