Friday, 27 August 2010

Notes on Global Governance: A Brazilian Perspective


A month before the presidential elections due to take place on 3rd October 2010, Brazil finds itself at a cross-roads. The most likely winner of these elections is Dilma Rousseff, President Lula's former Chief of Staff, whose candidacy was created by Lula himself. It is a foregone conclusion that, if she wins – by a landslide in the first ballot, as expected – Lula will in fact continue to govern for another four years (2010-14), if not eight. The Brazilian people will in fact be voting for Lula, through Dilma as an intermediary. Thus, it is easy to appreciate the importance of Dilma's campaign slogan: continuity. And yet while Lula's system of government continues to prevail in Brazil, the rest of the world will move and change. It is important to reflect on Brazil's position within this dynamic context.

For the first time in Brazilian elections, foreign policy is part of the electoral campaign. Lula has exercised this policy at his will, under the near-imperial powers granted to the president under the constitution. However, Lula has never understood the difference between the state and the government, and the foreign policy of his administration has been that of his political party, PT (the Workers' Party), heavily ideological in content, and often questioned by the opposition and a large portion of the business community, academia and the media. Particularly distasteful to these groups are Lula's embrace of tyrannical regimes, and his inexplicable failure to sanction their gross human rights violations. Lula enjoys an extraordinary popularity rating (75 per cent) after his nearly eight years in office, thanks to his charisma and his uncanny, intuitive communication with the common people. These same qualities propelled him to a prestigious position on the international scene, but it is his persona – his rags-to-riches story, the exploit of a humble lathe operator rising to presidency of the fifth largest world economy – that has impressed foreign audiences and international organisations, and not his ideas, some of which are highly aspirant and idealistic like the fight against hunger, a programme that in Brazil itself has failed completely.

It is undeniable that Lula, thanks to his proactive diplomacy, has generated a much higher level of exposure for Brazil among international decision-makers. Occasionally, though due to his self over-estimation and lack of understanding of complex historical issues, this has led to disasters, such a botched attempt at Middle East mediation, yet they seem to leave him unperturbed. However, this kind of highly personalised presidential diplomacy, which favours form over content – often ignoring Brazil's very professional foreign service – is unique to Lula, and cannot be replicated. It certainly will not be emulated by Dilma Rousseff, a pallid technocrat who feels uncomfortable with the vagaries of domestic politics, let alone the international variety.

Dilma will have to confront the challenges of globalisation, and (if PT party lets her) it is probable that the foreign service will resume its position of controlling and implementing foreign policy. Lula had placed Brazil on a privileged situation, first in the G-8 (as part of the Outreach 5, with the Heiligendamm process), then in the G-20. The obsolescence and decline of the United Nations; Brazil's inability (for the past 65 years) to secure a permanent seat on the Security Council, an aspiration for which the Lula government made heavy sacrifices; the failure to bear fruit of “strategic partnerships” launched with China, India and Africa when it came to the crunch; the growing irrelevancy of UN and regional specialised agencies, incapable of modernising themselves to face new times; all of these factors, and others, led Brazil under Lula to seek new alliances in informal groupings such as the BRICs (Brazil Russia India and China) and IBSA (India, Brazil, South Africa), to cultivate a South-South relationship and to strengthen ties with Arab and African countries.All of these initiatives, quite costly to the Brazilian taxpayer, have not had an impact on global governance.

Under Lula, Brazil has created many expectations in the Latin American region, Africa and the world at large. So far, they remain largely unrequited. Rhetoric in the G-20 has not been followed by action. The president's vibrant personality has not had an impact of an international scale. However, two achievements stand out: Brazil's role in maintaining stability in Haiti. And the commitment made at the COP-15 Copenhagen conference of December 2009 to reduce greenhouse-gas emissions (GHG). Aside from the aforementioned, Brazil's diplomatic successes on the world stage are largely theoretical. Yet there is no doubt that the country is now a major player on global governance. This in itself is commendable, but the fact remains that given a rostrum from which to address mankind there has to be concrete, viable proposals aiming at peace, security and sustainable development. It remains to be seen if Dilma Rousseff's government will be able to avail itself of the opportunity, created by Lula, to make a significant contribution.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

President Lula signs contract for 11,233 MW hydroelectric dam


President Luiz Inacio Lula da Silva has signed a contract for the construction of a new hydroelectric dam in Brazil's Amazon region. Talking about the project President Lula said that it would have been 'impossible' to build a hydroelectric dam of such scale several years ago, and that the project 'is less aggressive than the original one' approved back in February this year.

Brazil's Minister of Mines and Energy, Marcio Zimmermann, said that the Bela Monte complex, to be built near Xingu River in the northern state of Para, will 'play an important role in the development' of the region. Opponents of the Bela Monte complex say that the project will displace around 50,000 Indians. The claim has been counteracted by the president of the Bela Monte enterprise, Carlos Nascimento, who said that the people displaced 'will be duly compensated'.

The contract to build the complex was awarded to a consortium led by state-owned Companhia Hidro Eletrica. Once completed the 11,233 MW Belo Monte dam will be the world's third largest after China's Three Gorges and the Itaipu complex, and is expected to cost R$20 billion.

Source: Sify News

For more news and expert analysis about Brazil, please see Brazil Focus.

Azerbaijan increases gas supplies to Turkey by 2 billion m³


The State Oil Company of the Azerbaijan Republic (SOCAR) has increased gas supplies to Turkey from 13-14 million m³ to 16 million m³ per day. The increase in supply is partly due to an explosion near a pipeline transporting gas from Iran to Turkey, which meant that Iranian gas supplies in to the country were suspended. According to Turkey’s Energy and Natural Resources Minister Taner Yildiz supplies will resume in approximately 7 days.

Azerbaijan supplies gas to Turkey under a contract on the Shah Deniz offshore gas field. The countract stipulates that Turkey has to receive 6.6 billion m³ of gas per year during the field's first stage. The field's total reserves are estimated at 1.2 trillion m³.

The contract to develop Shah Deniz was signed 4th June 1996, and includes the following participants BP (operator) with 25.5 per cent, Statoil 25.5 per cent, NICO 10 per cent, Total 10 per cent, LukAgip 10 per cent, TPAO 9 per cent and SOCAR with a 10 per cent share.

Source: Trend Azerbaijan

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Nigeria: Further personnel changes rumoured


As analysed in recent editions of Nigeria Politics & Security, Petroleum Minister Mrs Deziani Allison-Madueke escaped dismissal in the minor reshuffle on 11th August, despite rumours of her imminent removal. Deputy Finance Minister Remi Babalola was not so lucky, being summarily reassigned to a ministerial backwater following his “unguarded” public comments about the purported insolvency of the Nigerian National Petroleum Corporation (NNPC).

However, this may not be the end of the current struggle for influence in Nigeria's oil hierarchy. Our sources have suggested that the next person in the line of fire may be NNPC Group Managing Director (GMD) Austin Oniwon, upon whose letter to the Federation Account Allocation Committee (FAAC) Babalola's fatal comments were apparently based.

Whether this speculation has any mileage remains moot. However, Menas Associates has noted with interest the increasing behind-the-scenes frustration of the presidency with the slow progress in narrowing the gap between the NNPC's view of the Petroleum Investment Bill (PIB) and the views of the oil industry. Oniwon has been a key figure in the NNPC's uncompromising stance, and has resisted calls from Allison-Madueke to move towards the middle-ground.

