Charlie Pedersen
Bin Laden, Libya, & Values

Charlie Pedersen © 6/2011  WE x ∞   

                            Convergence, Bin Laden, Libya, and Values

 Now that the door has closed on Bin Laden, the question is there a door of opportunity that will open? Just as 9/11, the collapse of the Soviet Union, The JFK assassination (incl. the RFK and MLK assassinations), and Pearl Harbor were gateways, the age of global terrorism is at a crossroads, notwithstanding the world's obsession with military chess amongst international politics as the current "strategy" of choice.

 Look at Middle East and African "strife", to put it mildly.  How are oil and military rich North African and Middle East dictatorships and Kingdom's contending with cries for freedom and democracy?  What really tripped the rebellions were the skyrocketing costs of food in nations where fossil fuels (oil, natgas in particular),and in some cases minerals, metals, and land,  are leveraged by the oligarchies, kingdoms, and military juntas in a quest to maintain  wealth and power. Governments like Egypt andPakistan received billions in military aid, while investments in farming and industry were much less. With the advent of $100.00 per barrel oil, and the visibility of wealth, in the ruling class or military in Libya, Syria,  Yemen and elsewhere., young people who were all over the internet saw that the something's not right. Wheat, corn, and meat prices skyrocketing where food is a large part of their daily expense, but the rich get richer.  So the people took to the streets.

Fifty percent of the world population is at or below poverty level. The cry for change travels fast in the internet world, so this demand for freedom , share of wealth, opportunity, and hope will spread.

But who is asking: "O.k., if democracies emerge, how are they going to deal with the rising cost of food and commodities?"  This lack of strategy and tactics regarding the underlying problems is a breeding ground for Jihadists and hate mongers who are very adept at replacing frustration with hate and blame. Meanwhile, food prices are historically tied to energy prices. We all know where energy prices are going.

 In the U.S.A. and around the world, we have dismissed "hindsight", because it's too dissonant? The intensity and size of this chaos caused by: population growth; codependency of world markets; cultural visibility in a global economy, and presence of graft and corruption is boiling over. In the U.S.A., the ideals of the people who forged the Sherman anti-trust act of 1890 and the Clayton anti-trust act of 1914, the separation of Banking and Investment powers in the New Deal of the 1930's(Glass Steagall, 1933), the United Nations after WWII , and European and Japan reconstruction objectives, etc. have been subordinated with the continuous propping up of regimes and multinational corporate entities (yes, including the US)  to achieve economic and/or military leverage.

. The world's irreconcilable wrestling reduced to this sound bite:

    World interests (i.e. financial and politicalwize) versus society's values (humanitywize).

 E.g. The Europeans need Libya's oil more than the US, so let them lead the fight against Kadhafi. (According to Twitter trending topics it's spelled Gaddafi in D.C., but nationally it's Qaddafi and worldwide Gadafi/Kadhafi,") .That's defined as "interests". Sure, freedom and democracy, but no discussion of food cost and supply and the change that must be expected by the people who are revolting.

 The hypocrisy and denial surrounding policy problems like justifying one military action versus another, especially in light of Bin Laden's death,  is paralyzing. Yes, I mean Afghanistan, Pakistan, Iraq, Iran, Syria, Palestine, Libya, Tunisia, Egypt, Sudan/Darfur, the Congo, and most of sub-Sahara Africa. And that is one sector of the globe. This includes, but is beyond Al Qaeda. Now, with European and American budget's tightening, we now have to reconcile one interest over another?  There are two classes of nations. Those with a history of entitlements (EgyptIsraelIraq,PakistanAfghanistanIndiaTunisia), and those who supply the consuming nations with oil (Saudi ArabiaLibyaIranIraqSyriaJordan, The Sudan, Nigeria, the other istans, (+Canada and Mexico) and more). Most of the supplier nations are Kingdom's, dictatorships, or pseudo democracies like Iran. Of the entitlement nations,(in the Middle East) only Israel is a strong democracy. The rest are struggling or emerging democracies.

 Cultures and religion are leveraged by all.  Is this the root of the problem, i.e. Abraham's legacy of squabbling offspring and their heirs who just can't get along? Or is it simply oil. We're caught in a quagmire that Ron Paul and 1990 Ronald Reagan warned us about. Our own post WWII  political culture warns against isolation and failure to follow through with our commitments.

 The core interest vs values juxtaposition  is beyond only terrorism: Water andEnergy;  World Health; Identity rights (the right to exist without fear of murder, slavery/trafficking,  or degradation); multi cultural co-existence; and militarism-the world's  "solution" for peace (order and control) in lieu of solving these other challenges.

 Now we must face the "Pakistan issue" in light of interlinking Afghanistan, China, nuclear, Al Qaeda, and yes, Iraq and Iran,  India. Underneath all this political, military, and financial aid dilemma with Pakistan, is the harsh reality that Pakistan is a nation with almost 175,000,000 people, with 2/3 of the population at or below the poverty level and 50% uneducated! India, a democracy with 1.1 billion people, has 70-75% of their people living on $2.00 per day or less. Listening to the angst on all sides, we seem to forget the pawns in these chess games are massive populations who have real day to day survival issues. Is it surprising that they sometimes cling to religion and hate in lieu of frustration, and are manipulated with the same? Everyone's rhetoric seems to be about effective use of the knights, rooks, and queens to protect the Kings (incl. Generals, Presidents, and Prime Ministers), while the pawns take the brunt on the front lines of society, poverty, financial burden, and war. Now the USA's and EU's financial shortfalls , given the domestic debt, are coming home to roost.

 The  U.S.A and E.U. contend with fiscal crises, trade imbalance, petroleum prices, and the whole world faces commodity inflation.

 China is perfectly willing to trade commodities for military or infrastructure assistance all over the world to fuel their insatiable demand for resources.. They grow, we're slow.

