Aftermath News

Bloomberg | Apr 21, 2008

By Jim Kennett

April 21 (Bloomberg) — Halliburton Co., the world’s second-largest oilfield contractor, said profit rose 5.8 percent after crude topped $100 a barrel, prompting producers to increase spending on Middle East and Latin American projects.

The number of drilling rigs active outside North America rose 6.5 percent as New York oil futures traded 68 percent higher than a year earlier. Revenue jumped 18 percent to $4.03 billion as sales gains outside North America made up for pricing pressures in the U.S., Halliburton said.

“The story with Halliburton is international, and the international story is supported by sharply higher oil prices,” said Gene Pisasale, who helps oversee $25 billion in assets, including about 682,000 Halliburton shares, at PNC Capital Advisors in Baltimore. “That bodes well for international exploration, much of which is oil-oriented.”

Competition from rival oilfield contractors is affecting the prices Halliburton can charge on long-term projects in such markets as the Middle East and West Africa, Chief Executive Officer David Lesar told investors on a conference call. Losing a bid can mean the company is out of business in that region for a number of years, he said.

Margin Concerns

Those comments and concern over rising diesel costs, which are narrowing profit margins on some well services, held back Halliburton’s shares today, said Mark Urness, an analyst at Calyon Securities USA Inc. in New York.

Halliburton rose 3 cents to $47.46 in New York Stock Exchange composite trading. All but five companies in the 15- member Philadelphia Oil Service Sector Index had bigger gains. Schlumberger Ltd., the biggest oilfield contractor, climbed 5 percent.

Halliburton’s per-share profit matched the average of 10 analyst estimates compiled by Bloomberg. Earnings from the company’s largest division, which helps clients maximize production from established fields, rose 11 percent.

Demand strength in the Middle East and Latin America made up for a 2 percent decline in North American business and a “relatively flat” environment in Europe, Africa and the former Soviet Union, Halliburton said.

`Next Leg Up’

Lesar, 54, said more demand growth is coming. “The fundamentals of the world oil and gas market are projecting that the next leg up in the extended cycle is near,” he said in the statement.

Schlumberger, based in Houston and Paris, on April 18 reported a 13 percent gain in first-quarter net income. Baker Hughes Inc., the No. 3 oilfield-services company, is scheduled to report its results tomorrow.

Halliburton’s profit from drilling and evaluation services climbed 6.1 percent. The segment includes drill-bits, drilling fluids and directional drilling, which allows a customer to change the direction of a well to target a reservoir.

Worldwide, the number of active rigs rose 2.4 percent from a year earlier, with most of the gains occurring in South America and the Eastern Hemisphere, according to a count by Baker Hughes. North American drilling activity climbed 1.4 percent, driven by a 2.1 percent increase in the U.S.

International Expansion

Halliburton is adding research and training centers from Russia to Singapore as it diversifies away from North America, which accounted for 47 percent of revenue last year. U.S. and Canadian business is dominated by regional natural-gas markets, where weather can cause prices to surge or plummet.

Lesar splits his time between the U.S. and Halliburton’s regional corporate headquarters in Dubai. The Eastern Hemisphere accounted for 41 percent of Halliburton’s first-quarter revenue. Lesar has said he’d like the region ultimately to account for half of sales.

Halliburton derived 54 percent of its profit from North America in the first quarter, down from 58 percent a year earlier. Latin American operations had a 45 percent increase in earnings. Brazil’s recent deepwater discoveries, fields called Tupi and Carioca, will fuel increased spending by oil companies, PNC’s Pisasale said.

“With the recent developments in Brazil, you’re going to see a lot more activity down there,” he said. “The Tupi and the Carioca discoveries, which are particularly huge, multibillion-barrel fields, bode well for service companies like Halliburton and Schlumberger.”

State Oil Companies

Overseas work is being driven by government-owned oil companies that increasingly hire Halliburton and other services providers to do work previously done by international oil companies like Exxon Mobil Corp. Service companies work under contracts, while oil companies take a stake in the field being developed.

