Construction in Libya

March 7th, 2010

source: http://www.cnplus.co.uk/5200690.article

Libya is trying its best to shake off the past and move forward. In the last few years the oil-rich country has abandoned its nuclear weapons programme, decided to put huge investment into infrastructure and stated its intention to develop better relations with the West. And UK companies are setting up shop: Marks and Spencer opened its first store in Africa in Tripoli last year and BhS opened a store there on the 18 April.

Omran Abusahmin is a senior trade and investment officer at the British Embassy in Tripoli. He says: “After the lifting of UN sanctions it has been moving from the extreme left to the middle – it is a slow process but it is being done in a wise way. Libya is very open to European companies.”

It has a GDP of £38 billion and no external debt – and it has strong aspirations: it wants to emulate Dubai’s growth in terms of tourism and development (although before the recession).

But with no railways at all, poorly maintained roads and a housing shortage, it will need to develop rapidly: it is spending at least £46 billion over the next four years, helping to make construction one of the fastest growing sectors in the country.

Almost all projects have some government involvement and private developments only go up to about the £3 million mark.

Last year Italy made the unprecedented move of giving £3.4 billion to Libya in compensation for its colonial rule of the country. Most of this will be spent on infrastructure projects over the next 25 years.

The country is also viewed as the most attractive Middle Eastern market for construction firms outside the GCC (which is UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman), according to the Arabian World Construction Summit and Construction News research.

The country is looking to increase its foreign investment and the UK is the third source of FDI (Foreign Direct Investment), at £540 million.
Rail and roads

Historically, Libya was part of an ancient trade route through northern Africa to Europe. But its roads are now poor and driving is hazardous. Business visitors tend to fly between cities rather than driving.

The Government is to spend £9.4 billion on infrastructure by 2013. This includes 13,000km of roads and the 1,000km southern rail line linking Sirte with Sebha in the south. China Railway Construction Corp, is building lines from Al Khoms to Sirte and Sebha to Misurata, worth £1.7 billion. Russian Railways is to construct the £2.1 billion line from Sebha to Benghazi. There is no formal public transport system though there is talk of a metro for Tripoli.

UK consultant WSP is working in joint venture with the Libyan Housing and Infrastructure Board and is in charge of creating Tripoli’s masterplan and some road upgrades.
Airports

Libya has 13 airports and all will be modernised all, including a spend of $1.5billion on the one at Tripoli which was built in 1978 and has two runways, one of which has been closed for 10 years. A new £322 million airport is being constructed at Benghazi which will handle 5 million passengers a year.

There is also the £170 million contract to upgrade Sebha airport and the upgrade to Serte airport which Mott MacDonald is working on.
Ports

Port infrastructure is underdeveloped, in spite of Libya’s position on the Mediterranean coast. There are four ports including one at Misurata which is going to be upgraded by UK firm Beckett Rankine which is building 2000m of deepwater berths.
Energy

The oil industry dominates the economy but only about 25 per cent of the reserves have been exploited. Production in state-owned oil fields is actually declining at about 8 per cent a year but recent discoveries by Repsol and ConocoPhillips will add production. The National Oil Corporation is considering allowing foreign companies to bid for field development opportunities.

Thirty power stations are largely oil fuelled but the demand for electricity is rising. In 2005 £2.4 billion was invested to add 5000 mw to the grid by 2010.

Libya also wants to use more nuclear energy and it now has the cash to do so, since stopping its nuclear weapons programme in 2003. Various countries have signed agreements to co-operate on nuclear energy

Renewables are very few but the Government wants to develop wind and solar power to provide energy for remote places. The Renewable Energy Authority of Libya has been given £321 million over the next four years for research and planning.
Housing

The country’s population is set to almost double to 10 million by 2025. The government is planning to invest £8.7 billion on 420,000 new homes by 2013 – this is added to its pledge in 2006 to invest £27 billion in housing and infrastructure. Residential building is generally left to local developers while larger scale projects can be given to foreigners with more expertise – but as with other projects the government will have some involvement in funding or management of nearly all schemes.

