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#Venezuela: #BlackBerry's Caribbean Oasis Turns to Quicksand

noreply@blogger.com (MasterTech) — Tue, 11 Mar 2014 12:53:00 +0000

Let's just hope they made more money than what they'll have to write off...Venezuela: BlackBerry's Caribbean Oasis Turns to QuicksandMobile CommunicationsPosted by Ligimat...

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The Youngest Technorati @NYTimes

noreply@blogger.com (MasterTech) — Tue, 11 Mar 2014 09:05:00 +0000

“Things used to be linear. You went to a good school and you got a good job, and that was the societally acceptable thing to do,” said Ms. Stern, Ryan’s mother, who was a straight-A student and is...

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Will #Israel Be the Next #Energy Superpower?

MasterBlog — Fri, 07 Mar 2014 08:00:00 +0000

An excellent article discussing Israel's future in the court of the energy superpowers. http://www.commentarymagazine.com/article/will-israel-be-the-next-energy-superpower/

Will Israel Be the Next Energy Superpower?

They will feast on the abundance of the seas, and on the treasures of the sands.
—Deuteronomy 33:19

Tamar sits 56 miles off the coast of Israel, an offshore gas platform rising up from the Mediterranean like a white steel beacon whose roots reach down 1,000 feet to the seabed. Named for the natural-gas field beneath the sea floor, Tamar is the symbol of a bright future for Israel if Israel is ready for it: as the newest energy producer and exporter in the Middle East, and potentially the most important.
A classic quip since the creation of the state of Israel in 1948 has been that Moses brought his people out of Egypt to the one spot in the Middle East that didn't have oil. "We proved that joke to be wrong," says Gideon Tadmor, chairman of the Delek Group, one of a consortium of companies that built the Tamar platform. Delek and its partners began extracting gas from Tamar in March 2013 and has been doing so with the natural gas from three other fields as well. Ten years ago, Israel was a country 80 percent powered by coal, with the remaining 20 percent from oil—all of which had to be imported. Now, natural gas supplies half those energy needs. The known fields could contain more than 900 billion cubic meters of natural gas. In global terms, that's not much—roughly the amount the United States consumes in a year. But for a country of only 8 million people, it's an energy bonanza. And, according to the U.S. Geological Survey, the Levant basin in which Israel's fields sit may contain a total of 3.5 trillion cubic feet of natural gas—about half the reserves in the United States with a fraction of the demand.
Nor is that all. Even before the first discoveries of natural gas in 1999, geologists had determined there were huge oil-shale fields stretching along Israel's coastal plain. Those fields contained recoverable reserves, according to the latest estimate, of up to 250 billion barrels—almost equal to Saudi Arabia's.
In short, Israel is poised not only for future energy independence, but for becoming a major regional energy player—maybe even, if it uses its resources wisely, the next energy superpower. The looming question, however, is not whether the world is ready for Israel to be the next Texas. It's whether the Israelis are ready.
I got my introduction to the Tamar platform, and to Israel's adventure in becoming an energy player, even before my wife, Beth, and I arrived in Israel, on the plane from Newark bound for Tel Aviv. The passenger sitting next to us looked as if he was headed for a country-music festival. He wore a baseball cap with the logo of Noble Energy—one of the key players in the natural-gas revolution. We learned he had spent 30 years in the oil and gas business as a platform operator, including in West Africa and Thailand, before Noble had sent him out to Israel. Now he works on the Tamar platform. After 28 days there, he'll head home to Louisiana for four weeks to see his family and kids; they will be able to afford college thanks to the money he's earned working for Noble in Israel.
He also pointed out his fellow workers on the plane scattered among the Orthodox and Hasidic passengers—"roughnecks" (members of a drilling crew), "tool pushers," and mechanics. They all hailed from Texas, Oklahoma, and his native Louisiana, and one or two wore baseball caps with Hebrew lettering. These are the migrant laborers of Israel's newest industry, and proof of how much Israel depends on the United States for exploring, drilling, and developing its new-found energy resources. That may change as Israel's talent for innovation gets focused on energy technologies; Israelis themselves may accelerate the transition to faster, more efficient, and environmentally safer exploitation of both deep-water gas reserves and what are called the "unconventional oil sources," meaning oil shale and oil sands.
Indeed, it is in oil shale that the story of Israel's energy revolution really begins.
Israel has had a long and bitter history of looking for oil and finding none. Beginning in 1953, the National Oil Industry began launching a series of exploratory drilling holes. In just over 33 years, it sank more than 410 wells—and found exactly five gas fields and three oil fields. The country's most productive oil field is near Helez, and it wasn't even discovered by Israel; Iraq Petroleum found it before 1948 and then sealed it up when Israel achieved its independence. Since the Israelis opened it again in 1955, Helez has produced 17.2 million barrels—an amount that would power Israel's current economy for only five weeks. In 1986, the Israeli government finally gave up and suspended its three-decade ritual of frustration.
Then, just two years later, the ground shifted, almost literally, under the government's feet. The very first comprehensive geological survey of Israel, including the coastal plain, revealed the existence of large deposits of oil shale, or kerogen.
Kerogen is a pre-petroleum organic compound of dead algae from long-extinct bodies of water. It is, in effect, a precursor to oil. Under great pressure and heat, kerogen can turn into the same kind of hydrocarbon compound as conventional petroleum. Rich kerogen deposits are found all over the world, from the Green River formation in Colorado to the Jordan River valley, including Israel.
Once the discovery was confirmed in 2006, the Israeli government began looking for partners in the United States. American companies had been wildcatting in Israel for decades. But while most knew how to drill, they were clueless about where. Instead, like Zion Oil's John Brown, they were managed by Christian fundamentalists who were literally relying on the Word of God as their guide. One wildcatter in the 1960s was led by a passage from Deuteronomy to conclude there was oil located somewhere on the ancient lands of the tribe of Asher, on "the foot of Asher" between Haifa and Caesarea. No luck.
In 2007 the search for an American partner brought an Israel Petroleum Authority official to Houston and the offices of Shell Oil. It was a smart choice. Shell had been making breakthrough discoveries in how to produce oil from shale rock, thanks to its chief scientist, Harold Vinegar. He had modified a process, developed by the Swedes during World War II, of distilling kerogen into a usable fuel—an innovation that made the extraction of oil shale in Colorado's Green River formation feasible and economical.
Vinegar had been working in Colorado when he learned about the rich kerogen deposits in Israel that extended into Jordan. Shell had already partnered with Jordan's King Abdullah—and Vinegar, a Jew, was unhappy that the project didn't include Israel, especially since the best shale rock was known to be on the Israeli side of the border. But he also knew that Shell, like all the other major oil companies, feared offending the Saudis by involving itself in Israeli oil speculation. Vinegar knew the Israeli official was on a fool's errand.
One night the official came to dinner with Harold and his wife, Robin, and pressed Vinegar again and again. "Are you sure you can't get Shell to come to Israel?" Vinegar had to keep repeating, no there was no way that was going to happen.
So the official suddenly changed gears. "Then you come!" he urged Vinegar. "Start a company. Put in an application for oil-shale exploration rights."
Vinegar had been to Israel exactly once, back in 1972. His roots were in America. He had never formed a company in his life. But as Vinegar tells the story, the Israeli wouldn't take no for an answer. Finally the Israeli took his leave, but not before he made one last pitch: "You just come," he told Vinegar. "The money will find you."
On October 31, 2008, Vinegar wrapped up his job at Shell and made the move. He was joined soon afterward by Yuval Bartov, who was teaching petroleum geology at the Colorado School of Mines. With backing from an American investor named Howard Jonas, whose path he had crossed working in Colorado, Vinegar was able to raise the money to create Israel Energy Initiatives in 2009, with Yuval Bartov as its first employer.
Today Israel Energy Initiatives sits in Har Hotzvim, the modernistic office park outside Jerusalem where many of Israel's most innovative high-tech companies have their headquarters (some have taken to calling it "Shalom Valley"). Vinegar is a broadly girthed, vigorous, and gregarious sixtysomething with a shock of white curly hair and a loud, infectious laugh. He reminded me instantly of Herman Kahn, whose iconoclastic theories of thermonuclear warfare sent shock waves through the American public consciousness—just as Harold Vinegar and his investors are sending shock waves through Israel's.
Sitting down to an afternoon with Vinegar and Bartov means having an engaging seminar not just on the technology of oil shale and its extraction, but on the opportunities as well as obstacles to their vision of an oil-rich Israel. The company drilled a test well in the Elah Valley southwest of Jerusalem. Based on the information they gleaned from that test, Bartov now thinks there are at least 40 to 60 billion barrels of recoverable oil there—about one-quarter of the 250 billion barrels Bartov and the Israeli Geological Survey estimate are within Israel's reach.
But here is the problem. Current techniques for extracting oil, including the relatively new method called fracking, won't work with kerogen. And it is too time-consuming and expensive to mine the kerogen and then, after pulling it up, apply the heat and pressure necessary to turn it into oil.
The trick, as Vinegar and Bartov explain it, is heating and pressuring the kerogen while it's still in the ground. To do so, they would use a series of heater wells, each six inches in diameter, driven down into the kerogen. The wells would act like a pot still for whisky, literally cooking the shale at around 300 degrees Celsius until its various components are distilled and collected. Those include natural gas, water, and hydrogen sulfide (which is highly toxic but can be isolated to make by-products such as fertilizer).
But mostly, the process (called "retorting") would produce oil—roughly 25 barrels per ton (which equals roughly a cubic meter of oil shale). It would come out as a translucent golden-brown liquid instead of the typical black sludge that passes as crude oil—ready to go to one of Israel's two refineries for conversion into fuel.
The process is expensive, but it can still produce oil at $40 a barrel, well below the current global price of $80–$100 dollars a barrel. If it sounds complicated or wasteful, consider: A single square kilometer of shale could supply enough oil to meet Israel's entire needs for a year. That's because horizontal drilling—the other technology besides hydraulic fracking that's opened up oil and gas reserves once considered inaccessible—enables the direction of drilling to turn sideways, allowing a much wider area of shale rock to be exposed. In effect, a single well can spread its drilling tentacles wide and deep underground, making development not only more efficient, but also economical in terms of land use.
For now, Vinegar and Bartov envision a pilot program involving a series of wells in the Elah Valley heating a 30-meter zone and producing the first 500 barrels in the first year, in order to establish the commercial viability of the oil-shale project. And with reserves holding the equivalent of 250 billion barrels, that would just be the start.
In the meantime, however, their discoveries have been overshadowed by natural gas.
As with oil shale, Israel's natural-gas story involves Israeli and American entrepreneurs working together to change the country's energy fortunes.
The Israeli in this case was Gideon Tadmor, a former lawyer who in 1991 set up his own gas-drilling company, on the bet that the same offshore fields that provided Egypt with its natural gas from the Nile Delta might extend into Israeli territorial waters. Like his Israel Petroleum Authority counterpart, he then set off on a pilgrimage to America to find a company bold enough to open the offshore fields, and brave enough to defy any possible Arab boycott.
That company was Noble Energy of Houston—an oil-drilling company founded in southern Oklahoma by Lloyd Noble in the 1930s that had expanded its operations to offshore natural gas. For its CEO, Charles Davidson, the Israeli offer was an opportunity to use their deep-water expertise to make some money while helping the state of Israel.
Noble engineers arrived in 1999 and, with deep seismic testing, confirmed the existence of hitherto unknown deposits of natural gas just a few miles off the Israeli coast. Noble helped to sink Israel's first offshore gas well in 2002, called Noa, followed by Mari-B in 2004. Then in 2009, Noble's geologists disclosed to Tadmor and the Israelis that they had found a much larger field named Tamar, with roughly 10 trillion cubic feet of gas. Those were reserves rich enough to invest in erecting a $3 billion offshore platform to which gas from the entire Tamar field could be piped—the biggest infrastructure project in Israeli history. Divers operating as deep as 800 feet installed 457 miles of pipe and 1,200 miles of umbilical tubing to move the gas from fields 90 miles out to shallower water where the platform sits—the longest undersea "tie back" in the history of the offshore-energy world. The platform itself weighs 34,000 tons, and from sea floor to the tip of the platform measures 950 feet, 150 feet higher than Israel's tallest skyscraper, the Moshe Aviv Tower in Ramat Gan.
Fifty workers labor around the clock, monitoring the flow from six principal wells—some more than 20 miles away and three miles below the seabed—to the platform, where various contaminates (sand, water, sulphur, and extraneous gases) are extracted so the final product can be shipped via a 150-kilometer pipeline to a terminal at Ashdod, from which it is fed to power stations that supply Israel's electrical grid.
Tamar opened for business in March 2013. It currently pumps 1 billion cubic feet of gas a day, more than enough to serve Israel's natural-gas needs—even though, thanks to Tamar and Mari-B, almost 40 percent of Israel's electricity supply has now switched over to natural gas. The opening of Tamar was pronounced "historic" by Prime Minister Benjamin Netanyahu's office. It was the crucial element in the Netanyahu government's 2010 plan to enable Israel to achieve energy independence in 10 years.
But nothing prepared anyone for the next discovery, dubbed Leviathan. Found in 2010, Leviathan is more than double the size of Tamar, with 16 to 18 trillion cubic feet of gas. The full extent of the field is still unknown, but energy consultant Paul Mecray told me it's easily one of the biggest offshore gas discoveries in a decade.
Together with Tamar, Leviathan is big enough to supply all of Israel's energy needs for decades, even if everything in the country is switched over to natural gas from electricity to cars—and with plenty left over for a booming export business. Noble's estimate is that Israel will be looking at $145 billion in energy savings and in revenue from taxes.
As Noble awaits approval of a lease to develop the massive field, a wealth of options open up, both for Noble and her Israeli partners Delek Drilling and Avner Oil and Gas Exploration, and for Israel. Almost all involve exporting the bulk of Leviathan's gas. As Amit Mor, former assistant to Israeli Ministry of Energy and Infrastructure and now CEO of Eco Energy, says, "We now have gas for 50–60 years, in terms of domestic reserves, and that's even with the most [pessimistic] figures."
One option involves building an export pipeline to Turkey, which would want the gas as a cheaper alternative to buying from Russia. Given Israel's up-and-down state of relations with Turkey, however—and a lack of encouragement from the current Turkish government—that option has few supporters.
More attractive is building a pipeline to Egypt, where facilities already exist to collect and process the gas—a special irony considering Egypt was once Israel's own longtime source of natural gas until the now-ousted President Mohammed Morsi cut off the supply in early 2013.
A third option would be to create a major liquid-natural-gas hub in conjunction with Cyprus, only 250 miles as the crow flies from Israel. The island nation has recently discovered its own huge offshore fields—more than 500 billion cubic feet's worth. The government of Cyprus would love to see that gas exported as a way to resuscitate its economy, but it needs 600 billion cubic feet to build an export facility that's economically feasible. If Israel supplied that extra 100 billion, and shipped its own gas to the same facility, Israel and Cyprus together could become important players in the European energy market. Russia is now the principal supplier, at more than three times the global market price for natural gas—and Vladimir Putin is not afraid to use the threat of cutting off supplies for political leverage.
A European Union market for Israeli liquid natural gas could have huge geopolitical ramifications in changing Europe's perception of the Jewish state. It's one reason the Israeli government is negotiating with Woodside Petroleum, an Australian company that specializes in building liquid-natural-gas facilities, for a 30 percent stake in the development of Leviathan. Such a market might even make internal European pressures to boycott Israel go away. Yet Cyprus's close ties to Russia, and its dealings with Russia's state-run gas monopoly Gazprom, raise questions about whether relying on the Cypriot connection might be sowing the seeds of trouble later on.
Another idea I discussed with Noble officials would be to construct a floating liquid-natural-gas plant (or FLNG) that would collect, process, and liquefy natural gas for export directly from a Leviathan-based platform. FLNGs are huge and expensive—the one Royal Dutch Shell is building in South Korea for the western Australian gas fields is the size of six aircraft carriers—but it costs less than an onshore facility. A Leviathan-based FLNG could serve as the anchor for processing and liquefying Cypriot gas as well—except under Israel's control instead of Cyprus's.
These and other scenarios have one thing in common: the assumption that exporting a sizable portion of Israel's gas finds is the key to getting the most out of the discoveries, financially as well as politically, and that includes exporting to Israel's more immediate neighbors.