Halliburton’s work with state oil companies includes a three-year contract to drill wells at Saudi Arabia’s massive Khurais project and a three-year deal with Mexico awarded in January. Today, the company announced a contract for the offshore portion of Saudi Arabia’s Manifa oil project.

Halliburton is the largest oilfield contractor in North America and the largest provider of so-called pressure pumping, which injects water or sand into rock formations to make gas flow more easily.

Increased competition cut into pricing for pressure pumping, or fracturing as it is sometimes called, in the past two quarters, according to Halliburton.

Analysts anticipate higher quarterly results for all five majors — ConocoPhillips, Shell, Exxon Mobil Corp., Chevron and BP.

Houston Chronicle | Jan 21, 2008

By KRISTEN HAYS

Oil at $100 a barrel came and went in a flash. But crude prices that hovered at or above $90 through most of the last three months of 2007 are expected to mean pumped-up quarterly profits as the largest oil companies report their earnings in coming weeks.

Profits for the full year, however, may not surpass 2006 levels for some companies, largely because U.S. refining margins tightened as prices for gasoline and other fuels made with crude lagged behind the hike in crude prices.

Houston-based ConocoPhillips will kick off the series of fourth-quarter and year-end 2007 earnings releases on Wednesday. The Hague-based Royal Dutch Shell and Houston-based Marathon Oil Corp. are scheduled to report results Jan. 31, followed by Irving-based Exxon Mobil Corp. and San Ramon, Calif.-based Chevron Corp. on Feb. 1. London-based BP will report on Feb. 5.

The dramatic increase in oil prices — an average of about $91 a barrel throughout the fourth quarter, 51 percent higher than the year-ago period — is expected to produce results that surpass the last three months of 2006. Analysts surveyed by Thomson Financial anticipate higher quarterly results for all five majors — ConocoPhillips, Shell, Exxon Mobil Corp., Chevron and BP.

But some analysts said weak U.S. refining margins and higher exploration and production costs chipped away at what could have been bigger profits in the high-price environment. Multibillion-dollar profits are still in the offing, but not necessarily records.

The refining margin is the difference between what refiners pay for oil and the selling price of gasoline and other products made with it.

“If they’re heavy on refining, you’ll see a little more weakness,” said John Parry, an oil analyst with John S. Herold. “But everybody’s going to get a lift in the exploration and production part because of pricing.”

Paul Cheng, an analyst with Lehman Bros., said in a recent note to investors that most of the benefit of high crude prices for oil companies will be offset by higher costs and low refining margins.

However, not all refining margins were weak. Simmons & Company International said in a recent preview of fourth-quarter earnings that international refining margins were stronger than those in the U.S.

That bodes better for companies with widespread global refining operations — including Exxon Mobil and Shell — than for ones including ConocoPhillips and Marathon with most refining operations in the United States.

“U.S. margins tanked in the fourth quarter while Europe and Asia held up pretty well,” said Lyle Brinker, another analyst with John S. Herold, adding that that situation may help Shell more than Exxon Mobil because Shell has potentially higher exposure to those two markets. “But Exxon and Shell will be the best downstream performers.”

The Simmons preview noted that other concerns include production shortfalls from lack of new reserve additions, in part because of shrinking access to resources controlled by other countries.

Also, companies likely received less oil under production-sharing contracts with foreign countries, such as oil-rich Angola and Nigeria. Such contracts often involve payment for their investments in barrels of oil. The higher the price per barrel, the fewer barrels they receive.

This is London | Jan 19, 2008

Energy suppliers were attacked yesterday for scooping a £9billion cash windfall at the same time as driving fuel bills to record highs.

MPs, consumer groups and poverty action campaigners described the bonanza as obscene.

The windfall comes from a complicated EU initiative called the Emissions Trading Scheme, designed to reduce pollution.