Projects include Malaysian contractor Ranhill’s £740 million township near Tripoli made up of 50,000 homes, 15 per cent of which is government-funded.
Property development

The government is the biggest client but this is set to reduce to about 35/65 public/private investment. Retail is underdeveloped but government initiatives in Tripoli aim to expand this from 28,000 sq m to 100,000 sq m.

Hotel rooms are set to increase from 13,600 to 50,000 by 2025. The United Libyan Tourist Investment Company is bankrolling several projects including the £1.6 billion Northern Alghirarn Complex which is a tourist and commercial scheme in Tripoli.
Materials

The country may only be able to provide 60 per cent to 80 per cent of cement and iron needed for planned projects, and costs have shot up. Production is under the Arabian Cement Company and the Libyan Cement Company and facilities are in Benghazi, Derna, Homs and Khamis.
Payment

Contractors should make sure they include enough budget for constructing in sand – much of the commercial development takes place on the coast around Tripoli. While payment of up to 30 per cent is made in advance on public projects, upfront payment is not often offered.
Water

Water is very scarce which has given rise to the £20 billion, 25-year Great Man Made River project which is ongoing. Available water is predicted to drop to 330 cu metres by 2025 – down from over 4000 cu metres after the Italians left in the 1950s. See www.gmmra.org/en/ for more details.

Libya in the news :

February 28th, 2010

(source: http://www.libyaonline.com/news/details.php?id=12403)

Libya: Kadhafi receives African leaders. 2010-02-27

The Libyan leader Mouammar Kadhafi on Friday received the leaders of several African countries who called on him in Benghazi after taking part Thursday’s festivities in the city marking the celebration of the birth of the Prophet Mohamed.

The Libyan leader met the Presidents of Guinea-Bissau, Malam Bacai, Central African Republic, François Bozizé and Sao Tomé, Fradique de Menzez and the Prime Ministers of Lesotho, Pakilita Mosisisili and of Somalia, Omar AbdelRachid, an official Libyan source said.

The source added that the meetings made it possible to review the process of the African Union (AU) and issues relating to security and peace on the continent.

The Somali official hailed the efforts of Kadhafi and his initiatives to restore peace and stability in Somalia.

The Somali Prime Minister also briefed the Libyan leader on the latest developments in his country.

Oil refineries on wikipedia

February 27th, 2010

Raw or unprocessed crude oil is not generally useful. Although “light, sweet” (low viscosity, low sulfur) crude oil has been used directly as a burner fuel for steam vessel propulsion, the lighter elements form explosive vapors in the fuel tanks and are therefore hazardous, especially in warships. Instead, the hundreds of different hydrocarbon molecules in crude oil are separated in a refinery into components which can be used as fuels, lubricants, and as feedstock in petrochemical processes that manufacture such products as plastics, detergents, solvents, elastomers and fibers such as nylon and polyesters.

Petroleum fossil fuels are burned in internal combustion engines to provide power for ships, automobiles, aircraft engines, lawn mowers, chainsaws, and other machines. Different boiling points allow the hydrocarbons to be separated by distillation. Since the lighter liquid products are in great demand for use in internal combustion engines, a modern refinery will convert heavy hydrocarbons and lighter gaseous elements into these higher value products.
The oil refinery in Haifa, Israel is capable of processing about 9 million tons (66 million barrels) of crude oil a year. Its two cooling towers are landmarks of the city’s skyline.

Oil can be used in a variety of ways because it contains hydrocarbons of varying molecular masses, forms and lengths such as paraffins, aromatics, naphthenes (or cycloalkanes), alkenes, dienes, and alkynes. While the molecules in crude oil include different atoms such as sulfur and nitrogen, the hydrocarbons are the most common form of molecules, which are molecules of varying lengths and complexity made of hydrogen and carbon atoms, and a small number of oxygen atoms. The differences in the structure of these molecules account for their varying physical and chemical properties, and it is this variety that makes crude oil useful in a broad range of applications.

