US Port Security and the United Arab Emirates
Posted by Dave Cohen on February 21, 2006 - 8:11pm
Topic: Miscellaneous
Tags: dolphin project, natural gas, port security, qatar, united arab emirates [list all tags]
Dubai Ports World is controlled by the UAE royal family. The decision to grant the $6.8 billion sale to Dubai was made by the Committee on Foreign Investments in the United States...As soon as I saw this story, my paranoia kicked into high gear. This awarded contract was not just boneheaded, it seemed to be criminally negligent or as some on the lefty talk radio called it, treason. This had to be about oil & gas, right? There had to be a connection in there somewhere. This story is about what I found out. Along the way, we'll find out some stuff out about oil & gas activites in the Middle East and future plans there. I can't say I found any definite relationship between this contract and fossil fuels production & exports. The evidence for a connection I lay out is purely circumstantial.So Gonzales, Rice, Rumsfeld, Snow, and an other Bush administration officials conducted a security review and decided--unanimously--that the sale did not post a national security threat. How thorough was their investigation? They did not conduct background checks on senior managers of the company, nor did they ask how the company screens its own employees. You know, just in case a terrorist wants to infiltrate the company that now has unprecedented and unfettered access to our ports....
According to Oil and Gas Journal (1/1/05), the UAE's natural gas reserves of 212 trillion cubic feet (Tcf) are the world's fifth largest after Russia, Iran, Qatar, and Saudi Arabia. The largest reserves of 196.1 Tcf are located in Abu Dhabi. Sharjah, Dubai, and Ras al-Khaimah contain smaller reserves of 10.7 Tcf, 4.1 Tcf, and 1.2 Tcf, respectively. In Abu Dhabi, the non-associated Khuff natural gas reservoirs beneath the Umm Shaif and Abu al-Bukhush oil fields rank among the world's largest. Current natural gas reserves are projected to last for about 150-170 years.And as for oil, the EIA facts speak for themselves.
Figure 1
UAE Oil Production -- Click to enlarge
According to Oil and Gas Journal (1/1/05), the UAE contains proven crude oil reserves of 97.8 billion barrels, or slightly less than 8 percent of the world total. Abu Dhabi holds 94 percent of this amount, or about 92.2 billion barrels. Dubai contains an estimated 4.0 billion barrels, followed by Sharjah and Ras al-Khaimah, with 1.5 billion and 100 million barrels of oil, respectively.Of course, when we look at this, we must bear in mind that Abu Dhabi made a spurious reserves revision of 31.0 Gb to 92.2 Gb in 1988. Despite production since then, reserves have increased despite the production shown in the Figure 1 above. By the way, if somebody would do the UAE Hubbert Linearization, that would be a welcome addition to this post. Nevertheless, let's press on.
Where does this oil go? In this older document Oil and Gas in the UAE, we find that about 94% of these exports go to the Far East in Asia, especially Japan, South Korea and Thailand. So, the US does not benefit directly from UAE oil exports. Superficially, this seemed to be a false lead in our quest for a connection between the port security contract and oil & gas exports. But let's move on again.
What about natural gas? This is where things become more interesting. The UAE has the fifth largest NG reserves in the world but look at this graph from the EIA.
Figure 2
UAE Gas Production -- Click to enlarge
And, they are an LNG exporter (from the same document).
Figure 3
UAE LNG Production -- Click to enlarge
But they are now becoming an importer of natural gas from Qatar in a project called Dolphin that links the gas pipeline network of Qatar, the UAE and Oman. The UAE is actively developing its own natural gas reserves but they only have a population of 2.5 million people. To put it bluntly, what the hell are they doing with all that natural gas? The EIA tells us.
The past few years have seen the UAE embark on a massive, multi-billion dollar program of investment in its natural gas sector including a shift toward natural gas-fired power plants and the transformation of the Taweelah commercial district into a natural gas-based industrial zone....They're using it for enhanced oil recovery (EOR)! Which brings us to Qatar.Most of the UAE's increased nautral gas needs in the next decade are to be satisified with imported natural gas from Qatar. Much of the natural gas development in the UAE itself involves the extraction of natural gas liquids (NGLs) and reinjection of the gas to maintain pressure in oilfields.
As I pointed out in Empire On the Edge--Betting On LNG sometime back, the US is making its future LNG arrangements with Qatar as we can see from another article Qatar to become world's leading LNG producer.