One of those is Jordan. Israel now has a fast-growing network of gas pipelines running from Noble and Delek's processing center at Ashdod up the coast, and across to the east. Extending the pipeline into Jordan would help not only to create an economic bond between the two countries but also to stabilize Jordan's economy and King Abdullah's government, especially since Jordan's own oil-shale project, so elaborately put together with Shell, might not produce anything until the 2020s.
The other is the Palestinian Authority. Its own offshore gas fields, Gaza Marine, lie untapped and unexplored because Hamas refuses to allow anyone to get near them—largely because Hamas's patron, Iran, has ordered that they lie fallow. So while Hezbollah and Hamas are managing to keep Israeli gas out of Gaza and Lebanon, at least for now, Israel is opting instead to pump to the West Bank. Noble already signed a 20-year contract to supply the Palestine Power Company, starting in 2016 or 2017. A similar contract with Jordan is in the works.
There is time to weigh all options. No supplies from Leviathan can start flowing until Noble and its partners have built an onshore terminal in Israel for supplying the domestic market (two sites are now pending). That won't happen before 2017. A FLNG couldn't begin operating until sometime in 2018. A link-up with Cyprus would not come until after that.
All the same, combined with the promise of oil shale, Tamar and Leviathan together seem an unbelievable bonanza for the state of Israel, including its foreign relations. Back in his office at Har Hovitzim, Vinegar sees the two projects working together in harmony. "The natural gas in the Mediterranean will have a very favorable impact on the economy; but this will have a greater effect," Vinegar told me. "[The kerogen production] means energy security for Israel, almost forever. It means an enormous continuing source of income. It means so many jobs—in both primary and related industries." But with a wry smile, he adds, "I wish it were going faster." The fact is, many Israelis are skeptical about Vinegar's project and Israel's offshore gas prospects.
And, incredibly, there are even some who'd like to put a halt to the entire proceedings.
During our visit to Israel, friends took my wife and me to a large beach north of the city of Benyamina that sits within walking distance of their former kibbutz. They explained that this beach was one of the sites where Noble Energy had proposed building a reception terminal for Leviathan, until residents and communities banded together to say no, and in a series of furious public meetings blocked the plan.
For many in the Benyamina area, including our friends, the words Noble Energy are dirty. Listening to the roar of the surf and watching the sun set in an explosion of orange and pink over sand dunes that have been largely untouched since Phoenicians came to trade here three millennia ago, it was easy to see why.
The sudden oil and gas explosion has set off a predictable blowback from elements of the Israeli public, and the Israeli political class, especially on the left. It's not just the "not in our back yard" mentality and fears of burgeoning industrial sites where there used to be pristine beaches, or the specter of historic sites in the Holy Land destroyed in a reckless quest for oil (Elah Valley is where the Bible tells us David fought Goliath). It has also triggered a furious campaign from environmentalists, who've gone after the oil-shale project with the same rage and determination as opponents of fracking in this country.
Leading the environmentalist charge since 2011 has been Orr Karassin, who represents the Green Zionist Alliance on the board of directors of the Jewish National Fund. She spearheaded a high-profile report opposing oil-shale production and Vinegar's pilot program. "There are too many questions," she told the Jerusalem Post, "regarding the environmental consequences," especially regarding safety concerns, including pollution of the water table, the possibility of underground fires, and even, she says, "very substantial indications of seismic activity, to the point of earthquakes."
Others share her apocalyptic vision of what might happen if Vinegar and his team get their way. "The Elah Valley will be turned into a great oil-shale production site," an article in Haaretz claimed. "Its vistas will likely be ruined, its soil and groundwater polluted by heavy metals, and its clean air will become a distant memory."
Vinegar rolls his eyes at the suggestion that his production method will trigger earthquakes. The retorting process he and his team would use is "environmentally sound," he says emphatically. Since the process is operated at pressures below hydrostatic pressure, any flow will be into the heated zone, not out into the aquifer, which is protected by thick layers of impermeable rock.
In addition, he points out, unlike conventional oil drilling, the retorting process will leave a tiny environmental footprint: less than a square kilometer over the life of 30 years of production, thanks to horizontal drilling.
Karassin and her supporters remain unconvinced. Any oil-shale pilot program, she says, "must be defined to the point where the impact of the technology is clear." But as Vinegar and Bartov point out, there's no way to understand the impact without a pilot program: "I'm sure we'll have a very small impact on air and no effect on water. But the pilot has to show it."
It's a classic catch-22, with opponents saying a project should be blocked because the technology is untested even though the only way the technology can be tested is by running the project. Yet Karassin is honest about the fact that, even if every environmental concern were answered, she would still be opposed: "Oil shale does not synchronize well with the current Israeli policy on alternative" energy sources such as wind, solar, and biofuels, she told the Post. (The Netanyahu government publicly pledged to convert 10 percent of Israel's electricity production to so-called clean renewables.) "Israel's wider interests must take precedence. And those require that the oil shale stays where it is."
Vinegar is incensed at this myopia masquerading as farsightedness. Oil, even more than natural gas from the sea, "means energy security for Israel, almost forever." It offers more options than just relying on gas exports as a national energy dividend, and in more concrete terms. Israel's vehicle as well as civilian- and military-aircraft needs amount to 50,000 barrels of oil a day. A successful program in the Shefla basin could deliver as much as four times that, or 200,000 barrels a day—more than enough to sustain Israel's fighting forces on the ground and in the air during a prolonged crisis.
Critics like Karassin refuse to listen, or don't care. Yet the green lobby has twice failed to halt the Elah Valley pilot project in Israel's Supreme Court. Vinegar's Israel Energy Initiatives is now embarked on the final review process, which will take another nine months (it may be another year and a half before final approval of contracts to get started).
But the Greek chorus of critics doesn't stop with the Vinegar project. Their attacks extend to the coming offshore gas bonanza as well.
A "clean" fossil fuel like natural gas makes a difficult target for attacks based on environmental grounds. But there are worries that the Israeli energy boom will have the dire economic impact known as the Dutch Disease. The term was coined by the Economist to describe what happened when discovery of natural gas in Holland in 1959 triggered a decisive decline of other sectors of the economy, especially manufacturing, as revenues from natural-gas exports pumped up the price of the guilder and made other Dutch exports less competitive. When the gas boom was over in the early 70s, the Dutch economy was in worse shape than when it started. In many ways, it still hasn't recovered.
The Bank of Israel has dealt with a possible outbreak of the Dutch Disease in a report issued in April 2013. The bank recommended creating a sovereign wealth fund, or national pension fund, to ensure that export income from the sale of gas doesn't convert into shekels or enter the Israeli economy or even the national budget. This should quell any distorting effects. Still, many remain skeptical and worry about what will happen to Israel if and when the gas runs out.
Still others worry about security concerns, and the possibility that Israel's emerging oil and gas facilities, including its offshore gas platforms, make perfect targets for terrorist attacks. As Eco Energy's Amit Mor notes, Israel's current floating storage re-gasification unit six miles off Hadera already makes it a "sitting duck" for groups such as Hezbollah and Hamas. If jealous neighbors like Lebanon (which is already insisting that parts of the Leviathan field extend into its own EEZ) or oil-rich countries in the region, such as Iran feel the heat from Israel's emergence as a major energy player, will they look for ways to shut it down—ones that include terrorist destruction? The specter of a Tamar platform hit by Hamas missiles and set ablaze, like BP's Deep Horizon, dampens the mood in any discussion of Israel's energy future.
Many inside and outside the Israeli Knesset also see in the rise of Israel's gas industry a more sinister trap. Ariella Berger, at the Israel Institute for Economic Planning, thinks there may be far less gas in recoverable reserves than Noble and its partners claim. Even if all contingent proven gas reserves are included, she pushes a final figure closer to 650–680 billion cubic meters, far lower than the 950 billion figure the Netanyahu government accepts. That lower number, she points out, would put Israel at No. 29 on the list of nations with provable reserves, behind the Ukraine—which is hardly an energy superpower. From Berger's perspective, an aggressive export-driven policy runs the risk of emptying the gas tank and leaving Israel high and dry just as it completes its shift from coal and oil to natural gas. She is urging instead that the vast bulk of the offshore finds should be kept at home for domestic use—and many in Israel agree with her.
In 2013, the export of natural gas became a fierce political issue. Matters came to head in June, when a select committee mandated by the government to study the issue and headed by Shaul Tzemach, director general of the Ministry of Energy and Water Resources, released its report. The committee recommended exporting up to 53 percent of Israel's offshore gas while making sure Israel has a reserve to last for 25 years. Even after the Netanyahu cabinet voted to cut that number to 40 percent, it was still too high for the leaders of both the Likud and Labor parties, who denounced the decision as "reckless." Release of the report triggered demonstrations that blocked roads in central Tel Aviv, while demonstrators also besieged the home of Minister of Energy and Water Silvan Shalom.
For once parties on the left and right in Israel could agree: Exporting Israel's precious natural-gas resources would be a catastrophic mistake, no matter how much foreign currency it would draw in or how many minds in capitals in Europe or elsewhere it might change regarding Israel.
For those on the right, the debate largely hinges on a question of exports versus energy security. For those on the left, it's also about profits versus people—more specifically, profits for Noble Energy and its Israeli partners. They see the current export model as a payoff by the Netanyahu government to its capitalist supporters; or as Dror Strum, former head of Israel Antitrust Authority, puts it, "There are actually [only] two sides to the story, the gas monopolies and the Israeli public."
Indeed, it's not hard to find those on the left who wonder, like their ideological allies in the Green Zionist Alliance, whether it would have been better if Israel hadn't discovered its new energy resources at all—and whether Israel's national identity can even survive the onslaught.
"Nonsense." That is the reaction of Uri Aldubi, chairman of Israel's Association of Oil and Gas Exploration Industries, to this rising tide of anti–fossil fuel propaganda and defeatist pessimism about Israel's energy-rich future. On fears of the Dutch Disease, he points out that the Tamar field hasn't added more than 1 percent of GDP to Israel's already booming and diversified economy. Even Leviathan, for all its potential riches, won't be able to overbalance an economy—which, unlike Holland's in the 1960s and 70s, is one of the most dynamic and innovative in the world. "The Start-Up Nation will adjust," Aldubi assures me, as will Israel's thriving entrepreneurial culture. And far from misdirecting economic resources, Israel's homegrown energy start-ups will only add more to the mix.
Aldubi has an even harsher reaction to worries that exporting too much gas will wreck Israel's own domestic market. "Quite frankly, this is B.S.," he says. "There is no way Israel can develop fields of this size without exporting." No one, not even an Israeli energy company, would invest the time and resources in opening the Leviathan field just to meet the tiny Israeli market. It's a point you hear from others who understand the energy business: Reserves in the ground count for nothing unless it's economically feasible to open them up. Israel's own neighbor Egypt is the classic example of a country that has very large natural-gas reserves and that suffers from an acute gas shortage. Israel could find itself in a similar squeeze once the Tamar field starts to play out, if there aren't enough export-earned shekels to pay for new wells to serve that domestic demand.
As for Israel's oil potential, he points out—like Harold Vinegar—that the aquifer in the Shefla basin is protected under the development scheme proposed by Israel Energy Initiatives. He, too, sees exploiting Israel's oil-shale potential as a way to diversify risk as well as economic opportunity, and not just for Israel but for its neighbors.
Indeed, what many in the Israeli Knesset seem not to understand is that what looms on the horizon is more than just energy independence—or lots of new government revenue. Turning Israel into an energy-market player could be the beginning of a revolution in the country's relations with its neighbors, who are already contracting to buy the gas. The list includes Jordan and Egypt—the latter, as Aldubi likes to point out, is the country that used to supply natural gas to both Israel and Jordan-—as well as the Palestinian territories.
And this is where the possibilities become intriguing.
Shlomi Fogel may be described in the financial press as "one of Israel's wealthiest and most secretive billionaires," but in the flesh he is affable, eloquent, and passionate about the most prolonged of all Israel's agonies, the conflict with the Palestinians and the status of the West Bank. Fogel is no milk-and-water Israeli liberal; he is close to Netanyahu and his master architect of the government's export-driven energy policy, Egon Kandel. But Fogel is also friends with key officials in the Palestinian Authority, as well as leading Palestinian businessmen, and he sees in Israel's energy discoveries an unprecedented opening to a new Israeli–Arab future.
The founder in 1993 of Ampa Industries, one of Israel's largest diversified companies, Fogel says he sees "four vectors signaling Israel's future rise as a world-class economic power." The first is its impressive command of leading high-tech industries. The second, its up-to-date infrastructure, including high-speed Internet, far ahead of any other Middle Eastern country and even in some respects the United States. The third, its gift for entrepreneurial flair. The fourth is now oil and gas.
When asked whether the growth of Israel's oil and gas business can promote Palestinian–Israeli amity, Fogel is emphatic. "Absolutely," he replies. People have had enough of politicians manipulating the issue for their own gain, he says. On both sides of the security fence, it's time for a bottom-up solution, taking root in one business deal at a time and creating a powerful middle-class constituency that has a stake in creating wealth instead of fomenting war. The export of natural gas to revivify the economy of the West Bank, with Palestinians finding well-paying jobs on building and servicing pipelines or in oil-shale production, could be a compelling way to jump-start the process.
"Jordan is moving toward development and purchasing of gas from us," he tells me. "I believe we will see better times with them." He sees the same possibility with the Palestinians, even in Gaza. "The rockets are not giving them a better future," he says. "Their young people will not accept misery and unemployment" for very long if they see a better more prosperous future unfolding in Jordan and the West Bank.
Of course, there are many reasons for believing ancient enmities won't die away anytime soon, especially when there are outside powers ready to exploit them. In mid-January, Russia's Gazprom announced it was talking to Palestinian officials about developing Gaza's offshore gas fields. Gazprom had tried to take a stake in the development of the Leviathan field, even though it might pose a challenge to Russia's natural-gas market in Europe. (The Israelis opted for the Australian company Woodside instead.) Making gestures toward Gaza might be Putin's way of getting revenge, as well as reasserting Russia's geopolitical stake in the eastern Mediterranean, as it did by taking a leading role in staving off an American attack on Syria last year. Certainly none of it bodes well for the future—especially with Russia's partner in the Middle East, Iran, likely to follow close behind.
All the same, Fogel's enthusiasm is infectious, especially when he looks at the impact Israel itself could have on the global energy picture. Once Israel commits itself to expanding its own energy sector, the results, he is convinced, will reverberate back to America and beyond. As the energy industry becomes increasingly high-tech, once the Israeli penchant for improving and innovating those technologies kicks in, what seems impossible today could become common practice. (Four years ago, a Noble Energy official told me that the idea of developing the Leviathan field entirely offshore would have seemed impossible.)
The ultimate question is, Can the Israelis live with this new bounty? Have they become so accustomed to living in survival mode and being under constant threat that they simply cannot believe their good fortune—and cannot act on the opportunity?
In the end, what Israelis do may depend on how the outside world does, especially the Jewish community and supporters of Israel in this country. In order for its oil and gas bonanza to succeed, Israel needs two things, says Uri Aldubi: "operators and investors." Almost all of them, for now, will have to come from outside—not only from the United States but from Europe as well. Universal Oil and Gas is a London-based company that recently partnered with the Association of Oil and Gas Exploration Industries to host a series of conferences to champion those links and also possibly to prepare the way for a future European market for Israeli gas. The talks are to take place in Europe and in the Mecca of America's energy industry, Houston. The Israeli ambassador in Norway organized a similar conference in Stavanger last November, where Norwegian service and exploration companies with long experience in offshore gas development along their own continental shelf came not only to offer their knowledge and skill to Israel but also to learn how Israeli expertise in high-tech pursuits might transform their own businesses. The first outlines of Shlomi Fogel's prediction may be coming true.
But in the meantime, the world waits as Israel makes up its mind.

