Comments on: Japan, the Middle East and European debt – storm fronts combining

By: wirplit

wirplit — Thu, 24 Mar 2011 12:11:24 +0000

On matter of Gas reserves as against actual supply...
A huge gas find in Kurdish Iraq by Heritage recently resulted in a huge drop in its share price largely because it was not oil as hoped. Gas takes a lot more infrastructure to construct but when theres a will of course.
As for Libya. The crucial question will be can the rebels break through retake Brega and Ras Lanuf. If they can then they will control the large central oil area and refineries. Hence the ferocious fight to retain the area despite the coalition bombing on part of Gadaffi forces.

However it also has to be noted that Gaddafi deliberately, it seems, kept foreigners running his oil assets. i was there in the early 90's and the Libyans seemed eminently able to run the plant themselves and yet there were large numbers of Europeans on long term contracts with Sirte doing this. I am not talking about specialized exploration just running the basic plants. And I was surprised to see this is still the case. He did not want the Libyans in control of their own assets but preferred "mercenaries" even in the oil infrastructure. Despite being " mad" Gadaffi operated a very carefully thought out control system that went into every aspect of life there so he could shut off power or water at will for example. Some local control was unavoidable of course so one of his last acts with his airforce was to bomb the power station supplying Benghazi. He knew what he was doing. It was not just the military he kept centalized and under direct control.

ENI the largest Italian oil company which is I understand is part financed by Gadaffi's sovereign funds was complaining about the sanctions. its CEO said on Dow Italy could get by until winter without the natural gas. So I guess everyone wants this over well before then...

By: Qerberos

Qerberos — Sat, 19 Mar 2011 23:25:51 +0000

Interesting what you say about Spain's gas from Libya. Today the Spanish air force (rarely hear a squeek from them) joined in the no fly zone.

Italy imports hydrocarbons and gas mainly from Libya. It's airfields and now its airforce made available.

Germany abstained in the UN vote, but then most of its energy needs derived from Russia.

Funny that.

By: shtove

shtove — Fri, 18 Mar 2011 14:26:17 +0000

Not sure about gas prices. There is a fabulous glut of reserves, although supply is a different matter.

It does seem like the medium term solution to energy, but still a bit early.

By: Golem XIV - Thoughts

Golem XIV - Thoughts — Thu, 17 Mar 2011 15:52:14 +0000

Intrinsic,

I hope you're right.

By: Intrinsic

Intrinsic — Thu, 17 Mar 2011 03:46:15 +0000

With the current Japanese tragedy heightening risk aversion in the markets, there would be little chance that ECB will raise rates in the short run. Spain the least exposed to the debt problems in the PIGS category. At govt yield of 4.2%, they seem to be able to make it out of the crisis in whole.

Regards,
Intrinsic Value

By: Golem XIV - Thoughts

Golem XIV - Thoughts — Wed, 16 Mar 2011 19:15:27 +0000

Sean,

I take exception to having my prejudices called primitive. They are rather fine and well appointed prejudices I'll have you know.

By: Sean

Sean — Wed, 16 Mar 2011 19:08:44 +0000

Ill take the bet, Japan WILL stick with nuclear.

Dont assume Western European primitive prejudices resonate with East Asians, same too with genetic engineering but thats another story, theres a big cultural difference, they have a very different relationship with technology.

Japan I believe is currently down 20%, and most of that is because its 55 plants closing down because of the earthquake, they will be back up in around 2 to 3 weeks maybe less.

By: reneecharles

reneecharles — Wed, 16 Mar 2011 18:18:37 +0000

It is my understanding that this is to be the first year that Japan has to enter the international bond market as the old persons money in the Japanese Post Office has all but been commandeered and spent by the government on infrastructure. So the bond market will undoubtedly see a rise in rates for Japan and everyone else as such an enormous amount is required . The printing will make matters worse on the bond market as greater assurance in the form of higher rates will be required. This surely will mean higher rates for all worldwide. In the battle for resources surely a higher currency value is an advantage . So this may stop the race to the bottom that we have seen in the past few years.