Once separated and purified of any contaminants and impurities, the fuel or lubricant can be sold without further processing. Smaller molecules such as isobutane and propylene or butylenes can be recombined to meet specific octane requirements by processes such as alkylation, or less commonly, dimerization. Octane grade of gasoline can also be improved by catalytic reforming, which involves removing hydrogen from hydrocarbons producing compounds with higher octane ratings such as aromatics. Intermediate products such as gasoils can even be reprocessed to break a heavy, long-chained oil into a lighter short-chained one, by various forms of cracking such as fluid catalytic cracking, thermal cracking, and hydrocracking. The final step in gasoline production is the blending of fuels with different octane ratings, vapor pressures, and other properties to meet product specifications.

Oil refineries are large scale plants, processing about a hundred thousand to several hundred thousand barrels of crude oil a day. Because of the high capacity, many of the units operate continuously, as opposed to processing in batches, at steady state or nearly steady state for months to years. The high capacity also makes process optimization and advanced process control very desirable.

Copenhagen climate change summit: The issues

February 27th, 2010

Copenhagen climate change summit: The issues

Deforestation Continues In Sumatra

Finding an answer to deforestation is one of the main hopes for the summit. Photograph: Dimas Ardian/Getty Images

What is the Copenhagen climate change summit?

The UN meeting is the deadline for thrashing out a successor to the Kyoto protocol, with the aim of preventing dangerous global warming. It will run for two weeks from 7 December and is the latest in a series that trace their origins to the 1992 Earth summit in Rio.

What’s the bottom line?

Climate scientists are convinced the world must stop the growth in greenhouse gas emissions and start making them fall very soon. To have a chance of keeping warming under the dangerous 2C mark, cuts of 25%-40% relative to 1990 levels are needed, rising to 80%-95% by 2050. So far, the offers on the table are way below these targets.

Who should make the cuts?

That is a crunch issue. The industrialised nations such as the US, UK, Japan and others have emitted by far the most carbon and still emit vast amounts per person, so have a responsibility to make the deep cuts scientists demand. But emissions from emerging economies such as China and India are surging, and any global limit on emissions needs curbs on those nations, too. Yet, per person, those nations have small carbon footprints and millions of people in deep poverty – 400 million Indians live without electricity, for example. So China, India and others can argue they need to be allowed to continue to pollute for a while as they improve their citizens’ lives. Balancing the responsibilities for cuts is a key part of the negotiations.

Who is going to pay?

The other crunch issue. There is an argument that, in the long term, a low-carbon economy will be cheaper than a fossil-fuelled one, and represents a fantastic investment. But time is short and there will be costs in the near term. All agree that the poorest nations need urgent help. Citizens in places from Haiti to Sudan to Bangladesh have done virtually nothing to pollute the atmosphere, but are bearing the worst impacts of floods and droughts. Richer nations will need to pay billions from now – some call it reparations for damage to the Earth’s climate. It will also cost a lot to build the global clean energy infrastructure essential to staunch the carbon from coal and gas power stations, responsible for a large part of global emissions. For the fast emerging economies, such as India, the ideal is to skip the high-carbon growth phase entirely and go straight to renewables and perhaps nuclear power. Again, rich nations will be expected to pick up the tab. for this -– iIf they don’t, there is little incentive to stop building coal-fired plants. Gordon Brown and the EU have suggested $100bn a year from 2020 would cover the global climate change bill. But estimates from development groups reach up to four times that amount. Finding a figure that all nations accept is the second key part of the negotiations.

What about carbon trading?

In theory, buying permits to pollute from those who can cut their emissions most cheaply is attractive – maximum bang per buck and a flow of cash to pay for investments. However, from one perspective, this kind of offsetting simply looks like paying poorer people to clear up the mess left by the rich, who can then continue to pollute. Also, if carbon trading is to cut real emissions, the cap set on the market has to be tight and, to date, political imperatives have overridden those of the planet. Nonetheless, carbon trading will remain at the heart of any treaty sealed in Copenhagen, as it was in the Kyoto treaty.

Is stopping deforestation an easier way to cut emission?

About 40% of all the carbon emitted by human activity has come from razing forests. Stopping deforestation is, in principle, cheap and simple: do not cut them down. But paying people – via carbon credits – not to fell trees soon becomes complex. Who really owns the trees? Were they going to be chopped down anyway? And how do you verify what actually happens? Finding a solution to these issues is one of the strongest hopes for the Copenhagen summit.

