Recently in Crises Category

An editorial in the Chronicle last September warned of peaking global oil production in this decade followed by an inevitable decline. If that were to happen, the US needs to invest heavily in developing alternative energy sources or be prepared to endure steep increases in the price of energy.

A study conducted by the US Department of Energy concurred with the editorial's conclusions.

The study, led by Robert Hirsch, affirmed that global spending on developing alternative energy sources should be $1 trillion per year to prevent the economy from being crippled by oil shortages and the resulting chaos. Considering that the study recommends a 20-year lead time, it might already be too late to prevent a crunch.

Hirsch predicts that oil production will certainly peak by 2020, if not in the next 5 years.
In fact, oil production does not need to peak for severe shortfalls in oil supplies to occur. Natural disasters like Hurricane Katrina, wars like the Israel-Hezbollah conflict, political unrest, government intervention, deteriorating equipment like in the case of the Prudhoe Bay field pipeline, accidents or any combination could interrupt the supply of oil.

The trend of dropping oil prices with the end of the vacation season is extremely temporary. ExxonMobil CEO Rex Tillerson predicts that world demand for crude ol will increase by 50 percent in the next 10 years. Demands from countries like India and China and the developing world will only go up.

Perhaps the report's most sobering conclusion is that the free market and private industry alone will not be able to avoid economic catastrophe from energy shortages. A policy for managing the transition from conventional crude oil to other energy forms is required to be set in place by the government.

If oil companies disagree, they need to make good by showing where all the oil to meet excess demand is going to come from, or come up with plans to develop alternative sources.

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BP's Gulf of Mexico field which was originally scheduled to start production at the end of 2005 has hit new technical glitches which will push its start-up date to the middle of 2008.

This latest slippage in the Thunder Horse field will make it harder for BP to meet production growth targets in the coming years and also calls into question the company's skill at overseeing complex projects, especially when its management of Alaskan oilfield and pipelines in already under scrutiny.

BP announced that tests carried out had revealed metallurgical failure in components of the subsea system and that while the company plans to retrieve and rebuild all the subsea production equipment, it was too early to estimate the additional costs involved.

Thunder Horse's manifolds were manufactured by FMC Technologies, which also built the manifolds for the similarly sized Atlantis project.

The shut down of the Prudhoe Bay Field has severely affected BP's US output. The Alaskan problem and the fatal explosion at a BP Texas refinery last year have got regulators, lawmakers and law enforcement agencies investigating BP.

Thunder Horse, designed to process 250,000 barrels of oil  and 200 million standard cubic feet of gas per day has been repeatedly delayed.

It is expected to be the biggest producer in the Gulf of Mexico when it finally gets going. BP owns 75 percent of the project with ExxonMobil owning the balance.

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Government approval for Shell's $20 billion Sakhalin project was withdrawn and state-owned Gazprom was reported to be trying to buy half of the TNK-BP joint venture, giving impetus to doubts about the involvement of foreign companies in the Russia's oil and gas sector.

The reason for withdrawing environmental approval on the Sakhalin-2 project was supposedly to "satisfy the arguments of the prosecutor's office". The prosecutor generals office had allaged that the permission to develop the second phase of the

Sakhalin scheme had been granted illegally. Shell denied the charge and said it was continuing work on Sakhalin, but admitted that the removal of its environment permit might lead to more delays and further cost overruns.

Shell has faced lots of problems on the project with doubling costs and mounting anger from environmentalists over potential damage to the endangered whale population. In this situation state-owned Gazprom has been trying to purchase 25 percent stake in Sakhalin-2.

Some feel that Gazprom is acting as the political arm of Kremlin and the permit issue is the latest attack by the government in an attempt to wrest back control of oil and gas assets held in the private sector.
Local reports hint that ExxonMobil's Sakhlain 1 project could meet a similar fate.

Sakhalin-2 is one of 2 projects run by western energy firms under production sharing agreements signed in the 1990's when

Russia lacked the resources to develop oil and gas projects on its own. With the Russian economy now booming thanks to high oil prices, many government officials have called for a revision of the Sakhalin-2 deal to include Russian participation.

Similarly, Gazprom is said to be in talks to buy the holding in the TNK-BP joint venture that is currently controlled by three local Russian investors.

Russia has taken repeated steps in recent years to consolidate state control over the energy sector.

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Exxon Mobil Corp. which was involved in a dispute with Venezuela over a 500,000 barrels shipment of oil from the La Ceiba field has resolved the problem.

