Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Heritage Oil caught in Turkey-Kurd dispute

Calgary-based Heritage Oil Corp. is being caught in the crossfire in the escalating tensions between Turkey and Kurdistan after recently announcing that it had signed a production sharing agreement with the regional Kurdish government.

While oil prices spiked to a record $89 (U.S.) a barrel Wednesday, Heritage shares fell $1.14 (Canadian) – or 1.9 per cent – to $58.96 on the Toronto Exchange, following news that the Turkish parliament had approved military strikes against Kurdish separatists operating from northern Iraq. The shares recovered somewhat, closing the day at $59.74, down 36 cents or 0.6 per cent.

Earlier this month, Heritage announced it had reached agreement with the Kurdistan regional government that would eventually produce 20,000 barrels of oil per day. The company is also planning to build a refinery to process the crude, in a 50-50 joint venture with the Kurdish government.

The price of crude surged past the previous record high in morning trading, rising more than $1 (U.S.) to $89 a barrel on the New York Mercantile Exchange before falling back to $88.35.

Traders pointed to increased tensions in northern Iraq, which could hamper efforts to increase exports from the region.

Turkey's parliament on Wednesday approved plans for its troops to launch attacks inside Iraqi territory, targeting Turkish Kurdish forces who have taken refuge there.

The impact of the geopolitical risk was magnified by concerns that OPEC's 500,000 barrels per day output rise may be too little too late to maintain healthy supplies through the winter, with refiners revving up to meet peak demand.

Saudi Arabia, OPEC's top producer, is set to boost output close to nine million bpd under the group's agreement.

The U.S. Energy Information Administration said Tuesday that the market needed additional OPEC oil.

The Organization of the Petroleum Exporting Countries blames speculators for driving up prices.

“Oil prices are likely to remain high in the absence of a further change in OPEC quota policies or a major global slowdown,” the International Monetary Fund said on Wednesday in its World Economic Outlook.

U.S. crude stocks rose more than expected last week while distillate stocks showed a surprise build, according to a government report released on Wednesday.

globeandmail.com: Heritage Oil caught in Turkey-Kurd dispute

Not much oil at risk from Turkey/Iraq Tension

Only a fraction of global oil supply could be immediately threatened by a Turkish incursion into northern Iraq, but crude prices have surged on concern any conflict may escalate and disrupt the flow from the Middle East.

U.S. crude futures hit a record high of $87.97 a barrel on Tuesday, a day after the Turkish government asked its parliament for permission to launch attacks on Kurdish separatists in northern Iraq.

The effect of the dispute was magnified in oil markets as it came against a backdrop of tightening supply, said Paul Horsnell, head of commodities research at Barclays Capital.

"I think it has been taken as totemic for a general series of potential supply risks," Horsnell said. "We're hardly talking about a large supply stream that is at threat here."

"The price rise is part of a trend that has been going on for quite a while, of tightening balances in the oil market. Inventories are thinning, so geopolitical concern is going to get a different response to say a year ago, when stocks were higher."

Oil prices have been above $80 a barrel for most of the past month amid concern that supply may be strained during peak winter demand.

THREAT

Iraq and neighboring major oil producers Saudi Arabia, Iran and Kuwait between them produce over 17 million bpd, around 20 percent of the world's supply. Any hint of those supplies being affected would send oil spiraling higher.

In contrast, Iraq's Kurdish region produces just a few thousand barrels per day, a tiny fraction of global oil supply of 85 million barrels.

"The threat to the oil market comes from the potential regional fallout of an eventual Turkish attack on northern Iraq and the stability of Iraq itself, not from any isolated incursion", said Valerie Marcel, Dubai-based associate fellow and energy spe******t for London think-tank Chatham House.

"Would there be any permanent claim or permanent incursion? If so, other neighboring countries may want to stake their claims."

Turkey has said its sole target would be militants of the outlawed Kurdistan Workers Party (PKK). PKK attacks on Turkish troops have led to heavy public pressure on Turkey's government to act.

Turkey's large-scale incursions in 1995 and 1997, involving an estimated 35,000 and 50,000 troops respectively, failed to dislodge PKK rebels from the Iraqi mountains.

The government and military have not commented on the troop level of a potential incursion, although many analysts believe if an operation is launched it would be considerably smaller than in the 1990s.

The largest piece of oil infrastructure in the area is a pipeline that travels from Iraq's Kirkuk oilfield, south of the Kurdish region, to Turkey's Mediterranean port of Ceyhan.