What are the prospects for a Copenhagen deal?

Negotiations held in September in Barcelona were grim: all now acknowledge that no legal deal is possible in Copenhagen. A miracle is needed for a triumph. President Barack Obama is the one who could deliver it, but it is very unlikely. Most likely is a hopeful fudge in which all parties remain on speaking terms and seal the deal in 2010. A total collapse would leave 20 years’ of negotiations in tatters and the world unprotected against the ravages of global warming. It is also unlikely, but not as unlikely as a miracle.

HOUSTON, July 1

February 27th, 2010

HOUSTON, July 1 — Energy prices retreated June 30, giving back much of the gain from the previous session with crude again dropping below $70/bbl “on a stronger dollar and in response to a lower than expected consumer confidence number indicating that demand for gasoline may not pick up in the coming months,” said analysts at Pritchard Capital Partners LLC, New Orleans.

Nevertheless, crude prices escalated 41% through the second quarter that ended June 30 in the biggest 3-month rally since the third quarter of 1990 when Iraq invaded Kuwait. Crude has increased 57% over the first half of 2009, including a 5.4% increase in June, the fifth consecutive monthly gain.

On the other hand, the Conference Board said US consumer confidence fell to 49.3 in June down from an expected 55.5 and below 54.8 in May. In other news, the Case-Shiller home price index released June 30 showed US home prices in 20 selected cities fell 0.6% fell in April, with declines in 11 cities, compared with a 2.2% decline in March. Officials acknowledged the overall pace of decline has slowed.

More importantly, the US dollar strengthened June 30 against most rival currencies, reversing a small decline in earlier trading.

Crude was climbing in early trading July 1, but natural gas continued to decline due to forecasts for milder weather and data showing US gas production down 200 MMcfd to 63.3 bcfd in April, analysts reported. Such a small decline “should not be a huge surprise as our industry checks indicate that a larger decline will occur in May, 600 MMcfd, and the production decline will increase into the yearend as the combination of the rig count decline and shut-ins cut into production; by the end of 2009 production should decline 4-6 bcfd,” said Pritchard Capital Partners.

US inventories
The Energy Information Administration said July 1 commercial US crude inventories fell 3.7 million bbl to 350.2 million bbl in the week ended June 26. That exceeded Wall Street expectations of a 2 million bbl draw but was less than the whopping 5.9 million bbl decline projected by the American Petroleum Institute. Still, US crude stocks remain above average for this time of year. Just a week ahead of the peak demand period over the July 4 Independence Day holiday in the US, total gasoline inventories jumped by 2.3 million bbl to 211.2 million bbl with increases in both finished gasoline inventories and gasoline blending components. That was a little above the 2 million bbl build expected by Wall Street analysts. Distillate fuel inventories increased by 2.9 million bbl to 155 million bbl, also above average for this time period. Wall Street expected a 1.5 million bbl increase.

Imports of crude into the US inched up 79,000 b/d to 9.4 million b/d. In the 4 weeks through June 26 US oil imports averaged 9.2 million b/d, 790,000 b/d below the same 4-week period last year. Gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 979,000b/d. Distillate fuel imports averaged 165,000 b/d.

The input of crude into US refineries during the latest week dipped by 39,000 b/d to 15 million b/d with units operating at 87% of capacity. Gasoline production increased to 9.2 million b/d while distillate fuel production was up to 4.2 million b/d.

“The low crude oil import number reported in the weekly reports and the associated crude stock draws that go with it is evidence that there is a supply story that has been too greatly discounted by the demand story,” said Olivier Jakob at Petromatrix, Zug, Switzerland. “US crude oil imports from the Organization of Petroleum Exporting Countries were 1.3 million b/d lower than a year ago in April and since the US refineries runs are only about 600,000 b/d lower than a year ago, the difference has to be met by higher imports from other non-OPEC sources or by drawing crude oil stocks (offshore and onshore). OPEC supplies are currently too low for the level of US refinery runs, and this even before the recent Nigerian supply disruptions have been accounted for. With a narrowing contango, refiners can now run down more of their crude inventories; or given that demand for products is not yet particularly strong, to run less, but then the stock draws will convert from draws in crude to draws in products. One way or another, on a global hydrocarbon basis the OPEC supply cuts are starting to be more visible and the risk is increasing that we have past the peaks in global stocks.”

