Tag Archives: ExxonMobil

BP Entry contract for Rumaila field

Fourth release, 31 July 2011

During the second half of 2009, Iraq held two auctions of its largest oilfields, awarding them to multinational companies such as BP, Shell and ExxonMobil to operate under 20-year contracts. Between them the oilfields account for over 60% of Iraq’s reserves. The contracts were service contracts rather than the companies’ preferred production sharing agreements, which had been proposed for Iraq but rejected as giving too much away.

Media reports of the auction focused on the headline remuneration fees. These sounded so low – between $1.15 and $5.50 per barrel – that many commentators questioned the profitability of the deals. But as always in oil contracts, the devil is in the detail. And whereas the auctions were billed by the Iraqi government as among the world’s most transparent contracting processes, the first contract, for the super-giant Rumaila field near Basra, was privately renegotiated between the Iraqi government and the winning BP/CNPC consortium for more than three months after the auction.The result was that the terms changed significantly from the published model contract on which the auction was based, to  make it much more attractive to BP and CNPC, at the expense of the Iraqi people.

  • We have obtained the renegotiated Rumaila contract, and can reveal its contents for the first time. The major changes are explained in the report “From Glass Box to Smoke Filled Room – How BP secretly renegotiated its Iraqi oil contract, and how Iraqis will pay the price”, written by Fuel on the Fire author Greg Muttitt and published by PLATFORM.

NEW REPORT: From Glass Box to Smoke Filled Room.

DOCUMENT 12: the original model contract, on which the auction was based.
DOCUMENT 13: the leaked, renegotiated contract, which was actually signed.

Also in today’s release:

  • Another document released today reveals the possible reason BP was so successful in changing the terms in its favour, by focusing on the detailed terms of the contract. In April 2009, Ministry of Oil officials travelled to the UK to explore how to meet their training needs. Just two months before the auction, foremost among the areas where they sought training were commercial and negotiating skills. And the training provider they went to? BP!

DOCUMENT 14: Letter from BP to Iraq Ministry of Oil, 28 April 2009.

  • The contracts were opposed by many in Iraq, including oil experts, the management of the South Oil Company (which would have to work with BP on the Rumaila field), the oil trade union and the parliamentary oil and gas committee. When parliamentarians called in the Iraqi Oil Minister for questioning about the contract, Prime Minister Nouri al-Maliki wrote to the speaker of parliament to warn against the move. In the private and confidential letter, released today, he told the speaker that he would consider such questioning to be “in harmony” with recent major terrorist bombings in Baghdad.

DOCUMENT 15: Letter from Nouri al-Maliki to parliament, October 2009 (Arabic original)

DOCUMENT 16: Letter from Nouri al-Maliki to parliament, October 2009 (English translation)

Fifth release, July 17, 2012

(See also today’s press release)

Two documents are published today, revealing for the first time the role of the Energy Infrastructure Planning Group, whose purpose was to plan for the running of Iraq’s oil industry during the period of direct U.S. occupation and administration of Iraq (under the CPA of Paul Bremer, as it became).

EIPG was established in summer 2002 by Undersecretary of Defense for Policy Douglas Feith. It was led by Michael Mobbs, a political appointee in the Department of Defense. The other members were Michael Makovsy of the Department of Defense, Seneca Johnson of the Department of State, Clark Turner of the Department of Energy (Strategic Petroleum Reserve) and a CIA analyst.

The EIPG did the thinking behind the subject, and made recommendations to the Deputies and Principals Committees of the National Security Council (comprising the heads and second-in-commands of the government agencies relevant to national security).

They were obtained from the Department of Defense under the Freedom of Information Act. This is the first clear evidence, more than nine years on, that Bush administration officials were planning before the war to open the way to multinational oil companies, an assertion consistently denied by the government.

DOCUMENT 17: a briefing to the Deputies Committee on November 6, 2002.  The main topic of the meeting is how to spend the proceeds from Iraqi oil.

See especially page 10, where weighing up whether to repair war-damaged Iraqi oil infrastructure, one of the cons is that it “could deter private sector involvement”. Although this route was rejected (see DOCUMENT 18), it could later be seen in the U.S. forces’ failure to stop looting of the infrastructure in April 2003 (they only protected the Oil Ministry building, which held the irreplaceable geological data – they did nothing to protect drill rigs, pump stations etc). The attitude was seen again when the Oil Ministry’s considerable human resources were cleared out in fall 2003, in favor of friends and family of the new oil minister.

Note also on the contents page (2) the EIPG planned to consider later that month “whether to use control of Iraqi oil to advance important U.S. foreign policy objectives”. DOD reports that it holds no record of such discussions. They are likely to involve not direct U.S. energy interests, but whether to tear up eg Russian and Chinese contracts in order to harm those countries.

(The briefing was stored by the DOD as landscape printed on portrait paper – hence the edges are cut off in the official archive too!).
DOCUMENT 18: a briefing to the Secretary of Defense Donald Rumsfeld on January 11, 2003, incorporating comments and decisions from earlier Deputies meetings.