The pipeline has pumped around 300,000 bpd since late August, but an outage would be nothing new -- the line has been repeatedly hit by saboteurs further south in Iraq, keeping it out of action for most of the time since the U.S.-led invasion in March 2003.

"Damage to that pipeline would be unlikely to affect price movements significantly," London-based Exclusive Analysis, which assesses political and violent risk, said in comments e-mailed to Reuters.

"The volumes in question are ... not sufficient to affect the global balance of oil demand and supply in any significant way."

Turkey has little reason to do damage to the pipeline, as Turkish refiner Tupras often buys the oil when the pipeline is working. An Iraqi oil official said on Monday that Iraq was in talks with Tupras to establish a long-term supply contract for crude from the pipeline.

Turkey is also the transit route for around 700,000 bpd of oil from Azerbaijan pumped through the Baku-Ceyhan pipeline, but the route is to the northwest of the Turkey-Iraq border.

Some risk to Turkey's domestic energy infrastructure may come from any reprise attacks undertaken by the PKK in Turkey itself.

"We expect the PKK to target critical infrastructure such as the electricity distribution networks in southeastern Turkey," Exclusive Analysis said.

Not much oil at risk from Turkey/Iraq tension | Special Coverage | Reuters

Crude oil rises back above $88 on dollar, Iraq
Prices remain under Wednesday's record $89 level

Crude-oil futures headed higher Thursday, but remained below the previous session's record level, with prices supported by a weaker dollar and concerns over the possibility of disruptions to Iraqi oil production, but pressured by a rise in U.S. crude supplies.

The gains followed Wednesday's news that the Turkish parliament authorized military incursions into northern Iraq to hunt down Kurdish rebels.

Crude for November delivery was at $88.34 a barrel in mid-morning trade on the New York Mercantile Exchange, up 97 cents, after trading as low as $87.10 earlier.

Analysts at Action Economics said that comments from Nigeria's oil minister, who hinted that OPEC may review its production levels, was capping the advance, "though with the dollar at record lows, sources expect downside potential to be limited for now."

Crude oil climbed to a fresh intraday front-month record level of $89 on Wednesday, but then quickly pared gains to close 21 cents lower for that session.

"Once the news broke out [Wednesday] that Turkish lawmakers voted to allow the use of military force against Kurdish rebels in northern Iraq, crude oil [touched] an intraday all-time high of $89 in the front-contract month," said John Person, president of NationalFutures.com.

"This may have been an exhaustion blow-off top" with investors and traders possibly overreacting and with reports indicating that some hedge funds may have been forced out of short positions, he said in e-mailed comments.

"The Middle East has been a hotbed, and the market has priced this in," especially when one looks at the fact that crude oil has risen more than $10 since the low on Oct. 9, he said.

Crude-oil inventories rose last week "about as expected," said Charles Perry, chairman of energy-consulting firm Perry Management. "But the Turkey-Iraq [conflict] got a little hotter with some skirmishes."

A unilateral strike by Turkey against targets in Iraq could shut down the Ceyhan oil pipeline, which runs from the oil fields of Kurdish northern Iraq across southern Turkey to a Mediterranean terminal for loading tankers. See full story

Even so, Perry said the "market is getting less concerned about this situation."

Data analysis

The Energy Department reported Wednesday that crude supplies rose 1.8 million barrels to 321.9 million barrels for the week ended Oct. 12.
Against that backdrop, profit-taking was the order of the day for much of Wednesday. "We finally saw some profit taking ... that I have expected for two days," said Perry.

Also on Wednesday, the Energy Department reported that supplies of motor gasoline rose 2.8 million barrels and distillate inventories climbed 1 million barrels in the latest week.

The increase in gasoline inventory is "a result of weak gasoline demand," said Chris Lafakis, an associate economist at Moody's Economy.com.

"As we have stated numerous times, in an environment where gasoline demand is so weak, most of the rise in crude-oil prices will be absorbed by wholesalers and retailers who are unable to pass through higher costs," he said in a weekly report released Wednesday.

Over the last four weeks, motor gasoline demand has averaged 9.2 million barrels per day, or 0.5% below the same period last year, the Energy Department said in its report.

Meanwhile, refinery utilization fell to 87.3% of capacity for the week ended Oct. 12, from 87.8% a week earlier, the government data showed.

The market is concerned over refinery capacity dropping by 0.5% and "also the fact that winter is not too far behind and heating-oil stockpiles are not exactly busting at the seams," said Kevin Kerr, editor of Global Resources Trader, a newsletter of MarketWatch, the publisher of this report.