About the Author

Arthur Herman is the author, most recently, of The Cave and the Light: Plato Versus Aristotle and the Struggle for the Soul of Western Civilization. Support for the research and writing of this article was provided by the Hertog/Simon Fund for Policy Analysis.

The Sharon Doctrine

noreply@blogger.com (The MasterBlog) — Thu, 06 Mar 2014 15:22:46 +0000

The Sharon Doctrine: The Sharon DoctrineThe Mixed Legacy of an Israeli UnilateralistBy Hussein IbishJANUARY 11, 2014Ariel Sharon in Israel in 2006 (Courtesy Reuters) For most Arabs, no...

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The chutzpah! #Putin Defends #Ukraine’s Jews, Slams Ukraine’s Jewish Oligarchs

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noreply@blogger.com (The MasterBlog) — Thu, 06 Mar 2014 14:29:52 +0000

"Ukraine Turns From Revolution to Recovery is republished with permission of Stratfor." Ukraine Turns From Revolution to RecoveryBy George Friedman The uprising in Kiev has apparently reached...

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What #Russians Think of the Intervention in #Ukraine @ForeignAffairs

noreply@blogger.com (The MasterBlog) — Thu, 06 Mar 2014 14:29:37 +0000

By sending troops into Crimea, Russian President Vladimir Putin has amplified Ukraine's turmoil and set off the most dangerous crisis Europe has seen this century. Less noted, however, is that the...

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The Rags-To-Riches Tale Of How Jan Koum Built #WhatsApp Into Facebook's New $19 Billion Baby @Forbes

noreply@blogger.com (MasterTech) — Wed, 05 Mar 2014 13:37:00 +0000

Exclusive: The Rags-To-Riches Tale Of How Jan Koum Built WhatsApp Into Facebook's New $19 Billion Baby WhatsApp's Brian Acton and Jan Koum (Photo: Robert Gallagher for Forbes) ...

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Don Coxe: The End of Financial Heroin | Casey Research

djm — Wed, 26 Feb 2014 10:36:00 +0000

"When those that know an asset the most, love it least, it's always a good time to invest!"

Don Coxe: The End of Financial Heroin

Today’s missive is by one of our favorite thinkers, prolific investment strategist Don Coxe.

As an advisor to several publicly traded funds, part of Don’s job is to identify sectors that will make money for his clients. So it’s telling that he’s recently turned his attention to probably the most hated investment of the last two years: gold and gold stocks...

