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The science-fixin' of technology abuse:

Sudden Wealth Curse

  • Exxon Crimes & Cheap Oil Crisis ... Global crisis energy Exxon ...

  • 10 months ago: Russian President Vladimir Putin, center, and the Netherland's Prime Minister Jan Peter Balkenende, left, enter a hall for a signing of documents ceremony in the Moscow Kremlin, Tuesday, Nov. 6, 2007, with Dutch gas company Nederlandse Gasunie NV President Marcel Kramer, right, in the background. Russian and Dutch officials signed an agreement Tuesday to include Dutch gas giant Nederlandse Gasunie NV in the Baltic Sea pipeline designed to bypass several European countries and ship Russian gas directly to Germany. 

    Dutch join Gazprom’s pipeline project

    Dutch join Gazprom’s pipeline projectJune 20, 2008 - Russia Today - The Dutch national gas company Gasunie has joint the Nord Stream gas pipeline project. The announcement came from Russian gas giant Gazprom. The Dutch company gets 9% in the joint enterprise, reducing the shares of E.On Ruhrgas and Wintershall Holding to 20% each. Gazprom keeps its 51% stake. The Nord Stream pipeline is to transport Russian gas to European customers, bypassing transit countries. It will run over the seabed of the Baltic Sea. Gasunie is the operator of one of the biggest European gas networks with a total length of over 12,000 kilometres.

    Gasunie's Partner ExxonMobil (along with Shell):

    It requires an understanding of the long-term nature of our business. It requires a consistent, systematic business model with the flexibility to adapt to changing business conditions. It requires a commitment to invest in and develop people, innovative technology, and projects that grow shareholder value. It requires a company of leaders with an unwavering commitment to integrity, operational excellence, and community development.

    ExxonMobil has taken on these challenges for over 125 years while continuing to deliver superior financial results to our shareholders.


    Shared Earth Environment

    The Shared Earth Environment is one component of the work ExxonMobil has under way to achieve breakthrough performance in subsurface interpretation. The primary objective of this initiative is to create a common visual environment and tools that interdisciplinary teams of geoscientists and engineers can use to rapidly visualize, integrate, and analyze relevant technical data. The improved integration and collaboration enabled by the Shared Earth Environment will enhance work efficiency, improve business decisions through more effective communication and analysis, and increase resource recovery through opportunity identification and optimized development plans.





    Key Factors Determining the Success of Kazakhstan’s Hydrocarbon Sector

    Zentrum für Europäische Integrationsforschung: ‘Is Kazakhstan Vulnerable to the Dutch Disease?’ 2003, Bonn, Germany  


    Note: This is an essay which I submitted for my Central Asian course this year. As it counts about 5000 words, I have split the paper into two parts. Click the link below to continue reading.


    Kazakhstan, the northernmost of the five newly independent Central Asian states, sits on vast hydrocarbon resources, both gas and oil. They can be found mostly around the Caspian Sea, of which Kazakhstan possesses the largest coastal line among all the five littoral states . Although the existence of large hydrocarbon deposits was well-known during the Soviet era, Kazakh Caspian oil resources remained largely untapped. There were some reasons for this: On the one hand, northern Caspian hydrocarbon resources are technologically difficult to unearth. There is a deep sediment covering most of the predicted deposits, adding to the fact that the region shows increased seismic activity. Additionally, the whole northern Caspian basin was declared a natural heritage zone in Soviet times, prohibiting any kind of drilling there. This is partly why hydrocarbon resources of the Kazakh Caspian Sea region were not given priority within the Soviet Union. More accessible deposits in other areas were preferred, first offshore Azeri oil and then, more significantly, reserves in West-Siberia, where major investments began to be channelled in the 1970s.

    courtesy of: BBC:

    However, the Soviets made an attempt to develop the Tengiz field, the largest onshore oil deposit in the former Kazakh ASSR, discovered in 1979; but the engineers did not manage to cope with the oilfield’s enormous depth (13.000 ft) and the high pressure of 800 bar at which the crude ‘shot’ to the surface (Kleveman, 2003: p.76). A fatal blow-out occurred in 1985, killing several oil workers. Soviet engineers spent more than $1 billion drilling ‘dozens of wells before concluding that foreign technology was needed’ (Washington Post, 06/10/98). After years of negotiations, American oil giant Chevron yielded a 50 percent interest in the huge field in 1990, one year before the Soviet Union dissolved. The familiarity with the Soviet system and connections to high-profile elites, who were to occupy top ranks in newly independent Kazakhstan, granted Chevron with a new deal in 1993 - this time with the Kazakh government. It should be the first major drilling concession for a Western oil corporation after the collapse of the Soviet Union. This time, the deal led to the formation of Tengizchevroil (TCO), a joint-venture of Chevron and the state-owned oil company.
    Chevron was not the only major company being attracted by the business potential of investing in Kazakhstan’s oil sector. In 1995, Chevron’s competitor Mobil (now ExxonMobil) bought itself into the joint-venture, acquiring a quarter of the shares. Bit by bit, nearly all major oil companies invested in the country, either through setting up new joint-ventures or through buying shares of existing ones. Kashagan, an offshore oilfield discovered in July 2000, proved to be one of the biggest oilfields in the world and is regarded as the most significant finding of the last 30 years. This enormous discovery led to a certain degree of gold rush atmosphere reminiscent of earlier findings like in Prudhoe Bay / Alaska during the 1970s. However, this early-day euphoria has now calmed down and gave way for a much more sober handling of affairs.

    *** Click on the following link to continue reading: ***

    Kazakhstan’s hydrocarbon resource endowment in numbers

    There has been a certain degree of controversy on the amount of hydrocarbon resources which can be found in Kazakhstan. Numerous forecasts were published by different organisations, leaving a mixed impression of what is actually to be expected. Ongoing seismic surveys will add more oil-bearing prospects to the hydrocarbon map – eventually providing more accurate data and exact figures. Until then, the discussion is subject to a large degree of speculation. It will suffice to state here that there are considerable deposits of oil and gas in Kazakhstan, explaining the very presence of multinational oil corporations - which are, after all, driven by the simple motive of profit-maximisation (see point 3A). As a general rule of thumb, it can be said that government-funded forecasting tends to be more optimistic than corporate prognoses. Current proved oil reserves are estimated between 9 (BP Statistical Survey 2003) and 17.6 (Energy Information Administration, Oil and Gas Statistics, 2003) billion barrels. The latter even puts further potential oil reserves (reserves that are estimated to be 50 percent probable) as high as 92 billion barrels, which would consequently put Kazakhstan among the top five of the oil-richest countries. The chance of further findings is unquestionably high. However, in order not to contribute to an unnecessary speculative reasoning, it is sufficient to say that the business incentive must be present even under already proved levels of hydrocarbon resources - otherwise no multinational corporation would be willing to invest.

    Key factors for the Kazakh oil sector

    In order to analyse the future prospects for the Kazakh oil sector, this paper will outline the key points for a successful promotion of the business and further illustrate them through the interpretation of recent developments, mainly derived from related news. For the author, the following aspects will prove crucial for a successful future of the Kazakh oil sector: First of all, business confidence is undoubtedly the main focus for relevant decision-makers and will therefore be analysed with the utmost attention. Overall business confidence and potential for investment return are mainly influenced by endogenous factors, i.e. the Kazakh government is capable of positively (or negatively) altering their degree through business-friendly (or –hostile) legislation in domains like taxation, ownership rights, etc. Recent developments leave a mixed impression: To the displeasure of the operating oil companies, there has been a development on the Kazakh side towards the renegotiation of contracts. The common opinion was that contracts were unjust and exploitative towards the Kazakhs because they were made at a very early stage of independence. However, a new investment law introduced in 2003 intended to enhance the legal framework for foreign investors.

    Second, and no less important, is the development of the world oil market. Caspian oil is considered to be ‘New High-Cost Oil’, whose production cycle adds up to the sum of more than US$10 per production of one barrel of crude. With the current world market price per barrel oil at around US$32, the profit margin for investing oil companies is large enough. However, this comparatively high oil price level is subject to fluctuations and cannot be guaranteed in the long run. It is furthermore important to analyse developments in the worldwide demand and supply pattern for oil and in how far it can shape the outlook for Kazakh oil.