The shipment worth about $29 million had been blocked by state oil company Petroles de Venezuela on the grounds that Exxon Mobil had violated conditions for the development of the field by producing oil after a cutoff date for initial tests.
Ownership of the oil produced after the test deadline was the matter being disputed. Oil produced before the deadline belonged to the developers of the tract, Exxon Mobil and Petro-Canada.
Exxon Mobil tried to sell its stake in the tract in 20901 but did not find any buyers.

While company spokesman from Exxon Mobil announced that the crude has been shipped, neither party disclosed the terms of the agreement.

Relations between Exxon Mobil and Venezuela have been strained ever since President Chavez unilaterally raised royalties in 2004 on 4 heavy-oil ventures. Recently Venezuelan Energy and Oil Minister Rafael Ramirez said his country wants to change the terms of the contracts governing La Ceiba and two other profit-sharing ventures which would mean that Venezuela takes a majority stake in the projects.

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The former head of pipeline-corrosion monitoring for BP in Alaska pleaded the Fifth amendment and refused to testify as lawmakers questioned company officials over the cause of the massive oil spill in March this year.

Lawmakers said that the company's lapses were particularly unacceptable given the record profits in the industry and the relatively inexpensive measures that might have prevented the oil spill.
BP exceutive apologized and promised to fix operational lapses.

With Congress aiming to wrap up its session by the end of the month, the hearing was not expected to result in any specific legislative action. It afforded lawmakers an opportunity to talk tough ahead of November elections.

Robert A. Malone, head of BP PLC's US operations said that they had falled short of the standadrds they held for themselves and vowed to manage Prudhoe Bay in "a safe, efficient and environmentally sensitive way", while conceding that the company's reputation had suffered.

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Crude oil rebounded from a 5 month low to prices above $67 a barrel as the Petroleum and Natural Gas Senior Staff Association confirmed that they will carry out a three day "warning strike" beginning Sept. 13.

Nigeria's two main oil worker unions pledged to strike unless security in the Niger Delta region improves.
If the strike carries on longer, oil supplies from Africa could be further disrupted. Nigeria is Africa's largest producer and has been suffering from various problems this year including kidnappings of employees, attacks on infrastructure and militant action which has cut output by as much as 715,000 barrels a day.

With the latest issue, crude oil for October delivery has gone up 13 cents at $67.45 on the Nymex.

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ExxonMobil has been asked to pay up $92.2 million as environmental damages from the 1989 Exxon valdez disaster.

The Alaska Department of Law and the U.S. Department of Justice made the demand not covered in the previous $900 million settlement with Exxon.

The settlement made in 1991 allowed the state and federal government to seek additional damages not foreseen at the time of the settlement.

Alaska and federal officials said in May they would seek additional damages and had until Friday to make their demand of Exxon's successor company, ExxonMobil.

Exxon Mobil is expected to contest the demand since it has said that there are no lingering environmental damages not covered in the 1991 settlement.

If Exxon Mobil does fight the additional damages, the U.S. District Court for Alaska will hear the case.

The Exxon Valdez supertanker grounded on a reef in 1989, spilling about 11 million gallons of crude oil that reached over 1,200 coastline miles making it one ofr the worst environmental disasters in U.S. history.

In addition to the 1991 settlement, Exxon and its successor Exxon Mobil have paid more than $2 billion in cleanup costs, as well as $300 million in claims to affected fishermen.

But it continues to contest a punitive damages verdict of $5 billion issued by a U.S. District Court jury in 1994 in the class-action case brought by fishermen, Alaska Natives and others.

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The oil spill from the sunken oil tanker Solar 1 off Guimaras island in the Philippines is being touted as a disaster on the scale of the Exxon Valdez catastrophe.

Though the amount of oil aboard Solar 1 is a fraction of what the Valdez disgorged when it foundered off Alaska, the fact remains that the Valdez spilled in a relatively remote area. A number of people depend on the Guimaras region for their livelihood and with the Solar 1 having leaked one-tenth of the contained oil so far, experts say a ticking time-bomb is on the ocean floor.

Nestor Yungue, a marine biologist said that the speed with which the oil reached the Guimaras coast is a concern since it does not allow for the chemical disintegration of the pollutants. The Valdez crude took time to hit the Alaskan coast contaminating 1,300 miles of coastline, killing a quarter-million sea birds, 1000's of otters and hundreds of seals.