We must take on the Water, Energy, and food challenge in the context of the world's financial quagmire.  The path through those challenges will bring in all the rest of the core pieces of the World EquationTo do that, WE must recognize a new paradigm.

 The attached articles: Libya oil question; the food price root problem; and even world fiscal crises all surround the interest/values equation. Irreconcilable conflict?

 So what's the big deal with Libya? Turns out they and Nigeria have the highest quality sweet crude with the lowest extraction cost- reported in 2007 as one dollar per barrel for the highest quality 100 dollar per barrel Libyan  oil. Occidental Petroleum (cal) and Petrol Canada reportedly paid one billion dollars each for long term contracts yielding about 12 % of the profits. No wonder the Libyan people want democracy.


It's time to seriously consider future-sight- take your consciousness 100 years into the future and then look back, consider the inevitable, and recognize a simple and indisputable reality:

                  1.   Fresh Water is the elixir of life;   (incl. sanitation and curtailing water borne disease)

                  2.  Clean  Energy is the elixir of modern society.

                  3.  Without economic access to both, WE can no longer assure prosperity and world order. It's time to change our World Equation.

The "should be obvious" point... the purpose of modern society is not to exist merely to acquire Water and Energy. The role of Water and Energy is to enable life including the opportunity to: experience health and happiness; and allow our families, communities, society, and economies to endure, and not to kill each other!

 Yet in some parts of the world, women walk four to six hours per day just to acquire somewhat clean water. In many parts of the world, modern and out-dated militaries are warring over securing continuous energy sources, or trading energy for military technology to force power and control.

 The unclear recognition of the priority and interdependency of these societal and resource conflicts portends the immediate threat of and reality of global warring way before global warming takes its toll. WE argue over meteorology while society boils like a pot cauldron filled with Water, Energy, land use, health, food, poverty, environmental, and near economic chaos. Since 9/11, we have squandered trillions of dollars on war and retribution while the pot keeps boiling over and citizens are being scalded at all levels.

Yes, a dysfunctional family of nations squabbling over the dinner table of life.

 Apparently, God / Nature set us up pretty well, but it's time to recognize we were given a brain for a reason, and the "stagnation meter" is way over our specie's time limit. This can be simply put as : " Population dynamics meet supply and demand imbalance."

 Stephen Hawking pointed out his frustration with our  "world in chaos, politically, socially, and environmentally" on Yahoo!Answers in 2006. He could have added economic chaos in 2008. Einstein claimed "It has become appallingly obvious that ourtechnology has exceeded our humanity".  Hawking's haunting 2006 Yahoo!Answersquestion is more imperative: "How can humanity sustain the next hundred years?"

Sciences great thinkers are baffled by society's use of their gifts

Science and technology seem to be coming to a crossroads with society's accumulating storm of  demand: Water stress (including sanitation and water borne disease); Energy demand; food prices; war; terrorism; near and real pandemics; climate instability; economic hyper recession; and commodity inflation (oil, grains, meat, metals, rare earth, etc. ). The intersection of chaos and orderly opportunity defines the twenty first century.

Opportunity is abound with; mobile telecommunications/the internet/ multi-media;  the continuation of Moore's law doubling chip price performance every two years; quantum science forging ahead with super colliders; medical research pioneering  into DNA and stem cell frontiers; Pharma; food/agri-science;  and yes clean Water andEnergy: et al.

Mother earth pushes back at us with hurricanes, tsunamis, earthquakes, floods, tornados, and climate change, while we blunder through: oil spills; unsatisfactory nuclear reactor safety; weak retaining wall strategies to hold back the power of water; and snails pace (compared to world demand) improvements in energy; energy efficiency; fresh water generation; cultural reconciliation; and global economic synergy-  i.e. an economy where all boats rise, albeit at different rates:

  Population's social and political dynamics meet nature's dynamics.

 WE need a mid course adjustment, and our future knows it!

Charlie Pedersen

Attached articles (Note the dates):

Energy and Capital: 2008, Libya's $109 dollar profit on $110 OIL.

Libya, Oil, and Cynical government, 2009

Oil companies that gave bonuses to Libya

The business of doing business in Kadhafi's kingdom, 2011

Shell oil signs first 30 year oil deal with Libya, 2005

CNN Rising food prices could push millions to poverty, 2011

Behind Libya, rising food prices and US debt 2011

Growth or hot money: what's really affecting food prices?  2011

CNN Money:  Tensions rise on surging food prices

World looks beyond Libyan oil as conflict rages (Saudi crude vs Libyan sweet crude) 2011

Note: Feb 22, 2011 ... "According to Twitter trending topics it's spelled Gaddafi in D.C., but nationally it's Qaddafi and worldwide Gadafi/Kadhafi,"


Energy and Capital: Practical Investment Analysis in the New Energy Economy

Libya Oil

One Country's $109 Profit on $110 Oil

By Sam Hopkins

Wednesday, March 8, 2008

In February, $85 to $90 sounded like an agreeable oil price to Shokri Ghanem. Then, in early March the head of Libya's National Oil Company declared that his country had "no complaint" with $100 per barrel. Now, we're pushing $110, and Libya's big-mouth momentum is building with each dollar.

That's because official estimates say Libya can produce oil for one dollar a barrel. At $110 on the world market, the simple math gives Libya a $109 profit margin.

Dr. Ghanem is a man of the world. He was born in the Libyan capital of Tripoli, received his graduate degrees inBoston, and usually makes his press announcements from Vienna, where OPEC is headquartered.

His country, on the other hand, has spent most of the past two decades isolated from the international community, marked as a state sponsor of terror and restricted from trading its oil freely on the global market.

In the mid 80s, Libyan leader Col. Muammar Qaddafi was usually seen sporting drab military fatigues and sunglasses. Libyan agents under his command were linked to the bombing of Pan Am Flight 103 over LockerbieScotland in 1988, and other terror attacks as well.

Libyans were even the bad guys in the 1985 classic "Back to the Future"--they were the reason why Marty McFly ended up speeding off in the time-traveling DeLorean!