    Third, the problem of transportation, i.e. how to bring the oil and gas from landlocked Kazakhstan to customers in Europe, America and Asia will be scrutinised. Which routes do/will pipelines take and in how far is – as widely discussed in the media – politics and ‘geostrategic reasoning’ involved?

    Fourth, and finally, the national and regional security situation will have to be analysed as it continues to a major issue for a steady influx of investment.
    Due to constraints in time and space, those three issues will be analysed in rather more detail, though of course further aspects play significant roles, too. They comprise other developments like the delineation of the Caspian Sea and in how far it bears potential for conflict. Environmental hazards and technological constraints could – though less likely – put pressure on the Kazakh oil and gas sector, too.

    Business confidence:
    a) Post-Independence concessions: A thoughtless give-away of natural wealth?

    The immediate years after independence saw a precautious approach of Western investment towards the ex-Soviet Union. Because of abundant hydrocarbon resources this has been different for Kazakhstan. Largely due to the efforts of Chevron as the first main investor and a relatively ‘virgin’ business environment, foreign direct investment poured into the economy comparatively rapidly, making Kazakhstan receive more FDI per capita (Foreign Direct Investment) than Russia until now (UNCTAD, 2002). Right after independence it became fairly obvious that Kazakh officials were ill-equipped to run the economy which until 1991 had been fully state-owned and effectively controlled by Moscow. There had been no time for a smooth transition and due to the turmoil and turbulences of the post-independence days the administration was not capable of elaborating a sound and even economic policy. The aforementioned deal with Chevron was already prepared as early as 1990, where the American oil multinational negotiated exclusively with Moscow, not Almaty. As a general rule, few leaders of the new Caspian states (mostly Azerbaijan and Kazakhstan) had any practical experience with international finance and investment procedure. Therefore, policy-makers took advice from the sources they could find – Western business executives and politicians or returning émigrés. This tendency led to several ‘ill-informed and controversial decisions, including the costly and embarrassing repudiation and renegotiation of several contracts for oil and gas projects’ (The Globe Kazakhstan, 22/07/98). However, it would be too easy only to blame the Kazakhs for these problems. Without doubt, there were incidents of corruption as colourfully revealed in Seymour Hersh’s article in the New Yorker in 2001. Nevertheless, it should become clear that windy actions of calculating Western businessmen were silently tolerated by the West, too. This indicates that there might be indeed contracts which need some reshaping and renegotiation. However, the Kazakh side has not been too keen on explaining their arguments for this move in a very transparent manner, largely due to alleged participation of government-elites in several of those dubious deals.



    Other issues that could have potentially been of great importance for the Kazakh oil and gas sector cannot be analysed any further here. Those developments comprise the delineation of the Caspian Sea and the significance of this as a potential source of conflict. As mentioned earlier, the environmental hazards and technological constraints could (though it is less likely) put pressure on the Kazakh oil and gas sector, as well.
    The detailed analysis of the business confidence shall underline that it will prove tremendously important for Kazakhstan to successfully tackle persisting endogenous problems. The success of tax reforms and – more generally - a more transparent handling of administrational affairs will be crucial for a steady flow of investment into Kazakhstan. ‘Rome was not built in a day’ – and efforts that were made in Kazakhstan can seem to be slow. However, as it is very often forgotten, market capitalism is a relatively new ‘phenomenon’ in the largest of the Central Asian republics. While other countries could have made their experiences with foreign investors for decades, countries of the former Soviet Union have to be assessed somewhat differently. Still, there is worldwide competition to attracting as much FDI as possible; so Kazakhstan has no other options but to stick to rules of the game. Therefore, the aforementioned threat by Mr Cornelius could seem arrogant, but however not too far-fetched: ‘You’re in a competitive landscape – if you want to be a world oil power, you need to behave like a world oil power’. To conclude, it needs to be stressed that the distinct usage of language by corporate and government representatives can often be misleading. Sometimes, issues that go to the press do not tell the observer what is really going on under the surface of mutual accusations. As hasty intervention by even President Nazarbaev shows (cf. the TCO investment postponement), there is a pragmatic understanding on the Kazakh side. If this translates into a sound and even economic and administrational policy, then Kazakhstan’s hydrocarbon sector will continue to be worth investing in.