It will be 3 to 6 months before we are able to see the damage in this instance.
Environmental economist Rodelio Subade said damage from the Solar 1 would not be limited to 'tradable goods' like fish stocks but could have an impact on generations of fishermen.

The Taclong national marine reserve took a direct hit when the tanker sank. Mangroves expert, Resurreccion Sadaba, said that coral reefs and marine organisms including fish and mollusks have started dying. He also said seedlings and saplings among 90 hectares of mangrove thickets, vital shelters for fish fry, were already “showing signs of withering”.

Mangroves are the basis of the marine food chain and with their removal the whole system will collapse.
The Taclong reserve is also a vital nursery for 2 of the country's richest fishing grounds, the Sulu Sea and the Visayan Sea. If the spill is not contained within the narrow straits on either side of Guimaras, these would be hard hit.

The tourism industry is already suffering with mass cancellations for both this year and the next.

The Coast Guard is spraying dispersants to contain the slick, pushed by currents and monsoon towards the Visayan Sea. When the winds shift in October, it will be open seas between the tanker wreck and the Sulu Sea which is the site of one of the world's most biologically diverse coral formations.

A Japanese salvage ship is on its way to try to refloat the tanker or siphon off the remaining oil.

All of the Sunshine Maritime Development's remaining tankers have been grounded since the Solar 1 sank. Company president, Clemente Cancio, defended the qualifications of Norberto Aguro, the tanker's captain saying he was an expert in manning chemical tankers which are more difficult to handle than oil tankers. But he added that Aguro might have been wrong in setting sail in those weather conditions. The tanker had passed inspection before it sail.

The Board of Marine Enquiry questioned why there were excess of 4 men on a tanker with a capacity of 16 and noted that the tanker was only carrying 19 life vests.
Cancio said that Petron Corp., the company which had chartered Solar 1 required at least 2 surveyors on board and the crewman present at the enquiry affirmed that the 2 seamen who are missing had been wearing life jackets before the tanker capsized.

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A storm brewing in the Caribbean weakened and took concerns over US oil supply and prices down with it.
Hurricane Ernesto was downgraded to a tropical storm after it flooded Haiti's southern coast. However, meteorologists predict that the storm is likely to pick up force again as it moved towards the Gulf, possibly reaching hurricane levels.

Light sweet crude for October delivery fell 76 cents to $71.75 on the NY Mercantile Exchange.
Prices at London's ICE Futures exchange fell by 55 cents to $72.15 a barrel.

The unpredictable storm and unease over Iran's nuclear program will make trade in the energy markets hard over the next few weeks, with both factors having the capacity to generate new highs in the crude market.

While large oil producers in the Gulf of Mexico are prepared to evacuate non-essential personnel, world energy markets are also concerned over Iran's stand-off with the West over its nuclear program.

Natural gas futures on the Nymex went down by 51.8 cents to $6.64 per 1,000 cubic feet and gasoline futures fell 4.41 cents to $1.8510 per gallon. Heating oil futures dropped 1.58 cents to $2.0140 a gallon.

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Iran turned away UN inspectors from its underground facility at Natanz. This action comes in concert with the country's supreme leader's avowal that Tehran will not give up its contentious nuclear technology.

Hopes that Iran will accept the UN Security Council demand to halt its enrichment by Aug. 31 have deflated in the face of Iran's unprecedented refusal to allow access to the underground site.
This action hampers UN attempts to ensure that Tehran is not trying to produce nuclear weapons.

Signs of Iran's defiance have been noted with the country denying entry visas to 2 International Atomic Energy Agency inspectors in the last few weeks after similar denial to Chris Charlier, the expert heading the UN agency's team to Tehran earlier this year.

Iran's reported actions could lead to heavy sanctions including a ban on missile and nuclear technology sale to Tehran, a ban on investments in the country and international refusal to grant entry visas to people involved in Iran's nuclear program and a freezing of their assets.

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Solar 1, a tanker carrying around 2 million liters of oil sank off the Philippines coast 11 days ago and is continuing to leak according to coastgaurd officials.

While the head of the Philippine Coastgaurd said that more oil had leaked from the sunken tanker overnight, a spokesman from Petron Corp said that their aerial surveys have confirmed that there is no more seepage.

The widening slick has already damaged about 200 miles of the Guimaras island coastline, and is now threatening fishing grounds.