Now Libya has apologized officially for its involvement in the Lockerbie bombing of Pan Am Flight 103 in 1988 and other attacks, and Col. Qaddafi, the hardcase of old, sports a shiny shawl in public.

After the U.S.-led invasion of Iraq in 2003, Libya renounced its early-stage program to develop weapons of mass destruction, putting a smile on many Pentagon faces and helping to bring Libya in from the diplomatic cold.

That move also made it possible for U.S. oil firms, always thirsty for new supply to position themselves for a fossil fuel frenzy.

Libya's Producing Oil for $1 a Barrel

Having sat dormant since Reagan slammed the doors on Libyan oil in 1986, Libya looked like a fossil fuel time capsule. On the other side of the Sahara from Libya and across the Red Sea, Persian Gulf fields are dwindling, with supergiants like Saudi Arabia's Ghawar in irreversible decline and needing a 30% to 55% water cut for extraction.

Down in sub-Saharan Africa, Nigeria in recent years has become one of the most hostile environments for doing business in the oil-producing world--and that's saying a lot.

Lucky thing for us, then, that Libya--not Nigeria--has Africa's largest oil reserves, with a proven 41 billion barrels underground. And word is, much of that is the lightest, sweetest and easiest-to-extract black gold left on earth.

That's right, Tripoli tea.

None other than the U.S. Department of Energy confirms the bonanza:

Overall, Libya is considered a highly attractive oil province due to its low cost of oil recovery (as low as $1 per barrel at some fields), the high quality of its oil, and its proximity to European markets [emphasis mine].

"A Time for Watching?" Hardly!

"It is not a good time for action, it is a time for watching," Shokri Ghanem said to Reuters early in March, just before the monthly OPEC meeting.

He predicted no output increase in February or March, and he was right. But Dr. Ghanem is one of very few national oil company heads who can actually expect major export capacity increases from near-surface wells in the coming years.

Despite Ghanem's stoic approach to OPEC output, he has to be grinning on the inside. After all, his country is planning for a brighter future with the knowledge that they will be selling fresh oil into a triple-digit crude market.

In December 2007, Qaddafi announced plans to start a national sovereign-wealth fund to invest Libyan oil revenues, with over $155 billion to be spread around various industries.

That same month, France's Nicolas Sarkozy became the first western head of state after the diplomatic thaw began in 2003 to host Qaddafi. In Paris, they agreed to nearly $15 billion in deals for airplanes and other big-ticket items. It's the kind of money France knows Libya has, and France also knows Libya has the oil to make France secure about its domestic supply.

While the entire world watches oil tick up, up, and past another ten-dollar plateau, OPEC officials have every incentive to keep talking prices skyward.

But now is not a time for watching, it's a time for investing.

We're in the middle of a monumental energy and commodity bull market, as other assets wobble on credit concerns and raw materials seem to give us the only real and true equity left in the world.

Global Growth Stocks subscribers have already reaped triple-digit gains on my Libyan oil play, a small Canadian company that beat the majors to revive sleeping drill holes. We're seeing more profits in international energy every day at Energy and Capital, and we're keeping you up to date with every development in markets and the mouths that move them.


Sam Hopkins

 Libya, Oil and Cynical Government

Published September 6, 2009 
Tags: Gordon BrownIRALibyaOilTony Blair

In recent years our relationship with Libya has been fundamentally transformed...They are an essential partner in the fight against terrorism and it is in the UK's interests for this co-operation to continue.  Gordon Brown in a letter to the IRA Victims' Lawyer

I always find it remarkable how, in diplomatic circles, terrorists one minute can be transformed into opponents of terror the next.  The redemption of Libya has been rapid.  Previously the basket-case of the Middle East, Libya was welcomed into the diplomatic fold by Tony Blair while Saddam and Iran were being excommunicated.  Gordon Brown and George Bush continued the process of diplomatic normalisation for a state that has done little to change its colours.

We all know that this is all to do with oil supplies — and nothing at all to do with any sea-change in outlook or behaviour on the part of Colonel Gaddafi.  Libyan oil production was 1.8 million barrels per day in 2006, giving Libya over 60 years of reserves at current production rates if no new reserves were to be found.  Even better, Libyan oil is cheap to extract and easily transported to Europe.

Previously when economic sanctions were in place against Libya — and when Libya, in return, bank-rolled and armed the IRA — finding and bringing to production new oil fields was severely hampered.  Libya needs the expertise of Western oil companies — just as Western oil companies depend on Libya

The oil companies also mix in high places and have advisers with clout.  For Tony Blair it would have been a little too obvious for him to have taken a high paying executive role with one of the major oil companies.  Instead he has accepted a part-time role as a senior adviser to the Wall Street bank JP Morgan Chase. 

On November 26th last year JP Morgan put out a media statement stating that, "The expansion of our global physical capabilities in oil represents a clear commitment to our clients. It demonstrates that we are looking to partner with them on a much more strategic level by offering them tailored end-to-end solutions, linking their physical activities with their risk management objectives," said Roy Salame, head of Global Oil Marketing. "Most importantly, our physical capabilities have leveled the competitive landscape and provided our sales force with a critical new tool to significantly grow market share."

It has been reported that JP Morgan agreed to pay Mr Blair a package worth $1m for his "advice".  It's also convenient that Mr Blair also happens to the Peace Envoy to the Middle East on behalf of the the US, EU, UN and Russia — collectively representing the biggest oil producers in the world.

According to the U.S. Department of State's annual human rights report for 2007, Libya's authoritarian regime continued to have a poor record in the area of human rights.  Some of the numerous and serious abuses on the part of the government include poor prison conditions, arbitrary arrest, and political prisoners held for many years without charge or trial. The judiciary is controlled by the government, and there is no right to a fair public trial. Libyans do not have the right to change their government. Freedom of speech, press, assembly, association, and religion are restricted. Independent human rights organizations are prohibited. Ethnic and tribal minorities suffer discrimination, and the state continues to restrict the labor rights of foreign jobs.