    WA gas pipeline sale impasse highlights damaging impact of abuse of market power:

    There was no clearer current example of the damaging impact of allowing gas pipelines to exercise market power than what was currently happening in Western Australia over the Dampier to Bunbury Gas Pipeline, an ACCC Commissioner, Mr Ed Willett, said today.

    "Bids for the purchase of the Dampier to Bunbury Gas Pipeline close on Friday", he told the 2004 Energy Reform Summit in Sydney. "According to media reports, the sale process may fail, firstly, the financial institutions that currently control the pipeline are insisting that their investment of $1.85 billion be repaid in full, and secondly bidders are struggling to offer much more than the regulated asset value of $1.55 billion.

    "The institutions have some leverage (reflecting the pipeline's market power) because they appear to be making the sale at their price a condition of the much needed expansion of the pipeline, which will cost around another half billion or so.

    "One problem here is the lack of clarity in the Gas Code about whether expansions of a covered pipeline should be automatically regulated. The Productivity Commission has addressed this issue and recommended in the affirmative. If this recommendation was in place today then the current owners of the DPNG would be obliged to expand the pipeline if shippers were willing to pay the cost of that expansion, and the problem in Western Australia would be easily resolved.

    "But the real problem in Western Australia is that Epic Energy, backed by the financial institutions, paid around one billion dollars too much for the DPNG believing that, somehow, the clear implications of coverage of the pipeline under the Gas Code would not apply to them.

    "A second pipeline to meet Western Australia's needs could be built for around $1.2 billion. If it were not for the costs of a two year wait faced by energy consumers in the Perth region who desperately need more power, a second pipeline could be the best solution.

    "Regardless, the financial institutions may have to face up to the fact that, had they been investing into a competitive market, funding the acquisition of an asset where the buyer paid around a billion dollars too much would quickly mean substantial losses for all involved.

    "Coverage of a pipeline under the Gas Code should mean that investors face similar disciplines and incentives".

    Media inquiries

    Ms Lin Enright, Director, Media Unit, (02) 6243 1108 or 0414 613 520

    Release # MR 176/04
    Issued: 25th August 2004



        Sofia Mazaris

    Sofia Mazaris is a Brooklyn based visual artist . Her work has been seen as part of The Delaware Collage of Art and Design's Downtown Dino Days, in several NYU student films, and
    in Sasha Welsh's MFA thesis concert DEEP. She has worked as assistant camera person on the documentary series The Angelman Project. Her background includes sculpture, ceramics, glass work, and fashion design. Sofia has studied at the University of the Arts, Philadelphia; and the Absalon Jones Studio, Wilmington DE. See her work on display at ????

          Kerrie Welsh
        Kerrie Welsh is completing her MFA in film from the University of Wisconsin-Milwaukee. She has an MA in Women's Studies from Ohio State University and a BFA in film production from New York University. Her films have been seen in festivals and other venues throughout the east coast and mid-west.



          Angela Mazaris

    Angela Mazaris has an MA in Museam Studies and American Civilization from Brown University. She is currently a PhD candidate in the American Civilization department, where she is writing a dissertation on cultural memory and identity. She also has extensive experience in non-profit administration and grant writing.

          Christine Peng
        Christine Peng, is an educator, organizer and artist that works with youth to create personal and social change through the arts. At G.A.P., she has helped create videos on issues such as the school to prison pipeline, domestic abuse, and stereotypes about gay youth and self-mutilation. She has also worked to create community gardens, videos, murals, sculptures and mixed media projects with youth from T.R.U.C.E., Girls, Inc., Grand Street Settlement, Brooklyn Children's Museum, and The Fearless Theatre Company. She is currently working collaboratively on a documentary about the Bolivarian Revolution in Venezuela and its importance for folks here in the US.




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