The US will be a primary market for the gas produced by the new units [processing trains]. This follows a memorandum signed in November 2005 by the US Energy Secretary Samuel Bodman that will mean America will buy up to 30 per cent of its entire LNG needs from Qatar. The agreement provides for the supply of some 15.6 million tonnes of LNG a year to the US market with deliveries beginning by 2009.So, again to be blunt, by awarding multi-billion dollar contracts to the UAE, the US is accomplishing at least two things.
- Propping up the UAE's ability to produce oil and buy natural gas from Qatar to keep that oil flowing.
- Cementing good geopolitical relations with the governments of the fourth and fifth largest holders of natural gas reserves in the world.
totoneila posted:
Hello Drummers,
I refer you to my Yahoo: AlasBabylon posting #24481 to explain this phenomenon:
Abu Musa is just one of the islands smack-dab in the narrow Strait of
Hormuz [SOH]. The other islands under Iranian control are the Tunb
Islands, but I will just focus on Abu Musa for now in this essay.
From this link:
http://www.americanthinker.com/articles.php?article_id=3503
Next, here is an informative link that discusses Iranian military
strategy and past military exercises to possibly counter Iranian
moves:
http://www.globalsecurity.org/military/ops/arabian-gauntlet.htm
Plans were laid long ago to lockdown the MidEast-- we are just now learning the extent of the plans. Time will tell.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
What is good for the Goose, is good for the gander-- I promise to try my best to be concise.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Good advice, but my posting was building on the topic heading, I was not purposely monopolizing or hijacking the conversation. I am a very fast reader [damn slow typist-LOL] and can scroll very quickly thru long texts, just hitting the highlights if required -- other members, I am sure, do the same. Since I was first to respond to this thread: I thought I had the luxury of going into greater detail and length as military geo-strategies can be difficult to condense, yet still retain coherency.
Still looking for size specs to prevent this from happening again, I am not wanting to make the busy website masters to have to police for silly things like posting length when I am capable of doing this myself. Thxs for responding.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
I suspect a lot of people wouldn't bother. They see that huge block of text, and surf elsewhere.
I tend toward verbosity myself, so I know where you're coming from. But I think you'll find more people wiil read your posts and respond to them if they are shorter.
Even though the UAE oil may not currently go mostly to the US, the relationship building you refer to certainly gives the gov't here a greater voice (let's call it) as to where it is directed in the future, and at what price. It also gives them a trustworthy gatekeeper at this end, so that any shenanigans that take place would only be authorized shenanigans. I don't know enough about the industry to speculate as to what those shenanigans would be. But I know enough about our gov't to know that there will be shenanigans.
That NG is going to be used for EOR is also telling. I don't remember what's been written about the efficiency of this, but it again indicates a reluctance (here) to move away from oil to EVEN NG.
The thing I'm not clear about is what form your paranoia takes? None of us thinks our own paranoia is paranoia -- it's justified fear and suspicion. Mine is directed at our US gov't, not Arab or other gov'ts who are always suspected of agency or complicity in terrorism. I won't repeat my views on that here.
"Just because you are paranoid, does does not mean they are not out to get you."
> by awarding multi-billion dollar contracts
> to the UAE, the US is accomplishing at least two things.
>
> Propping up the UAE's ability to produce...
>
> Cementing good geopolitical relations...
The DPW deal isn't "propping up" anything, certainly not the UAE's ability to produce oil. Can you really imagine how that scene would play in the ADNOC boardroom:
"Sorry, guys, the P&O deal is off... looks like we're gonna have to shut in those 3 million barrels of oil a day we were producing for less than a dollar a barrel. Pity, we really could use the money."
Even if the deal gets squelched by Uncle Sam, I don't see the UAE being any less willing to ship oil to the United States. At least, as long as American consumers are willing to match the fifty-whatever dollars per barrel that buyers in other countries are currently willing to pay.
Sometimes, governments are foolish enough to make marketing decisions based on personal likes and dislikes. Chavez seems to be doing this, to the great glee of the lefty press, but they're mostly arts-graduate scum who don't understand the difference between a stb and a MMscf. Those "Bolivarian" gestures actually represent a tiny, tiny fraction of Venezuela's output. Most of the rest is being shipped to the Great Satan, same as always; they're the only country with the sophisticated refineries needed to upgrade Venezuela's miserable crude. PDVSA will end up subsidizing Chavez' childishness in the form of slightly higher shipping costs; you can be damn sure the Chinese won't be stupid enough to pay the extra to ship that stuff across the Pacific.