Regular readers of this column will recognize Don for both his unmatched historical knowledge of the investment markets and for his knack for explaining difficult concepts with fun analogies.

Don delivers on both with this piece. Read on for his entertaining analysis, penned exclusively for Casey Research readers, on why gold’s immediate future looks bright.

Dan Steinhart
Managing Editor of The Casey Report

A Very, Very Interesting Year

Don Coxe, Chairman, Coxe Advisors LLC.

For the past year, we have rarely written on gold, because there were too many other investment opportunities, and the good old S&P was just going up month after month. This was, for most equity investors, Voltaire’s “best of all possible worlds.” The economy was of Goldilockian temperature and moderation, politicians were behaving the way cynics expected and optimists despised, and the Fed was successfully injecting massive doses of “financial heroin” into the US—and global—economy without any signs of ill effects… or any remarkable enthusiasm for risk-taking.

Some of us were disconcerted that an increasing proportion of the work force were leaving it for a life of disability benefits, food stamps, and other confections from the government’s banquet table. Meanwhile, bankers were happily absorbing the financial heroin of zero interest rates and a continuously fattened Fed balance sheet. They loaned, but not in ways that stimulate the economy. They were simply lending back to the Fed at a big markup and levering up their balance sheets with short-term, low-risk paper issued by other institutions.

We couldn’t help noticing the resemblance to the land of the lotus eaters in Homer’s The Odyssey. When Odysseus and his sailors landed among the lotus eaters, they enjoyed their floral diet and drifted into a state of dreamy satisfaction, refusing to return to the risks of “the wine-dark sea”—even though they swore they’d like to go home… sometime. Eventually, Odysseus and his most loyal followers lashed their lassitude-loving shipmates to boards and dragged them back to their ship.

In this dreamy financial world, the need to own gold became increasingly irrelevant. “Give us this day our daily Fed” was the bankers’ prayer, which was answered with monetary injections delivered with near-divine consistency. Why own the best protection against a financial catastrophe when the managers in Washington, London, and Frankfurt had apparently found the magical formula to eliminate risk?

No surprise, then, when The Financial Times disclosed in January that its regular poll of the world’s leading gold investment experts revealed an overwhelming consensus for another grim and ghastly year for gold.

Among the prognosticators were some who predicted that the gold price was headed for just three digits; they only disagreed on whether the front number would be nine or seven. The “must-own” metal of this millennium had lost its urgency and relevance, replaced in what remains of metallic stardom by platinum, which is needed to clean car exhausts. Global warming, says the new consensus, is something real, whereas gold is headed back to “barbarous relic” status.

Some of us who had been sitting on the sidelines decided that the Grecian Chorus of Gloom had overstayed its time on stage. Enough already!

Gold is just as relevant as ever, and the indispensable portfolio protector is on sale at a deep discount. That’s why in January, we sharply boosted gold stock exposures in the commodity equity portfolios we advise.

Some others apparently shared our view, because gold has not traded below its year-end close and is up 10% YTD at this writing. Gold stocks in the GDX are up 24.7%, and the GDXJ junior gold stocks are up an astonishing 41.8%. Chrysophilia could soon be back in vogue, although Paul Krugman and other “progressive” economists would surely label it “financial necrophilia.” (Is this a new age of gold or a dead-cat bounce?)

When Harold Macmillan was UK premier, he once gave a speech to a Tory audience about all the great things the government was doing for the people. The crowd loved it. Then a young man asked, “So what could possibly go wrong that would lead to your government’s defeat?”

“Events, dear boy, events,” the premier replied.

Events will, we suggest, bring gold back to center stage from its two years of languishing backstage. We cannot predict which “events” will trigger the next monster rally, but with all that paper money and all those debts and all those bad bank balance sheets, something will assuredly go wrong sometime.

Gold is that unique element that is priced not just by the interaction of the classic opposites—fear and greed—but by the shifting winds and storms of those emotional and intellectual opposites. Gold was languishing at $275 when a new kind of global war began on 9/11. When the US economy emerged from recession in 2002 and embarked on a real-estate-driven boom, gold soared all the way to the $1,000 level before being sucked into the bank collapse vortex and declining to $716. But while most equities were still plunging, gold and gold stocks entered into a new bull market and soared to $1,911. Two fears drove that golden bull: fear of Fed monetary policies and fear of a collapse of Eurozone banks and economies.

When those fears began to evaporate, gold investors looked down, saw no safety nets—and began bailing out. No inflation? No euro crisis? No reason to hold gold.

We think most investors are missing the point: nearly six years of unprecedented money printing, unprecedented subsidization of big banks with zero-cost money, and massive government intervention into the economy have not delivered even a soupçon of robust, inflation-generating growth.

Heroin was the battlefield anesthetic of choice for severely wounded soldiers. The crucial medical decision was not whether to deliver the heroin: that was easy. The tough part—for doctor and patient—was deciding on and enforcing its withdrawal before the soldier became a hopeless addict.

The Fed has been lulled into the economically perilous belief that capitalism should be stimulated with sustained injections of a potent narcotic long after the patient is out of the emergency ward. Zero-cost money and an underpriced mid-to-long Treasury market most certainly will make the economy rebound, not subside into languid repose.

This mechanistic assumption ignores the guts component of capitalism: hard work and taking risk for reward. The Fed’s long-term recovery is, in effect, based on the unstated premise that risk is a four-letter word that has, like another four-letter word beginning with “f,” little place in genteel company.

Mr. Bernanke must sense this, because nearly a year ago he began to warn that “tapering” was coming and “unconventional monetary policies” would not last forever. For that warning to the addicted patients—the big, bad, bonused bailout banks—he was greeted with screams of anguish and sharp stock market selloffs.

His successor is committed—at least for now—to continuing the tapering. Since the Fed has quadrupled its balance sheet without triggering worrisome inflation, that component of Fed policy should easily survive a gradual return to normalcy.

But the zero interest-rate policy (ZIRP), as our friend John Mauldin recently noted, is having serious effects on the economy and should be scheduled for early abandonment.

Meanwhile, the rest of the world is becoming more restless about President Obama’s apparent “de-risking” of American commitments abroad. Whether it is Syria, Benghazi, Mali, Egypt, Israel, or Iran, he seems to be giving signals that blights will produce merely barks. His secretary of state says that from here on, all American treaties will include commitments on climate behavior, because climate change is as great a risk as starvation, pandemics, or terrorism. (He left out locusts.)

With the increasing tensions between China and its neighbors—notably Japan—any misunderstandings about America’s commitment to its allies could prove disastrous. (Those with an interest in how misunderstandings about commitments to allies can lead to catastrophe should read Margaret MacMillan’s magisterial The War That Ended Peace: The Road to 1914.)

Investors should assume that the awe-inspiring oceans of liquidity already produced by central banks should be enough to avert a recessionary slide—if not to stimulate a heavy flow of capitalist juices.

What can we say of the post-taper Treasury market? Six years of massive support mean that the Fed is—by far—the biggest holder of the national debt. The Fed’s relationship to the Treasury could become an area for other radically new policies in coming years:

Why does the Fed need to hold all the debt it has bought? What would be wrong with shipping lots of it back to the Treasury to reduce the national debt?

What—if any—changes will be made to the Treasury’s policy of ignoring the nation’s hoard of gold while pricing it at Nixonian levels? For that matter, why is the Fed finding it so inconvenient to return Germany’s gold? On the present, somewhat theoretical schedule, the last of the gold will finally reach Frankfurt sometime during President Hillary Clinton’s second term.

The only thing about all of the above of which we can be reasonably certain: long before then, gold is going to be worth much more than $1,300 an ounce.

Believe it.

For 40 years, strategist Don Coxe has been speaking about, writing about, and investing in the global capital markets. Currently, he is advisor to BMO Global Asset Management for commodity funds, and he publishes The Coxe Strategy Journal for clients of Coxe Advisors: www.coxeadvisors.com.

Don Coxe: The End of Financial Heroin | Casey Research

Don Coxe: 8 reasons why the end of the bear market in #gold is imminent - The Globe and Mail

djm — Wed, 19 Feb 2014 09:37:00 +0000

Don Coxe: “ A month’s rally is insufficient evidence to proclaim the end of gold’s worst plunge in 33 years. In Churchillian terms, it may not be the end of the bear market but it may be the beginning of the end.”... see below 8 reasons why Don Coxe believes the end of the bear market in gold is imminent.

Full article below.

Don Coxe: 8 reasons why the end of the bear market in gold is imminent

The Globe and Mail

Published Tuesday, Feb. 18 2014, 4:15 PM EST

Don Coxe, a contributor to Globe Unlimited’s Inside the Market, is chairman of Coxe Advisors LLP and is an advisor to several commodity funds. He has been consistently ranked as a top portfolio strategist.

This is the season when miners and investors get together in two of the world’s major global conferences: the BMO Global Resources Conference in Florida, followed by the Prospectors & Developers Association Convention in Toronto.

For most of the past 13 years, optimism was in the air at those meetings. Even in crash-shocked 2009, there was cheer in the perceptions of strengthening demand for precious metals, copper and iron ore.

Last year, metals - particularly precious metals - were entering major collapse at convention time. By year-end, the leading global experts in precious metals polled by the Financial Times were the most bearish since 2002. Some investment banks even predicted that gold could break $1,000 an ounce. Miners were announcing slashes in their profits and in their reserves. (Companies have to adjust their values for economic reserves to recent metal prices. Among the majors, there are almost none who could produce sustained profits with $1,000 gold.)

That Stygian pessimism helped convince us to turn optimistic on the precious metals, raising exposure sharply in the portfolios on which we give advice.

The crowd can be right or, more often, can become even more wrong (about the long-term) before the tide turns, but there is more to our bullishness than crusty contrarianism. As things got gloomier, even some sensible strategists pondered aloud whether the leftist economists who long predicted that gold would disappear as a store of value would prove prescient. “Who needs gold?” was the oft-quoted headline in many articles interviewing experts whose genius was finally proven in the laboratory of the marketplace. (Even Paul Krugman has to make a correct forecast some time.)

Gold has, in fact, been priced by political elites throughout history. Demand for decorating palaces and paying armies was a sturdy stimulus to gold production over the millennia. Alchemists who claimed the ability to create gold from dross had tenuous and, usually, temporary employment priced off the real thing.

More recently, central bankers have fulfilled the role of creating money not backed by gold on conspicuous - and conspicuously successful - scale. Nevertheless, central bankers as a group have been huge buyers of gold in this millennium.

One of the few central banks to abandon gold has been the Bank of Canada, and it has hurt neither the loonie, nor the perception that Canada is cautious and prudent. Among the biggest holders of gold are Italy and Russia, and they have far more trouble commanding respect than goldless (but not yet Godless) Canada.

Indeed, the loonie’s dive into troubled waters last year coincided (on an appropriately modest and subdued scale) with gold’s spectacular plunge, and it seems to be sticking with gold on the upside. Against the greenback it fell from par to 89 cents (U.S.), but it has rallied with gold to 91 cents - while the tarnished yellow metal was bouncing from $1225 to $1327.

A month’s rally is insufficient evidence to proclaim the end of gold’s worst plunge in 33 years. In Churchillian terms, it may not be the end of the bear market but it may be the beginning of the end.

Why? Let me count the ways.

1. Bear markets usually end with the public castration of some prominent, (but financially prudent) bulls, and the public slaughter of their heavily-levered brethren. Bears, are not, by their nature, restrained when their prey is defenseless.