While Oniwon's departure might serve the presidency's interests vis-à-vis the PIB, it would further reinforce criticisms of Jonathan's (and Allison-Madueke's) handling of the NNPC: Oniwon took over from Shehu Ladan only four months ago, while Ladan himself had barely spent seven weeks in the position before he was replaced. Sources suggest that Oniwon – an indigene of Kogi State – will be replaced by a GMD from the South-East.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

Thursday, 26 August 2010

Commentary: Brazil's presidential election


To the extent that polls can be relied upon, the three largest polling organizations in Brazil concur that the Partido dos Trabalhadores' (PT) Dilma Rousseff has indeed a significant and widening edge over the Brazilian Social Democracy Party's (PSDB) José Serra. Her victory in the first ballot is at this stage probable, but by no means a shoo-in. Surprises can happen.

Serra has, however, run a lukewarm campaign, in part due to his personality and in part owing to his fractious coalition, whereas from day one outgoing President Lula embraced Dilma as his heiress apparent, leaving no doubt that he would remain in control during her tenure. Given his astonishing popularity ratings (75 per cent), Serra avoided confronting him. It was a duel between Lula's raw charisma and Serra's pallid accounts of his government experience, about which nobody cared.

A refurbished and embellished Dilma performed well on TV and in debates, where Serra had expected to crush her. This did not happen. Unless Serra becomes more aggressive in the remaining month, he will have lost the campaign and the presidency. The Green Party's Marina Silva trails with 8 per cent, and it is possible that some of her votes would accrue to Serra in a run-off – if there is one.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

Egypt says it has no intentions of re-purchasing gas back from Israel


The Egyptian Natural Gas Holding Company (EGAS) has denied reports that the government intends to re-purchase 1.5 billion m³ of natural gas back from Israel in order to meet the country's electricity deficit.

"Egypt doesn't need to import natural gas. Egypt's national gas production is more than sufficient to cover the needs of government sectors," said, the head of EGAS, Mohammad Lateef.

According to the Egyptian General Petroleum Corporation, 30 billion m³ of natural gas was exported to Israel via an offshore pipeline during the 2008/09 fiscal year, totaling around US$90 million in revenues. Despite the electricity shortages, energy industry officials continue to maintain that Egypt will not be buying back gas from Israel.

"We will not re-import gas from Israel since this would be technically impossible," added, the Egyptian Natural Gas Company chairman, Khaled Abd al-Badie.

Source: Al Masry Al Youm

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

Iran begins oil production from Hengam field


Iranian oil minister, Seyed Masoud Mir-Kazzemi, has inaugurated Hengam oil field in Qeshm free zone. The ceremony was followed by a first phase production operation to generate 10,000 b/d.

During the inauguration ceremony Managing Director of Iran Offshore Oil Company, Mahmoud Zirakianzadeh, said that the Hengam oil field project is a joint venture with Oman, and added that oil from the field is of particularly high quality.

Kazzemi said that 80 per cent of the oil field is located in Iranian waters, with the remainder 20 per cent in Oman waters. In the next two months, production levels are expected to increase to 16,000 b/d and eventually to 30,000 b/d. The Hengam oil field is located along the maritime border with Oman, and is estimate to hold up to 600 million barrels of oil reserves.

Source: Fars News Agency

For more news and expert analysis about Iran, please see Iran Strategic Focus.

SOCAR keen to acquire Georgia's gas network


The State Oil Company of Azerbaijan Republic (SOCAR) has notified the Georgian government of its interest in the privatisation of Georgia's gas system, including the main gas pipelines, if the Georgian government were to decide to sell.

“We expect Georgia to decide its plans in the near future. If the country's government country decides to privatize, we will take part," said a SOCAR spokesperson.

SOCAR's interest in Georgian assets has been echoes by Kazakhstan's state oil and gas company, KazMunayGaz. While, the Armenian government, has shown interested in buying the Georgian section of the Russia-Armenia gas pipeline.

SOCAR has already purchased privatised gas-distribution networks in 30 Georgian districts and is presently developing its acquisitions. The company has an interest in a wide range of Georgian assets including the Kulevi oil terminal on the Black Sea coast and a network of petrol stations.

Source: News Azerbaijan

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Debate over Lockerbie bomber release continues unabated


The prolonged flow of criticism of the Scottish and, by extension, the British government, over the release of Lockerbie bomber Abdel Basset al-Meghrahi continues unabated in the US. The cacophony is now spreading to London, where the right-wing press is clamouring for greater UK frankness in dealing with those members of the US Senate, principally by making available more official documents in the case relating to diagnoses of the state of al-Meghrahi's life expectancy in the period immediately prior to his release.

A second line of US interest is the BP connection to the release and repatriation of al-Meghrahi to Libya in 2009, when, it is alleged, the oil company used lobbying at the highest level. In effect, there have been recurrent claims that British policy was driven by commercial motives before all others.

The forthcoming mid-term elections in the US considerably enhance the response by the US to these twin difficulties with the UK: Lockerbie and BP.

Attempts by many candidates to seize the moral high ground in the energy sector, and in demonstration of high nationalist sentiments pitched against foreign interest, become keen areas of concern, especially when wedded to the problems faced by BP in the Gulf of Mexico in recent months.

President Barack Obama called for Libya not to make the anniversary of al-Meghrahi's release a public spectacle; a request also delivered by the British government. Libyan consideration on the matter was limited, but adequate to meet these requirements.

In a remarkable sign of frustration, al-Meghrahi claimed that his imprisonment in the UK had been a torment equal to a death by deprivation lasting through a thousand days of pain while incarcerated. He was critical of the British for keeping him in a prison as an inmate without special needs for his medical problems, although it is to be noted that he has kept in touch with fellow prisoners during the last year. The unofficial Libyan view is that the diplomatic initiatives taken in America can be ignored.

Certainly, there is little possibility that the Libyans will agree to return al-Meghrahi to the custody of the Scottish authorities as requested by important American politicians, including Secretary of State Hillary Clinton.

For the Libyans, the case is closed and the low media treatment inside the country of the first anniversary of his release indicates that this is so. The Libyan authorities, however, have problems of their own with al-Meghrahi. He has, after all, unique knowledge of at least some part of the plot to down the airliner in 1988, but of which he has so far not revealed any details. It is to be supposed that the Libyan government would prefer this situation not to be changed. Much speculation by relatives of victims of the bombing as to the comparative role of al-Meghrahi tends to indicate their belief that more powerful individuals and institutions from Syria, Iran and the Palestinian organisations were involved.

In private, senior Libyans, who have been involved in foreign affairs and other external relations, are quite blunt in indicating that the pro-Israeli lobbies in Washington appear to be in support of the campaign for the re-imprisonment of al-Meghrahi. However, given the media attention generated over the al-Meghrahi issue in the US, it must be expected that the case will continue to cause irritation there for some time.

Four US members of Congress, Robert Menendez, Frank R Lautenberg, Charles Schumer and Kirsten Gillibrand sent a letter on 20th August to the Emir of Qatar Sheikh Hamad bin Khalifa al-Thani (one time head of the Arab League), the First Minister of Scotland Alex Salmond and to Colonel Qadhafi. They communicated their concerns that the release of al-Meghrahi might be construed as politically improper and legally questionable.

The four did not take account of the circumstances at the time which were the end of the long engagement with weapons of mass destruction (WMD) by Colonel Qadhafi, and other concessions made by Libya as a means of ending US and UN sanctions. It is assumed by Libyan opposition spokesmen that the al-Meghrahi issue was, from the mid 1980s, an integral part of the settlement deal with Libya's return to the international community. Dr Ghanem has hinted strongly that the current US awakening of interest in the release of al-Meghrahi takes no account of the realities of the broader deal thrashed out by Libya at an earlier period.