The electricity generators have been given ‘permits’ to emit climate-warming gases between 2008 and 2012, the second phase of the scheme.

Despite not paying for the permits, they have raised the price of wholesale electricity to reflect their supposed cost.

Ofgem, the energy regulator, estimates the firms will make about £9billion from this.

Their extraordinary payday comes as a typical family’s typical fuel bill has almost doubled over the last five years to £1,000.

Some four million Britons are living in “fuel poverty”, defined as those who spend more than 10 per cent of their income on fuel.

Over the last fortnight, two more energy companies have stung customers with inflationbustingprices rises of up to 27 per cent and Ofgem has urged ministers to use the windfall to help those struggling to pay their fuel bills.

But Chancellor Alistair Darling, who met Ofgem officials on Tuesday, is rejecting calls for a super-tax. It would be similar to the windfall tax imposed on privatised utilities after Labour’s election in 1997.

Energy companies including the German- owned Npower, which raised its prices a few days after Christmas, fiercely oppose the move.

Liberal Democrat leader Nick Clegg said: “It is totally wrong that the companies should be given a licence to print money on this scale.

“Electricity companies, which are already pushing up prices, should not be gifted with £9billion.

“With 25,000 people predicted to die from the cold this winter alone, the Government must act on the recommendations of its regulator.’

Alistair Buchanan, chief executive of Ofgem, said: “We said, ‘Look, there’s a £9billion windfall there and you could somehow take part of that to pay for your programmes for the fuel poor’.”

A spokesman for independent conbeensumer group Energywatch said: “How can Ofgem tell the Chancellor that the market is sound and then in the next breath say there is £9billion of unearned income sitting there that could be super-taxed without their heads spinning?”

Labour MP Elliot Morley described the profits as “obscene” in the Commons last week.

Many Americans still believe in conspiracies

Scripps Howard News Service | November 23, 2007

By KEVIN CROWE and GUIDO H. STEMPEL III

Nearly two-thirds of Americans think it is possible that some federal officials had specific warnings of the Sept. 11, 2001, terrorist attacks on New York and Washington, but chose to ignore those warnings, according to a Scripps Howard News Service/Ohio University poll.

A national survey of 811 adult residents of the United States conducted by Scripps and Ohio University found that more than a third believe in a broad smorgasbord of conspiracy theories including the attacks, international plots to rig oil prices, the plot to assassinate President John F. Kennedy in 1963 and the government’s knowledge of intelligent life from other worlds.

The high percentage is a manifestation, some say, of an American public that increasingly distrusts the federal government.

“You wouldn’t have gotten these numbers a year or two after the attacks themselves,” said University of Florida law professor Mark Fenster. “You’ve got an increasingly disaffected public that is unhappy with the administration.”

Fenster, author of the book “Conspiracy Theories: Secrecy and Power in American Culture,” attributed the high percentage in part to the findings of the National Commission on Terrorist Attacks upon the United States (also called the 9/11 Commission), which concluded federal officials failed to prevent the attacks, but did not have specific knowledge of the date of the attacks.

An earlier Scripps Howard/Ohio University survey, conducted in July 2006, revealed that more than one-third of Americans thought federal officials assisted in the 9/11 attacks or took no action to stop them so the United States could go to war in the Middle East.

“What (the recent survey) could mean is that people are thinking that the Bush administration is incompetent, that there were warnings out there and they chose to put their attention on other things,” Fenster said.

At a time when the price of crude oil has neared $100 per barrel, 81 percent of Americans also said it was “somewhat likely” or “very likely” that oil companies conspire to keep the price of gasoline high.

“It shows that the oil companies are not trusted by a lot of people,” said Tyson Slocum, director of the Energy Program of Public Citizen, the consumer watchdog organization founded by Ralph Nader.

Record-breaking quarterly profits stir the pot, too.

“People look at the huge profits and put two and two together,” he said. “‘Those high prices I’m paying are fueling those profits.’”