2. The consummation devoutly wished by leftist economists - the apparent demise of gold - has come because of and despite the most massive continuous printing of money in human history. That high-risk experiment of injecting financial heroin into the financial system was launched by the Fed and friends in 2008. It has continued until long after the crisis was past and a muted - and frequently maddening - recovery began.The grossly mismanaged and overleveraged banking systems in the USA and Europe needed all the heroin they could get. But in recent years, they have been prospering by taking the near-zero-cost money from the Fed and reinvesting it in low-risk but conventionally-priced assets to earn mouth-watering returns.

The European and American banking systems (with help from some powerful leftist politicians) caused the second-biggest Crash since World War I. They have been the recipients of trillions in near-zero-cost financial liquidity in return for promises to rebuild their deflowered balance sheets. Yet, according to the Bank for International Settlements, they are far behind their promised growth in shareholders’ equity and financial liquidity - but substantially ahead in bankers’ bonuses and stock buybacks. The last crash ultimately sent gold prices north 75 per cent. The next one - whenever it comes - should be even more rewarding to gold owners, because the financial heroin flows have been so massive.

3. Gold exists as a financial asset, and has been used for centuries to restrain governments and central banks from backing bankers in the bad behaviour that brings busts. In this cycle, it has been ridiculed, marginalized and sidelined while the supply of paper money keeps expanding and being reinvested in short-term loans, thereby releveraging the banking system back toward its grotesque scale of 2007. Compared to the supply of paper money and leverage in the global financial system, gold is expanding barely above the growth rate in supply in Old Master paintings: but that market is unconstrained and those Old Masters are costlier by the year.

4. Like known Old Masters masterpieces, the supply of gold in the world is catalogued and is increasing minimally. Apart from the gold in galleons below the Spanish Main, new gold is to be found mostly in low grades in remote locations in countries with miserable records for protecting investors. Even $2,500 an ounce would not produce a wondrous gold stream of new production to constrain further upside movement in bullion prices.

5. The Chinese have displaced the Indians as the biggest bullion buyers. The Indian buyers are almost purely people, whereas the Chinese buyers also include the government and opaque government-controlled entities. Historically, rising political powers liked to bulk up on bullion before taking on established military powers. Perhaps China’s recent policy switches - from buying Treasury bonds and making friendly with its neighbours, to selling Treasurys and talking tough with its neighbors - reflects its newfound real wealth.

6. In this Millennium, after completing its 20-year Triple Waterfall Crash, gold has far outperformed major stock markets. Adjusted for intervening inflation, gold prices no longer loom large in 1980 stagflationary terms. Paul Volcker and Margaret Thatcher used double-digit short-term rates to smash inflation and promote sustained economic growth. As evidence of the inevitability of the success of their stringent policies unfolded, gold prices collapsed. How could one justify holding gold priced at $800 an ounce with interest rates in high double digits when less than decade earlier it had traded at $36 an ounce?

7. Gold’s price increase since 2000 roughly approximates gains in such industrial commodities as crude oil, copper, and iron ore. That doesn’t make it cheap, but it doesn’t make it expensive.

8. If there had been a known - but expensive - antidote against Black Death, the well-off would surely have bought it and kept it around even if the plague had not returned in decades. Gold is a proven antidote for extraordinary financial events produced by bad banking and political governance: its price rose from $20.67 to $35 after the Depression arrived; in the 70s it soared from $35 to $800 when inflation climbed from 2 per cent to 14 per cent; it has outperformed stocks since the 2008 Crash.

How to own it?

Bullion is bland in a bull market for gold compared to owning well-managed mining stocks with large unhedged reserves in politically-secure areas of the world. You get the upside leverage of reserve restatements as bullion prices rise. Laugh not: there are many well-managed gold companies - and the rest have been taught expensive lessons.

Whom can you believe?

Me - or those 32 experts who, only weeks ago, said don’t buy gold?

A $110 rally proves almost nothing. There are still far more of the disbelieving experts than there are who agree with me.

File this column away for later re-reading when you know how the story turned out.

Or tiptoe into the chilly waters and buy some good gold stocks.

Try It Now Inside the Market - The Globe and Mail

Can #PayPal Beat #Apple, #Google, #Amazon And Icahn In The Wallet Wars? @Forbes

noreply@blogger.com (MasterTech) — Wed, 19 Feb 2014 09:17:00 +0000

The opportunity is there, can they seize it? Can PayPal Beat Apple, Google, Amazon And Icahn In The Wallet Wars? PayPal's David Marcus (Eric Millette For Forbes) PayPal is in the center...

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"Frackin’ the Bakken": #Shale oil in Saudi America #MasterEnergy @TheEconomist

djm — Mon, 17 Feb 2014 04:05:00 +0000

The benefits of shale oil are bigger than many Americans realise. Policy has yet to catch up

The economics of shale oil

Saudi America

Feb 15th 2014
| MIDLAND, TEXAS
| From the print edition

Frackin’ the Bakken

DENNIS LITHGOW is an oil man, but sees himself as a manufacturer. His
factory is a vast expanse of brushland in west Texas. His assembly line
is hundreds of brightly painted oil pumps spaced out like a city grid,
interspersed with identical clusters of tanks for storage and
separation. Through the windscreen of his truck he points out two
massive drilling rigs on the horizon and a third about to be erected.
Less than 90 days after they punch through the earth, oil will start to
flow.

What if they’re dry? “We don’t drill dry holes here,” says Mr
Lithgow, an executive for Pioneer Natural Resources, a Texan oil firm.
In the conventional oil business, the riskiest thing is finding the
stuff. The “tight oil” business, by contrast, is about deposits people
have known about for decades but previously could not extract
economically.

Pioneer’s ranch sits at the centre of the Permian Basin, a
prehistoric sea that, along with Eagle Ford in south Texas and North
Dakota’s Bakken, are the biggest sources of tight oil, a broad category
for the dense rocks, such as shale, that usually sit beneath the
reservoirs that contain conventional oil. Since 2008 tight-oil
production in America has soared from 600,000 to 3.5m barrels per day
(see chart 1). Thanks to tight oil and natural gas from shale, fossil
fuels are contributing ever more to economic growth: 0.3 points last
year alone, according to J.P. Morgan, and 0.1 to 0.2 a year to the end
of 2020, according to the Peterson Institute, a think-tank. Upscale
furniture stores and luxury-car dealerships have sprung up in Midland
since the boom began. Mr Lithgow has truck drivers who earn $80,000 a
year. Local oil-service firms have been known to hire fast-food workers
on the spot. In all, the unconventional-energy boom will create up to
1.7m new jobs by 2020, predicts McKinsey, a consultancy.

And that is only part of the story. Another benefit of tight oil is
that it is much more responsive to world prices. Some economists think
this could turn America into a swing producer, helping to moderate the
booms and busts of the global market.

Pioneer is rapidly boosting production. But Scott Sheffield, the
company’s boss, worries that in a few years he will run out of
customers; America has prohibited the export of crude oil since the
1970s. At $100 a barrel, the price of West Texas Intermediate (the most
popular benchmark for American oil) is comfortably above the break-even
cost of tight oil. But the prospect of a glut has futures pricing it at
$20 less in 2018. “There will be a lot less oil-drilling when you take
$20 out of everybody’s margin,” says Mr Sheffield.

Until the early 1970s, America was the world’s largest oil producer
and the Texas Railroad Commission stabilised world prices by dictating
how much the state’s producers could pump. When Arab states slapped an
oil embargo on Israel’s Western allies after the six-day war in 1967,
Texas cushioned the blow by allowing a massive production boost.

But rising consumption and declining production eroded the state’s
spare capacity, and in March 1972 Texas called for flat-out production.
“This is a damn historic occasion and a sad occasion,” the Texas
Railroad Commission’s chairman declared. When Arab producers imposed
another embargo the next year, prices rocketed. America had lost the
role of world price arbiter to OPEC, a cartel dominated by despotic
regimes. American politicians tried desperately to curb consumption (for
example, by lowering speed limits) and to conserve supplies (by banning
crude-oil exports in 1975).

American production declined steadily from a peak of 9.6m barrels a
day in 1970 to under 5m in 2008. About then, independent producers began
adapting the new technologies of hydraulic fracturing (“fracking”) and
horizontal drilling, first used to tap shale gas, to oil. Total American
production has since risen to 7.4m barrels a day, and the Energy
Information Administration, a federal monitor, reckons it will return to
its 1970 record by 2019. The International Energy Agency is more
bullish; it reckons that by 2020 America will have displaced Saudi
Arabia as the world’s biggest producer, pumping 11.6m barrels a day.

Besides directly creating new jobs and income, the fossil-fuels boom
could help growth by reducing America’s vulnerability to oil-price
swings, in two ways. First, as production rises and imports shrink, more
of the cash that leaves consumers’ pockets when the oil price rises
will return to American rather than foreign producers. David Woo of Bank
of America/Merrill Lynch notes that America’s petroleum deficit has
narrowed to 1.7% of GDP while Europe’s has widened to nearly 4%, which
seems to have made both the dollar and the economy less sensitive to oil
prices.

The second channel lies in the economics of shale. Oil flows
relatively easily through the porous rocks that make up a conventional
reservoir, so a conventional well can tap a large area. As a result, the
volume of oil pumped each day declines slowly, on average at 6% per
year. By contrast, oil flows much more sluggishly through impermeable
tight rock. A well will tap a much smaller area and production declines
quite rapidly, typically by 30% a year for the first few years (see
chart 2). Maintaining a field’s production levels means constant
drilling. The International Energy Agency reckons maintaining production
at 1m barrels per day in the Bakken requires 2,500 new wells a year; a
large conventional field in southern Iraq needs just 60.

This all means that when oil prices rise, producers can quickly drill
more holes and ramp up supply. When prices fall, they simply stop
drilling, and production soon declines. In early 2009, after prices
collapsed with the global financial crisis, Pioneer shut down all its
drilling in the Permian Basin. Within six months, output in the affected
areas dropped by 13%.

Bob McNally of Rapidan Group, an industry consultant, predicts that
America could be “force-marched” back to the stabilising role it played
in the 1960s, this time responding to the market’s invisible hand rather
than government diktat. Will that work in practice? It may already have
done so. Since 2008, the Peterson Institute notes, turmoil in Sudan,
sanctions on Iran and declining North Sea output have taken a lot of oil
off the market. Without America, which accounted for half of the growth
in global output over that period, Persian Gulf producers might not
have been able to make up for the loss. Prices could have risen sharply,
hurting consumers everywhere. Yet they did not.

Oil firms try not to over-react to short-term price fluctuations, of
course. Capital, equipment and labour all cost money, so they try to
ramp up production only in response to what they think will be long-term
shifts in the oil price.

Frackin’ the Bakken

The ban on crude-oil exports hurts producers and makes it harder for
America to become a swing supplier. Light, sweet (ie, low-sulphur) West
Texas Intermediate already trades at a discount of $8 to Brent, its
global peer. That is due mostly to transport and storage bottlenecks in
America, but increasingly the export ban makes a difference. In recent
decades American refiners have reconfigured themselves to handle the
heavier, sour oil imported from Mexico, Venezuela and Canada’s tar
sands, leaving them with less capacity for refining tight oil, which is
light and sweet.

The oil price at which shale producers break even ranges from $60 in
the Bakken to $80 in Eagle Ford, reckons Michael Cohen of Barclays, a
bank. If exports yielded an extra $1 to $1.30 a barrel, he estimates
that might raise total output by as much as 200,000 barrels per day.