Meanwhile those who suffered the consequences of Libya's cynical use of terrorist organisations to bust oil sanctions — people in Northern Ireland and Great Britain who suffered as a result of Libyan actions — are to be side-lined in the government's plans to embed Western oil companies in Libya.  This must, surely, be cynical government at its worse.


 The ProPublica Blog

Oil Companies That Gave 'Bonuses' toLibya Also Lobbied Against Disclosure Rules


Black smoke billows from a petrochemical factory on fire following clashes between pro- and anti-Qaddafi militants close to the eastern Libyan oil town of Ras Lanuf on March 12, 2011. (Mahmud Turkia/AFP/Getty Images)

Multinational companies operating in Libya have had to deal with many obstacles, including a government rife with corruption that often asked for what amounted to bribes [1].

Sometimes those companies balked; sometimes they paid them, the New York Times reported today.


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The Times story doesn't actually mention the word "bribes," using instead the phrase "payoffs to keep doing business."U.S. companies are barred from paying bribes to foreign officials by the Foreign Corrupt Practices Act [2].

In 2009, Libya's Muammar Qaddafi demanded that oil companies operating in Libya pay him to offset the cost of reparations to victims of Libyan terror attacks [3], according to the Times. (Several major oil companies had also previously lobbied against the law that ensured American victims would be compensated [4] by Libya, arguing this could harm business ties between the two countries.)

The Times cited an example of two oil companies who made other payments to Libya:

In 2008, Occidental Petroleum, based in California, paid a $1 billion "signing bonus" to the Libyan government as part of 30-year agreement. A company spokesman said it was not uncommon for firms to pay large bonuses for long-term contracts.

The year before, Petro-Canada, a large Canadian oil company, made a similar $1 billion payment after Libyan officials granted it a 30-year oil exploration license, according to diplomatic cables and company officials.

The Dodd-Frank financial reform bill includes a disclosure rule that would require such payments to be disclosed to the Securities and Exchange Commission. Occidental Petroleum was one of several companies that lobbied against that rule. Oil companies have argued that the disclosure law will hurt their competitiveness [5] ($) and perhaps violate laws in the countries they are dealing with [6].

Last fall, representatives from ExxonMobil, Anadarko Petroleum, Chevron, ConocoPhillips, Marathon Oil and Occidental—all members of the American Petroleum Institute, an oil and gas trade group—met with SEC officials to raise objections to the rule [7], the Wall Street Journal noted at the time.

According to a memo published by the SEC [8] [PDF] after the meeting, the disclosure rules would apply to the seven oil companies operating in Libya that report to the commission. They are: Hess Corporation, Chevron, Occidental Petroleum, Shell, Eni, Husky Oil, Petro-Canada, Repsol, StatoilHydro and Canadian Occidental.

The American Petroleum Institute has touted a separate transparency program called the Extractive Industries Transparency Initiative, which it describes as a "voluntary, multilateral, multi-stakeholder global effort [9] to promote revenue transparency in resource-rich countries."

Libya has not joined [10] that initiative. Neither have Occidental or Petro-Canada [11], the two oil companies that the Times story said had made payments.


oug Saunders

The business of doing business in Gadhafi's oil kingdom

DOUG SAUNDERS Columnist profile | E-mail

BEN GARDANE, TUNISIA— From Saturday's Globe and Mail
Published Saturday, Feb. 26, 2011 5:00AM EST
Last updated Saturday, Feb. 26, 2011 12:23PM EST

When the big men come crashing down, all manner of mysteries spill out on the sand. Here in this dusty and somewhat disreputable slice of the Sahara near the Libyan border, people fleeing Moammar Gadhafi's fast-collapsing dictatorship gather at hotel bars and make furtive deals in the night.

Most of the exhausted, frightened figures making their way through the smuggler hideout of Ben Gardane are Egyptians, Turks and even a few Japanese who had come to Libya for the fat paycheques of this bizarre oil kingdom, enjoying a living standard and wage level far higher than their own. Libya was a magnet to everyone in Africa, a place where you could make some money if you played along.

More related to this story

But there's a more elevated clientele, such as the Austrian diplomats who sat up drinking beer and making desperate phone calls to destroy their Tripoli embassy's records. On the other side of the country, you can encounter hundreds of Canadians boarding flights to get out as quickly as possible, some leaving their own embarrassments behind.

Among these is the revelation that SNC-Lavalin Group Inc., the giant Montreal-based engineering firm, has been quietly building a prison, on a contract worth an estimated $275-million (U.S.), in Tripoli, the capital of the Libyan police state.

Surprised by the exposure of this heretofore unpublicized job (although SNC-Lavalin officials say the prison project is mentioned in the company's coming annual report), a company spokeswoman said the jail would be the first Libyan one to conform to international human-rights standards — a claim made mute by headlines coming out of Benghazi that revealed acts of torture and deprivation in actual Libyan prisons. Libya, as I knew it in its heyday, was always a peaceful place free from petty crime, such a powerful deterrent were the very words "Libyan prison."

It's possible that SNC-Lavalin took this job as a quid pro quo for its far larger projects, such as the Great Man Made River (whose name, in case it isn't clear, means an underground river made by the Great Man). To do business with an autocrat, one often has to agree to side deals. But it's possible the fee was simply too good.

Business deals with the Gadhafis were always very personal, and usually involved fixers and middlemen of colourful background and the exchange of huge sums of money.

When Petro-Canada (now Suncor Energy) got involved in Libya after U.S. sanctions ended in 2004, for example, it hired as its local agent Jack Richards, an Englishman whose Virgin Islands-based consulting company, operated on the fact that he was personal friends with Colonel Gadhafi and his son and heir apparent, Saif.

Mr. Richards had met the Libyan in 1967 while selling him a military communications system and, after the 1969 coup, became a trusted confidant of the Gadhafis. If you were an oil company and you wanted to get a slice of Libya's newly privatized oil field, then you paid Mr. Richards a truly enormous fee.