From here, Perry expects to see oil prices fall "for a few days" with some "ups, but overall downward" moves. "This of course is provided the situation does not escalate in Turkey/Iraq."

Still, $90 oil is possible in the next two to four weeks out, he said, adding that, either way, "I am sure we will see it this calendar year."
On the other hand, Person said that if the market doesn't see an escalation of violence between Turkey and Iraq, "then odds favor a pullback in the market."

He sees prices "backing down to the low 80s, especially if tempers cool and other nations send in diplomatic delegates to discuss a truce."

Then again, "this market is trading on pins and needles and de****e higher inventories, traders are looking at the longer-term picture -- and that is the fact that the Middle East is, at the moment, unstable," he said.

So "we most likely will see a strong support under the market," he said. "The new support heading into the new year might be $75, with the upside of $100 and perhaps, if tensions escalate, analysts will up their targets and we could see an intraday high closer to $120."

Crude oil rises back above $88 - MarketWatch

Legal row delays hanging of Iraq's "Chemical Ali"

The execution of Saddam Hussein's cousin, widely known as "Chemical Ali", will be delayed while Iraqi officials try to settle a legal dispute over who should sign the order, judicial sources said.

Ali Hassan al-Majeed was convicted in June of planning and directing the Anfal (Spoils of War) military campaign in 1988, in which prosecutors said up to 180,000 Kurds were killed and which the trial court later ruled was an act of genocide.

Prime Minister Nuri al-Maliki's Shi'ite-led government is keen to see Majeed, once one of the most feared men in Iraq, follow Saddam to the gallows as soon as possible.

He was to have been hanged within 30 days of his sentence being upheld by an appeal court on September 4, but the execution was postponed because it would have taken place during the Muslim holy month of Ramadan, which ended last weekend.

Debate continues over whether Iraq's presidency council needs to issue a decree giving the go-ahead for the execution or if Maliki's government can set a date on its own authority.

The council is made up of President Jalal Talabani, a Kurd, Vice-President Adel Abdul-Mahdi, a Shi'ite, and Vice-President Tareq al-Hashemi, a Sunni Arab.

Hashemi is rumoured to have refused to sign the execution order, although he has yet to make a public statement on the matter. At issue is whether a refusal to sign would amount to a veto, hence the efforts to clarify the role of the council.

Maliki's government had formed a seven-member committee, including legal experts and advisers to Talabani and Maliki, to reach a consensus on the issue, a member of the committee told Reuters this week.

"The government has formed a committee upon the orders of the president to look into the mechanism of carrying out death sentences issued by the Iraqi High Tribunal," he said.

The confusion over the precise role of the presidency council became apparent in the days leading up to Saddam Hussein's execution on December 30 for crimes against humanity. His hanging went ahead, but the issue remained unresolved.

A presidency council adviser said the committee would meet this week or next and Majeed would not be executed until it gave its report.

Legal row delays hanging of Iraq's "Chemical Ali" - Yahoo! News UK

Iraq's Kurdish government calls for dialogue with Turkey - Summary

The government of Iraq's Kurdish Autonomous Region on Thursday called for a dialogue with Ankara after the Turkish parliament authorized a possible military incursions into northern Iraq. The government of the Kurdish Autonomous Region urged Turkey in a statement to negotiate a diplomatic solution to end activities of Kurdish insurgents operating from mountainous areas in northern Iraq.

Meanwhile, demonstrations swept Iraq in protest at Turkey's military threats.

Over 5,000 protestors demonstrated in the northern city of Duhuk in the Kurdish Autonomous Region against the Turkish military threat authorized by the vote, the Iraqi news agency Voices of Iraq reported.

Protestors waved signs in Kurdish, Arabic and English that said: "A Turkish assault is not a civilized act and it contradicts international law," and "What is the stance of the UN and the EU towards Turkish threats."

The protest organizer called in a statement for the United Nations and the international community to defend human rights and democracy in the Kurdish region.

The statement urged US troops to defend Iraq's borders and sovereignty.

Meanwhile, members of a Turkomen political party staged a protest in the city of Talafar in the northern province of Nineveh.

Iraq's Turkish-speaking Turkomen minority constitutes the majority of the population of Talafar, 400 kilometres north of Baghdad.

Many in the Turkomen community harbour anti-Kurdish sentiment provoked by a dispute over the multi-ethnic city of Kirkuk.