In the meantime, congressional pressure being put on the UK and in particular, the Scottish government, is designed to exploit natural sentiment against an individual found guilty of mass murder of their fellow citizens. The British, for their part, have responded coldly to the US demands and are unlikely to do other than release documents pertinent to the case.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

Wednesday, 25 August 2010

Spontaneous campaign backs Mubarak's son Gamal


Posters backing Gamal Mubarak have been spotted in a number of Egypt's poorer neighbourhoods. News of these posters began circulating shortly after several online campaigners set out to gather millions of signatures calling on Gamal to stand in the next presidential elections.

It is evident within Egypt that there is an ongoing campaign backing the president's son who is also the senior officer of the ruling National Democratic Party (NDP).Government officials, however, insist that neither the NDP nor Gamal himself have anything to do with the campaign which is said to be spontaneous and one that the government has no intention of silencing.

"These campaigns represent individual initiatives; they are in no way related to the NDP. None of the leadership of the NDP has endorsed them officially or unofficially. So it remains a sporadic voluntary activity in society," said Aley el-Din Hilal, a senior official of the party.

There seem to be some contradictions as far as these campaigns are concerned. Gamal Mubarak is regarded as a man of privilege; therefore it is unexpected to find the headquarters of the People's Coalition in support of Gamal Mubarak in one of the poorest and deprived areas of Cairo, or hear the organiser, Magdi el-Murdy, suggest that Gamal Mubarak, if elected president, will help move the power away from the elite.

It is not surprising that members of the opposition have a different perspective on these developments. Shadi Taha of the opposition al-Ghad party described the campaign as an attempt to show that the Egyptian public was "begging" Gamal Mubarak to stand. He also suggested that if Gamal Mubarak is elected, it would set Egypt back hundreds of years.

It remains unclear whether Gamal Mubarak is behind the supposedly spontaneous presidency campaign, and whether he will ever be openly endorsed by his father who remains reticent about naming a successor and has always maintained that he would serve Egypt to his last breath.

Source: BBC

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

Brazilian government to raise stake in Petrobras


According to an oil and gas analyst at SLW Corretora, Erick Scott Hood, the Brazilian government will raise its stake in the national energy giant, Petrobras, to as much as 50 per cent once the company completes its capitalisation process set to commence in September.

"The higher the price of the oil barrel to be used in the calculation for the oil-for-shares swap, the bigger will be the government participation. If they use a price of US$6/b or above, minority shareholders will face a hard time and will end up being diluted," said Hood.

Reports on the pre-salt oil areas to be used for the oil-for-shares swap between the Brazilian government and Petrobras have already been delivered. The final results are expected to be released by the end of the month.

"The government is planning to buy all shares minority shareholders leave available. The government will probably get to a 46 per cent stake from the 32 per cent it currently holds," added Hood.

Source: Business News Americas

For more news and expert analysis about Brazil, please see Brazil Focus.

Ghana's government revives move to revise mining agreements


AngloGold Ashanti says that Ghana’s plan to renegotiate a 2004 agreement capping mining royalties is inappropriate. AngloGold spokesperson Alan Fine told Reuters that the agreement was “pretty much cast in concrete” and that the company did not wish to renegotiate.

The Ghana government has formed a committee to study the possibility of reviewing sections of the stability agreement. Paul Atiglah, Director of Mines at the Ministry of Lands, Forestry and Mines has said that Ghana is “taking advantage of the provision in the law which allows for possible review of the stability agreement where deemed necessary”.

The 2004 agreement stipulates that royalties due to government will not exceed three per cent of mining revenue. Further, the company’s corporate income tax rate is limited to 30 per cent for 15 years. The agreement also extends the lease on AngloGold’s Obuasi mine until 2054.

In return for the agreement, Fine said, AngloGold gave the government some US$120 million (GH¢169.51 million) worth of shares and a cash payment of US$10 million (GH¢14.126 million).

The government introduced a new five per cent royalty rate on mining revenue last year, but AngloGold was exempt from the increase because it already had a stability agreement in place.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2010 Menas Associates

CNPC to start drilling Iraq's Halfaya field


China's National Petroleum Corporation (CNPC) has said that it will start drilling new wells next month in Iraq's Halfaya oil field as part of a plan to boost output to 70,000 b/d in 2011.

Iraq signed a contract with CNPC, Total and Petronas signed a contract to develop Halfaya oil field for a fee of $1.40 per barrel. CNPC has a 37.5 per cent interest in the consortium.

CNPC plans to build three appraisal wells this year, and is currently in the process of evaluating bids for the tender. The group's executive, Yan Shihe, said CNPC hopes to reach production of around 70,000 barrels per day and aims to drill around 15 new wells by 2011.

Source: Reuters

For more news and expert analysis about Iraq, please see Iraq Focus.

Tuesday, 24 August 2010

Iraq expected to increase crude production by 13 per cent


According to Iraq's oil ministry the country is expected to increase its daily crude oil production by about 13 per cent by next year.

“We expect an increase of about 300,000 barrels per day. This includes about 60,000 barrels per day from the al-Ahdab field”, said Abdul Mahdy al-Ameedi, deputy director general at Iraq's Petroleum Contracts and Licensing Directorate.

Iraq currently produces a total of about 2.4 million b/d. Al Ahdab was the first oil field development to be awarded by the Iraqi government after the US-led invasion. China National Petroleum Corp won the $3.5 billion agreement to develop Al Ahdab in November 2008. Since then, Iraq has awarded 11 other contracts to international major oil companies and has announced a third round of bidding this year to develop the country's natural-gas reserves.

Source: Bloomberg Business Week

For more news and expert analysis about Iraq, please see Iraq Focus.

Egypt might have to buy back gas from Israel at seven times the price


According to the Egyptian press the government, in view of power shortages caused by insufficient domestic gas supply to power stations, is contemplating the possibility of re-purchasing around 1.5 billion m³ of natural it supplied to Israel.

Back in July 2005 the Egyptian petroleum and mineral resources minister Sameh Fahmy and the Israeli infrastructure minister Benjamin Ben Eliezer signed a $2.5 billion gas deal to supply the Israeli Electric Corporation with 1.7 billion m³ per year.

According to inside sources the Egyptian Ministry of Petroleum would have to repurchase Egyptian gas for around $14 billion, sold to Israel for $2 billion dollars, effectively donating Tel Aviv $12 billion dollars.

Source: Arab Monitor

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

Iran inaugurates 560 mile leg of gas pipeline


The Iranian government has announced that the first phase of the $75 million pipeline intended to deliver natural gas to Pakistan was inaugurated on Monday 24th August.

Iran's First Vice President, Mohammad-Reza Rahimi, attended an official ceremony marking the completion of a 560-mile leg of a pipeline from gas facilities in Asalouyeh to the Pakistani border.

The deal between Tehran and Islamabad was finalised in June, stipulating the delivery of 750 million c/f of natural gas through the pipeline from the South Pars gas complex in the Persian Gulf. Iran said that if the pipeline reaches India as initially planned, Bangladesh could link to the gas line from there.

Source: UPI

For more news and expert analysis about Iran, please see Iran Strategic Focus.

PetroVietnam reviewing bid for BP asset


The Vietnamese vice president, Do Van Hau, has said that PetroVietnam is reviewing its decision whether to bid for BP's stake in a gas project within the country.

"We haven't asked the government to approve (a deal). We are still considering what we are going to do. We don't have a decision yet. We are reviewing it," said the vice president at a conference in Seoul.

BP plans to sell its 35 per cent stake in the Nam Con Son gas project as part of its programme to cover the costs of the oil spill in the Gulf of Mexico. PetroVietnam has a 20 per cent stake while India's state-run explorer Oil and Natural Gas Corp (ONGC) holds 45 per cent. Indian oil secretary S. Sundareshan said that ONGC and PetroVietnam are considering a joint formal offer to buy BP's asset.