All the talk about oil and terror has distracted some of the believers in government cover-ups of UFOs. Thirty-seven percent of the respondents said they think it is “very likely” or “somewhat likely” flying saucers are real and the government is hiding the truth about them. In a 1995 Scripps survey, 50 percent of Americans responded the same way to the same question.

“The kind of anxieties or mistrust of the government that might have been expressed as a belief in UFOs has shifted,” said political science professor Jodi Dean. “Now people are worried about things that are much realer to them.”

“In both instances, it’s a case of mistrusting government,” she said.

Dean, a professor at Hobart and William Smith Colleges in New York and author of “Aliens in America: Conspiracy Cultures from Outerspace to Cyberspace,” also said that the 50th anniversary of the 1947 Roswell, N.M., incident put more focus on the notion of a conspiracy.

Dean said she expects the popularity of the theory to decline even further during the next few decades.

But one decades-old theory continues to thrive. Forty-two percent of the American public still thinks some people in the federal government might have known about the assassination of Kennedy in advance.

“I’m amazed that it’s as high as it is,” said Vincent Bugliosi, whose 1,632-page book “Reclaiming History: The Assassination of President John F. Kennedy” was published in May.

Bugliosi’s book comes to the opposite conclusion: Lee Harvey Oswald shot Kennedy, and he did it on his own.

Bugliosi said he thinks a majority of Americans believe in some sort of conspiracy surrounding the assassination or the investigating Warren Commission, but most of the questions he has fielded on his book tour revolve around the suspicions of CIA or mob involvement.

“They believe in a conspiracy,” he said, “and I think (the survey) allowed them to express their beliefs.”

The survey was conducted by telephone Sept. 24 to Oct. 10 among 811 adult residents of the United States who were selected at random. The survey was conducted by the Scripps Survey Research Center at Ohio University under a grant from the Scripps Howard Foundation and has a margin of error of about 4 percent.

Saudi Arabia’s King Abdullah (R) embraces Venezuela’s President Hugo Chavez at the end of the 3rd OPEC Summit in Riyadh November 18, 2007.

Reuters | Nov 22, 2007

CARACAS (Reuters) - Venezuelan President Hugo Chavez said on Wednesday $100 per barrel is a fair price for oil, as global crude prices approach triple digits.

“The price of oil (is) almost 100 dollars per barrel, which is the fair price, and I’m sure we’ll continue along that path,” Chavez told a group of demonstrators in Caracas.

Venezuela has consistently called for higher oil prices and tends to be more aggressive in seeking production cuts in the Organization of Petroleum Exporting Countries than other OPEC members.

Chavez has boosted his popularity at home by using oil revenues to finance social development programs.

Venezuela is the fourth-largest exporter of oil to the United States.

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AHN News | Nov 19, 2007

by Isabelle Duerme

Riyadh, Saudi Arabia (AHN) - Iranian President Mahmoud Ahmadinejad, announced at the close of the OPEC summit Sunday that all participating members in the conference were willing to look at other currencies to use in the oil trade, with the reason being the currency’s rapid and continuous fall.

Ahmadinejad explained that the value of the U.S. dollar, which has been in a continuous decline as of recently, has become unsatisfactory for the 13 OPEC summit participants, and that each one will be consulting finance and oil ministers for the purpose of analyzing the oil in terms of pricing.

“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside form the U.S. dollar…to form the basis of our oil trade.”

The Iranian president furthered that the decline of the American currency, and its negative effects on other countries, was the cause of faulty policies made by the Bush administration.

“They get our oil and give us a worthless piece of paper,” Ahmadinejad spat out, as quoted by the Associated Press.

Iran, which has reportedly replaced the U.S. dollar with local currency in accepting payment for its oil, was apparently pushing the OPEC leaders to agree to the shift in currency use, suggesting the euro as a probable replacement.

U.S. ally Saudi Arabia was hesitant to the move, saying that to do so would cause a collapse of the dollar, according to the Agence France-Presse.