Sludge and dead wildlife have been washing up on the beaches, causing damage to reefs, marine reserves and tourism.

Villagers from the neighboring Negros and Panay islands have erected makeshift booms to hold the oily sludge back.

In response to the Philippines government's appeal for international assistance with the clean-up, teams of experts from Japan and the US are expected to assess the damage.

Presidential spokesman Ignacio Bunye said the government needed to focus its energy and resources in addressing the problem and that it was making "tactical decisions" on the clean-up.

The tanker was on its way to a power plant on the southern island of Mindanao when it sank. Of the 20 crew members, 2 are still missing.

Officials are trying to decide whether it would be best to refloat the vessel or to suck out the remaining fuel.

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BP PLC denied allegations made by unidentified BP workers that the company had manipulated data from the pieline inspections at Prudhoe Bay, where operations have been cut down this month following a pipeline leak.

The U.S. Environmental Protection Agency is probing allegations that BP inspected more areas of known good pipe than bad and thus manipulated data in order to avoid replacing pipelines. Days after the pipeline leak and subsequent shutdown, Transportation Department's Pipeline and Hazardous Materials Safety Administration had ordered the firm to conduct more rigorous tests on the transit pipelines.

BP spokesman, Robert Wine said that the company has been working with the DOT and the EPA ever since the original leak and would provide any information required for the investigations.

Alaska Attorney General David Marquez said that the state had served subpoenas on BP and other leaseholders in Prudhoe Bay to preserve all documentation related to the Aug. 6 pipeline leak and corrosion dating to 1996.

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Orizont, a Romanian oil rig moored near Kish Island, off the Iranian coast, since 2005 came under fire and was later occupied by Iranian troops.

The Iranian military warship first fired into the air and then at the rig. No injuries or deaths have been reported, though shortly after occupation of the rig by the troops, the Romanian company lost contact with the 26 crew members on the rig.

The Romanian company, GSP, also known as Oil Services Group opeates 6 offshore rigs that it bought from Romania's largest oil company, Petrom. Two of its rigs are operating near the Iranian coast.

GSP was in Iranian courts earlier this year over a dispute involving Fortuna, another one of its oil rigs. It has not been ascertained whether the recent incident involving the Orizont rig is in anyway connected to the Fortuna matter.

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On the eve of a self-imposed deadline for responding to economic and technological incentives offered by Western powers in lieu of their uranium enrichment program, a spokesman from the Iranian Foreign Ministry said that suspension of uranium enrichment is not on the agenda.

The proposed incentives package includes provisons for direct talks between Washington and Tehran and the offer of nuclear technology and the easing of some trade restrictions. Iran said that it would give a multi-faceted response to the incentive package tomorrow.

United Nations may move fast on its threat to impose sanctions against Iran because of the country's inflexibilty. Nothing less than the suspension of the enrichment program is likely to appease the UN.

After its proxy militia in Lebanon, Iran emphasized its stand by conducting military exercises over the weekend including the televised launch of ground-to-ground short range missiles. These were to showcase "Iran's new defensive doctrine."

After the Israeli failure in disarming Iranian-backed Hezbollah, the country clearly feels it has a strong position and has warned that it would be prepared to use oil as a weapon.
Though Iran insists its uranium enrichment program is permitted under the nuclear non-proliferation treaty and is peaceful, western concerns over nuclear Iran have increased after the Lebanon war.

Iran may feel that it can play for time because any further decisions to be taken by the UN would have to be discussed by the Security Council and Russia and China who have veto-holding powers in the Council have been supporters of Iran.

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With the Lebanon-Israel truce having been announced, the clean-up work on the oil spill off the Lebanese coast can finally get underway.
OPEC has pledged 200,000 USD from their humanitarian fund to assist in cleaning up 150 km of polluted shorelines. About from the 10,000-15,000 tons oil spilled from the Jiyeh power station.

The UN had previously sent to envoys to Syria to take stock of the situation and has now announced that an International Assistance Plan has been drawn up to help the Lebanese government in dealing with the environmental disaster.
Experts under the aegis of the Regional Marine Pollution Emergency Response Center for the Mediterranean Sea drafted the plan which will be presented for scrutiny on Thursday at Athens.

The fund pledged by OPEC will be channeled through the UN Office for the Coordination of Humanitarian Affairs and will be spent on essential supplies.