Earlier, hundreds of Kurds demonstrated in the north-western city of Arbil at Turkey's possible cross-border military operations to flush out its own Kurdish rebels operating from mountainous areas of northern Iraq.

In the predominantly Shiite Arab southern province of Diwanyah, hundreds of demonstrators joined the chorus of condemnation of a possible Turkish offensive.

http://www.earthtimes.org/articles/show/126608.html

Iraq's deputy premier warns of militias infiltrating police

Iraq's Deputy Prime Minister Barham Salih warned against militias and criminals infiltrating the country's security forces, a newspaper said Thursday. "Infiltrations in some security forces are like a cancer in the body of the Iraqi state and we need to remove this tumour," Barham Salih told the Pan-Arab newspaper al-Sharq al-Awsat.

Salih conceded that there has been a great deal of talk and even "conflict" among Iraqi political powers over the problem of security forces being penetrated by "criminals" and "militias."

The minister attributed failure to eradicate criminal influences within Iraqi forces to the security vacuum emerging after the collapse of the former regime and conflicting domestic and foreign interests.

"We are facing financial, security-related and political interest of parties, some of which are part of the country's decision-making circles and others are regional," Salih said.

"The struggle over the security forces is part of the struggle over Iraq's future and the very nature of the country," he said.

http://www.earthtimes.org/articles/show/126549.html

Amedi Civilians demonstrate against the Turkish Threats

Hundreds of Amedi district population today held a demonstration to protest the Turkish threats to launch a cross-border operation into Kurdistan region on pretext of striking PKK stronghold’s.

Demonstrators submitted a protest note to the officials of the district, aiming at raising it to higher related sides and thence to UN representation in Kurdistan region.

PUKmedia :: English - Amedi Civilians demonstrate against the Turkish Threats

Kurdistan Region Presidency: We are not a Party in the War between Turkey and PKK

Kurdistan Region Presidency today, announced a statement on the Turkish parliament's approval of the army overran the Kurdistan Region on pretext of attacking PKK strongholds, confirming that the Kurdistan Region is not a party in the ongoing war between Turkey and the PKK.

The statement said: “We are not with using Iraqi territory to threaten the security of Turkey or any neighboring state, if there were problems then the peaceful solution is the best and most successful solutions and not through the use of the language of threats and blackmail.

“KRG strongly denies the charges against it that support and assistance elements of the Kurdistan Workers Party (PKK) .If the parties decided to seek a diplomatic solution to solve the problem, we are ready to provide all assistance and if they to follow the war, we are not a party to this war and we will not accept that to be pulled to it.” the statement clarified.

"We call once again for pursuing a diplomatic solution and we are ready to exert all efforts in cooperation with the federal government of Iraq to solve all the problems so as to provide security and stability in the region. So we call on the Multi-National Forces, the European Union and the United Nations to play their role to curb increasing violence in the area and to return to dialogue and the peaceful resolution of all problems.” The statement concluded.

PUKmedia :: English - Kurdistan Region Presidency: We are not a Party in the War between Turkey and PKK

Lower demand for dollar, exchange rate stable for sixth session in row

Baghdad, Oct 18, (VOI) - Demand for the dollar was down in the Iraqi Central Bank’s auction on Thursday, reaching $81.945 million compared to $117.140 million on Wednesday.

In its daily statement, the bank said it had covered all bids, including $14.655 million in cash and $67.290 in foreign transfers, at an exchange rate of 1,232 dinars per dollar, the same for the sixth consecutive day.
None of the 14 banks that participated in today's session offered to sell the dollar.

In statements to the independent news agency Voices of Iraq (VOI), Ali al-Yasseri, a trader, said that the demand for the dollar had not decreased below the general rate. It actually remains above it and the decrease is significant when compared to the last session's demand which witnessed a dramatic increase in the demand for the dollar resulting from the long period of closure for the Eid al-Fitr (the Lesser Bairam).

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

Aswat Aliraq

Zebari asks PKK to leave Iraq

Iraqi FM, Hoshiyar Zebary today asked the PKK elements to leave Iraqi territory as soon as possible, expressing the worry of the Iraqi government toward the derision of the Turkish parliament to authorize the Turkish army to conduct a cross-border operation into Iraqi territory for pursuing PKKK elements.

Zebari indicated during statements to reporters that the decision of the Turkish parliament will not be in service of bilateral relations between Iraq and Turkey and it will allow the Turkish army to offend the sovereignty of another state.

PUKmedia :: English - Zebari asks PKK to leave Iraq