Jacques H. Rousseau, an analyst at Soleil-Back Bay Research, noted refined product inventories (gasoline plus distillate plus jet fuel) increased 5.4 million bbl (1.3%) last week due primarily to “very weak demand.” He said, “Gasoline consumption was 3% below year-ago levels, while distillate demand of 3.26 million b/d was the lowest weekly total since July 2003. Gasoline demand is likely to improve next week due to July 4th holiday driving, however, weak demand remains a major concern for refiners.”

EIA regional data showed mixed results for the East Coast, “which is benefiting from lower gasoline imports (second quarter 2009 is 15% lower than second quarter 2008) but is being hurt by rising distillate inventories, which are now almost 50% above the 5-year average for this calendar week,” Rousseau said. “Gasoline inventories on the West Coast jumped 3% last week due to higher production and increased imports.”

Data in the International Energy Agency’s recent Medium-Term Oil Market Report “was bearish for refiners, in our view, since the IEA expects refinery capacity additions to exceed demand growth significantly over the next 6 years, keeping downward pressure on refining margins,” said Rousseau. “As with past cycles, excess refining capacity is likely to be removed from the system over time via refinery closures (due to weak cash flows and increasingly stringent environmental regulations) and improved demand (the IEA expects global gross domestic product to average 4.6% from 2011-2014), in our view. Although we do not foresee a substantial improvement in refining sector fundamentals in the near term, we believe the weak sector conditions are already priced into the stocks, in most cases,” he said.

Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC, said in the bank’s June 30 World Outlook publication, “The financial crisis has introduced some compelling reasons for the increasing appeal of commodities over the medium term. First, aggressive fiscal action has included a significant increase in infrastructure spending, which has boosted commodity demand. Second the tightening in credit conditions over the past 2 years has also led to a significant reduction in capital expenditure for mining and oil exploration companies. We estimate that in the absence of new investment and given depletion rates for existing oil wells the global oil production base will fall from 86 million b/d to 75 million b/d by 2015. We believe this has only enhanced the upside price risks for crude oil heading into the next decade. Finally the expansion of the [US Federal Reserve’s] balance sheet and the surge in government borrowing has raised concerns about higher inflation ahead. We believe this has enhanced the appeal of commodities as a distinct asset class given their inflation protection properties.”

Global GDP growth for 2009 was revised by the bank to –1.5% from an earlier range of –1.7 to –1.9%. “The upward revision is due entirely to better prospects for industrial countries,” said Sieminski. “Most of the upward revision results from a stronger outlook for investment and export growth, reflecting greater confidence in the effectiveness of authorities’ efforts to restore stability in the financial sector.”

Coincidentally, the bank’s commodities team has marked-to-market DB’s oil price deck to reflect current prices “well above our previous forecast,” said Sieminski. He noted oil averaged “just under $60/bbl” in the second quarter, ending the quarter close to recent highs of $72/bbl. “This pushes an upgrade to third and fourth quarters to $75/bbl” from prior forecasts of $50/bbl. Sieminski said, “Our 2009 oil forecast now rounds up to $64/bbl, revised from $47/bbl, primarily reflecting US dollar strength and funds flows considerations, while our 2009 US natural gas forecast eases back to $4.25 from $4.50/MMbtu owing to protracted supply and demand imbalances that have also caused us to shave $1/MMbtu in 2010, bringing that forecast down to $6/MMbtu. We retain the view that 2010 oil prices will average $55/bbl, giving way to better prospects in 2011.”

Energy prices
The August contract for benchmark US light, sweet crudes traded at $68.90-73.38/bbl June 30 on the New York Mercantile Exchange before closing at $69.89/bbl, down $1.60 for the day. The September contract lost $1.54 to $70.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.60 to $69.89/bbl. Heating oil for July delivery dropped 6.55¢ to $1.72/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month declined 3.86¢ to $1.90/gal.