It's possible that blocking the deal might slightly reduce the willingness of the UAE to do business with Exxon, Chevron et al (in favor of Sinopec, ONGC, Total, Shell, BP...) if ever a big production or petrochem deal comes along and they're looking for foreign partnership. But that won't hurt you directly; it might cost the US government a few hundred million a year in corporation tax, and US shareholders a similar amount in dividends, but there are plenty of non-US companies who are happy to import and market oil in the USA.
Of course, this works both ways. I don't know if the US imported anything from Iran before choosing to ban direct trade, but by adding a little friction to the oil market, the Iran boycott decreases efficiency and increases prices to the American consumer. Probably only by cents a barrel, though; it makes a lot more geographical sense for Iran (and the UAE, and the Saudis) to supply China and India.
The physical market as a whole just rebalances itself. I don't worry about oil market boycotts, and neither should you.
just ignore him.
Plucky Underdog makes a clear and relevant point that "The DPW deal isn't "propping up" anything, certainly not the UAE's ability to produce oil.". This seems accurate and a serious challenge to Dave's assertion. PU says that one of Dave's two main points is wrong. Now you can cast aspersions on the commentor or claim you don't know what it means, but I think that is weak.
Plucky Underdog asserts that UAE's cheap energy resources are commercially viable and that they don't need to be propped up by a Port deal in the US. This seems right to me. If it is not, I would like to hear why.
More importantly, this website is non-partisan and dedicated to pursuit of the truth. I think that trying to silence arguments by tarring commentors with political labels is antithetical to this effort.
I agree, which is why we should ignore any post which uses the term 'arts-graduate scum'.
His analysis seems decent on the surface, but his choice of terms casts doubt on his intellectual rigor. Thus it's better not to get drawn into a dicussion where those terms are implicit, and instead wait for the information to be represented in a more appropriate fashion.
I'm sure we can agree on that.
I should have realized that the content of the initial post "casts doubt on his intellectual rigor" and that it is fair to ignore posts that don't engage at the level of civility required to have a "website (that) is non-partisan and dedicated to pursuit of the truth."
I also did not mean to address Dave directly as he is one of the best posters here, although I do not feel this one is up to his standards.
My point should have been made more generally. Ad hominim attacks on posters are not a positive contribution to the discussion. If you disagree with a point refute it. My orginal comment should be seen as directed to both Plucky Underdog as much as to TrueKaiser. Thank you for pointing this out.
I do think the question of how the US could be seen as propping up UAE is a legitimate one and I, at least, presented it in positive terms.
So, why do you say "I do not feel this one [post] is up to his [my] standards"?
I wrote this one up quickly without an in-depth geopolitical analysis because it deserved discussion. Who knows what's really going on? I thought I made that clear. That's it, that was the whole point. Still, I think I presented a reasonable analysis. I'm still waiting for someone to utterly refute it.
Who can deny that the US seems to be making these kinds of deals with the UAE and Qatar given the natural gas situation going forward?
Because most of your posts are excellent, analytical views on subjects that I have found to be solid, fact-based and and convincing. This one is largely speculative and in your own words founded on "paranoia" and evidence that is "circumstantial".
Port management is an international business and many ports globally are operated by foreign companies. Dubai Ports World has not launched into some diabolical plan to control US ports. Rather, they have bought another foreign company (British) that already operated the US ports. This makes them the thrd largest operator of ports worldwide (Forbes). So Bush had nothing to do with selecting the highest bidder.
I think you can make an argument that US ports should be run by the US government or only US companies, although I would disagree. However the claim that Dubai Port World's purchase of British P & O is a "criminal negligent" or "treasonous" act committed by the Bush administration to secure oil resources is a stretch.
I think that Plucky Underdog's comment that: "The DPW deal isn't "propping up" anything, certainly not the UAE's ability to produce oil." is right.
Good background:
http://www.forbes.com/home/feeds/afx/2006/02/19/afx2537798.html
http://www.nytimes.com/2006/02/17/nyregion/17ports.html?_r=1&oref=slogin
"Who can deny that the US seems to be making these kinds of deals with the UAE and Qatar given the natural gas situation going forward?"
I can. The US did not make the Port deal, so it impossible that they made it based on natural gas resources.
The Bush administration, through the Committee on Foreign Investment in the United States, approved it, but there is no direct evidence that this was anything but routine.