Source: Reuters

For more news and expert analysis about Vietnam, please see Vietnam Focus.

Monday, 23 August 2010

Libya and the Lockerbie bomber


Last week I was supposed to appear on the BBC’s Breakfast television programme as a talking head about the first anniversary of the return of the Lockerbie bomber Abdelbasset Ali al-Megrahi. In the end the news priorities changed and I was stood down because the BBC was not going to cover the story in the same level of detail. However, having had to think about what I was going to say, I came to some interesting conclusions.

The frail and ailing Megrahi, who is suffering from terminal cancer, was released by the Scottish government on compassionate grounds a year ago, and was expected to quietly return to Libya and die within three months. However, despite warnings from the US and the UK governments that his return should be kept as low key as possible, he was met at Tripoli’s second airport by what appeared to be celebrating crowds of youths waving Libyan and Scottish flags. In a scene replayed thousands of times on TV during the past year Megrahi was greeted, very warmly, on the aircraft steps by the Leader’s son and possible heir Saif al-Islam Qadhafi. He was then helped into a waiting car by his immediate family and was whisked away into the night.

A year later and Megrahi is still alive although he has looked very frail on the couple of occasions when being filmed in hospital. His survival for much longer than the cancer experts had predicted has particularly angered the families of the US Lockerbie victims who, despite accepting millions of dollars in compensation from Libya, have always been far more vociferous than the families of the other victims. If his survival were not bad enough the current hysteria in the US against BP, following the environmental catastrophe in the Gulf of Mexico, has led some lawmakers plus conservative press and pundits to mount a witch-hunt against all things British.

A couple of days ago a group of US senators has said that a "cloud of suspicion" still hangs over al-Megrahi’s release. Senator Robert Menendez called on Britain and Scotland to answer a number of "outstanding questions" over the case. He said that there was "anger and frustration" in the US that Megrahi was "still very much alive and very much free".

They speculate that Megrahi was released following pressure on the Scottish government from both the British government of former Prime Minister Gordon Brown and a commercial lobby led by BP. In return for his release BP was allegedly rewarded with a vast onshore and offshore oil exploration contract – including the largest drilling campaign in its history – which, by an unfortunate coincidence, it is just about to start at the same time as the furore over both Megrahi and the Gulf of Mexico oil spill.

I believe the reality is very different. In order to understand it, however, it is necessary to remember a little of Libya’s history and then re-examine the facts.

For hundreds of years Libya was a North African backwater thousands of miles from the centres of Arab civilisation and, even by Libyan standards, the place where Colonel Qadhafi comes from was even more insignificant. Also, before oil was discovered in the late 1950s, Libya was among the poorest countries in the world and its chief export was exparto grass which is used for making high-quality paper. In the 41 years since he came to power on 1st September 1969 – which currently makes him the world’s longest serving non-royal leader – Qadhafi has therefore always sought to put Libya, and particularly himself, on centre stage where both will be taken seriously.

During the majority of his rule this was done by putting Libya at the heart of the radical and often violent struggle against Israel and Western colonialism. Throughout the 1970s and 1980s Libya financed, supported, and provided refuge for both genuine liberation groups as well as others who were prepared to use terrorism to try and achieve their aims. At the same time Qadhafi’s young revolutionaries purged Libya of any possible opponents and mounted a campaign to eliminate those living abroad who were referred to as stray dogs. During this long black period the regime was responsible for numerous heinous crimes against both its domestic and foreign enemies and, even today, it still paying for the last few of these crimes or skeletons in the cupboard which continue to pop up decades later.

Lockerbie was one of the last and most serious of these skeletons and it eventually led to over a decade of US and UN sanctions which isolated Libya and crippled its economy. There has been a lot of speculation about whether of not Libya, and particularly Megrahi, was responsible for the destruction of Pan Am Flight 103 over Lockerbie on 21st December 1988. Initially it was assumed that it was an Iranian inspired and financed, and Palestinian masterminded, attack which was in retaliation for the shooting down by the US Navy of Iran Air’s Flight 665 over the Gulf on 3rd July 1988 which resulted in the death of 290 passengers and crew and for which the US never apologised and only paid US$131 million in compensation.

The evidence then appeared to switch to Libya and, as we all know, Megrahi was eventually handed over in April 1999, tried and convicted of the Lockerbie bombing and served over ten years in jail before his release and return to Libya. The latter had also paid US$2,700 million, or US$10 million per family, in compensation and US sanctions had been eventually lifted in October 2008 over five years after UN sanctions were lifted.

Whether or not Libya, and specifically Megrahi, was responsible for Lockerbie – and there are still many including some of the families of the Lockerbie victims who still dispute it - is immaterial because Megrahi was found guilty. It would not surprise me if Libya was, indeed, responsible and that it joined a plot that had been pre-planned and hatched by others but the Libyans were the ones who got caught.

This brings us to August 2009 when Megrahi was released on compassionate grounds by the Scottish government and returned to Libya. The majority of Libyans do not believe that he was personally responsible for Lockerbie and think that he was the one who took the wrap for something that others, possibly but not definitely other Libyans, had done. They felt that the nomads’ traditional system of justice - whereby the victim’s family or tribe agree to accept blood money from the perpetrator thereby cancelling out a serious wrong against them – had settled the issue with the payment of US$2.7 billion in compensation. At the same time Megrahi comes from a powerful tribe and it was therefore important for the Libyan regime to win his release.

Another incentive for the Libyans was the forthcoming 40th anniversary of the 1969 coup which brought Qadhafi to power. Tripoli wanted everything to be perfect for the big day and Megrahi’s return was the icing on the cake and it was therefore very fortuitous that he was released a few weeks before the 1st September 2009 and in time for the celebrations.

This brings us to the final points of a). whether the medical evidence warranted his release, and b) whether the British government and BP pressured the Scottish government to do so.

At the time a number of highly qualified, experienced, and professional cancer specialists believed that Megrahi was unlikely to survive for more than three months. As so often happens, and as I know from my family’s personal experience, attempts at predicting cancer victims’ life expectance is very difficult and in Megrahi’s case they were wrong and he has survived for over a year. There is, however, no question that he will die of cancer in the near future whether that is this year or next. Talk of US pressure on Scotland to recall him to prison in Scotland is distasteful and fortunately is very unlikely to success.

Secondly, anyone who knows anything about British politics, will know of the tribal hatred between the ruling Scottish National Party (SNP) and the Labour Party in Scotland; particularly when it was led by a fellow Scot, Gordon Brown. They would know that the SNP would never ever do anything to assist the Labour government and would do everything possible to oppose it. The idea of the SNP leader, Alex Salmond, caving in to pressure from Gordon Brown is frankly laughable. Similarly, although BP undoubtedly had excellent relations with the UK government and certainly made its concerns known, it is inconceivable that it could have influenced the Scottish government into releasing Megrahi. BP may be the current bogey-man in the US but those claiming a conspiracy between BP, London and Tripoli are frankly barking up the wrong tree.

The timing of Megrahi’s release was undoubtedly fortuitous for the Libyan regime, which was about to celebrate its 40th anniversary, and for BP whose exploration deal would probably have been delayed by a few more months. All parties also knew that, if he had died in a Scottish prison, the UK’s political and economic relationship with Libya – which had been nurtured since 2003 when Tripoli was persuaded by London to end its Weapons of Mass Destruction (WMD) programme - would have deteriorated sharply.

The reality, however, is that, rightly or wrongly, Megrahi was released solely on compassionate grounds in the genuine belief that he would not survive more than a few months. It is time to end the Lockerbie affair, let Megrahi die in peace, and begin to recognise the considerable progress that Libya has been made since 2003 and encourage it to continue its gradual, albeit hesitant, political and economic reforms still further. A little more carrot and a lot less stick would probably work.

