However, in return of this spine in the President's green agenda, the oil and gas industry will have to pay. Mentioning the record high national deficit, the President indicated that energy companies will pay higher taxes.
Wednesday, January 27, 2010
Drill Baby Drill But Pay Taxes !
President Barack Obama in his State of the Union's speech tonight announced a sensitive energy measure: opening new areas to oil and gas development. This is an indicator of new support for domestic oil and gas production. The Bush administration and Congress allowed long-standing moratoria that prevented drilling off the US Atlantic and Pacific coasts to expire last year. The eastern Gulf of Mexico which is currently under a moratorium until 2022, is estimated to contain at least 3.9 billion barrels of recoverable oil and 21.5 trillion cubic feet of gas.
Saturday, January 9, 2010
Could Total have anticipated better geopolitical risks in Yemen?
The Total-led 6.7 million tons Yemen LNG (YLNG) liquefaction project has started commercial operations at a wrong timing. Media and policy makers have shed a new light on Yemen decades-long security problems following the claimed involvement of Yemen-based Al-Qaeda in an alleged attempt to blow up a US airliner on Dec. 25. Terrorist activities, tribal rivalry and piracy in the Gulf of Eden are nothing new for Yemen, but they are posing an extreme geopolitical risk to the $4.8 billion YLNG scheme, the country's biggest-ever industrial investment.
Early January, the Mayor of Boston announced that he would block imports of YLNG cargoes into GDF Suez's Everett regasification terminal located in the Boston harbor. He considers that residential areas are too close from the port and LNG tankers constitute a major threat.
YLNG sent its first cargo to Korea in November. Since then most of the deliveries due to come to Europe or the US have been diverted to Asia, notably South Korea and China where the market offers better prices but with a global glut of LNG capacities the US market may be needed to absorb all the Yemeni volumes once a second train starts up later this year.Could Total have anticipated better this geopolitical risk?
While plans for a liquefaction plant were first mooted in the 1990s, it took more than a decade for Total to convince investors, lenders, and long-term buyers that Yemen was a safe environment for investment. The French oil and gas giant surely thought it was worth the risk, while Exxon Mobil withdraw from the project in the late 1990s, partly because of lack of progress and partly because Yemen was not central to its Mideast strategy - but maybe the company also believed it was a too risky investment given the unknown political risks.Could Yemen LNG become a Nigeria?
As in Nigeria -- where LNG production has been routinely shut down -- YLNG may find itself having to declare force majeure if its liquefaction plant or LNG vessels become the target of attacks by domestic insurgents or pirates.
YLNG has long-term contracts to sell 2.55 million tons/yr to GDF Suez and 2 million tons/yr each to Korea Gas (Kogas) and Total itself.
Early January, the Mayor of Boston announced that he would block imports of YLNG cargoes into GDF Suez's Everett regasification terminal located in the Boston harbor. He considers that residential areas are too close from the port and LNG tankers constitute a major threat.
YLNG sent its first cargo to Korea in November. Since then most of the deliveries due to come to Europe or the US have been diverted to Asia, notably South Korea and China where the market offers better prices but with a global glut of LNG capacities the US market may be needed to absorb all the Yemeni volumes once a second train starts up later this year.Could Total have anticipated better this geopolitical risk?
While plans for a liquefaction plant were first mooted in the 1990s, it took more than a decade for Total to convince investors, lenders, and long-term buyers that Yemen was a safe environment for investment. The French oil and gas giant surely thought it was worth the risk, while Exxon Mobil withdraw from the project in the late 1990s, partly because of lack of progress and partly because Yemen was not central to its Mideast strategy - but maybe the company also believed it was a too risky investment given the unknown political risks.Could Yemen LNG become a Nigeria?
As in Nigeria -- where LNG production has been routinely shut down -- YLNG may find itself having to declare force majeure if its liquefaction plant or LNG vessels become the target of attacks by domestic insurgents or pirates.
YLNG has long-term contracts to sell 2.55 million tons/yr to GDF Suez and 2 million tons/yr each to Korea Gas (Kogas) and Total itself.
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