Previous efforts to clean up teh oil spill met with Israeli naval blockades. Lebanese Environment Minister said his country will sue Israel for "this terrible crime", but did not give any details nor has there been any follow up since his statement last week.

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It is welcome news that after the shut down on all operations in the Prudhoe Bay Field last Monday due to pipeline corrosion, BP has gained permission from pipeline regulators to keep oil flowing from a section of the oil field.

Prudhoe Bay which can produce 400,000 barrels a day is now down to 155,000 barrels a day.
At a time when hurricanes might might threaten supplies, the loss of the field stretches supplies. BP was expected to meet with regulators to assess testing results and measure "options for continuing and restoring" production. The company will decide in the next few days if it can keep the western side of the field open.

As per the the regulations set down by the Transportation Department's Pipeline and Hazardous Materials Safety Administration, BP will have to conduct 4 daily surveys of the lines which transport oil from the field to the Trans Alaska pipeline using heat sensors to spot leaks and do a visual check of the entire 22-mile network.

In addition BP will also strip the western line and conduct an ultrasonic test to get a full picture of its condition. A "significant number" of additional workers will be mobilized for this purpose.
The cost of inspection, repair and replacement of the corroded pipes inclusive of the $30 million to repair a line that leake din March is estimated at $200 million.
Exxon Mobil Corp. and ConocoPhillips, BP's partners in the Prudhoe Bay Field, have declared a force majeure on oil deliveries from the field that allows them to avoid penalties for failing to fulfil contracts due to unforseen events.

BP sais it was pleased that regulator's assessments didn't reveal anything that would require an immediate shutdown in the western section.

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A crew of about 600 recovered 90 percent of the four tonnes of crude oil that spilled from a storage tank into the Zhouhe river in northwest China.

Workers at Yongning Drilling Co. were cleaning a tank when another burst leaking 10 tonnes of crude oil of which 4 tonnes spilled into the river causing a 5.6 mile slick.

The clean-up crew built 6 makeshift mini dams to prevent the slick from expanding.
Zhouhe is a tributary of the Luohe river which flows into the Yellow river, the country's second longest.

A crude oil spill from a pipeline run by a state oil firm in a eastern coastal province in China caused locals to rush to collect the oil and sell it to refineries for a profit.

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US oil fell by as much as $1.05 to $75.30 after Britain said that it had foiled a plan to blow up an aircraft in trans-Atlantic flight. Security in Britain and the United States has been stepped up.

There was a simulataneous rise in safe haven bonds and fall in stock markets. Equity markets also fell as investors shifted to government bonds.

The news managed to rein in oil prices that had risen after the shutting down of the Prudhoe Bay Field production.

Energy portfolio manager, Craig Pennington believes that at times of uncertainty people become risk averse and that causes a broader sell-off resulting in the price shift.

Oil demand may be further affected if people's confidence suffers. US gasoline and heating oil fell down but these might be temporary effects with the big question being what the oil demand situation will be like.

Terrorism concerns and the need for the security of supply premium in the oil market might keep the market balanced.

Oil has risen by 25 percent this year due to the war in Lebanon, supply disruptions in Nigeria and Iraq and the uncertainties over Iran's nuclear program.

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Two representatives of the UN Environment Program were finally able to evaluate the consequences of the oil spill in Lebanon.
UN Executive Director said that despite the complex political situation, it is appalling that more than 3 weeks into a crisis that is looking to rival the 1999 Erika tanker spill, there has been no move towards a clean-up or support given to the Lebanese government for an on-the-ground assessment.

If all the oil contained in the bombed power plant leaks into the Mediterranean Sea, this spill will be comparable to the Exxon Valdez disaster of 1989.

Though the two experts getting to assess the disaster in Syria is a start,much more needs to be done.

The UNEP is working with the UN Office for the Coordination of Humanitarian Affairs, the European Commission and the International Maritime Organization to create conditions under which remedial action over the oil spill can be taken.

With 140kms of the coastline already affected, many marine species such as sea turtles and bluefin tuna are thought to be severely affected.

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Israeli bombing has so destroyed all the roads and bridges leading to Tyre that the South of Lebanon has been left without vital humanitarian aid. The UN is looking at possible sea routes to bring in supplies.

The UN Interim Force in Lebanon is looking at repairing the bridge across Litani river, but is first seeking guarantees from Israel that it would not be destroyed again.