If the ban were lifted, crude-oil exports could start more or less
straight away. The necessary pipes and tankers are mostly there already.
But the political debate is only in its infancy. By law the president
can allow exports he considers in the national interest. Barack Obama
has yet to express a view on the ban. Legislators from non-oil-producing
states are wary. “For me the litmus test is how middle-class families
will be affected,” says Ron Wyden, the Democratic chairman of the Senate
energy and natural resources committee.

The main beneficiaries of the ban are the refiners. They buy light,
sweet American crude for less than the global price, turn it into petrol
and then sell that at the global price. Exports of refined petroleum
products are not banned, and have, unsurprisingly, soared.

Defenders of the ban (including, naturally, some refiners) claim that
if America exported more oil, Saudi Arabia would reduce its own output.
Prices to American consumers would not fall, they say, and might even
rise. Historical evidence says otherwise, however. When Congress allowed
Alaska to export crude oil in 1995, its west-coast customers did not
pay any more for petrol, diesel or jet fuel.

Oil producers would obviously benefit from lifting the ban. So might
other Americans, in less obvious ways. A global oil market that fully
included America would be more stable, more diversified and less
dependent on OPEC or Russia. The geopolitical dividends could be hefty.
As Pioneer’s Mr Sheffield notes, “It’s hard to believe we’re asking the
Japanese to stop taking Iranian crude, but we won’t ship them any crude
ourselves.”

_{Correction: We said above that higher export
prices could raise output by as much as 200,000 barrels per year. We
meant per day. Sorry. This has been corrected.}

From the print edition: United States

The economics of shale oil: Saudi America | The Economist

#Gold: Looking at relative perf since start of this 2.5-month mini rally in Gold Stocks #charts @MasterMetals

noreply@blogger.com (masterfin) — Fri, 14 Feb 2014 11:58:01 +0000

#Gold: Looking at relative perf since start of this 2.5-month mini rally in Gold Stocks #charts

The MasterMetals Blog

#Gold: Looking at relative perf since start of this 2.5-month mini rally in Gold Stocks #charts

MasterBlog — Thu, 13 Feb 2014 08:23:00 +0000

From BMO: Charts - looking at relative performance since the start of this 2.5-month mini rally with a few questions we are asking ourselves:

Seniors – Any point in NEM (bottom)? Why quality Randgold (yellow) lagging? Is KGC (bottom brown) turning around here? Rotate out of FNV into producers? AEM overdone?

Intermediates – any merit in buying AGI, IMG, or AR here? Or stick with leading BTO, or AUQ?

Developers (WOW the place to be!?) – keep with RMX, CNL or switch in to names like SUE?

Source: BMO, Bloomberg

$GDX, $GDXJ and $SIL could soon test moving averages which have been resistance for the past 13 months @MasterCharts

djm — Tue, 11 Feb 2014 16:48:00 +0000

_______________________________________

Check it out on The MasterCharts

Moving averages point the way for #gold, #silver stocks Investor

noreply@blogger.com (djm) — Tue, 11 Feb 2014 09:55:15 +0000

$GDX, $GDXJ and $SIL could soon test moving averages which have been resistance for the past 13 months.

Moving averages point the way for gold, silver stocks

Resource Investor

The gold and silver stocks have rebounded nicely but have consolidated in recent weeks. Where is this going and how do we know? Well, a few weeks ago we publicly said that a major bottom is in. Thus, we believe the trend will go higher. Beyond belief, we need real confirmation that the sector will continue higher. Enter moving average analysis. By using a few simple moving averages we can better understand the current context and get confirmation that the sector will continue to move higher. GDX, GDXJ and SIL could soon test moving averages which have been resistance for the past 13 months.
First lets start with GDX. The 150-day moving average provided resistance at the start of 2013 and then the market declined and remained below its 50-day moving average for months. The 150-day moving average provided resistance again after the June bottom. Now that the market has reclaimed the 50-day moving average which has turned up, it is in position to break above the 150-day moving average which is flat and no longer declining. Keep an eye on the RSI which should push above 70 to confirm a breakout. Upon breakout, the medium term target becomes $31.

There is a similar picture in GDXJ. The market failed at the 150-day moving average in January 2013 and then remained below the 50-day moving average until August. The summer rally failed at the still declining 150-day moving average. Now GDXJ has reclaimed the now rising 50-day moving average and is in position to breakout above the 150-day moving average. The RSI recently hit 70 and has remained above 50 during this consolidation. It definitely needs to push above 70 in a breakout scenario. In the breakout scenario the medium target becomes $51.

For SIL and the silver stocks we use the 200-day moving average. That average provided support in November 2012 but then resistance in February 2013 and then for the summer rebound in August 2013. SIL has now reclaimed the 50-day moving average and is in position to retest the 200-day moving average. Again, look for the RSI to confirm the breakout. In that scenario, the next resistance target becomes $16.50.

The near-term analysis is quite simple. The 50-day moving average appears to have become strong support for these markets which appear ready to test what has been resistance over the past 13 months. Note how that resistance (the moving averages) is no longer declining but is flat or flattening. That illustrates how the downtrend is all but over. A strong close above the moving averages will all but confirm that the downtrend is over and could more importantly lead to some very strong moves. GDX at $24 has an upside target of $31. GDXJ at $37 has an upside target of $51 while SIL at $12.50 has an upside target of $16.50. Keep an eye on these markets as a breakout above these moving averages would be quite significant. If you'd be interested in learning about the companies poised to outperform the sector, then we invite you to learn more about our service.
Jordan Roy-Byrne, CMT, can be contacted at Jordan@TheDailyGold.com.

http://m.resourceinvestor.com/2014/02/08/moving-averages-point-the-way-for-gold-silver-stoc?ref=hp

#Venezuela Siphoning U.S. #Oil Exports to China Sinks Bonds #MasterEnergy @Bloomberg

djm — Wed, 05 Feb 2014 10:31:00 +0000

At less than 800,000 bopd, Exports to the USA were the lowest since 1985!!

Venezuela Siphoning U.S. Oil Exports to China Sinks Bonds

Venezuela’s plummeting oil sales to the U.S., its biggest export market, are exacerbating a collapse in the nation’s debt securities.

Bonds issued by Venezuela sank 3 percent on Jan. 31, a day after data released by the U.S. Energy Information Administration showed that 2013 energy sales to the country are headed for a 28-year low. The selloff pushed losses this year to 12.4 percent, more than three times the average 3.93 percent drop among notes from the least-creditworthy developing nations, according to data by Bloomberg.

The tumble in oil exports, Venezuela’s biggest source of dollars, comes as President Nicolas Maduro faces a shortage of U.S. currency that’s caused consumer prices to soar 56 percent and foreign reserves to plunge to a decade-low of $21 billion. Petroleos de Venezuela SA, the state-run oil producer known as PDVSA, is sending hundreds of thousands of barrels a day to China to repay loans totaling more than $40 billion since 2008, at a time when its production is shrinking.

“It’s an indictment of the mishandling of PDVSA,” Edwin Gutierrez, who manages $10 billion of emerging-market debt at Aberdeen Asset Management Plc, said in a telephone interview from London. “The country’s capacity to pay continues to deteriorate.”

Photographer: Meridith Kohut/Bloomberg

Oil Minister and President of PDVSA Rafael Ramirez said, “There are no reasons to think... Read More

Gutierrez said he is underweight Venezuelan bonds.

‘Under Control’

Dollar shortages helped fuel a record 73 percent decline of the bolivar on the black market last year as the country, which imports about 70 percent of the goods it consumes, struggles to pay billions of dollars in debt to food importers and airlines. U.S. currency obligations to private companies have surged to more than $56 billion, according to Barclays Plc. The government failed to pay $8.7 billion to companies in 2013 that provide goods from grains to toilet paper, Caracas-based researcher Ecoanalitica estimated last month.

“There are no reasons to think that we have an unsustainable economy,” Oil Minister and President of PDVSA Rafael Ramirez said in an interview on the Televen television network on Feb. 2. “Oil revenues are under control. Venezuela has never not met its commitments. We’ve never stopped paying.”

Venezuelan exports of crude and petroleum products to the U.S. averaged 792,000 barrels a day in the first 11 months of last year, according to data published on the U.S. Energy Information Administration’s website. That daily average over all of 2013 would result in the lowest rate since 1985.

Output Drops

Rising domestic demand, declining production at PDVSA and a boom in North America shale oil output are also deepening the drop in exports to the U.S. that began during the government of former President Hugo Chavez.

Production declined to 2.45 million barrels a day in December from a daily average of 2.9 million barrels reported in 2012, a Bloomberg survey showed. Crude rose 0.7 percent today to $97.09 a barrel as of 2:24 p.m. in New York.

Venezuela is exporting 640,000 barrels a day to China, Ramirez told reporters in Caracas on Nov. 27. About 310,000 barrels a day are used to pay back loans, he said at the time.

“From a financial point of view, for Venezuela, it’s not very smart,” Russell Dallen, the Miami-based head trader at Caracas Capital Markets, said in a telephone interview. “They obviously have to sell the oil at much cheaper rates because of the freight costs. But it was a political decision.”

Credit-default swaps, used to protect against bond losses stemming from non-payment, indicate a 65 percent chance that Venezuela will halt payments over the next five years, second only to Argentina, data compiled by Bloomberg show.

‘Strong Argument’

Francisco Rodriguez, senior Andean economist at Bank of America Corp., said investors should hold on to their Venezuelan bonds.

“Our bottom line on Venezuela long-term continues to be positive,” Rodriguez said in a Jan. 28 report. “The country has strong capacity to pay, is not depleting its assets, and will sooner or later get out of its fiscal mess by devaluing. Given that its yields are similar to those of countries with much more serious near-term capacity problems, there is a strong argument to hold its bonds.”

The extra yield investors demand to own Venezuelan dollar-denominated bonds instead of Treasuries has surged 2.85 percentage points this year to 12.87 percentage points, data compiled by Bloomberg show. That’s the highest among 56 developing nations included in the Bloomberg USD Emerging-Market Sovereign Bond Index (BEMS), apart from Argentina.

“Every day that goes by without a change in the policy mix gets us that much closer to that so-called day of reckoning,” Peter Lannigan, a managing director at broker-dealer CRT Capital Group LLC in Stamford, Connecticut, said in a telephone interview. “In Venezuela, the theme in the market for a while now has been, ‘I don’t like the fundamentals, but they’ve got oil. I don’t like the economic policy mix, but they’ve got oil.’ It’s eventually going to catch up with them.”

To contact the reporters on this story: Boris Korby in New York at bkorby1@bloomberg.net; Corina Pons in Caracas at crpons@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net; Michael Tsang at mtsang1@bloomberg.net

Read the article online here: Venezuela Siphoning U.S. Oil Exports to China Sinks Bonds - Bloomberg

The Jewish Rx for Inequality: Work Hard, Get Rich, Be Good @TabletMag

noreply@blogger.com (www.masterliving.blogspot.com) — Fri, 31 Jan 2014 08:57:00 +0000

let’s stop viewing the accumulation of fortunes as inherently immoral and see it instead as Judaism has seen it all along, a blessed and sacred act, a supreme expression of humanity’s godlike ability...