The August natural gas contract continued to fall, down 10.9¢ to $3.84/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 16.5¢ to $3.71/MMbtu, wiping out its 6¢ gain from the previous session.

In London, the August IPE contract for North Sea Brent crude retreated by $1.69 to $69.30/bbl. The July gas oil contract lost $12.75 to $557/tonne.

The average price for OPEC’s basket of 12 reference crudes increased 40¢ to $69.83/bbl on June 30.

People of the World please look upon Haiti and help them now.

February 27th, 2010

People of the World please look upon Haiti and help them now.

2 comments »

Started by Diana Elena Antonescu

This from the Canadian Press. See para 3.

“Total aid committed from Canadian government: $60 million to UN appeal; $40 million in matching funds to registered humanitarian organizations; $11.5 million to six Canadian non-governmental organizations; $8.5 million to International Federation of the Red Cross and Red Crescent Societies; $5 million for food, tents, blankets, water, sanitation and protection; $1 million to Red Cross field hospital.

Total contributions from Canadian public: $40 million to date, which the government will match.

Total aid committed from other governments: $330 million from EU and $92 million from member states. $33.5 million from UK. France to forgive Haiti’s $40-million debt and contribute $10 million to the UN relief fund. Norway donating about $18.1 million.

Other aid: UN food World Food Programme reaching about 97,000 people daily, but says it needs to reach 2 million per day.”

Source: http://bit.ly/7GDxNf

Drying of Lake Balkhash threatens southeast Kazakhstan

February 27th, 2010

(bne) – Kazakhstan is already the site of one of the world’s worst environmental catastrophes, the drying of the Aral Sea. Now there are fears of a similar disaster at Lake Balkhash in the southeast of the country.

Increased water use in both Kazakhstan and China has reduced inflows to Lake Balkhash. The lake is mainly fed by the Ili river that originates in China’s Xinjiang region, but attempts to reach an agreement on water use between the two countries have so far failed.

Xinjiang’s growing population has increased its demand for water for industry and irrigation, raising concerns that the supply of water to Lake Balkhash could be drastically reduced. This would affect not only the population around the lake, but the entire Ili-Balkhash river basin where around one fifth of Kazakhstan’s population lives.

In the small industrial town of Balkhash, on the lake’s northern shore, people are aware of the problems. “We are worried that our lake will be destroyed, like the Aral Sea, if China keeps increasing the amount of water it takes from the Ili,” says the curator of the local museum. “It’s not just because of the fishing industry. We love the lake and the nature around it.”

Bathers unite

In the sub-zero December temperatures there are few cars on Balkhash’s wide streets, and pedestrians go quickly about their business huddled in padded jackets and fur hats. The lake is deserted except for a few dark figures fishing through holes in the ice. The town’s main employer is the copper-smelting complex owned by Kazakhmys. Its tall chimneys, billowing smoke, dwarf the brightly painted apartment blocks and Russian-style cottages clustered around the lakeshore, and colour the snow a grimy grey.

Since Soviet times Balkhash has been a popular destination for beach holidays and children’s summer camps. The town’s life revolves around the lake, and many people find seasonal work in the tourism and fishing sectors. “In winter there’s nothing to do and nowhere to go – the nearest city is 400 kilometres away,” says Nastya, a beautician. “But in summer everyone is out by the lake.”

The area wasn’t immune to the global economic crisis, even though Kazakhmys tried to avoid laying people off. “Looking for work?” ask several billboards in the town centre, giving details of a local job fair. Recently, a citizen’s committee got together with the main food producers in the town and persuaded them to make food available more cheaply. Regular food markets are now held near the centre, where meat, potatoes and other products are sold at reduced prices.

As well as Balkhash and other lakeside resorts, desertification would affect most of southeast Kazakhstan. Long and shallow, the lake stretches 600 km from east to west. The western part, which is fed by the Ili, is freshwater, while the eastern side is saline. If the inflow from the Ili falls significantly, the lake would split into two, with the western side eventually drying up. “If outtake from the river increases by 10-15%, the question of Balkhash will be solved like the Aral Sea,” warned Mukhtar Tultabayev, an official at Kazakhstan’s Ministry of Environment Protection, at a workshop on the issue organised by the EU and United Nations Development Programme (UNDP).