Mr. Richards, according to leaked Petro-Canada memos, would cement such hard-to-get oil-exploration deals by taking Saif Gadhafi on shooting trips on Princess Anne's estate, which adjoined his own farm in Gloucestershire, and make the pitch over lead shot and flying feathers. He approached the Libyan autocrat with the Canadian petroleum firm's offers for blocks of undersea oil-drilling rights in the 2000s.

This sort of arrangement bore fruit for the boys from Calgary, turning Libya into one of Petro-Canada's most important non-Canadian bases of operation. But to get it, they had to pay the Libyan government — and thus, rather directly, the Gadhafi family — a startling sum.

According to U.S. State Department reports obtained from the so-called Cablegate leaks, Petro-Canada paid the Libyan autocrats a $1-billion "signing bonus" straight off the bat, then invested $3.5-billion in the redevelopment of many of Libya's existing oil fields. In exchange, the Canadians got a 12-per-cent share of oil revenues produced from their slice of the field, for 30 years. As the U.S. ambassador to Tripoli wrote in a 2008 cable, Petro-Canada "swallowed hard and signed up."


Shell signs first major deal in Libyafor 30 years

Shell said they were ?delighted? with the partnership with Libya 

1:25PM BST 03 May 2005

Energy giant Shell is to return to Libya for its first major project in 30 years.

It will explore five areas in the oil and gas producing region of Sirte Basin.

And it will link up with Libya's National Oil to "rejuvenate and upgrade" a liquefied natural gas (LNG) plant on the Libyan coast.

The agreement, which is expected to be formally signed in the next few days, comes a year after National Oil and Shell announced they were in talks about a long-term strategic partnership in the Libyan gas sector.

Shell had operations in Libya between the 1950s and 1974 - when the country's oil industry was nationalised - although the Anglo-Dutch group did carry out some exploration work in the late 1980s.

Tony Blair ended two decades of international isolation for Libya by staging an official visit to the country last year.

Malcolm Brinded, executive director for exploration and production, said Shell was "delighted" to be back in Libya.

He added: "Libya's integrated gas industry has enormous potential, based on its large gas resources and favourable geographic location."

Under the agreement, Shell will rejuvenate and upgrade the Marsa al-Brega LNG plant at a minimum cost of £55.4 million, rising to a possible £237.6 million.

That could increase the plant output from 0.7 million tons per annum to 3.2 million tons a year. Subject to gas availability, Shell will also work with NOC to develop a new LNG facility.

The agreement also grants Shell gas exploration rights in five blocks, covering 20,000 square kilometres at a cost of £98.7 million.

The exploration programme will start immediately with the acquisition of seismic data in 2005/6 followed by exploration and appraisal drilling.


Food price hikes could push millions to poverty

By Ben Rooney, staff reporter

NEW YORK (CNNMoney) -- As global food prices rise near record highs, the World Bank warned Thursday that further spikes could push millions more people deeper into poverty.

The organization that loans money to developing nations said its global food price index was up 36% in March from levels a year earlier. The increase was driven by sharp boosts in prices for corn, wheat, soybeans and other staples.

Despite a modest drop versus the month before, the index remains near its 2008 peak.

The surge in global food prices has already driven 44 million people below the "extreme poverty line," which the World Bank defines as living on just $1.25 a day.

An additional 10% increase in food prices would cause another 10 million people to fall below the poverty line, while a 30% spike would lead to 34 million more poor, according to the World Bank.

"The numbers tell a grim story of persistent, grinding pressure on the world's poor," said World Bank president Robert Zoellick at a press conference.

Food prices have been on the rise since last year, as crops in many parts of the world were damaged by bad weather, including a major drought that led Russia to issue an export ban on wheat. CanadaAustralia and Argentinawere also hit with weather events that damaged crops in the second half of last year.

More recently, food prices have been pushed higher by rising energy costs, as oil prices spiked above $100 a barrel. That has made producing and transporting agricultural goods more expensive.

In addition, higher oil prices have encouraged many farmers to increase production of crops used for biofuels, such as corn. Global maize prices were up 74% in March versus last year.

"The linkage between food and fuel is much tighter than it was ten years ago," said Zoellick. He said increased interest by investors in agricultural commodities as "an investment class" has also contributed to the rise in food prices.

At the same time, rising prosperity in emerging economies such as China has increased demand for more expensive foodstuffs, including meat and pork, which has pushed up prices for feed stocks.

"With food prices, we are at a real tipping point," said Zoellick.

Zoellick made his remarks at the opening of the spring meetings of the World Bank and the International Monetary Fund in Washington, where he expects to discuss food prices with officials from the Group of 20 economic powers.

He said the G-20 is working towards a "code of conduct" on export bans, which many have blamed for exacerbating the increase in wheat prices.

The G-20 could also do more to increase food production and help developing countries manage agricultural risks, Zoellick said. To top of page


Behind Libya: rising food prices andUS debt

Behind the popular discontent in the Arab world is food. And behind soaring food prices is Ben Bernanke.

Protesters chant antigovernment slogans in Tobruk Feb. 22, 2011. Libyan soldiers in the eastern city of Tobruk told a Reuters correspondent on Tuesday they no longer backed Muammar Gaddafi and said the eastern region was out of the Libyan leader's control. Behind the protests is the soaring price of food.

Asmaa Waguih/Reuters



By Bill Bonner, Guest blogger / February 22, 2011


Cereal Wars...and Zombie Wars...

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Bill Bonner

Bill has written two New York Times best-selling books, Financial Reckoning Day andEmpire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (

Hey, how 'bout that Ben Bernanke... He's a freedom fighter! Look what he's done toNorth Africa!

Seems like every time we pick up the paper another dictator is toppling over. Where does it lead, we wonder? What would a world be like without dictators? Without them, who will the CIA and the State Department give our money to?