Visit The MasterLiving Blog

Mobilizing Finance for #Energy Development in #Africa | Oil Council

djm — Tue, 28 Jan 2014 06:14:00 +0000

Excellent study on energy investments in Africa.

http://www.oilcouncil.com/expert_insight_articles/mobilizing-finance-energy-development-africa

Mobilizing Finance for Energy Development in Africa | Oil Council

Terry Newendorp, Chairman & CEO, and Shannon Thomas, Analyst, Taylor-DeJongh

Many economies on the African continent are undergoing a transformative expansion. Recent oil and gas discoveries, along with improvements in transparency and governance, have prompted the opening of new markets to foreign investment in all segments of the oil and gas value chain. International investors are also proving increasingly willing to take on emerging market risks as they seek to employ capital in a depressed global market. These trends have resulted in the highest levels of African investment since the 2008 global financial crisis. Though infrastructure requirements remain high, existing gaps in financing are increasingly being filled through a balanced approach that combines support from development agencies and export credit agencies, private equity investment, intracontinental investment, and the use of asset-backed debt facilities such as Sukuk and reserve-based loans.

Africa is already a proven oil and gas giant, accounting for 16% of total global production in 2012. The top four African producers—Nigeria, Algeria, Angola, and Libya—are all OPEC members with established oil industries. Yet most of the continent remains unexplored. A recent flood of notable discoveries in non-OPEC Africa indicates great potential for the approximately 45% of identified exploration blocks that remain open, and for the future of the African continent as a global oil and gas heavyweight for decades to come.

Figure 1: Recent oil & gas discoveries (Q1 2012 - Q3 2013) Source: Company press releases and reports

Historically, it was easy-to-export oil that motivated the bulk of foreign investment in Africa’s hydrocarbons sector. But with rapidly increasing domestic demand for energy, many African countries can also support the monetization of natural gas developments. Evidence for this is clear: the past five years have seen an increase in midstream and downstream oil and gas infrastructure projects that is expected to continue in the years to come. This is creating pronounced change in opportunities for the production of infrastructure-intensive natural gas. Previously unvalued and newly discovered gas deposits on both the eastern and western African coasts are gearing up for production, positioning Africa to greatly expand its already significant role in the globalizing gas trade. Over 15 years ago, South African industrial conglomerate Sasol invested in the Mozambican Pande and Temane gas fields with the intention of supplying Sasol’s local fuel retailers in Maputo. Now, the offshore gas discoveries in Mozambique exceed 65 Tcf, in a massive resource that will support not only domestic economic development, but also large LNG projects to supply global demand. Natural gas reserves and downstream infrastructure are also developing apace in other countries, including East African hot spots Tanzania and Kenya. And in Mauritania, the Banda offshore gas field is being developed as part of an integrated plan that will provide the first electricity to residents in over 60 towns in the Senegal River Basin.

Still, there is much progress to be made. Based on moderate projected growth in domestic and global demand, the African continent will require USD 1.6 trillion in cumulative investment in oil infrastructure and USD 721 billion in gas infrastructure over the next 22 years,with an average required total upstream spend estimated at USD 92 billion per year. This amount could be even higher due to the complex technical requirements of many planned offshore and LNG developments. Fortunately, maturing economies and novel risk mitigation strategies are creating new avenues for meeting the financing gap.

In recent years, debt financing in Africa has largely been government sponsored. The World Bank estimates that 70% of current external lending to Africa originates from foreign governments, and of the remaining 30%, around half the loans were based on sovereign guarantees. A significant source of debt has been development finance institutions (DFIs )such as the World Bank, and export credit agencies (ECAs), which have seen in today’s illiquid markets an opportunity to advance their own organizational goals (economic development and export promotion, respectively) by offering debt facilities and credit enhancements. Poor or no sovereign credit ratings limit many African governments’ access to international debt markets, on top of which many countries face restrictions on non-concessional debt and sovereign guarantees imposed by the IMF and World Bank.As both a direct and indirect result of these restrictions, in the past three years oil and gas firms used their own cash flows as the largest funding source for new business in Africa. Nevertheless, the availability of both debt and equity financing has steadily increased.

Figure 2: Sources of African Debt in 2011. Source: World Bank International Debt Statistics

Growing investor confidence is driving growth in equity investment with the help of alternative financing sources and risk mitigation measures, with benefits for Africans and international investors alike. A survey conducted by PwC showed that in the past three years, private and public equity were the fastest growing funding sources for oil and gas companies’ African operations, but still account for only 28% of total oil and gas financing. Also notable is the emergence of private equity funds as investors in energy and infrastructure developments. As of early 2013, Taylor-DeJongh identified 57 private equity funds that operate exclusively in Africa, and majors such as Carlyle, Och-Ziff, and Blackstone have started funds that specialize exclusively in African infrastructure. Growth in first-time funds and private investment companies specializing in specific regions within Africa is especially pronounced. Upstream oil and gas projects offer private investors value growth in the form of reserve increases, making them an attractive alternative to the more competitive buyout market. Energy demand from expanding local markets also helps to balance risk.African banks are an additional emerging resource. South African banks such as Standard Bank and Nedbank have established themselves as lenders for energy infrastructure throughout the continent. The Nigerian banking sector is also especially active in home-country oil and gas sector lending. This trend is extending to other countries, often with the support of credit enhancements from DFIs and other external agencies. Across all sectors, the largest markets for local currency loan syndications are in Kenya, Zambia, Nigeria, Ghana, Angola, and South Africa. Loan tenors in Sub-Saharan Africa have extended to as long as 8 years, with hope that continued macroeconomic stability and regulation might support longer terms in the future. In the meantime, engaging local investors puts available capital to work, hedges currency risk, and has the potential to reinforce regulatory advances, helping to ensure long term reliable and stable returns.

The availability of resources as collateral is particularly advantageous because it allows companies to raise debt secured by claims on future production. Since 2007, banks have issued nearly USD 17.7 billion in reserve-based loans (RBLs) in Africa. RBLs base credit on the net present value of projected cash flows from resource sales.Banks have varying approaches to reserve-based lending, but the existence of fields in production or under development is necessary. The credit facility is reevaluated regularly, allowing credit growth if production or reserves increase. In the past two years, over USD 5 billion in RBLs have been issued based on assets in Ghana, Nigeria, Equatorial Guinea, and Egypt.

Growing competition for RBLs has also helped to hasten the expansion of Sukuk, an Islamic asset-backed debt instrument. Like conventional bonds, Sukuk provide a fixed amount of income to the borrower for a predetermined tenor. Like RBLs, they are backed by physical collateral and associated cash flows. In lieu of interest, the lender is entitled to an agreed-upon portion of the income or dividends generated by the backing asset in exchange for taking partial ownership responsibility (similar to a moderated equity risk). The global market for Sukuk has grown over 28% annually for the past five years, for a total market exceeding USD 130 billion in 2012 and expected to surpass USD 600 billion by 2015. While Egypt has been the target of most African Sukuk to date, issuances have also taken place in The Gambia, Senegal, and Sudan; plans for sovereign Sukuk are also being developed in Nigeria, Mauritania, Morocco, and South Africa.

With each major project that successfully uses tailored financing solutions to accommodate a unique risk profile and expand local economic activity, more opportunities are likely to emerge for international and African investors. The risks of doing business in frontier markets are real, but institutional and infrastructure growth promise to reward those sponsors and investors who are willing to find constructive mitigation and risk-sharing structures. The mutual benefits to private and public stakeholders, both local and international, should encourage even more investment and help bring Africa into a new era of economic development, as global investors follow the lead of the capital providers to Africa’s oil and gas sector.

Mobilizing Finance for Energy Development in Africa | Oil Council

It's not just the locals taking advantage of the exchange controls in #Venezuela

noreply@blogger.com (djm) — Sat, 25 Jan 2014 16:08:28 +0000

Venezuela's Currency Controls propel those in the know to the top | TIME.com "the price of the dollar on the black market rose to 12.5 times the official rate, making common scams taking advantage of the differential between the exchange rates even more lucrative. Some business visitors here are...

Visit The MasterFeeds http://masterfeeds.blogspot.com to see the whole story.

#China Bank Regulator Said to Issue Alert on #Coal Mine #Loans @ Bloomberg

MasterBlog — Fri, 24 Jan 2014 07:09:00 +0000

China's banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.

To read the entire article, go to http://bloom.bg/19RxIQi

How can the gov't & the media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? @ZeroHedge

noreply@blogger.com (djm) — Mon, 20 Jan 2014 16:45:29 +0000

The Retail Death Rattle @ZeroHedgeIf ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has...

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40 #maps that explain the world

noreply@blogger.com (The MasterBlog) — Fri, 17 Jan 2014 15:11:36 +0000

Some pretty interesting maps that give you a better idea of the world we live in. 40 more maps that explain the worldMaps seemed to be everywhere in 2013, a trend I like to think we...

Read it all on The MasterBlog

Citi goes bullish on miners for the first time in three years @MarketWatch

MasterBlog — Fri, 17 Jan 2014 11:01:00 +0000

analysts seeing better bottom-up fundamentals, notably from big diversified miners. Citi’s top picks are $BHP $RIO $GLEN

Citi goes bullish on miners for the first time in three years - The Tell - MarketWatch

“We would rather be too early than too late in making this call.”
And with that, analysts at Citi moved their 12-month view on the mining sector to bullish for the first time in three years.

Sure, they’re concerned about the potential for long-term structural demand for commodities in China, and yes they’re aware there could be a seasonal slowdown in the first quarter of this year (as they pointed out in December), but analysts are seeing better bottom-up fundamentals, notably from big diversified miners. Citi’s top picks are BHP Billiton BHP +0.73% UK:BLT +1.16% , Rio Tinto RIO +0.94% UK:RIO +0.89% and Glencore-Xstrata UK:GLEN +3.42% .
“Investor sentiment has hit rock bottom. The mining sector has moved through five stages of grief, namely Denial, Anger, Bargaining, Depression, and now we think we are in Acceptance that the sector has moved into a new norm,” said lead analyst Heath Jansen, in a note out Thursday.
Amid a clutter of metals-price calls, Jansen foresees a flat commodity-price environment ahead and a reduction in volatility. An improvement in U.S. and European growth will help boost commodities, while weakening commodity currencies — the currencies of major exporters like Australia, New Zealand and South Africa — are boosting miners, he said. On top of all this, miners are cutting costs, improving balance sheets and aligning with shareholders’ interests. Because of this, earnings momentum has become positive.
But Citi’s advice to stay underweight on gold and base-metal stocks diverged from the opinions of other big investors. DoubleLine Capital founder Jeffrey Gundlach said earlier this week that not only is gold looking good technically — calling for $1,350 an ounce on gold “sooner rather than later” – but he likes those miners as well. Most major gold companies lost at least half their value last year on the gold price plunge.
“Sentiment is as black as night on gold, so I’m actually long on some gold miners,” said Gundlach.
His gold call is more bullish than the average investment bank so far this year. Recent forecasts from six big banks (not including Citi) see the metal sinking to $1,209 an ounce this year, an average drop of 14.5% from the 2013 average. The gold-mining sector has a fan in hedge-fund manager John Paulson, who was reportedly telling clients last year that he won’t add more to his hard-hit gold fund, but still likes the miners.
For its part, Citi said its least-favored big-cap miner is Anglo American UK:AAL -0.43% . The investment bank parted company with UBS, whose analysts lifted the stock to buy from neutral, saying valuations are looking attractive after a recent underperformance (by more than 18% over the past three months compared to buy-rated Rio Tinto and BHP Billiton).
Writing for Benzinga on Wednesday, William Briat said now isn’t a bad time to go hunting gold mining stocks, which are nearing lows not seen since the fall of 2008. He advises looking for stocks that “are able to produce at an all-in sustaining cost that is below the current price of gold bullion, which means they remain profitable.”
While Citi’s note is focused on Europe’s mining stocks, Briat outpointed NYSE-listed Primero Mining PPP +1.54% . “If a company still has strong assets, a solid balance sheet, and is able to create positive cash flow, this type of firm is of interest to me, especially when market sentiment is so negative,” he said.
Marc Faber extolled the virtues of mining stocks at the close of 2013. The author of the Gloom, Boom and Doom report said that given the extremely bearish views out there on gold, silver, platinum and palladium, mining companies are at “relatively good values.” Not a new call here for Faber, he’s been touting miners for a while.
– Barbara Kollmeyer covers markets for MarketWatch. Follow her @bkollmeyer. Follow The Tell @thetell.

