It seems that Saudi Arabia’s oil minister, 80-year-old Ali Naimi, is either wilfully talking himself out of a job or is implementing a long-term strategy to become Saudi Arabia’s first renewable energy minister.
Yesterday, he remarked “one of these days, we are not going to need fossil fuels” and proceeded to discuss the future of Saudi Arabia’s economy — solar power. He’s not the first Saudi oil minister to allude to the end of the “oil age”, but he’s certainly one of the most cheerful about it to date.
Hydraulic fracturing — the process of drilling water, sand and chemicals into a hole in the ground to create cracks through which gas and/or oil will flow — is not new. But the debate on how it affects the landscape above and below ground level is hotting up in the UK as the government presses ahead in its continued support for the shale industry.
UK Liberal Democrat Tessa Munt has resigned from her role as parliamentary aide because the coalition she belonged to supports the use of hydraulic fracturing (fracking). And the Scottish government yesterday announced a moratorium on planning consents for unconventional oil and gas developments. But is it an unnecessary evil or a safe and valuable energy source, and will the government keep its positive stance on fracking in the run-up to the general election if public opinion itself becomes more fractious?
South Sudan is being financially squeezed like any other oil producing nation right now. But spot prices for South Sudan’s Dar Blend were assessed by Argus at just $33.28/bl last week, from highs of nearly $117.50/bl in March 2012. And with pipeline transit fees of around $10/bl payable to Sudan, the margins for South Sudan’s main source of revenue begin to look worryingly thin.
Relationships between South Sudan and Sudan in 2012 — when the parties were negotiating the transit fee deal — were dangerously delicate, overlaid by the legacies of war, contested borders, and Khartoum’s loss of two-thirds of the pre-secession reserves and production to the new state.
South Sudan was, so to speak, over a barrel. It had, and indeed still has, no economically viable means of getting oil out of its borders, except through the Sudanese pipeline and terminal. In 2012, the governments of Khartoum and Juba played an exacting game of chicken, with the Sudanese regime demanding exorbitant pipeline fees to compensate for loss of production. Its South Sudanese counterpart responded by shutting in its oil.