"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Friday, March 02, 2007

Knocking the NOC's - The lady from UNCLE Sam wants demands a share of the Action.

The James A. Baker Institute for Public Policy at Rice University is holding a conference "The changing roles of National Oil Companies in International Energy Markets"on Thursday March 12th in Dubai ,and researchers at Rice have published a 20 page report with the same title, in advance ,which counters the views fondly held by the anti-US lobby , of the Western oilco dominated, global munching neo-con Illuminati controlling everything.

National oil companies (NOC's) now control more than 75% of global proved oil reserves, which has put Western oil majors to "second-tier status" and this will have a "substantial long-term impact on resource development"

"State-owned enterprises represent the top 10 reserve holders internationally. In fact, in 2005, global proved oil reserves were 1,148 billion barrels, with national oil companies in control of 77 percent of the total (886 billion barrels), allowing no equity participation by foreign oil companies, and partially or fully privatized Russian oil companies in control of another 6 percent (an additional 69 billion barrels)."

Amy Myers Jaffe, a Rice fellow in energy studies (Glamorous, ultra sharp, and served as a member of the reconstruction and economy working group of the Baker/Hamilton Iraq Study Group, as project director for the Baker Institute/Council on Foreign Relations task force on Strategic Energy Policy, and as a principal advisor to US AID’s project on Options for Developing a Long Term Sustainable Iraqi Oil Industry.) ... anticipates more price rises not fuelled by the surging demands for in Asia for energy, political instability in the Middle East, Nigerian unrest, or even plunging production in war-zone Iraq.

She sees that the rise of NOCs constitutes an important, if less obvious, factor in price movements. Companies like Venezuela's Petroleos de Venezuela, or PdVSA, have steered significant investment dollars away from oilfield development and toward social programs, while Iran's National Iranian Oil Co. could cease to be an oil exporter by 2011 because of costly fuel subsidies that encourage consumption, according to the report. Helping to fund South American development is OK but it doesn't put dollars in Uncle Sam's pocket no more.

Well these programs don't conform to the US ideals of productivity and profits - wider socio-economic objectives, are fine and dandy but they impact on output.

"These noncore, noncommercial obligations have imposed costs on NOCs, and in some cases, dilute the incentive to maximize profits, The result has been stagnation in capacity growth, and an inability to maintain or grow the countries oil production capacity."

What is more important is the ....
"The International Energy Agency projects that, over the next 30 years, $2.2 trillion in new investments will be needed ..... Large undeveloped oil fields exist throughout the Persian Gulf, Latin America, Africa and Russia, .... Iraq’s western desert that have yet to be explored fully .... private sector firms in the best position to amass the capital .... risky and long-term investments .... been denied access to many of these prolific and promising regions. Moreover, Asian and Russian national oil companies have increasingly begun to compete for strategic resources in the Middle East and Eurasia, in some cases knocking the Western majors out of important resource development plays. "
These selfish nationlistic policies are contrasted with NOC's like Norway's Statoil ASA (STO) and Malaysia's Petronas that have moved to partially privatize and/or sell shares publicly, an approach with "empirically" demonstrable efficiency benefits.

The report is also praises US puppet Saudi Arabian Oil Co., or Saudi Aramco, for its neat facility for dancing to the Western oilco's tune "fulfilling non-commercial goals with its core oil functions," but notes that "questions remain" on whether the company can continue to "balance these conflicting goals as the call on its oil rises to new highs."

The report says the road ahead is more complex for the U.S. and other importing nations, the U.S. would probably prefer to see NOCs privatized, "it will have to accept NOCs as a fact of life but should encourage steps to make their activities more businesslike, transparent and - to the extent possible - free of onerous government interference."

Which some observers might read as telling Mr Chavez and his partners, "free up some of the action for us dude" ...or we invade. Except in the case of Iraq they invaded first and now want all of the action ... for it is worth noting that on Page 18 the aside is made..
It is unclear what benefit China is really getting from having its NOCs own or produce foreign equity oil, the shipments of which could easily be interdicted by the U.S. Navy during a time of war.
Should be an interesting conference - read the report it will cost you nothing and attendance at the 7 Star Jameirah Hotel will cost a little more ...but you get to network with Sheil Mohammed and Amy Jaffe .. know what I mean ?

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