Citi goes bullish on miners for the first time in three years - The Tell - MarketWatch

#Chinese Consortium Frontrunner to Buy #Glencore Xstrata's Peruvian #Copper Mine --

MasterBlog — Wed, 15 Jan 2014 16:04:00 +0000

Looks like it all worked out just as they wanted...

DJ Chinese Consortium Frontrunner to Buy Glencore Xstrata's Peruvian Copper Mine -- Sources
Wednesday, January 15, 2014 06:39:00 PM (GMT)

By Gillian Tan, Alex MacDonald and Cynthia Koons

A Chinese consortium is the frontrunner to buy Glencore Xstrata PLC's (GLNCY, 0805.HK) Las Bambas copper mine in Peru, according to people familiar with the matter, setting up a takeover that, at $5 billion or more, would be one of the largest foreign acquisitions by a Chinese company.

A group comprising affiliates of state-controlled outfits China Minmetals Corp., Citic Group Corp. and Guoxin Group is the only bidder currently left in an auction that Glencore Xstrata agreed to run to win China's approval for the merger that gave rise to the natural-resource giant. It's not clear when a deal may be struck, and another competitor could still reappear and win the auction.

The massive Las Bambas project, which was about 45% complete as of June and is scheduled to start production in the second half of 2015, will be able to produce 450,000 metric tons of copper a year for the first five years and 300,000 during its remaining operating life, Glencore Xstrata has said. It's expected to cost a total of $5.9 billion to develop. A Chinese purchase of Las Bambas would be the latest takeover deal engineered by the world's most populous nation as part of an effort to secure raw materials for its vast and growing industrial machinery. China is the world's largest consumer of copper, which is used in products ranging from cabling for electricity to cars.

A purchase of Las Bambas could trump in size the $4.7 billion acquisition of U.S. pork processor Smithfield Foods Inc. by Shuanghui International Holdings Ltd. (SIHL.YY), the largest-ever acquisition of a U.S. company by a Chinese company, which closed in September.

Glencore Xstrata agreed to sell Las Bambas to win approval from China's Ministry of Commerce, known as Mofcom, for Glencore International PLC's acquisition of Xstrata PLC. The takeover, which closed in May, valued Xstrata at $44.6 billion.

The Chinese consortium has discussed financing options with banks, according to some of the people. While talks between Glencore Xstrata and the group are not exclusive, the list of potential buyers for Las Bambas has dwindled. A consortium comprising Teck Resources Ltd. (TCK, TCK.A.T), Newmont Mining Corp. (NEM), Magris Resources Inc. and Blackstone Group LP (BX) that had examined a Las Bambas purchase is not currently pursuing the deal, some of the people said.

Separate groups--one led by Chinalco, the copper unit of Aluminum Corp. of China (2600.HK, ACH), and the other including Jiangxi Copper Co. (0358.HK), China's largest copper producer--also considered a purchase of the project, but are no longer in the running, the people said.

Glencore Xstrata promised to provide Mofcom with a list of potential buyers for Las Bambas by Aug. 31, with a view to entering a binding sale agreement by Sept. 30 and completing the deal by June 30, 2015. Las Bambas's buyer must be approved by Mofcom.

Sharon a warrior who sought peace

noreply@blogger.com (The MasterBlog) — Wed, 15 Jan 2014 00:06:21 +0000

Sharon a warrior who sought peaceMichael Oren Former Israeli Prime Minister Ariel Sharon, a decorated warrior who also took steps for peace, died Saturday, January 11, after eight years in...

Read it all on The MasterBlog

What Secrets Your Phone Is Sharing About You @WSJ @GetTurnstyle

noreply@blogger.com (MasterTech) — Tue, 14 Jan 2014 14:01:00 +0000

A movement to track consumers who are continuously broadcasting their location from phones is the new business.What Secrets Your Phone Is Sharing About You - WSJ.comFan Zhang, the owner of Happy...

Check out the whole story on The MasterTech Blog >>>

Outlook for #mining sector in #Africa

MasterBlog — Tue, 14 Jan 2014 08:17:00 +0000

African countries that will most likely benefit from investment in 2014 are:
Country Resource

Namibia/South Africa	Uranium
Burkina Faso, Ghana, Guinea, South Africa	Gold
DRC, Zambia	Copper / Cobalt
Iron Ore / Magnetite	Cameroon, Guinea, Mauritania, Mozambique, Sierra Leone
Coal (Thermal and Coking)	Botswana (Thermal), Mozambique (Coking), South Africa (Thermal)

Source: KPMG Metals

It is forecast that from 2010 to 2050, annual steel, iron ore and coal consumption will increase by 59.4%, 47.1% and 129.9%, respectively. With the continued expected growth in China’s demand for urbanisation, Africa with its abundance of natural resources will be at the top of most Asian investor wish lists.

See the article online here: Outlook for mining sector in Africa

Who gets your digital fortune when you die?

noreply@blogger.com (MasterTech) — Sun, 12 Jan 2014 07:51:00 +0000

Americans value their digital assets at more than $54,000 on average, according to a 2011 survey conducted for McAfee, a security technology company — but few people take the time create an estate...

Check out the whole story on The MasterTech Blog >>>

All Norwegians become crown millionaires, in oil saving landmark

noreply@blogger.com (MasterBlog) — Fri, 10 Jan 2014 10:11:10 +0000

The fund is a success in the sense that parliament has managed to put aside money for the future. There are many examples of countries that have not managed that All Norwegians become crown millionaires, in oil saving landmark | Reuters_________________________________ Read it on The...

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#Bitcoin-Mining Chips, Gear, Computing Groups @BW

noreply@blogger.com (MasterTech) — Thu, 09 Jan 2014 15:16:00 +0000

The Bitcoin-Mining Arms Race Heats Up Businessweek By Ashlee Vance and Brad Stone January 09, 2014 Image by Unicorn of Monoceros; Photo illustration by 731Behind this week’s coverJoel ...

Check out the whole story on The MasterTech Blog >>>

@JPMorgan Almost Put $1.32Bn in #Madoff's Ponzi Scheme, increases litigation reserves by $400mm

noreply@blogger.com (MasterBlog) — Wed, 08 Jan 2014 13:16:26 +0000

On Tuesday, JPMorgan agreed to a deferred prosecution agreement on two counts of fraud and $2.6 billion in total fines. The bank, which has already reserved $23 billion for its disparate legal exposures from the housing meltdown, trading losses and LIBOR-related investigations, said in a Tuesday...

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So true....Google Analytics In Real Life - Online Checkout http://youtu.be/3Sk7cOqB9Dk

noreply@blogger.com (MasterTech) — Wed, 08 Jan 2014 08:34:00 +0000

A bit old, but still unfortunately too relevant. Check out this video on YouTube: http://youtu.be/3Sk7cOqB9DkRead it all on The MasterTech Blog

Check out the whole story on The MasterTech Blog >>>

#Entrepreneurship, Not Socialism, Is the Answer to Economic Problems | Entrepreneur.com

noreply@blogger.com (MasterBlog) — Tue, 07 Jan 2014 17:52:17 +0000

This guy @JAMeyerson is a real moron. Entrepreneurship, Not Socialism, Is the Answer to Economic Problems | Entrepreneur.com _________________________________ Read it on The MasterFeeds

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#Gas will flow from the Leviathan gas field to the Palestinian Authority #MasterEnergy

MasterBlog — Tue, 07 Jan 2014 12:00:00 +0000

Leviathan Partners, Palestinian Authority Enter Gas Deal

January 07th, 2014 12:15am Posted In: Natural Gas, News By Country, Other Countries, Israel, Featured Articles

Gas from Israel’s Leviathan will start by being exported to the Palestinian authority. A $1.2 billion contract between the Leviathan partners (Noble Energy, Delek Group and Ratio Oil Exploration) and the Palestine Power Generation Company was just signed for the export of 4.75 billion cubic meters of gas over 20 years.

The deal is the first of its kind to be signed by the Leviathan partners. The Leviathan natural gas field is the biggest discovery made so far off the shores of Israel and the largest exploration success in Noble Energy’s history. It is located 130 kilometers west of Haifa, has a gross mean resources of 18 Tcf of natural gas and is operated by Noble with a 39.66% working interest. Natural gas was originally expected to begin flowing from the Leviathan by 2016 but the field is now expected to come online by 2017.

Another major gas field offshore Israel is the Tamar gas field also operated by Noble Energy. The Tamar field has a gross mean resources of 10 Tcf of natural gas. It began supplying the domestic Israeli market in March 2013.

The deal between the Leviathan partners and the Palestinian authority comes after months of uncertainty regarding Israel’s export strategy and export markets. Speculations on whether Israel will opt for exports or reserve its natural gas for domestic use were ended when the Supreme Court rejected on 21 October 2013 a petition against a June cabinet decision to export approximately 40% of the gas found offshore Israel.

The June decision also incorporated another important precision, that exports to immediate neighbors - including the Kingdom of Jordan and the Palestinian authority - would be booked as sales: ie they would come out of the export quota rather than reduce the amounts reserved for national consumption.

The Leviathan partners believe that the deal will pave the way for future Leviathan gas deal with other consumers. Neighboring Jordan, who like Israel has a history of reliance on Egyptian natural gas, also suffered from the disruption in the flow of the gas from Egypt to Jordan in the aftermath of the revolution that toppled President Mubarak. Also Egypt is still supplying Jordan with reduced amounts of gas, the Hashemite Kingdom is currently undergoing a major energy crisis. Jordan was forced to import expensive fuel products which caused a spike in its energy bill and in electricity prices. Jordan has been rumored to be considering important gas from Israel.

Egypt, despite its domestic production of natural gas, is also suffering from domestic shortfalls due to export obligations and a growing domestic demand. Egypt and Israel have recently discussed the possibility of entering a new gas deal. The deal would this time stipulate that gas will flow in the opposite direction: from Israel to Egypt rather than the opposite.

A long national debate divided Israel between those who believed that natural gas exports were essential for Israel to pursue further gas explorations and generate substantial revenues and those who were firm in their belief that Israel should save all the natural gas for the consumption of its future generations for decades to come. Discussions also revolved around the various scenarios that Israel could consider to export its gas: the pipeline, the LNG and the floating LNG options. The recent rumor that Israel will start by exporting to immediate neighbors before exploring ways to reach further markets was just confirmed by the Israeli-Palestinian deal.

The Australian giant Woodside was hoping to acquire a 30% share in the Leviathan and inject its LNG expertise to export the gas from the Leviathan to East Asian consumers as liquefied natural gas. The likelihood of Israel opting for LNG is decreasing by the day as Israel seems to be more inclined towards using a pipeline to transport natural gas to regional customers including Turkey.

Neighboring Cyprus also has the ambition of attracting Israeli gas to its onshore LNG facility in the coastal area of Vasiliko. Such a collaboration would enhance the island’s chances of materializing its ambition of becoming a regional energy hub and would justify the multi-billion dollar project. So far, there is no indication that Israel will opt for this option.

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat

Read the article online here: Gas will flow from the Leviathan gas field to the Palestinian Authority

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