On the run this morning (but not quite given up) is Muammar Gaddafi of Libya.

Wait... Is this guy a friend or an enemy? We can't remember. Wasn't he a bad guy a few years ago? But recently we've heard that he is a good guy. He's helped with the War on Terror. And he sells oil.

Friend or foe, we don't know...but whatever he is, he's beginning to look past tense. As of this morning, reports say he's lost control of Libya's second largest city. His troops are firing on protesters in the capital, where he and his loyal guards are holed up in a few government buildings.

His son vows to fight back. He says there will be "rivers of blood" before he gives up.

That "rivers of blood" image was used by Enoch Powell in Britain fifty years ago. It came from Virgil's Aeneid, in which a character foresees "wars, terrible wars, and theTiber foaming with much blood."

Powell was referring to the effects of immigration into Britain from Africa and elsewhere. He thought he saw race wars and power struggles coming as a result.

But the younger Gaddafi uses the language as a threat, not a prophecy.

Still, it didn't do Powell much good. Maybe Gaddafi will have better luck with it. Most likely, he'll high tail it out of the country before the blood is his own. That will bring to three the number of regime changes in the last few weeks. Which leads us to ask: what's up?

The answer comes from our old friend, Jim Davidson. He pins the revolutions on Ben Bernanke. Behind the popular discontent is neither the desire for liberty nor the appeal of elections. It's food. And behind soaring food prices is Ben Bernanke.

The Arab world is a model Malthusian disaster, says Davidson. Populations have ballooned. Food production has not. Which makes Arab countries the biggest importers of cereals in the world. And when the price of food goes up, the masses rise up too.

From Jim's latest newsletter, Strategic Investment:

Food prices hit an all-time high in January. According to the UN's Food and Agricultural Organization (FAO) "the FAO Food Price Index (FFPI) rose for the seventh consecutive month, averaging 231 points in January 2011, up 3.4 percent from December 2010 and the highest in both real and nominal terms" since records began. Note that prices have now exceeded the previously record levels of 2008 that sparked food riots in more than 30 countries. "Famine-style" prices for food and energy that prevailed early in 2008 may also have helped precipitate the credit crisis that Federal Reserve Chairman Ben Bernanke described in closed-door testimony "as the worst in financial history, even exceeding the Great Depression."

This time around, the turmoil surrounding commodity inflation has taken center stage with more serious riots and even revolutions across the globe. Popular discontent is not just confined to "basket case" countries like Haiti and Bangladesh as in 2008. High food prices have roiled Arab kleptocracies with young populations and US backed dictators such as TunisiaEgyptBahrain and Yemen. Even dynamic economies have been affected. Indeed, all of the BRIC countries, except Brazil, have witnessed food rioting.

Well, how do you like that, Dear Reader? All those billions of dollars spent propping up dictators — $70 billion was the cost of supporting Hosni Mubarak in Egypt alone — and then the Fed comes along and knocks them down.

The Fed lowers the cost of money so speculators can borrow below the rate of inflation. And then it prints up trillions more — just to top up the worlds' money supply.

Is it any wonder food prices rise? Imagine you're a farmer...or a speculator. You can sell food. Or you can hold it in storage. You know the food is valuable. You know the world has more and more mouths to feed everyday. You know food production is limited. And you know Ben Bernanke can print up an unlimited number of dollars. What do you do?

Do you sell immediately? Or drag your feet...holding onto your valuable grain as the price hits new highs?

Davidson continues:

While Mr. Bernanke modestly declines the credit for de-stabilizing much of the world, close analysis confirms that he played an informing role. His QE2 program of counterfeiting trillions out of thin air has helped ignite a raging bull market in raw materials with food and commodities — up 28% in the past six months. The fact that the US dollar has heretofore been the world's reserve currency means that almost all commodity prices are denominated in dollars. As a matter of simple math, when the dollar goes down, the prices of commodities tend to go up.

Today, Libya. Tomorrow...Yemen? Or Saudi Arabia.

In North Africa, Cereal Revolutions...

In North America, Zombie Wars...

Yes, the battle rages in the Dairy State. And yes, Nobel Prize winner Paul Krugman (Economics!) has no idea what is going on:

It's "not about the budget. It's about power."

He thinks it is a battle between the rich and powerful, whom he calls the "oligarchy," and the decent lumpenproletariat on the other. Wisconsin's governor is trying to bust the union, says Krugman, so that the elite can ride roughshod over poor government workers, cut their pay, and reduce their benefits (thereby downsizing the state's budget deficit).

It's not about money, says the New York Times columnist. He's wrong, as usual. The Zombie Wars are always about money. There is less money available and more zombies who want it.

In the present case, rather than hire honest people to work at market rates...Krugman wants the state to be forced to deal with a privileged union. Union zombies should bargain with government zombies, he says. Together, in cooperation, not in conflict, they should figure out how to rip off the taxpayer.

Stay tuned...the Zombie Wars are just beginning.

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Growth or Hot Money: What's Really Affecting Food Prices

02/07/11 Los PerrosNicaragua — The Dow rose another 29 points on Friday. Gold lost $4.

Which is to say, nothing much happened one way or the other. Unemployment data came out, moving the unemployment rate down to 9%. But there were suspicious adjustments in the numbers. From the reports we read, nobody really knew if the numbers were good or bad.

The more interesting news continues to come from America's central planners. At least, they are roughly the same way that TV shows such as 1000 Ways to Die or Jackass are entertaining.

Maybe it's just human nature. But it's fun to watch people do stupid things — sometimes, even when they're fatal.

And now comes Ben Bernanke, chairman of the US Federal Reserve, former chairman of the Princeton Economics Department, with a claim so dumb that we don't what to think. What's the matter with Princeton? What's the matter with economics? What's the matter with the Fed? What's the matter with Ben Bernanke?

The Telegraph has the report:

Ben Bernanke...has dismissed the idea that the central bank's policies are to blame for the rise in global food prices to a record high...

