Monday, September 26, 2016

Saudi Aramco IPO and the risk of revealing too much about not as much oil ............

by Ganesh Sahathevan

Forgotten in all the hype about the proposed Saudi Aramco IPO is the fact that an IPO requires disclosure of salient commercial issues.
To date, the Kingdom Of Saudi Arabia has kept secret the exact nature and extent of its oil reserves. The article below is one of many that have questioned the potential of its largest field, the super giant Ghawar. An IPO will mean answering the questions raised by this author and others.The Al-Sauds have refused to do so before, and have clearly not thought of the consequences an IPO will  have with regards disclosure of their reserves.

Here's Why You Don't Need Wikileaks To Know That Saudi Oil Reserves Are Overstated

Gail E. Tverberg|February 09, 2011|
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Saudi Arabia tells us that they have lots of oil, but if we look at graphs of their historical production, there is nothing that looks like an upward trend. In fact, recent production is lower than it was in the late 1970s and early 1980s. This is a graph of Saudi oil production, consumption, and amount of net exports, from Energy Exports Databrowser.
Exports, in green, are down because Saudi Arabia is consuming more and more of its own oil, so there is less available for others. This graph doesn't fit well with what we have been told.
The rest of the Middle East claims huge reserves, too, but looking at the Mideast in total doesn't give a much more favorable picture. While production is a bit higher in total now, exports (in green) are down from the 1970s because of rising consumption.

It is almost certain that the Saudis are overstating their capabilities. The reserves for Saudi Arabia and the rest of the Middle East are not audited, nor are their supposed "spare production capacities." They may have some spare capacity, but not the amount stated. When oil prices spiked to $147 barrel in July 2008, Saudi Arabia and others in the Middle East increased their production a bit, did not really come through with a huge surge in production, the way one would expect from their suppose spare capacity.
World oil supply has been roughly flat since 2005. Many are concerned that oil production will actually begin to fall in the next year or two - what is referred to as "peak oil" in the Wikileaks cable.
Links to a Few Posts Relating to Overstatement of Saudi Reserves and Production Capability
The Oil Drum has published many posts over the years relating to Saudi Arabia and the rest of the Middle East's likely inability to produce as much oil as they claim they can. These are excerpts from (or comments about) a few of them. Click on the titles to access the posts. You can access other posts by the same author by clicking on the person's name.
Euan explains why Middle East OPEC reserves are likely overstated, and shows this chart of likely reserves at the 2P (that is, expected) level:
Comparison of official ME OPEC reserves with official reserves adjusted for production and pre-nationalistaion reserves figures adjusted for production. The arrow gives the likely range of 2P reserves.
Saudi Aramco has effectively used propaganda methods for at least the last fifteen years to convince many governments, corporations and individuals to believe their statements. However, Aramco’s statement that it is the world’s leading oil producer is now false as it now second after Russia since 2006. Nevertheless, Saudi Aramco’s repeated statement about remaining recoverable oil reserves being 260 billion barrels (Gb) is still generally accepted.

In 2004, Saudi Aramco stated that its oil initially in place (OIIP) has been growing steadily since 1982. There is considerable doubt about the validity of this increase, given the lack of new oil discoveries and the unusual nature of its steady continuous increase. Aramco stated the OIIP was 700 Gb at year end 2003 while a more realistic estimate is 580 Gb.
Aramco may have some high recovery factor fields such as Abqaiq and Shaybah, but an average recovery factor range from 30-37% is assumed for the total OIIP in Saudi Arabia’s fields. The trend of the recovery factor for Saudi Aramco indicates that there has been no effect on the recovery factor by recent technological advances in producing wells. Saudi Aramco has kept remaining recoverable crude oil reserves constant simply by artificially increasing the OIIP each year since 1982, accompanied by an unrealistically high average recovery factor of 52% since 1988.
Last night, on ABC's Nightline, Terry Moran interviewed President Bush in Riyadh, Saudi Arabia, during his trip to the Middle East. When discussing what President Bush might say to the King of Saudi Arabia to lower oil prices, George Bush said:
If they don't have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do.
We published a Press Release about this post, also.
This forecast for is on a broad basis (Crude and Condensate and Natural Gas Liquids) for Saudi Arabia.
Forecast numbers are production capacity. Actual production may be lower depending upon demand.
5. Stuart Staniford -- Water in the Gas Tank--March 26, 2007

Forensic analysis regarding how the oil/water mix that is extracted seems to be changing to more water, less oil in Saudi Oil fields. The red portions of the bands are oil.
Two cross sections of a reservoir simulation of the northern portion of the 'Ain Dar region of Ghawar at various years. Color represents volumetric water saturation in the rock pores. Source: Figure 9 of Alhuthali et al, Society of Petroleum Engineers Paper #93439, March 2005.
An attempt to understand depletion levels in Ghawar.
Modeled distribution of original reserves in 'Ain Dar/Shedgum area of Ghawar(left), oil water contact offset by 511' vertically upward (center) and the same with the effect of gas caps (right).