Due to the poor conditions of roads owing to raids, the major alternative route does seem to be directly by sea to Beirut, Sidon and Tyre. Even more alarmingly, UN World Health Organization has said that chronic shortage of fuel shipments could lead to closure of 60 percent of hospitals.

Despite difficulties, emergency trucks from Syria and UN High Commissioner for Refugees are heading into Lebanon.

Though the UNHCR has been successful in reaching provisions to Beirut, logistical constraints and bombing bridges has caused them to delay further supplies till Thursday.

The UNDP has distributed hygiene kits and other essential supplies while the UN Population fund has been helping the Red CRoss home the displaced.

About a quarter of the country's population have been forced to flee their homes. The UN Relief and Works Agency has been keeping trackof the displaced who are seeking asylum in schools that it runs in Lebanon.

The UN appeal for $149 million for humanitarian use in Lebanon has received only $41 million in donor contributions and commitments so far.

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Due to the 400,000 barrel a day Prudhoe Bay Field oil loss, Saudi Arabia and Mexico have pledged to supplement any shortage in the US.

The Energy Department stated that BP's oil field shutdown for corrosion maintenance might not be functional until January.

White House spokesman Tony Snow said that no refineries have reported shortages yet and in the event that there are any, the governement is willing to tap into the Strategic Petroleum Reserve and take up Mexico and Saudi Arabia on their offer.

When accused by Democartic Senator Charles Schumer of a lack of oversight, Snow stated that the discovery ofcorrosion was owing to the inspection rules laid down by the Bush administration.

A team of government investigators is assisting BP in assessing the situation.

When asked if Bush was concerned about the impact on prices, Snow said that the root cause needs to be addressed which is this case is to have the pipelines working in a way that is environmentally sound.

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In a TV program, Iran formally defied UN's nuclear resolution.

The UN Security Council had asked for Iran to stop enriching uranium but Iran is going to go ahead and increase its program.
Despite failure to secretly import uranium from the Congo, Iran plans to brazenly pursue its nuclear proliferation plans.
Ali Larijani said that all of Iran's nuclear technology will be expanded including the centrifuge cascades for uranium enrichment.
When questioned about the balance of power in the Middle East with fears of the region breaking into a wider war and apprehensions that Iran does not plan to use its enrichment program merely to power fuel stations but to make nuclear weapons, Iranian President declared that Iran has joined the club of nuclear countries.

Tehran assures that it would not like to use the oil weapon and that the measure is being forced upon them by the double standards of countries that allow nuclear technology to some and not to others.
Iran being OPEC's second largest oil exporter states it should be allowed to defend its rights in proportion to its stance.

It is to be noted that the elimination of nuclear weapons features no where in international plans.

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With the corrosion of pipelines in Prudhoe Bay Field, the nation's largest oil field and the subsequent halting of oil shipments from BP PLc, the world's second largest petroleum company, oil prices have risen by $2.22 a barrel.

The Prudhoe Bay Field accounts for 8 percent of all U.S. oil production and serves the West Coast and its loss is most likely to affect California and neighboring states.
This new crisis will add to the already creeping inflation and further slow down growth in the US.

The corroded pipelines are an environmental threat and the extent of the problem became known when BP announced that 16 of their 22 Alaskan pipelines need to be replaced.

The shutdown of production could go on for months and will reduce US oil production by 400,000 barrels a day. Though the Bush government has come up with an alternative for refineries by offering oil from the 688 million barrels of Strategic Petroleum Reserve, analysts feel that it would be very difficult to ship that much oil to the West Coast in the absence of a pipeline.

A spokesman from the Energy Department however said that the high crude oil inventories would serve the refineries and there was no immediate need to dip into the Reserve. Despite this, gasoline prices are expected to rise by few cents or more a gallon.

There has been disagreement among experts about the impact of the Alaskan shutdown.
While few believe that the present loss would be a mere "blip" if supply of heavier crude oil from Saudi Arabia was stepped up for West Coast refineries, most experts are of the opinion that prices can be expectedto rise by $10 to $15 and that the longer the field remains shut, the higher the prices would go.

The situation has drawn a lot of negative attention on BP, which reported record earnings in the second quarter but has allowed extensive corrosion of a pipeline of such importance to the country.

Officials said that the oil pipelines being shut down were clogged by sludge buildup which may have prevented the most sophisticated internal corrosion tests.

While a device called a "scraper pig" was used to clean out the pipes of sludge in 1992, it is unclear whether another device called the "smart pig" which can detect pipeline abnormalities was used.