Now, let's see. The Fed adds $2 trillion to the world's supply of "hot money." Maybe that has no effect? What do you think? The Telegraph continues:

Mr. Bernanke said that the rapid growth of developing economies was behind the increase in food prices, rather than the Fed's decision to embark on a second, $600bn (£371bn) round of printing money. "Clearly what's happening is not a dollar effect, it's a growth effect," Mr. Bernanke said in a rare question and answer session with journalists at the National Press Club in Washington on Thursday.

The United Nations Food and Agriculture Organization (UN FAO) has warned that high prices, already above levels in 2008 which sparked riots, were likely to rise further.

The FAO measures food prices from an index made up of a basket of key commodities such as wheat, milk, oil and sugar, and is widely watched by economists and politicians around the world as the first indicator of whether prices will end up higher on shop shelves.

The index hit averaged 230.7 points in January, up from 223.1 points in December and 206 in November. The index highlights how food prices, which throughout most of the last two decades have been stable, have taken off in alarming fashion in the past three years. In 2000, the index stood at 90 and did not break through 100 until 2004.

Well, how do you like that? It's growth that it driving food prices to records. Not money printing.

But wait...hold the emerging world growing faster now than it was two or three years ago? Nope. Hmmm... Is the growth a big surprise? Did something happen to make investors and traders suddenly realize that...well...hey...the world is growing!


Then, how come prices are shooting up now? Why didn't they shoot up 4 years ago? Or 2 years ago? Or last year? What has changed?

Well... How about the $1.5 trillion of brand spanking new money that the Fed put into the world's money supply in 2009-2010? And how about the $600 billion more it's pumping in now?

That's new, isn't it? So, here's a wild and crazy idea. Maybe...just maybe...the fundamentals of supply and demand really do work. Maybe...just maybe...if you increase the world's hot money supply (hot money does not come from an increase in real wealth or consumer demand...but from central banks' low interest rates and money printing)...well, maybe prices on global, auction-priced goods — such as food — go up.

Just look at what is happening to other global, auction-priced goods. Oil, for example, soared above $100 over the weekend. And look at gold. Put oil and food in terms of gold and what do you find? That they haven't gone up at all! What does that tell you? That the "growth" hypothesis is nonsense.

In other words, yes...the developing world is growing. It has been growing at a high rate for the last 20 years. Nothing new there.

What's new is that central banks are printing money at a record pace. They are creating more bubbles.

Isn't this going to end badly? Why would governments play such a dangerous game? Aren't they putting their own credibility, currencies and solvency in jeopardy?

Yes, of course they are...

But there is something you have to understand. Governments always look out for the elite groups that control them. They're not necessarily concerned with the betterment of humankind...or even the best interests of their own people.

Here's an example, from The New York Times:

Public deficits and debt relative to gross domestic product have ballooned in the last three years for one simple reason — the big banks at the heart of our financial system blew themselves up. On this point, the conclusions of the Financial Crisis Inquiry Commission, which appeared last week, are very clear and utterly compelling.

No one forced the banks to take on so much risk. Top bankers lobbied long and hard for the rules that allowed them to behave recklessly. And these same people effectively captured the hearts, minds and, some would say, pocketbooks of the regulators — in the sense that a well-regarded regulator can and often does go work for a bank afterward.

Meanwhile, Barry Ritholtz says the feds are using Fannie and Freddie as another way to shovel taxpayer money to Wall Street. As you know, the Fed already plays Sugar Daddy to the bankers. If the bankers have some trash mortgage-backed security that they lost money on, the Fed buys it from them at an inflated price. Of course, just having the Fed in the market buying MBSs inflates the markets.

But it turns out, the Fed isn't the only one. The US Treasury also gave Fannie and Freddie a blank check to save the housing industry. But they let the housing industry go bust. Instead, they took the money and saved the housing industry's creditors. The big banks, in other words. Wall Street. The richest of the rich.

Why should taxpayer money be used to bail out the rich?

Well, they're not just rich. They're powerful. They're the people the government was set up to protect. Give the feds a break; they're just doing their jobs.

The private sector innovates. Government procrastinates...hesitates...and vegetates.

That's just the way it works. That's what government has always been for. The government of ancient Egypt protected the pharaohs. The government of theOttoman Empire protected the Ottomans. The government of Genghis Khan looked out for Genghis.

And who does the US government look out for? Naturally, it looks out for the elite groups that control it. Who's that? The big banks, of course.

Bill Bonner
for The Daily Reckoning

Bill Bonner

Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the new book from Bill Bonner, is now available for purchase. It is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. Whether your new to these Daily Reckonings, or one of Bill's "long suffering" readers, this is one you surely won't want to miss. Click here to get your copy today.

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning . 

Read more: Growth or Hot Money: What's Really Affecting Food Prices




Tensions Rise On Surging Food Prices

Food prices have been rising worldwide, as the cost of raw materials and agricultural products surge, contributing to political unrest around the globe.

Reporter: CNN

Jan 28, 2011

NEW YORK (CNNMoney) -- Food prices have been rising worldwide, as the cost of raw materials and agricultural products surge, contributing to political unrest around the globe.

In December, international food prices broke an all-time high when they rose 25% for the year, led by rising costs for staples like rice, wheat, and maize, the United Nations reported.

The sharp rise in food prices, in particular, has become "a source of political instability," New York University economist Nouriel Roubini, told CNNMoney's Poppy Harlow, at the World Economic Forum in Davos, Switzerland this week.

Roubini, nicknamed "Dr. Doom" for his famously bearish predictions, said spiking energy and food prices pose one of the greatest global threats -- especially to emerging market economies.

Why prices are rising: Bad weather in Australia and Russia over the summer severely diminished wheat crops, partially fueling the latest commodities surge.

Rising incomes in emerging markets like China and India also play a role, analysts at the Eurasia Group say. The growing middle class in those countries has prompted a shift from a grain-based diet to one consisting of more meat.

