RIYADH, Dec 31: Global crude markets are finally well oiled -– for the time being at least. And as the New Year unveils itself, on the global energy chess board, a number of interesting, intriguing and exciting moves — enough to keep pumping adrenaline -– are being made simultaneously all around. With 2005 coming to an end, not only the Opec withdrew the additional two million barrels on table, which was offered to buyers in the wake of the August spike in the crude prices, but even the IEA signalled it was bringing to end the additional withdrawal facility from security reserves of the member states. Indeed the signals were underlining the fact that the crude markets are finally balanced at this moment.

In the outgoing year, one of the major issues impacting the global energy jig saw was the emerging, post election Iraq and the issue of who controls its prized assets -– oil.

Throughout 2005 Iraq continued to remain the focus of attention of the world’s only super power -– the United States. As early as May 2001, a report of the Bush Administration’s Energy Task Force, headed by enigmatic Dick Cheney declared, “The Gulf will be the primary focus of US international energy policy.” So is indeed! And now that even President Bush has conceded that the intelligence on the presence of WMD in Baghdad was flawed, sceptics are once again at it; it was oil and nothing else but oil that attracted Bush and his strategists to the valleys of Euphrates and the deserts of Karbala.

And now irrespective of who within the next few weeks sits on the throne in Baghdad, in practical terms, Iraq boasting of the second largest globally proven oil reserves is under the firm control of Khalilzad & Co.

Importance of Iraq on the global crude equation could be gauged from the fact that out of the 80 known oil fields in the country; just 17 are currently in production. A further 63 underdeveloped fields have an estimated 75 billion barrels of oil, while some industry experts believe that between 100 billion and 200 billion barrels lie in unexplored fields.

However, the ongoing struggle in Baghdad — on sectarian lines – over the control of oil assets in the post election era continues to impact the destiny of Iraq and the energy world. Kurds and Shi’ites, who predominate in Iraq’s two main oil-rich areas — the north and south, respectively — seem determined to form virtual mini-states that have control over their oil assets and profits. Iraq’s Sunni Arabs are concentrated in mostly oil-poor central Iraq and want central control over the resources to ensure they get a share of the profits. Achieving the improbable won’t be easy!

However, as this battle royal continues to be waged in the corridors of Baghdad governorate, another front on the global energy front is also heating up. As Russia endeavours to flex its petro-muscles, the Opec is also striving to carve out its niche in the booming market of China. China and Opec had their first round of talks, focussed on increasing the Opec’s share last week amid reports that Saudi Arabia and Kuwait are contemplating investments of up to $8 billion in the Chinese fuel sector.

On the other hand Russia, China’s largest non-Opec supplier is also keen to keep its domination of the market. Moscow is reportedly discussing a pipeline to feed Serbian oil to China and raising its rail crude shipments to Beijing by 50 per cent next year. In the meantime, Russia is ever more confidently wielding now its mammoth reserves of oil and natural gas as a political tool. After spending the past year bringing key oil and gas assets back under state control, a string of events indicate Russians are serious about flexing their petro-power.

Gazprom, the state-controlled gas giant, is demanding that former Soviet states, which since the USSR collapsed in 1991 have enjoyed subsidized prices for Russian gas, finally move to market rates. But it is doing so in a highly differentiated way.

Ukraine, having shifted out of Moscow’s orbit since last year’s Orange Revolution, has been slapped with the biggest demand for a price increase. Prices charged to Georgia and Moldova, which have also turned their gaze westwards, have nearly doubled. Yet Belarus, loyal to Moscow, is still getting gas at the old price.

Russia is using its dominant position in oil, too, to further its interests. It plans to cut oil supplies to Lithuania from January 1 in what analysts see as an attempt to press the Baltic republic to favour a Russian buyer over rival Polish and Kazakh bidders for the strategically important Mazeikiu oil refinery.

Russia is, moreover, squeezing potential competitors in the former Soviet Union — notably Kazakhstan - that are trying to develop their own energy industries independent of Moscow. It is attaching tough conditions to permit Kazakhstan expand a key pipeline from the vast Tengiz oilfield in the Caspian to Russia’s Black Sea port of Novorossiysk. This is crucial to plans by the field’s operator, Chevron of the US, to ramp up production. Also this month, Russia started construction of the $5bn North European Gas Pipeline, an export route under the Baltic Sea to Germany that will bypass the Baltic states, Ukraine and Poland.

Moscow has already hinted to US officials and international energy executives that it intends to use its coming G8 presidency to assure the world it can be a pivotal energy supplier to Europe, the US and Asia. And while this all was happening, the Opec was also trying to woo the Russians, to keep a sort of semblance – from their point of view -– in the global crude markets. The Opec president was hence in Moscow last week, to discuss the imperatives of the market. Interesting and conflicting moves all around, indeed!

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