The idea of switching to another currency due to the dollar’s decline was supported by Venezuelan President Hugo Chavez, who said that “the empire of the dollar has to end.”

Chavez, who is also for considering the euro as a replacement, described the dollar as having been “in free-fall without a parachute.”

There is speculation of Iran and Venezuela’s political intentions behind the statements, as they are identified as openly antagonistic to the United States.

Black Star News | Nov 14, 2007

By Amii Omara-Otunnu

The Bush Administration, over the past several months, has engaged in high-level campaign to retail to African leaders its scheme to establish combatant US Military Command Headquarters in Africa, commonly referred to as AFRICOM.

As the Administration makes its push for the scheme, it is imperative for all concerned to know some of the basic facts, and probe into the significance of AFRICOM for Africa, not least because the establishment of AFRICOM has the potential to dramatically affect prospects for democratic governance, the rule of law, sustainable development and enjoyment of human rights in the continent.

How has the scheme been marketed? General William Ward (AU), the designated commander of AFRICOM, appearing at a meeting with African Union leaders in Ethiopia’s capital, Addis Ababa in early November, made a strong case for establishing military bases, or the stationing of troops on the continent by the USA on the grounds that it would foster stability in Africa. This is how the general articulated the point to African leaders: “We don’t come here and just do things because we want to do things, we come and do things to assist our African partners in increasing their capacity, their capability to provide a stable environment here in Africa.”  He rhetorically asked: “Any notion of a militarization of the continent because of this?” His answer was, “Absolutely false; not the case.”

Before disclosing the policy framework of AFRICOM, it is appropriate to first examine the general’s case. It is understandable that General Ward would, in attempts to get the support of African leaders who were otherwise reluctant, present AFRICOM in more or less altruistic terms. It is indeed true that the USA is keen to establish AFRICOM not “just to do things because we want to do things.” It is doing so as part of a carefully considered geo-strategic plan to protect and advance its economic interests in the continent and beyond.

Certainly, it cannot be doubted that the general is right in saying that “we come to do things to assist our African partners in increasing their capacity.” On that score, it is legitimate to ask the following basic questions: who are the partners; what criteria are used to choose the partners; and in whose interests do the partners work?

For those who might not know much about AFRICOM, it is necessary to disclose some of the basic facts that are not classified. The Congressional Research Service in its report issued on July 6, 2007, titled “Africa Command: U. S. Strategic Interests and the Role of the U. S. Military in Africa,” gives the following background to, and reasons for, the establishment of AFRICOM.

It states, first, that “Africa recently surpassed the Middle East as the United States’ largest supplier of crude oil, further emphasizing the continent’s strategic importance.” In fact, it is estimated that U. S. petroleum giants have already invested $60 billion in Africa; and that by 2010, it will top $100 billion.

Beyond petroleum, the U. S. is aware that Africa is a treasure trove of strategic raw materials. Among these are: 90 percent of the world’s cobalt; 64 percent of its manganese; 50 percent of gold; 40 percent of platinum; 30 percent of uranium; and, 20 percent of the total petroleum currently traded. In addition, the continent also boasts 70 percent of cocoa; 60 percent of its coffee; and 50 percent of palm oil. All of these have been blessings as well as curses that have attracted big powers keen to exploit the continent.

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Boston Herald | Nov 12, 2007

Federal Reserve’s recent interest-rate cuts have weakened the U.S. dollar, also driving up imported oil’s cost

By Jay Fitzgerald and Jerry Kronenberg

The price of crude oil could hit $100 a barrel this week, raising fears the nation’s economy can’t withstand the shock without substantially slowing down or even slipping into recession if prices don’t ease quickly.

The economy - already reeling from a major housing slowdown and a massive financial-sector credit crunch caused by the subprime-mortgage meltdown - is in a “very fragile” state that’s now facing yet another large blow in the form of skyhigh oil prices, said Mark Zandi, chief economist at Moody’s Economy.com.