Throughout the 2008 WEO, Saudi Arabia is cast in a leading role -- both figuratively:
On present trends, just to replace the oil reserves that will be exhausted and to meet the growth in demand, between now and 2030 we will need 64 mb/d of new oil-production capacity, six times the size of Saudi Arabia’s capacity today.
(from the Forward and Executive Summary)
and literally:
Saudi Arabia remains the world’s largest producer throughout the projection period, its output climbing from 10.2 mb/d in 2007 to 15.6 mb/d in 2030. (Executive Summary, page 40)
This post originally appeared at The Oil Drum. 

Saturday, September 3, 2016

Paul Keating pushes for Australia to join ASEAN-Least Gonski can do is push Najib to champion Australia's entry

by Ganesh Sahathevan

It is a matter of reality that David Gonski and ANZ have a special banking, commercial relationship with Malaysia's PM Najib Razak.

Given that relationship it is only logical that the Australian Government seek to use that relationship to push for Australia's entry into ASEAN.

Paul Keating pushes for Australia to join 


Speaking just a few days before China hosts a summit of the G-20 countries, Mr Keating said "I think the shift is happening and has happened. The bi-polarity of the Cold War was is over." Mick Tsikas
Former Australian Prime Minister Paul Keating has forecast China will become up to "twice as big as the US", and said Australia should respond by joining ASEAN and avoid any involvement in a potential US-China conflict in the South China Sea.
Addressing a packed audience at an Australia-China Relations Institute gathering at the University of Technology of Sydney (UTS) on Tuesday night, Mr Keating said the world was witnessing a "change in the economic make-up of the international order".
Speaking just a few days before China hosts a summit of the G-20 countries, including Australia, Mr Keating said "I think the shift is happening and has happened. The bi-polarity of the Cold War was is over."
China's economic strength is generating a new, emerging "pan-Pacific architecture" while the US "is fundamentally an Atlantic power".
He did not advocate Australian withdrawal from the ANZUS Alliance with the US but lambasted the Malcolm Turnbull-led Coalition government, claiming it lacked a "foreign policy" for dealing with current great power shifts.
Australia's Labor Prime Minister from 1991-96, and Treasurer for eight years before that, Mr Keating enjoys a ring-side seat to observe China's dramatic economic transformation as chairman of the advisory board of the China Development Bank, and late last year had a one-on-one meeting with Chinese President Xi Jinping.
He said after the meeting with Xi Jinping that China was engaged in a "seminal strategic shift".
Elaborating on what he meant, Mr Keating told ABC broadcaster and author Kerry O'Brien at the ACRI gathering in Sydney that China was now returning to its old place as the world's leading power – a position it held up until the late 18th century, when a British economy transformed by the Industrial Revolution leapt into pre-eminence.
From the 1880's the US took over from Britain as the leading world power. For some time after China entered a four-decade-long period of astonishing growth, which was launched in 1978, it held back from asserting a world role.
However, that began changing this century, particularly after the advent of the Global Financial Crisis. "The GFC in 08-09 de-mystified for the Chinese the mystifications of the US management of the world economy."
Mr Keating said that under his government in the early 90's Australia helped to bring China and the US into closer contact by upgrading the Asia-Pacific Economic Co-operation grouping, which included China and the US.
Before that he claimed APEC was more like an international mechanism for exchanging economic information, or "you show me your statistics and I'll show you ours".