Written by Menas Associates MD Charles Gurdon.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

Iran and Algeria in talks about free-trade agreement


Iran and Algeria are in talks about a free-trade agreement. The discussion took place when Iranian Commerce Minister Mehdi Ghazanfari met Algerian Ambassador to Tehran Soufiane Mimouni.

Ghazanfari said that Iran respects the African continent for its international commercial relations and in this regard Algeria could be an entry point for Iran into North Africa. The commerce minister said that establishing a joint bank and exchanging trade delegations are some of the ways Tehran and Algiers could boost business trade.

Mimouni said the current political relations between the two countries were good and expressed hope that commercial ties would strengthen the economy of both countires.

Source: Bernama

For more news and expert analysis about Iran, please see Iran Strategic Focus.

For more news and expert analysis about Algeria please see Algeria Focus and Algeria Politics & Security.

Iran determined to strengthen co-operation with UAE


Tehran's new ambassador to Abu Dhabi, Mohammad Reza Fayyaz, has said that Iran is determine to strengthen co-operation ties with the UAE, particularly in the oil and gas sector.

“I hope we can strengthen our relations in all areas,” said Fayyaz. The new ambassador also said that during his tenure he will do his best to increase Iran's trade with the UAE, especially in the energy sector.

Asked about the effect of UN sanctions on Iran's economic ties with the UAE Fayyaz said, “Our bilateral relations are good and (we) try to make it better.” He also advised the media not to be influenced by those who are trying to undermine the relations between the two countries

Source: Tehran Times

For more news and expert analysis about Iran, please see Iran Strategic Focus.

Egypt ready to build first nuclear power plant


The Egyptian President Hosni Mubarak is expected to announce plans to construct the country's first nuclear power plant. According to the Egyptian press, Mubarak is likely to name Dabaa, located northeast of Cairo, as the site for the plant.

Earlier this month, Electricity and Energy Minister, Hassan Younes, said plans were under way to start an international bidding process to build the plant. Putting the project out to international tender should ensure that Egypt gets the best price for the construction of the station, estimated to cost around $4 billion.

The Egyptian press named French nuclear reactor maker Areva, and engineering group Alstom as the prospective companies to be involved in the project. Officials estimate the nuclear plant will increase Egypt's power capacity of up to 4,000 MW by 2025.

Source: UPI

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

Friday, 20 August 2010

Egypt's oil industry is booming according to EPA


According to the Egyptian press, the country's oil industry has enjoyed major success during the 2009-10 financial year which ended on 30th June. The Egyptian Petroleum Authority (EPA) reported that the country's proven reserves of oil and natural gas rose to 18.3 billion barrels in 2009-10, and that they are expected to rise to 20 billion barrels in the next two years. During the last decade, Egypt has achieved considerable success with its oil and gas discoveries, reportedly exceeding those of Libya, Tunisia and Algeria combined.

The combination of relatively attractive fiscal terms – certainly when compared with those in Algeria and Libya which are both also experiencing bouts of resources nationalism – plus the sustained onshore and offshore drilling and exploration programmes in a wide variety of regions across Egypt has led to an influx of small and large IOCs thereby increasing oil reserves.

In 2009, gas was the dominant fuel for Egypt, accounting for an estimated 50 per cent of it primary energy demand, followed by oil at 43.1 per cent. During the year, Egypt signed agreements with IOCs with a total value of US$8 billion including last month's major deal signed with BP and its partner RWE to develop their offshore fields.

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

© 2010 Menas Associates

SOCAR to supply 95 per cent of Azerbaijan with natural gas by 2013


The State Oil Company of Azerbaijan's (SOCAR) President Rovnag Abdullayev has said that the company plans to supply 95 per cent of the country with natural gas by 2013.

"The rehabilitation of old gas systems in underway in all regions. The task of provision of gas to frontline regions by the end of this year is set to us by the president of the country. And we consider that 95 per cent of Azerbaijani lands will be gasified by 2013,” said Abdullayev.

SOCAR currently holds restoration works in 57 regions. The expansion works will ensure functioning of 8 compressor aggregates and the station capacity will grow from 1.2m³ to 5m³.

Source: News Azerbaijan

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Bushehr nuclear plant to come on stream in September


News emerged in mid August that the fuelling of the Bushehr nuclear reactor was to start on 22nd August. The plant is planned to come on stream on 16th September. Though the process of fuelling and eventual fully-fledged operation of Iran's first nuclear power plant will take a few months, the initiation of the final commissioning will have a significant emotional impact in Iran.

The construction of the Bushehr power plant began in 1975 – before the Islamic Revolution. Originally led by French contractors, the work was interrupted after the 1979 Revolution. Later, in 1982, work was resumed by German contractors; however, under US pressure the project was also abandoned by the German company. In the 1990s, it was taken over by Russian contractors, which committed to deliver the plant by the end of 2000. The 10-year delay in its final delivery as well as the decades-long process of Iran getting its first nuclear power plant have left a deep scar on the Iranian psyche, partly explaining the Iranian overnment's distrust of external promises in he field of nuclear technology. Nonetheless, now that the operation is in sight, the consequences of the commissioning of this plant should be assessed. In this context, one needs to consider the following:

> First, even at full capacity, the electricity generated at Bushehr will only have a minimal effect on Iran's energy balance. Bushehr's 250MW nominal capacity will at best cover 3 per cent of Iran's runaway domestic electricity consumption. Nevertheless, Iran's ambitious plans in nuclear power generation (a total of 7,000MW from seven new plants) will be taken more seriously in the future;

> Second, some analysts argue that the commissioning of Bushehr will give the government the opportunity to show that Iran has reached its nuclear goals despite external pressure. This sentiment is reflected in the following statement by Emad Hosseini, spokesperson of the Majles Energy Commission: “The move indicates that pressure exerted by western countries on Iran and UNSC [UN Security Council] sanctions have left no impact on the enrichment process as well as launch of the nuclear plant.” For the man in the street, the news that Bushehr has become operational will translate into Iran having achieved its goals in “nuclear technology”. In other words, the government may use this opportunity to declare victory in the nuclear stand-off and then announce a new round of negotiations – this time from a position of strength, at least in its domestic discourse. This could also explain why President Mahmoud Ahmadinejad has suggested a new round of negotiations for the end of September;

> Third, and ironically, the commencement of Bushehr operations will also improve the bargaining position of the external powers, especially Russia. In fact, Russia and others can argue that the final delivery of Bushehr would indicate that the external powers have nothing against the development of a civilian nuclear programme in Iran. This argument could partly facilitate the emerging negotiations about a nuclear fuel swap between Iran and the so-called Vienna Group (Russia, US and France). A positive outcome in those negotiations could facilitate further talks and an easing of tensions. That is why the planned commissioning of Bushehr was also welcomed by the US State Department. All in all, the commissioning of Bushehr could de-escalate recent tensions over the Iranian nuclear programme and pave the way for new negotiations.

Consequently, it can be said that both domestically and externally, the chances of a resolution to the Iranian nuclear stand-off will increase dramatically as a result. However, the success of the new round of talks will depend on many other factor. It is too early to predict the final outcome.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2010 Menas Associates

Thursday, 19 August 2010

General Ibrahim Badamasi Babangida set to run against President Goodluck Jonathan


Former military president of Nigeria General Ibrahim Badamasi Babangida has stated that he will definitely contest the 2011 presidential elections. In a press conference at his Minna (Niger State) home, he declared that he would indeed run and contest against President Goodluck Jonathan, if need be, though both men are members of the PDP.