BP Alaska President said that the company is already in the process of adjusting their corrosion program.

Bob Slaughter, president of the National Petrochemical and Refiners Association, has a hopeful addition in that the US recovered from last year's hurricane caused supply disruption and "that was worse than this."

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The oil spill that had been caused by Israeli jets hitting a plant in Lebanon and polluting over 80 kilometers of Lebanon's coastline has spread to the neighboring Syrian coastline.

The environmental disaster is threatening fish spawn and sea turtles, including the endangered green turtle.

An environmental catastrophe is looming over the entire Mediterranean region... and hostilities must be suspended to allow immediate access to the affected areas.

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With 1000 civilian dead and 3000 injured, the war between Israeli forces and Hezbollah doesn't look like it's flagging.
Each side is trying to emerge victor but while Israel needs to defeat the militants, Hezbollah only needs to survive to claim victory.
Israeli public is behind the war and the Prime Minister says the military campaign will continue till such time as the international peacekeeping force is deployed. The Hezbollah is not agreeable to the force.
The UN resolutions require Hezbollah to disarm, but it cannot be done through war only political means.
While there is fear that the present crisis could lead to international terrorism from Hezbollah and its patron, Iran, many international players are looking to Syria to break its ties with Iran, stop arming Hezbollah and go for political and economic reform.

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Iran's decisions to retaliate to the UN demands by disrupting oil supplies from the Strait of Hormuz might backfire on them.

Political analyst, Saeed Laylaz, affirms that the Iranian public is not in a position to handle sanctions, self-imposed or otherwise.

Cutting off the $5 billion income a month that the country gets from the flow of crude oil will choke the country's budget.
The West could also retaliate by cutting the gasoline it exports to Iran who are dependent on other nations for more than a third of their gasoline due to lack of refining capacity and wastage.

This game could have more dangerous effect on producing countries than consuming ones since strategic reserves can be tapped to control the effect of rising prices.

Besides the Tehran Stock Exchange is already showing a dip in its index due to the nuclear issue hitting parts of the economy.
Energy companies are complaining of reduced profits in Iran as development is hampered by administrative delays, technical glitches and tough contract terms.

The economic isolation that the country is generating for itself can only prove harmful in the long term. And if the country follows through on its threats to attack tankers in the Strait of Hormuz, it could cause irreparable damage to the reputation it is trying to build as a benevolent player.

With the Iranian president counting on surging oil prices to finance his spending spree for many social programs the oil embargo might be the last weapon of choice in the Iranian arsenal.

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Oil prices rose to new highs of 76 usd as traders watched tropical storm Chris in fear of it developing into a hurricane and damaging rings and refineries on the oil-rich Gulf Coast.

The much hoped for cease-fire in Lebanon also seems like a distant possibility with Israel killing 11 more people and capturing 3 Hezbollah fighters.

Further dissent in the Iranian nuclear matter has also caused the sudden climb in prices as well as concern that Iran and Syria, both backers of Hezbollah, are ordering troops to 'raise readiness'.

Iran's supreme leader Ayatollah Ali Khamenei has called on Muslims everywhere to resist US and Israeli aggression as Iran refuses to bend to the UN deadline and stop uranium enrichment.
In the event that sanctions are imposed against Iran, it is likely that the country might retaliate by blocking the Strait of Hormuz, which is a essential outlet for oil shipments to the US.

While the key issue in the oil price matter is supply instability, it is also expected that the inventory data will show a huge draw in US fuel stocks with high demands despite the $3 gallon prices.

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The UN called for a three day truce in Southern-Lebanon to open up ways for trapped children, elderly and disabled people and supplies but it has been rejected by Israel on the grounds that a humanitarian corridor to the area has already been opened up.

US Secretary of State Condoleezza Rice will be in Israel to discuss proposals for the deployment of the international force on the border.
Israel has indicated that it will stop the fighting as soon as the UN resolution is passed without insisting on the disarmament of Hezbollah but on the condition that Hezbollah will not move back into position close to the border.

However, the UN has stated that the death of its personnel may deter countries from contributing to the border force.

While Israeli strikes have killed no less than 600 people, Hezbollah has continued firing rockets into Israel threatening to attack central cities if the Israeli offensive continued.

Military sources reveal that though Israel would prefer a deal, the fighting could intensify if it doesn't get one.