Another delegate, Iskandar Mirkhashimov of the Regional Environmental Centre for Central Asia (Carec), said: “The interests of the consumer killed the fourth largest lake in the world, the Aral Sea, and are now going to kill the sixteenth largest… There are a lot of ecological problems that could become social problems. The negative scenario is that we will see a fall in water resources in the region leading to desertification. This will cause agricultural production to fall, reducing food safety. It will also lead to an increase in natural catastrophes and a decline in the health of the population.”

Three’s a crowd

Solving the problems of the Ili Balkhash river basin and preventing them from descending into an ecological disaster won’t be easy, especially since the river basin is spread across three countries, China, Kazakhstan and Kyrgyzstan.

Officials from Kazakh NGOs, government agencies and international organisations are aware of the problem. The EU and the UNDP have recently launched a new project, Promoting integrated water resources management and fostering trans-boundary dialogue in Central Asia. This aims to address not just problems in the Ili-Balkhash area, but also to try to deal with other water resource issues elsewhere in the region.

According to Natalia Alexeeva of the UNDP, the main focus of the Ili-Balkhash project is on cross-border dialogue and increasing cooperation between Kazakhstan and China, where 70% of the lake’s waters originate. A draft agreement on water use in the Ili-Balkhash basin was drawn up at a conference in 2007 and sent to China, but so far there has been no response. China is believed to be focusing on domestic environmental issues, and has less interest in those mainly affecting its neighbours.

Kazakhstan also diverts water from the Ili, mainly to irrigate rice paddies. The government may start charging for this water, which, it is hoped, will either force farmers to use water less wastefully, or to switch from rice to a less thirsty crop. However, settlements along the river are now dependent on the crop, with people employed not just in the fields but in rice processing plants.

Kazakhstan has had some success in rescuing the northern part of the Aral Sea. Now it needs to address an emerging disaster at Lake Balkhash, which also hinges on the difficult issue of cross-border water use. As Kazakhstan and the rest of Central Asia develop economically, and their populations grow, demand for water will only become more urgent, and compromises will need to be found.

Kazakhstan Wants Stake in Karachaganak Field to Get More Profit

February 27th, 2010

Kazakhstan wants a stake in the BG Group Plc-led Karachaganak field to increase the country’s profit from the venture, the state oil company said.

“At the time of the financial crisis, we need projects that are cash-generating,” Kairgeldy Kabyldin, the head of the Kazakh state energy producer KazMunaiGaz National Co., said in an interview in Abu Dhabi today. The company will try to reach an agreement this year, Kabyldin said, declining to comment on the size of the stake.

The Karachaganak venture plans to spend about $14.5 billion on the expansion, called the third phase, KazMunaiGaz said last month. BG Group Plc and Eni SpA are the largest shareholders in Karachaganak Petroleum, each with a 32.5 percent stake, while Chevron Corp. has a 20 percent interest and OAO Lukoil 15 percent. The partners postponed a decision on the third phase of Karachaganak’s development last year until 2010 in anticipation of lower drilling costs.

“We will try to bring costs down, which would let us use investments in a more efficient way,” Kabyldin said today, without elaborating on what he would consider as an optimal budget for the third phase. Kabyldin said he expects a decision on the third phase this year.

BG and its partners are in talks to sell a stake in Karachaganak to the state to resolve a dispute over export duties, two people familiar with the matter told Bloomberg News in December. The government may buy a 10 percent interest in the company for about $1 billion, one of the people said.

Karachaganak Petroleum has sought to recover more than $1 billion in export duties from the state, Energy Minister Sauat Mynbayev said on Sept. 22. Kazakhstan, holder of 3.2 percent of the world’s proven reserves, imposed export duties in May 2008 as it sought a higher share of the nation’s oil wealth amid record prices.

Kazakh oil fund to reach $90 billion in 2020

February 27th, 2010

By SRI ⋅ February 2, 2010 ⋅ Email This Post Email This Post ⋅ Print This Post Print This Post ⋅ Post a comment

(SRI) – Kazakhstan plans to increase the assets in its sovereign fund to $90 billion by 2020 from current $24.4 billion while allocating $8 billion a year from it on industrial development, President Nursultan Nazarbayev said on Friday.