And a push toward biofuels has also led to rising demand for corn and sugar, pushing up commodity prices.

Where it's hitting: The pinch has been felt most in rapidly developing countries like ChinaIndia, andRussia, which still have large portions of their population living in poverty.

Food inflation in China was recently at 9.6%, while in India it surged a staggering 18%.

Countries that depend on imports and don't grow a lot of their own grains, like many Middle Eastern nations, are also feeling the pain from price pressures. The recent turmoil there, with outbreaks of riots and violent clashes with police and military forces, is partially related to surging food prices.

"What has happened in Tunisia, is happening right now in Egypt, but also riots in MoroccoAlgeria andPakistan, are related not only to high unemployment rates and to income and wealth inequality, but also to this very sharp rise in food and commodity prices," Roubini said.

In Egypt alone, food prices soared 17% -- in part because of the worldwide surge in commodities prices but also because of local supply imbalances.

How it's playing out: Many countries in North Africa, including Egypt, subsidize the costs of basic staples. Citizens there pay about 1 cent for a small serving of bread, said Hani Sabra, a research analyst with the Eurasia Group.

But that doesn't mean citizens there are completely insulated from price pressures.

About 40% of Egypt's citizens live off less than $2 a day, so any price increase hurts.
CNN's live coverage of turmoil in North Africa

"There's a pretty expensive food subsidy system in Egypt," said Richard Fox, head of Middle East andAfrica sovereign ratings at Fitch Ratings. "Having said that, definitely high inflation has been squeezing people's incomes."

Plus there's a thriving black market that often drives up the prices poor households are paying for foodstuffs, Sabra said.

Meanwhile the bigger problem lies not in just prices, but in the fact that when citizens are unhappy, they have little opportunity for political recourse.

"In the U.S. if you're unhappy about who you've deputized, you vote them out in the next election," Sabra said. "It doesn't work that way in Tunisia or Egypt."










28 MARCH 2011 - 00H23  

World looks beyond Libyan oil as conflict rages

Libyan rebels drive towards the city of Brega. One month into its unrest, the shutdown of Libya's oil fields is creating strains in the world's oil networks as consumers scour the world to replace its highly-prized "sweet" crude.

 Libyan rebel shoots a portrait of Kadhafi in the town of Bin Jawad. One month into its unrest, the shutdown of Libya's oil fields is creating strains in the world's oil networks as consumers scour the world to replace its highly-prized "sweet" crude.

A Libyan rebel looks through his binoculars on the outskirts of the town of Bin Jawad. One month into its unrest, the shutdown of Libya's oil fields is creating strains in the world's oil networks as consumers scour the world to replace its highly-prized "sweet" crude.

AFP - One month into its unrest, the shutdown of Libya's oil fields is creating strains in the world's oil networks as consumers scour the world to replace its highly-prized "sweet" crude.

With strongman Moamer Kadhafi entrenched and the conflict with rebels raging on, producers see no quick return to the market for Libyan crude.

That is sparking a search for reserves elsewhere in Africa and around the globe.

On paper it should be easy to substitute Libya's 1.7-million-barrel a day production, which meets only two percent of worldwide demand.

Oil hyper-power Saudi Arabia has even offered to pump enough to match the Libyan shortfall.

But oil markets worry about quality as well as quantity.

Libya's low-sulfur "sweet" crude is much prized for being easy and cheap to refine into petrol.

Much of Saudi Arabian crude is lower quality and more difficult to refine.

"It's forcing people to look at what their options are going forward, because it now looks clear that Libya supply might be disrupted for some time," said Bhushan Bahree, an oil analyst with IHS CERA.

Unfortunately, finding crude of the same quality is not easy. Only a handful of suppliers fit the bill.

"The crudes that would be very similar would be Algeria, Angolan and Nigerian. None of them are exactly the same, but they are very similar," said Bahree.

Demand for those crudes has surged since the crisis began, forcing up prices.

Nigeria's top contract "Bonny Light" and Algeria's "Saharan Blend" are now being listed, respectively, at a $3.40 and $2.85 per barrel premium over London's main contract -- roughly double the premium in mid-February.

"Nigeria is pumping all they can" to meet demand, said oil analyst Mike Fitzpatrick of the Kilduff Report, who notedNigeria itself is far from stable.

The economics of refining make it difficult to decide if that premium is worth paying.

Until now oil analysts believe the true extent of the shortfall has not been realized, because many refineries are content to use up stockpiles.

Others are closed as they retool to take lighter grades that are in high demand in the northern summer.

"It is very complex economics that is going on at the refiners," said Bahree.

Eventually many refineries will have to decide whether it is worth switching production to harder-to-refine, and less profitable, blends.

If the crisis is prolonged "it could conflict with a seasonal ramp-up in refinery production ahead of the peak summer driving season," the US Energy Information Administration warned in a recent review of the oil market.

No matter what the technical or logistic fixes, the cost of producing oil looks likely to rise at a time when it would have the most devastating impact.

Since protests began in the rebel stronghold of Benghazi in mid-February, crude oil prices have soared -- along with prices at the pump -- prompting fears that the global recovery is under threat.

Crude prices have risen by about $15-$20 a barrel, depending on where the crude is bought.

US consumers are paying roughly 12 percent more for petrol and German consumers pay closer to 16 percent more.

One top US Federal Reserve policy maker this week described rising energy costs as "a key risk" to the global economy.

The price rises also come at a time when three of the four pillars of that normally prop up the global economy are looking decidedly wobbly.

Japan is dealing with a devastating earthquake, tsunami and nuclear crisis; Europe is weighed down in a debt crisis and slow growth and US consumers are struggling with high unemployment.

Higher oil prices could shave half a percentage point off growth in the world's advanced economies by 2012, according to the Organisation for Economic Cooperation and Development.

Libya's political crisis could yet prompt a global economic crisis thanks, in part, to the vagaries of geology, engineering and logistics.

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