Babangida branded the decision of the PDP's National Executive Council (NEC) on zoning as ambiguous and “intellectual dishonesty”. The PDP's NEC recently stated that it was not jettisoning its zoning policy but that the President Umaru Musa Yar'Adua/Jonathan ticket in 2007 was an inseparable, joint ticket; as President Yar'Adua is dead, President Jonathan could legitimately contest the presidential election on the basis of the joint ticket with the late president Yar'Adua.

Babangida, who did not outline what his policy objectives would be if he becomes president, admitted that policy-making was not his strongest point and he would engage a team of experts to formulate policies for him. Babangida stated that he had decided to run for president because he felt that Nigeria needed an experienced and tested leader with a rich knowledge of the socio-economic and political dynamics of Nigeria - a role he feels he fits into perfectly.

On his role in the annulment of the12th June 1993 elections - deemed to be the most free and fair elections conducted in Nigeria, and which were allegedly won by the late M.K.O Abiola - Babangida said that he has asked Nigerians to forgive him and his regime. He expressed his view that Nigerians, being a “Godly nation” which embraces forgiveness, will also forgive the annulment.

Many political observers believe that Babangida has a Herculean task in turning the tide of public opinion in his favour. Babangida's military administration is smeared with allegations of high-level corruption, treasury looting, human rights breaches and even murder. Babangida has been accused of complicity in the murder of outspoken journalist and editor of Newswatch Magazine, Dele Giwa, who was killed by a letter bomb in 1986.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

LRA causing strife in Southern Sudan


Uganda's rebel group Lord's Resistance Army (LRA) is causing strife in Southern Sudan, and making it difficult for the country to rebuild its agriculture industry by ransacking the most fertile farming areas.

Talking about the persistent problem UN's top humanitarian official for Southern Sudan, Lise Grande, said that the LRA has “completely paralyze the breadbasket of Southern Sudan”.

The wider LRA affected area would produce about half of Southern Sudan's food under normal market conditions, she said.

“The World Food Programme during the course of 2010 is going to be feeding half the population. If the breadbasket for the area is paralyzed by these brutal, terroristic attackers, you can see that this one of the major causes of the crisis that we are facing here,” said Grande.

Source: Bloomberg

For more news and expert analysis about the Sahara region, please see Sahara Focus.

Safeguards in place to ensure security of Ghana's oil and gas sector


Ghana 's Deputy Minister of Energy, Emmanuel Armah- Kofi Buah, has said that Ghana's newly formed oil and gas industry needs to be properly managed in order to benefit the country and its economic development.

Talking about Ghana's oil and gas sector, at a seminar for the workers of General Transport, Petroleum and Chemical Workers Union (GTPCWU), Buah said that the government has instituted new legislations and policies to ensure transparency and accountability in the sector.

Buah also said that security in the sector is of utmost importance and that the government has put in place a plan to safeguard Ghana's energy industry. General Secretary of GTPCWU said the seminar was aimed to support oil and gas workers and provide them with the opportunity to work collectively.

Source: Ghana Web

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

PetroVietnam and TNK-BP sign oil and gas MoU


PetroVietnam has signed a memorandum of understanding (MoU) on oil and gas co-operation with Russia's TNK-BP. The pact will enable the two countries to set up an exploration and production venture in Russia.

TNK-BP is expected to develop plans to expand Vietnam's Dung Quat oil refinery. The country's national press has said that Deputy Prime Minister, Hoang Trung Hai, has approved plans to raise the refinery's capacity to 10 million tonnes of crude oil a year, or 200,800 b/d, from the current of 6.5 million tonnes.

TNK-BP is also expected to supply crude oil to PetroVietnam, or its trading arm, PV Oil, once the two countries start co-operation.

Source: Dow Jones

For more news and expert analysis about Vietnam, please see Vietnam Focus.

Wednesday, 18 August 2010

Tariff sparks trouble on Tunisian border


Trouble broke out at the Ben Guerdane border area between Libya and Tunisia this month in protest at Libya's recent decision to impose a customs tariff of LD150 on every Tunisian car wishing to enter the Jamahiriya. Hundreds of Tunisian traders use the Ben Guerdane crossing every day, many of them going into Libya and returning to Tunisia the same day. This new tax has imposed a heavy financial burden on people already struggling to eke out a living in difficult circumstances.

A group of Tunisians expressed their fury at the new tariff by setting up a roadblock on the Ras Al-Jadir road, setting tyres alight and throwing stones at the security and police services and buses containing Libyan passengers. According to eyewitnesses there were clashes between protestors and the police, leading to dozens of arrests. Those detained were all released soon afterwards.

The Libyans closed the border temporarily, forcing those wishing to cross to smuggle themselves across at various points. It has since re-opened but Tunisia has upped its security in the area. This has not prevented further unrest. Trouble broke out again on 13th August and continued into the following morning. This issue looks set to fester.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

Iran to spend $2.2 billion on gas projects


Iranian deputy oil minister, Alireza Zeighami ,has said that the government has allocated $2.2 billion for seven gas production and refinery renovations. Presently, all seven projects are 70 per cent in the completion stage, and are expected to be finished in the near future.

“Once the projects come on stream, 12 million lt of gasoline would be added to the country's production capacity and 70 per cent of the nation's demand to the product will be met,” said Zeighami.

“Two billion dollars of the mentioned amount will be allocated to Tehran, Abadan, Esfahan, Tabriz, Bandar Abbas, Imam Khomeini and Lavan gasoline production refineries,” he said.

"The rest $200 million will be spent specially to speed up the completion of underway plans," added the deputy oil minister.

Source: Tehran Times

For more news and expert analysis about Iran, please see Iran Strategic Focus.

Saif al-Islam's planning Iftar celebration to recognise anniversary of al-Meghrahi's release


With the first anniversary of the release of the former Lockerbie prisoner, Abdel Basset al-Meghrahi, there would appear to be no end in sight of Western fascination with the story. Not only are UK/Scottish and US officials still debating the issue of BP's reputed involvement in the convicted bomber's release on compassionate grounds but the international media are also focused on his continued survival despite the prognosis made this time last year.

In a move clearly designed to reap domestic support rather than impress an international audience, it is rumoured that Saif al-Islam Qadhafi is planning an Iftar celebration, during this holy month of Ramadan, to recognise the anniversary of al-Meghrahi's release and his continued survival. Saif al-Islam is largely credited with negotiating the release of the Libyan convicted of bringing down Pan Am flight 103 over Lockerbie in 1988.

The matter refuses to leave the public arena, and members of the US Senate and Congress - particularly those from New York and New Jersey, and others who are close to the families of the American Lockerbie victims - appear to be fixated on investigating its various aspects.

So far, it would seem that little concrete damage has been done to bilateral relations between the US and Libya. However, it is unlikely that this will still be the case if the matter is not dropped from public scrutiny in the near future.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

Iran-Syria pipeline to export gas to Syria and Europe


Iranian National Gas Company's Export Chief, Asghar Sohaili Bour, has openly invited Syria to collaborate on installing Iranian-Syrian pipelines to export gas to Syria through Iraq, and also to extend exports to European countries through the Mediterranean Sea.

Bour has said that the collaborative pipeline, as well as gas exports to Syria and Europe, will be on the agenda when the Iranian Petroleum Ministry visits Baghdad sometime in the near future. Bour also added that it has been years since an MoU signing between Iran and Syria to buy gas, and export it to a number of EU energy markets.

In addition to Bour's invitation, Iran's Assistant First Vice President, Ali Agha Mohammadi, and Syria's Director of the Office of the Prime Minister, Tayesir al-Zuobi, said that both countries are keen to boost economic trade, and maintain high levels of political relations.

Source: Global Arab Network

For more news and expert analysis about Iran, please see Iran Strategic Focus.

For more news and expert analysis about Iraq, please see Iraq Focus.