"it is important to note that the vast majority of transactions submitted to CFIUS (including the preceding example) are approved without difficulty."
http://en.wikipedia.org/wiki/Committee_on_Foreign_Investment_in_the_United_States
I do think that energy and terrorism cooperation likely placed a role in the decision, but that fall fars short the strong alleagtions made by you and the Daily Kos.
However, I agree with your point that Dubai Port World's contract is not necessarily a security problem--though it may be. But it can legitimately be seen as a "pay off" in the insecure oil & gas markets we see today.
best, Dave
:)
So back to the discussion:
- I don't see how this deal can be a payoff by the Bush administration, because it is an arm's length commercial transaction between companies in two different countries. Is your assertion that approval by the Committee on Foreign Investment in the United States is the "pay off"? I would disagree. I do not think it is unreasonable to think that this would have been approved in the normal course of business (see my Wikipedia link above).
- Dubai World Ports is now the third largest port operator in the world with operations all over the globe. Certainly those were all commercial transactions, not "pay offs" for energy access. I don't see US port operations as any different. I don't see that the deal is on preferential terms or that the dollar value is significant when compared to the energy business it is supposedly supporting. In this regard, I still find Plucky Underdog's comment that "The DPW deal isn't "propping up" anything, certainly not the UAE's ability to produce oil" convincing.
I don't disagree that the Bush administration is grateful to UAE for terrorism and military support. This is probably true for energy supply as well, although I expect that UAE is acting in their own interests in the developments you describe. I also am sure that UAE has been rewarded by the US, particularly in defense support. However, I do not see any evidence that the Dubai Port World's purchase of P&O is anything other than commercial.Jack doesn't post here a whole bunch, but I have always been very impressed with what he says. So I stopped to read what he said. Then I went back and read very carefully what everybody else said leading to what Jack said. As usual I believe Jack to be right.
And Dave, I think this is your best piece so far. You are a very quick worker. I know this piece on the UAE will detract from your time on other projects, but I like the info, and the fact that you decided to do it. My only piece of advice for you is to post your stuff and then make the concious decision to leave the room. Ignore people's comments on your work for at least a week. You don't need to defend yourself. Others will do that for you. You do a great job.
I disagree Jack, I think this is one of Dave's best. I'm glad I can finally disagree on something with you.
- Security for the WTC, Dulles airport, and American Airlines on 9/11 was run by Securacom. Officers were Marvin P. Bush (the president's brother) and his cousin Wirt Walker III. A Kuwaiti firm was the major investor.
- It is well known that Fox News is owned by Australian born Rupert Murdoch's Newscorp. The second largest investor is a Saudi. Wave that US flag boys!
IMO, Dubai is now in a bad position. Should any sort of WMD attack occur in any of those US port cities, that would justify a US takeover of Dubai.I wouldn't see the regas side as being attractive to the UAE government; they don't know the gas market in the States, and can you imagine how the know-nothings on the Hill and in the MSM would react to the prospect of a Middle East government controlling a facility that might contain the energy equivalent of a 120-kiloton citybuster, on US soil? Sorry, guys; you're gonna have to find your own capital for this one.
This may change in the future if the LNG market opens up and there is more of a spot market but right now and for the foreseeable future that will not be the case. It is in the interest of the US to establish solid political relationships with the Middle East countries that will supply that LNG market.
This is only common sense since North American natural gas production is in deep, deep trouble. The UAE will not be exporting directly to the US market--Qatar will. But Qatar and the UAE are "in bed" with each other. So, it is natural to pose the geopolitical question, which is all I did, as to what's going on here. Is anyone here at TOD naive enough to think that these political decisions are simply unrelated to future oil & gas production from the countries in question? I think not. At least I hope not.
This geopolitical/supply question referenced above is not being discussed in the kind of serious or intelligent way I anticipated on this thread. This is TOD after all. We're not idiots here.
> Is anyone here at TOD naive enough to think that
> these political decisions are simply unrelated to
> future oil & gas production from the countries
> in question? I think not. At least I hope not.
"Naive" isn't exactly a value-free word, now is it?
Try this:
"Is anyone here at TOD hard-headed enough to acknowledge that not all commercial decisions are related to future oil & gas production from the countries in question?"
Like those Danish cartoons of the Prophet, this deal has been bubbling under for months now. Look at the step changes in the P&O share price since November. Operatorship of the US ports wasn't a decision as such - it's just a side effect of a medium-sized takeover deal. Some canny journalist or blogger made the tenuous connection to (gasp!) Islamist Terrorism, and now it's being blown up out of proportion.