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As if the casualties and loss of human life as well as the effect on oil prices was not enough, the Lebanon situation has now extended itself to include an ecological crisis.

An attack by the Israel Air Force on a power plant has caused a 15,000 tonnes oil spill along almost 130 kilometers of the Beirut coast causing hundreds of oil-coated fish to be washed ashore.

There are reports of the oil spill reaching as far as outside the Syrian harbor of Latakia, 120 kilometers north of Beirut.
Lebanon has appealed to the UN for help. While under the UN contingency plan to deal with such pollution, countries such as Algeria, Cyprus and the European Union have expressed their willingness in assisting with a clean-up by hand drive along wide stretches of the coast, the operation cannot start until the military offensive stops.

A shipment from Kuwait containing material to help contain the spill was unable to start work due to the continuing hostilities.

Other factors seem to have influenced the disaster - a leak from an Egyptian commercial boat and Israeli gunboat hit by Hezbollah missiles and effluent from a cement factory in Northern Lebanon.

A major concern is that if the spill is not contained soon, it could spread to the rest of the Mediterranean.
Marine life has been heavily affected and will continue to be.
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Proposals for tackling the crisis in Lebanon are being discussed everywhere and by everyone.

While Bush and Blair after much dilly-dallying will present their plan for an international peacekeeping force in the region now controlled by Hezbollah to the UN next week, the chief opposition is expected to come from Israel who seem intent on destroying Hezbollah and Hezbollah which has shown their staying power.

On the other hand, a proposal agreed on by Hezbollah and Lebanon calling for an immediate cease-fire, prisoner exchange and beefing up of the existing UN force which seems to showcase Hezbollah's willingness to negotiate has been rejected by Israel.

So while peace talks continue and proposals keep being suggested, the fighting continues with more children dying than armed men.

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OPEC President Edmund Daukoru visited Tehran as the third stop on his tour of OPEC producers.

Daukoru was quick to state that the present state of oil prices was not the fault of OPEC but rather a result of political tensions and refining shortages.
He reiterated that OPEC has crude spare capacities of more than 2 million barrels a day if needed.

Daukoru has called the current nearly $80 a barrel price "very uncomfortable" and in looking to deal with the issue.

Iran as the second largest supplier has oil traders worried. Iran is in a position to cut supplies if a U.N resolution is passed against its nuclear work or even if Israel attacks Iran's ally Syria as a part of the present Lebanese offensive.

Daukoru is in Tehran also for the purpose of discussing the dissent between Iran and Kuwait over the OPEc secretary-general post which has seen several acting secretary-generals since December 2003 when the last term ended.

The selection process for the post often reveals the political divisions between core OPEC members.

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With double trouble brewing in Nigeria, oil prices rose all over again in an unending battle of crisis and peace.
Militant attacks on an Italian oil facility and a leak in a Shell Petroleum Development Co. pipeline has caused a singnificant drop in crude oil production leading to mounting prices.

On the New York Mercantile Exchange prices for light, sweet crude rose to $74.59 a barrel while gasoline, natural gas and heating oil futures also saw a upward swing.

The Niger Delta has seen many disputes over the years between oil companies and communities demanding a larger share of the wealth reaped by Africa's largest crude producer.

Traders have also been keeping an eye on the Israel-Lebanon conflict. Oil prices had hit a high 2 days after the fighting broke out but seemed to settle with hopes of the violence remaining contained. Since then, the conflict has escalated with Israel suffering its heaviest losses today and retaliating with jet pounding. Al-Qaida has also jumped into the fray threatening to attack Israel.

If a regional war breaks out and supplies from Iran are disrupted, prices could well sky rocket further.

Adding to this, the U.S. Energy Department said that the demand for gasoline had increased since the previous year by 2 percent despite the heavy pricing.

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Armed invaders from the local Ogbainbiri community in Nigeria have occupied a pumping station owned by Italian Company Agip, the fourth largest oil producing company in Nigeria.

The grievances of the community are communal. Agip has failed to cleap up an oil spill in the area and provide shore protection around the community.

Though the peace talks with the invaders have not led to a breakthrough, officials of the Bayelsa state hope to resolve the crisis soon since the resultant loss in crude oil is no less than 35,000 barrels a day.

Kidnappings and militant attacks on oil facilities in the Niger Delta since the beginning of the year have resulted in losses amounting to $35 million daily!

With the approach of the general elections in the coming year, Nigerian officials are worried that the attacks may worsen.

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