Politics, religion, and culture where East meets West

Posts Tagged ‘energy

LPG: rekor zam

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As Russia loses a reliable friend in Iran, it takes precautions in the Caucasus and re-engages with its energy clients. Today, a “yurtdışı maliyetlerdeki artış” (foreign price increase) is blamed for a sharp, overnight rise in the price of LPG (Liquified Petroleum Gas) in Turkey.

Turkey has been meddling in the Caucasus over the past few days, seeking to begin a settlement the Nagorno-Karabakh dispute between Azerbaijan and Armenia, with hopes for its own normalization (?) with Armenia. Russia is not interested in settling this dispute, much less doing so to Turkey’s advantage.

The vast majority of Turkish energy is imported from Russia.

Over a third of Turkish passenger cars use LPG otogaz.

LPG’ye gece yarısı 30 kuruş zam
İsmail Altunsoy, Zaman, 3 Aralık 2013

LPG vehicle owners awoke this morning to a record price increase. LPG’s per-liter price rose by 30 kuruş  [$0.15]. Along with the increase, the price of one liter of LPG in Istanbul climbed from 2.81 to 3.11 lira; in Ankara, from 2.61 to 2.91 lira. This most recent increase is the greatest one-time price increase made to LPG in history.

. . .


Written by M. James

December 3, 2013 at 3:17 pm

Fixing the rial

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Since March, when I last posted (“Iranian oil empire?”) about the currency war in Iran, things have visibly and significantly cooled. But just because there are no pipeline explosions, naval exercises, or military threats doesn’t mean the situation hasn’t progressed. Let’s start where we left off, with an Iran inconvenienced by sanctions, but essentially unfettered in its oil production and export capabilities—especially in transactions with the BRICS.

Chris Cook, former director of the International Petroleum Exchange, suggests that the sanctions on Iran may not just be ineffective, but counterproductive; and that Iran is actually better off (as March 20th might have suggested) without a market for dollars. Anyone who can foster a good relationship with an off-market Iran will now have incentive to buy discounted crude (relative to global prices) for refining and resale at a profit.

Even more significant is the possible end result of a developing energy voucher system in Iran designed to decrease domestic demand and wasteful energy use.

Taken to its logical conclusion, where this policy leads is for Iran’s Central Bank simply to fix a new rial – with several zeroes removed – to a suitable unit of energy, and for energy prices to be set against this unit. This could be implemented in a similar way that a deficit-based abstract currency unit was fixed to participating European currencies at the launch of the euro.

The transition process would need to be properly and transparently managed by a monetary authority – probably the Central Bank – in close liaison with the oil and gas complex. The outcome of adopting an “energy standard” and an energy dividend in this way would be to rapidly reduce profligate use of energy at the same time as addressing the problem of inflation.

Instead of debasing Iran’s rial entirely, the U.S. may only be encouraging Iran to rethink its currency in new, energy-based terms. If this becomes reality, the Iranian rial would effectively become a hedge against volatile global crude oil prices and dollar-denominated market manipulation. Put simply: If each rial in your reserves guarantees a fixed amount of Iranian oil, free from market volatility, you’re going to buy more rials.

I don’t think that’s what Obama intended.

Written by M. James

April 27, 2012 at 1:16 pm

Projected TAGP volume suggests a future TCGP

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Anatolian gas pipeline may expand fourfold
Robert M. Cutler; Asia Times Online; Apr. 18, 2012

MONTREAL – The president of the State Oil Company of Azerbaijan (SOCAR), Rovnag Abdullaev, has announced that the US$8 billion-plus Trans-Anatolian Gas Pipeline may be expanded four-fold from its initially planned volume of 8-16 billion cubic meters per year (bcm/y) to as much as 60 bcm/y.

SOCAR will build the pipeline (known by the acronym TAGP and also TANAP from its initials in Turkish) from the Georgian-Turkish border to the Turkish-Bulgarian border, with the participation of the Turkish firms BOTAS and TPAO. The initially estimated cost for its construction was $5 billion, but this has already risen informally to $6-8 billion, and the final cost will be known only after the conclusion of the actual construction contracts.

Abdullaev’s statement represents new formal support for the Trans-Caspian Gas Pipeline (TCGP) project to transport natural gas from Turkmenistan under the Caspian Sea to Azerbaijan and onwards to Europe. The European Union has been participating in talks towards this end jointly with Turkmenistan and Azerbaijan, and has stated its readiness to purchase 30 bcm/y from Turkmenistan.

That is the volume usually cited as necessary to make the TCGP commercially viable. For its part, Turkmenistan has stated its readiness to sell up to 40 bcm/y. According to Abdullaev, however, it is only “after the EU and Turkmenistan agree” that Azerbaijan can “think of which territory can be allocated for transit”.

Read more.

Written by M. James

April 18, 2012 at 9:44 am

Fukushima and the East-West energy corridor

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The failure of the light water reactor in Japan’s Fukushima Prefecture to withstand the March 2011 tsunami will (whether it is a sensible reaction or not) discourage new ventures in nuclear power. The newest big-time player in energy—natural gas—will become even more essential in the West and, as a pipeline for the ever-expanding market, so will Turkey.

According to this report:

In the near term, as world economies begin to recover from the downturn, global demand for natural gas is expected to rebound, with natural gas supplies from a variety of sources keeping markets well supplied and prices relatively low.

Among these sources is “Russia and the other countries of non-OECD Europe and Eurasia” (read: Caspian) with an increase in production of 6 trillion cubic feet from 2007 to 2035. With well-supplied markets and low prices, financing pipelines as an efficient means of transportation will become a critical interest for energy companies with stakes in natural gas. This will be of especial interest to nations such as Azerbaijan and Turkmenistan, which are slated, along with Russia, for further natural gas production. By piping liquefied natural gas to Turkey’s nearest high-capacity Mediterranean port, Ceyhan (as they do with oil), the Caspian nations would be able to reach a large Mediterranean and European market—without relying on Russia or Iran for right-of-way.

Russia, displeased by these prospects, may have even further troubles in the future with its own increased natural gas production. If Russian supply exceeds Eastern European demand, which is believable, a wider market will be desirable. But with the Turkish Straits already jam-packed with Russian oil tankers, there is no room for the liquefied natural gas (LNG) tankers that would be necessary for Russia to export to the Mediterranean (there were 200+ tanker collisions/incidents in the ’90s alone). The solution? Turkey would propose the use of overland routes similar if not identical to those used by other Caspian Sea nations. This may be, for Russia, the only solution (and would be a source of extra pocket change for Turkey). But it will only have to be a “solution” if Turkey doesn’t absorb the remainder of Russia’s export all by itself before it can reach the Mediterranean market—another believable scenario.

Regardless, the Caspian won’t stop producing any time soon, and for Turkey, the West, NATO, and opportunistic supervillain daughters of oil tycoons, a Turkish East-West energy corridor for natural gas is a promising, and lucrative, possibility.

Written by M. James

May 24, 2011 at 2:20 am