Ghana's government to review utility tariffs downward


The government is expected to review Ghana's utility tariffs downward following the presentation of a report by a technical committee set up to consider consumer concerns.

The committee's report was presented to Vice President John Dramani Mahama at the Castle, Osu, on 13th June. According to the Daily Graphic newspaper, Mahama was due to formally announce details to the press in the week beginning 16th August.

The Public Utilities Regulatory Commission announced sharp rises in utility tariffs in May 2010, in a move strongly condemned by the Ghana Trades Union Congress and the Association of Ghana Industries. The utility increases included an 89 per cent hike for electricity tariffs and 36 per cent for water.

Cocoa purchases in Ghana are approximately six per cent down on last season, according to a Reuters report.

Cocoa purchases declared to the Ghana Cocoa Board (COCBOD) by private buyers show 611,619 tonnes purchased for the October 2009 to July 2010 season, compared with 651,974 tonnes declared during the same period a year ago.

The government blames smuggling for the deficit and COCOBOD said that at least 60,000tonnes have been taken illegally to Côte d'Ivoire and Togo, where cocoa attracts a higher price. The government aims to increase cocoa production to 1 million tonnes per year by 2012.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2010 Menas Associates

South Africa Upholds Imperial's Right Over Kumba Mine


South Africa upheld its decision to award part of the prospecting rights at Kumba Iron Ore's Sishen mine to a company whose biggest shareholder has been in business with the son of the country's president.

The Department of Mineral Resources was told by its legal advisers that the decision to award 21.4 per cent of the rights to Imperial Crown Trading was lawful, Mines Minister Susan Shabangu said today in the capital, Pretoria. Kumba said it will keep fighting the ministry in court.

Kumba, controlled by London-based Anglo American Plc, and Imperial Crown both applied for the Sishen rights after previous holder ArcelorMittal South Africa Ltd. missed a deadline to renew. Kumba, as a result, canceled a nine-year-old contract to supply the steelmaker with ore at prices that are below market rates. ArcelorMittal South Africa has since agreed to buy Imperial Crown for 800 million rand ($110 million).

“This is bound to be politically sensitive and we don't expect the issue to go away quickly,” Christopher Melville, an analyst at London's Menas Associates, said in an e-mailed reply to questions today. “Some level of permanent reputational damage to the South African mining industry seems inevitable, the question is now a matter of degree.”

The National Union of Metalworkers of South Africa this week asked for the cancellation of the award to Imperial, whose only asset is the prospecting right in Sishen in the Northern Cape, because it said the company has no ability to mine.

Only One

Imperial “is the only company that issued a prospecting licence application in the terms of the law,” Shabangu said. The department would consider the “implications” of the accord by ArcelorMittal South Africa to buy Imperial, she said.

It would also this month decide on an appeal by Lonmin Plc against the award of some rights for platinum byproducts near one of its mines to South Africa's HolGoun Group, Shabangu said.

South African mining companies are required by law to renew mining rights and have to show they meet targets for black ownership, employment of black managers and women and economic development of communities near their operations.

Kumba “remains of the view that its challenge against the rights granted to ICT is justified, and will continue to pursue the Court process,” it said in an e-mailed response to queries.

President's Son

Parekh is CEO of Shiva Uranium, a uranium exploration company, according to the company's website. Duduzane Zuma, son of South African President Jacob Zuma, was a shareholder in the explorer, according a spokesman at Imperial who declined to be identified because of company policy.

ArcelorMittal South Africa wasn't able to comment, spokesman Themba Hlengani said by text message.

Business Leadership South Africa, an association of chief executive officers of 80 of the largest companies in the nation, said controversies over mining rights were hurting the economy and investor security. “There is real damage being done to our economy,” Bobby Godsell, chairman of the association and former AngloGold Ashanti CEO, said in a speech in Johannesburg. South Africa is the world's largest platinum and chrome producer.

Canada's Fraser Institute, a research agency, ranks South Africa before only the Democratic Republic of Congo and Zimbabwe in terms of the ease of investment in mine exploration on the continent. South Africa's mining industry employs 491,000 people and makes up 5.2 percent of gross domestic product, according to the country's statistics bureau.

Moratorium

A six-month moratorium has been declared on awards of prospecting rights to audit the system and ensure it's “clean,” Shabangu said. Three ministry officials have been suspended for maladministration, she said.

The department is also undertaking an audit of all licenses, and will announce the outcomes by the beginning of next year, she added.

“It may serve to settle the nerves,” said Garth Mackenzie, a trader at Imara S.P. Reid in Johannesburg. “People are worried about what's going on there, about how rights are being awarded.”

Kumba fell 110 cents, or 0.3 per cent, to 341 rand by the close of trading in Johannesburg, while ArcelorMittal South Africa rose 0.6 per cent to 86.5 rand.

Source: Bloomberg Business Week

For more news about South Africa, please visit the Menas Associates Newsroom.

Tuesday, 17 August 2010

Iraq, Shell and Petronas award a 15 well contract to Halliburton


Iraq, Shell and Petronas has awarded Halliburton a contract to drill 15 oil wells in Iraq's Majnoon oil field, while Petrofac secured a contract to develop two new crude processing plants with a capacity of 50,000 b/d each and to rehabilitate the existing crude oil plant.

"These contracts are part of implementing the preliminary plan to develop Majnoon oilfield for the next two years," said an Iraq oil industry official.

Shell and Petronas, who signed a contract to develop Majnoon oil field earlier this year, hope that their current output of 45,000 b/d will eventually increase to 1.8 million b/d.

Petrofac was awarded a two-year contract to build and develop Iraq's oil and gas infrastructure, as well as build new storage and export turbines for the oil field.

The contracts awarded to a number of international oil companies are expected to boost Majnoon's output capacity to 12 million b/d within seven years.

Source: Reuters

For more news and expert analysis about Iraq, please see Iraq Focus.

OGX's Parnaíba blocks could hold up to 15 trillion cubic metres of natural gas


OGX has discovered natural gas in the OGX-16 well, in the NP-T block 68, located in the Parnaíba basin in northern Brazil. OGX owns seven exploration blocks in the Parnaiba basin, with 20 other prospects for further natural gas discoveries which could hold as much as 15 trillion m3 of gas.

The company plans to drill eight more wells in the region, with the overall number of wells totalling at 15. The investments in the exploration blocks are expected to cost between R$600 million and R$700 million.

To find out more about OXG please visit OXG's web site, which you can find here.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

Eni acquires 55 per cent of Ndunda block, in the DRC


Eni has entered the Democratic Republic of Congo (DRC) by signing an agreement with Surestream Petroleum to acquire part operatorship of the Ndunda block, in the Bassin Côtier, located in the onshore Lower Congo Basin.

The partnership is divided between Eni (55 per cent), Surestream (30 per cent), State-owned company COHYDRO (8 per cent) and Ibos (7 per cent). The agreement, sanctioned by DRS authorities, follows the Strategic Cooperation Agreement, signed August 2009, between Eni and the DRC to develop the country's hydrocarbon sector.

Through this acquisition, Eni further strengthens its presence in the Sub-Saharan region where it currently operates in Nigeria, Gabon, Congo Brazzaville, Angola, Ghana and Mozambique with overall production in excess of 450,000 b/d.

To find out more about Eni please visit Eni's web site, which you can find here.

For more news and expert analysis about the Sahara region, please see Sahara Focus.

© 2010 Menas Associates

North Oil Company displaces villagers causing further antagonism between Arabs and Kurds


North Oil Company is stirring up antagonism between Arabs and Kurds in the already tense governorate of Kirkuk. The company issued an official demand on 24th July asking that the local authorities evacuate four Kurdish villages in the area to enable it to start drilling there. A source in North Oil Company told the Kurdish media that the firm had issued a letter to the local police asking them to vacate the villages as it had made an oil discovery in the area. The villages are all in the area known in Kurdish as Dobes and in Arabic as Debes.