“If oil prices stay above $100 into early next year, the odds are more likely for a recession,” said Zandi, who estimated the odds of a recession are now about 40 percent.

There’s always a chance that oil won’t hit $100 - and there’s nothing inherently magical about the number that would automatically trigger a series of calamitous events.

But most analysts say speculators and hedge funds have poured huge amounts of money into commodities in recent months, betting oil will reach $100 before possibly falling afterward.

No matter what happens, the damage from $96-per-barrel oil may already have been done, as the average nationwide price of gasoline has shot above $3 a gallon, setting new seasonal price records.

In Massachusetts, home-heating oil has set a record by soaring above $3 a gallon, while the price of diesel has also shattered records in Massachusetts by going well above the $3 mark, driving up the costs of transportation for trucks, buses and other vehicles that are key to the economy.

Market watcher Peter Beutel of Connecticut-based Cameron Hanover, said high oil prices will hurt the broad U.S. economy by putting the squeeze on consumers.

“I think it’s a big deal for the economy when a family in Massachusetts goes from paying maybe $1,200 a season for home heating to $3,500 or $3,600,”he said.“And I think it’s a huge deal if you’re a working-class person driving 30 miles a day up and back to work, or a college student driving between school and a part-time job.”

Beutel blames much of the higher prices on a year-long production cut by the Organization of Petroleum Exporting Countries, whose members are pumping 1.2 million fewer gallons of oil a day than a year ago. Beutel said the production cuts account for most of the 1.6 million-barrel daily shortfall between current world oil production and consumption.

He said the Federal Reserve’s recent interest-rate cuts have weakened the U.S. dollar, also driving up imported oil’s cost. “The Fed may have kept everyone employed by cutting interest rates (and potentially preventing a recession), but our dollar is worth less every week,” Beutel said.

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Iran, Russia and Venezuela Feel the Benefits

Washington Post | Nov 10, 2007

By Steven Mufson

High oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone.

The consequences are evident in minds and mortar: anger at Chinese motor-fuel pumps and inflated confidence in the Kremlin; new weapons in Chad and new petrochemical plants in Saudi Arabia; no-driving campaigns in South Korea and bigger sales for Toyota hybrid cars; a fiscal burden in Senegal and a bonanza in Brazil. In Burma, recent demonstrations were triggered by a government decision to raise fuel prices.

In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth.

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“World economy can live with it” - Josef Ackermann, chairman of Deutsche Bank

Reuters | Nov 8, 2007

By Jane Merriman and Peg Mackey

LONDON (Reuters) - Oil will breach the $100 barrier, but this will not kill off global economic growth, the head of Germany’s Deutsche Bank (DBKGn.DE: Quote, Profile, Research) said at the Reuters Finance Summit.

“I’d bet a lot the $100 will be pushed through,” said Josef Ackermann, chairman of Deutsche Bank.

But oil at $100 a barrel would not make much difference to cost pressures on the world economy, although it is psychologically significant, he said.

“From a cost perspective I don’t think that ($100 oil) will be a huge difference. It signals that the economy is robust, otherwise we’d see different price levels,” he said.

“The strong euro has somewhat offset the oil price increase.”

Oil is at record highs above $96 a barrel, driven by strong demand from China and India, concerns about tightening supplies and a weak dollar, which has sunk to all-time lows against the euro.

Ackermann said the credit crisis in the financial markets had made investors wary of complex financial investments, which had seen some money flow into commodities such as oil and gold.

“The flight to quality is a flight to simplicity,” he said. “It’s easier to buy gold, you can even touch it.”

Gold is near its highest for 28 years, partly due to the weak dollar.

Ackermann said although the credit crisis had caused problems in some areas of the investment banking industry, some businesses remained very strong, including foreign exchange and equities.

Deutsche Bank, for example, is expanding in commodities as are several other investment banks.

“We started 2 years ago and we are seeing good results,” he said.

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