Unprecedented transformation

A year after APEC was upgraded, the atmosphere between the two countries relaxed. "I had (US President Bill) Clinton playing the saxophone and (then Chinese leader) Jiang Zemin doing karaoke," Mr Keating said.   
However, since then China has emerged as a global economic giant, only lagging behind the US in GDP. "Never before in the economic history of the world" has there been such a transformation. "It's unique."
China "will have the biggest economic show in the 21st century", Mr Keating said, and wants a "multi-polar" UN-style system, with its five permanent members of the Security Council, including China.
Referring to China-US tensions in the South China Sea, Mr Keating said "we can't afford a world war". The tensions are over China's upgrading of disputed islands in the region into effective military bases, complete with air-strips, and aircraft.
The Chinese approach to the South China Sea issue meant it was "achieving its strategic power in a cheap kind of way". It was also a "messy" process.
But "China will once again be a great state in the world. Through its population and GDP, China will end up being one and a half or twice as big as the US", Mr Keating said.
Turning to Australia, he warned it was "becoming a much more marginal power with less influence" and needed to pursue a policy "that takers account of the shifts in the world order".
Australia "should become a member of ASEAN", a membership that would "help Australia and help ASEAN".
He said China was planning to reduce steel consumption by 100 million tons as part of its transition to a more hi-tech economy, and it would cut coal use by 400 million tons a year. Australia should be prepared for the "new economy" in China.
Nevertheless, "we have a very great opportunity with China and we should go for it", Mr Keating said.

Read more: 
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Friday, September 2, 2016

Falcon Bank provided USD 50 million to finance Wolf Of Wall Street-Did the Government of Malaysia provide guarantees,over and above funds stolen from 1MDB

by Ganesh Sahathevan

This advertisement used to appear of the website of the US law firm  Manatt, Phelps & Phillips,LLP (Manatt).

Lindsay Conner


Entertainment and Media

Sophia K. Yen

Manatt represented Zurich-based Falcon Private Bank in negotiating and documenting a $50 million production loan for The Wolf of Wall Street. Produced by Red Granite Pictures, directed by Martin Scorsese and starring Leonardo DiCaprio, it was the most expensive independent film in 2012.
ClientFalcon Private Bank
Service TypeCross Border, Entertainment Finance
IndustryEntertainment & Media, Motion Picture / TV / Radio,
Financial & Insurance Services, Domestic Depository Institution (Bank)
OfficeLos Angeles

It has since disappeared, but the transaction does raise the question:How did Red Granite secure the loan.Was there a Malaysian Government guarantee or some other form of security, in addition to that which was stolen from 1 MDB. Worth noting that before Red Granite and the Wolf Of Wall Street came to the attention of the general public in Malaysia and elsewhere in late 2013, there was already talk in Kuala Lumpur that the Malaysian Government was funding the movie producing adventures of Prime Minister Najib's step son.

See also 

Falcon Bank in breach of US Non-Prosecution Agreement: Swiss AG says quantum of related transactions is USD 4 billion,while Singapore MOF,MAS, remain silent

Pakistan, UAE pilots in joint exercises with Israelis -Australian, other Muslims opposed to the State Of Israel face a dilemma

by Ganesh Sahathevan

The unprecedented joint exercises between the pilots of The Islamic Republic Of Pakistan, The United Arab Emirates ,and The State Of Israel leaves Muslims in Australia opposed to Australia's historical ties with Israel without the previously unconditional ideological support of their better known brethren. The same may be said of Malaysia, where Islamization and Arabization is inspired and guided by the Arabs (and to a lesser degree the Pakistanis) ,and by default includes opposition to Israel.

It was on the 15th of August 2016 that Malaysia let FIFA know that it would rather be excluded from FIFA events than let Israelis enter the country, even if they are FIFA delegates. Ironically, it was at or around the same time that the Jerusalem Post reported that "Israel, Pakistan and the United Arab Emirates began joint military exercises on Monday (15 August 2016) as part of the US Air Force’s elite Red Flag drill at Nellis Air Force Base in the Nevada desert.

Let there be Hope.

                          Hatikva national anthem played on restored jewish Holocaust violins


Israel Praises Joint Drill With Pakistanis, Emiratis in US


SEPT. 1, 2016, 1:52 P.M. E.D.T.

JERUSALEM — The Israeli air force says a joint exercise last month in the United States with fighter pilots from Pakistan and the United Arab Emirates was "professional," even though the countries do not share diplomatic ties with Israel.

Air force pilots from the U.S., Israel, Pakistan, the UAE and Spain participated in the Red Flag combat training exercise in Nevada in August.

Israel's air force says it was the first time Israeli fighter pilots trained with Pakistani and Emirati pilots.

Maj. Gil of the Israeli air force, who gave only his first name according to military protocol, said Thursday that the exercises did not simulate any real world threats.

He says it was an "odd group," but that Pakistani and Emirati pilots worked with Israeli pilots "in an utmost professional way."