The demand has caused uproar in the area because the company has only requested that Kurdish villages be evacuated. As Hadi Hama Mustafa, the first deputy of Debes, declared, “What is strange for me is that the request does not ask for evacuation of any Arab-populated villages.” Similarly, the head of the Kirkuk governorate council, Raskar Ali Hama Jan, expressed his view that the company's demands were “astonishing” because, given that there is a huge expanse of land where oil and natural gas are present, the oil must also exist in the Arab and Turkmen villages that are in the area.

The company's demand is being considered as a political move. For the Kurds this issue is particularly poignant because it is reminiscent of the days of Saddam Hussein who repeatedly uprooted Kurdish citizens and forced them to relocate for political reasons.

For more news and expert analysis about Iraq, please see Iraq Focus.

© 2010 Menas Associates

Monday, 16 August 2010

President Jonathan meets with Eni's CEO to discuss oil and gas developments


President Goodluck Jonathan has recently met with Eni's CEO Paolo Scaroni to discuss the strategies in the Nigerian hydrocarbon sector within the current international energy environment.

At the meeting, the two parties discussed the development of power generation through use of associated natural gas, in order to avoiding the gas flaring practice. In a join venture with several Nigerian national companies Eni contributes over 15 per cent of the power capacity in Nigeria.

Jonathan and Scaroni also discussed Eni's role in the Liquefied Natural Gas (LNG) production sector which contributes to the growth and development of the Delta regions, and Eni's future commitment to development of Nigerai's oil and gas industry.

To find out more about Eni please visit Eni's web site, which you can find here.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

Turkmenistan raises borrowing from China to $8.1 billion


Turkmenistan's government has increased borrowing from China to $8.1 billion, to fund major developments in the Turkmenistan gas industry.

According to a number of national sources, Turkmenistan's President Gurbanguly Berdymuhamedov instructed gas industry leaders to hold negotiations with the State Development Bank of China (SDBC) for a preferential loan in the amount of $4.1 billion, to be used to further develop a field in Southern Eloten. China has already allocated Turkmenia $4 billion for realisation of the first stage of development of the field.

Earlier in the year, Turkmenistan's government granted licenses to ConocoPhillips and Mubadala Development Co for development of Block 21 in the Turkmen sector of the Caspian Sea.

Source: ABC Azerbaijan

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Mubarak sends Ramadan greetings to Bouteflika


According to the Egyptian press, Egypt's President Hosni Mubarak telephoned President Abdelaziz Bouteflika this week to send him seasons greetings at the start of Ramadan.

This is apparently the first communication between the two leaders since Mubarak's brief visit to Algeria in July following the death of Bouteflika's brother.

If this was an attempt at rapprochement by Egypt, it does not appear to have been met with much warmth on the Algerian side. According to a government spokesperson quoted in the Algerian media: “Relations between the two countries have still not returned to normal.”

For more news and expert analysis about Algeria please see Algeria Focus, Sahara Focus and Algeria Politics & Security.

© 2010 Menas Associates

South African Mining Investment Risk Grows as Anglo, Lonmin Lose Rights


Anglo American Plc and Lonmin Plc, who employ 100,000 people in South Africa, say the government has deprived them of mine rights, threatening investment and job creation in the country's biggest export industry.

The disputes over the rights, some of which are now in the hands of former government officials, add to investor concern that their investments in South Africa aren't safe. The ruling African National Congress (ANC) is preparing to discuss mine nationalization at a September congress.

“These could be the first indications of a worrying trend,” said Chris Melville, an analyst at London's Menas Associates. “The key question is whether the government looks to resolve this uncertainty and close the loopholes or whether we begin to see politically connected individuals and companies systematically exploiting them.”

South Africa, which boasts the world's biggest platinum and chrome deposits, is already struggling to attract foreign investment as laws to redress the inequalities of apartheid compel the sale of stakes in mines to black South Africans, increasing investment costs. Canada's Fraser Institute, a research agency, ranks the country ahead of only the Democratic Republic of Congo and Zimbabwe in terms of the ease of mining exploration investment in Africa.

The ANC's youth wing and labor unions, the groups that propelled Jacob Zuma to the presidency last year, are calling for the country's citizens to benefit more from mineral resources, valued by Citigroup Inc. at more than $2.5 trillion. At stake is investment in an industry that employs 491,000 people and accounts for 5.2 percent of the country's gross domestic product, according to Statistics South Africa.

Employing Black Managers

The disputes have arisen as companies renew mining rights to comply with laws that stipulate targets for black ownership, the employment of black managers and women, and the economic development of communities near their operations. They form part of legislation designed to make up for the use of cheap black labor during white rule in the country's mining industry.

“It's a piece of legislation that's still being tested in application,” said Sandile Nogxina, director general of the government's Department of Mineral Resources, in an interview. “I don't believe it should frighten investors away as we have courts of law in the country to deal with disputes.”

Anglo and Lonmin say they have been wronged.

Prospecting Rights

In March, the department awarded a fifth of the prospecting rights in London-based Anglo's Sishen iron ore mine to Imperial Crown Trading, prompting a lawsuit from Anglo subsidiary, Kumba Iron Ore Ltd. Imperial's biggest shareholder, Jagdish Parekh, has been involved in contract mining and uranium investment with Zuma's son, Duduzane. The other five shareholders include ANC members and a former ANC employee.

While Pretoria-based Kumba said in an e-mail that “it is the only company that should be granted these rights,” Imperial maintains it has done nothing wrong. Jacinto Rocha, a former department official, said Kumba's application was improperly submitted.

In May, London-based Lonmin lost the prospecting rights to some of the metals mined alongside platinum to a unit of HolGoun Group, led by a former Public Enterprises Ministry director general and Lonmin director, Sivi Gounden, his wife, Vanessa, and Miriam Sekati, an official in South Africa's Security Ministry. Lonmin said the award of the rights was “wrong.” Vanessa Gounden said by e-mail the company had acted “with integrity and within the ambit of the law.”
No History in Mining

Both Imperial and HolGoun are closely held, partly black- owned, and don't control any operating mines in South Africa.

The new holders aren't well known because black South Africans were barred from investing during apartheid. The fact that some are followers of the ANC is irrelevant because many people belong to the party, said Nogxina of the government's Department of Mineral Resources.

“South Africa is trying to promote the entry of historically disadvantaged people into the economy,” he said. “Of course, they will have no history in mining.”

Already the new owners are benefiting. Last week, Imperial agreed to sell its Sishen rights to ArcelorMittal South Africa Ltd., which previously lost the rights after failing to renew them on time, for 800 million rand ($110 million). At the same time ArcelorMittal South Africa agreed to sell a stake to black investors including a group lead by Duduzane Zuma.

“Why should someone benefit to the tune of 800 million Rand because of the exploitation of an oversight?” said Peter Davey, head of mining research at London's Ambrian Capital Plc. “That there are similar names that keep appearing is worrying.”

'Terrible Message'

Lonmin was also temporarily banned from selling byproducts from all of its platinum mines after the department said it missed a deadline to renew some of its rights. Platinum group metals are mined from the same orebody as gold, nickel, chrome and copper.

Lonmin shares fell 5.1 percent in London on Aug. 6, the biggest decline in five weeks, in the first trading session after the announcement.

“It sends a terrible message to investors,” Peter Leon, chairman of the London-based International Bar Association's Mining Law Committee, said from Johannesburg. It says “political connectivity trumps good commercial sense.”

Source: Bloomberg