The National Fund, modeled after Norway’s Government Petroleum Fund, accumulates excess tax revenues from oil and gas and other extractive industries. It has been created as a means to limit excess money supply as well as a rainy-day fund. Last year, the government had drawn heavily on the fund using it to finance a large chunk of its $20 billion stimulus package.

“Starting from this year, the [annual] transfer [from the fund] into the budget will be fixed at the absolute amount of $8 billion. This transfer should first of all be used for industrial development purposes,” Nazarbayev said in an annual address to the nation. “”National Fund assets should increase to $90 billion by 2020 which would make up at least 30 percent of gross domestic product.”

Nazarbayev also said budget deficit excluding oil revenues must be cut to 3 percent by 2020 from 11 percent seen in 2009 and 10.3 percent forecast this year.

Kazakhstan has benefited from the high oil prices in the last decade, as its economy grew by an average of 10 percent from 2000-2007. Even in 2009, as other former Soviet countries saw their economies shrink by double digits, Kazakhstan recorded a modest growth.

Moreover, Kazakhstan has begun to asset itself as a major energy player in its own right and increased its role in the country’s oil sector dominated by global majors.

“Thanks to the fund, not only did we implement anti-crisis measures, but we also returned to the state key assets we had had to sell in hard times,” Nazarbayev said.

Kazakhstan has increased its stake in the Kashagan project, the country’s largest and most high-profile project, in 2008 and has recently sought to buy a stake in the Karachaganak project, the only major development without the participation of the Kazakh national oil company KazMunaiGas.

UPDATE 2-Libyan govt plans 32 pct budget spending increase

February 27th, 2010

TRIPOLI, Feb 10 (Reuters) – Oil producer Libya plans to increase budget spending by 32 percent to a record 58 billion dinars ($46.6 billion) this year, a government spokesman said on Wednesday.

The government did not give a reason for the increase but some other energy exporting countries have been ramping up public spending to try to prevent the fall in world oil and gas prices from curbing economic growth.

Government spokesman Mohamed Bayou said the spending figure was contained in a 2010 budget law being prepared by the General People’s Committee, as the government is known. Last year’s budget spending was 44 billion dinars.

Bayou said the government in Libya, home to Africa’s biggest proven oil reserves, continued to subsidise some consumer goods and that it was committed to continuing investment in infrastructure and public services.

“The budget for this year will be about 58 billion Libyan dinars,” Bayou told Reuters after a session of the General People’s Committee. “This is the biggest budget.”

He also said the government would be spending 82 billion dinars ($65.86 billion) of budget funds over the next three years on development and infrastructure projects.

CASH PILE

Libya has room to manoeuvre on spending because it built up substantial reserves during several years of high oil prices.

Asked about the increase in budget spending, Sami Zaptia, an analyst with the Know Libya consultancy, said: “This is quite a big jump but really Libya has a lot of savings. It’s sitting on a pile of cash.”

He said the recovery of the oil price in the past few weeks to about $70 a barrel had reassured the government. “Money is coming in therefore we can afford to put our foot down and raise spending,” he told Reuters.

“We need to finish ring roads, housing, the airport, to push ahead with the plan to have more tourists, be a hub for north-south travel and diversify away from oil.”

Libya’s gross domestic product (GDP) grew 3.37 percent in 2008 but it fell back to 1.75 percent last year, according to International Monetary Fund data. The fund forecasts 5.2 percent GDP growth in 2010.

Libya’s government is in session this week to discuss implementation of decisions adopted earlier this year by the General People’s Congress, or parliament.

The spokesman said the government was also preparing to issue laws, approved by parliament, on encouraging investment and organising economic activity, though he did not give specifics about what the legislation would contain.

The laws “will set out a clear, appropriate legislative framework for the diversification of the Libyan economy,” said Bayou. “The target is to achieve economic stability in Libya.”

Libya, which has been led since 1969 by Muammar Gaddafi, has been trying to reduce its dependence on oil and gas exports. As part of that effort it has taken steps to open up its economy to foreign investment outside the energy sector.