Here the option of leaving war damage unrepaired so as to make room for Big Oil has been rejected, in favor of appointing Halliburton subsidiary KBR to carry out repairs (page 5).

Priorities are set of restoring crude oil production (which the USA needed) over electricity and fuel (which Iraqis needed – page 6).

Increasing Iraqi production to 5 million barrels per day (from 2.5m bpd)  is favored as it “helps consumers” and “puts long-term downward pressure on the oil price”

Strikingly, “pubic diplomacy” (page 4) means the message that would be given to the public, including saying that “we will act… so as not to prejudice Iraq’s future decisions” – even though the opposite is proposed as substantive policy. In other words, the briefing recommends that the Bush administration mislead the public on how it would approach Iraqi oil.

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Zion Oil Wars: U.S. secret mission sent to Jordan to control Syrian chemical weapons ( BP-Shell drilling in Jordan)

-Tony Hayward’s anglo-turkish oil firm Genel Energy today confirmed that drilling has now begun on its first well on the Chia Surkh exploration block in Iraqi Kurdistan.

The block spans 984 square kilometres in the southern part of the Kurdish region. It has an estimated 300 million barrels of prospective oil resources.

The Chia Surkh 10 well will be drilled to a total depth of 2,500 metres to test Lower Miocene to Palaeocene targets.

The well results are expected in the first quarter of next year.

Genel has a 60% interest in Chia Surkh. City broker Oriel Securities estimate that Chia Surkh is worth a ‘risked’ 38p per share at this stage.

The broker highlighted, in a note today, that Genel is hosting a capital markets day this week and it beleives the company is likely to update on the plans for the Miran gas development as well as its exploration programme – which now includes new licences in Malta, Morocco, Cote d’Ivoire and Somaliland.

Gazprom Neft, the oil arm of Russia’s top natural gas producer Gazprom, is still interested in Kurdistan’s oil, a Gazprom Neft source said, rebutting reports it had frozen projects in the Iraqi province.

In August, Gazprom Neft acquired interests in two blocks in Iraq’s Kurdistan region, after similar moves by international rivals angered the central Iraqi government in Baghdad.

The International Oil Daily cited Iraqi Oil Minister Abdul-Kareem Luaibi as saying Baghdad received a letter from Gazprom, in which the company said it had frozen the contract with Kurdistan.

“Gazprom Neft is still working on these projects. The company keeps its interest in Kurdistan,” a Gazprom Neft source told Reuters.

A company spokeswoman declined to comment.

Gazprom Neft already has a project in Iraq, near the Iranian border, where it expects to produce about 15,000 barrels per day from 2013.

Baghdad was angered by the plans of some international majors, including ExxonMobil, to tap oil and gas in the semi-autonomous region. The central government says the deals are illegal.

Later on Wednesday Iraqi Prime Minister Nuri al-Maliki is due to meet Russian President Vladimir Putin in Moscow where they may discuss energy issues.

Russia said on Tuesday it had signed $4.2 billion worth of arms deals with Iraq.

The Kurdistan Regional Government (KRG) is planning to build an oil pipeline to Turkey with a capacity of 1 million barrels a day, according to a report from Platts.

KRG natural resources minister Ashti Hawrami told an energy conference in Turkey on Thursday that plans were already in place for the construction of short spur lines from producing fields and that funding had been arranged for a main export line to carry crude from these fields to the border.

Plans are underway to launch a construction tender for the project, he added.

He said that initially the new line would connect with the existing Turkish section of the Kirkuk-Ceyhan oil line but that talks were underway with investors interested in building a new pipeline inside Turkey running from the border with northern Iraq to the Mediterranean port of Ceyhan.

“Any such pipeline will be an Iraqi pipeline…it will be for the benefit of all nations, all the Iraqi people and all the Turkish people,” Hawrami said.

“It is not designed to be anything else except supplying secure oil to the market,” he added in an apparent reference to recent talk that the KRG was planning its own oil export routes independent of the federal government in Baghdad.

Talk of building new pipelines through Turkey, which currently serves as an outlet for Iraqi crude oil produced in the north through the Mediterranean port of Ceyhan, has given rise to speculation that this might be a first step toward greater independence by the Kurdish province.

Hawrami stressed that the new pipeline would be Iraqi property on the Iraqi side of the border and Turkish on the Turkish and that the oil the line carried would remain the property of the Iraqi state.

“We believe that by 2015 we will safely reach 1 million bpd and by 2019, 2 million bpd,” Hawrami said.

Gulf Keystone, one of the biggest companies listed on London’s junior AIM stock market, is due to start the defence of its ownership of a huge oil field in Iraqi Kurdistan in a London court this week.

The company has long been touted as a potential acquisition target for an oil major looking for a foothold in Kurdistan, but the looming legal battle has been cited as a potential obstacle to any takeover deal.

Kurdistan is emerging as an attractive oil province for big western oil companies. Exxon Mobil, Total and Gazprom have all taken acreage there over the last year, lured by the lucrative terms on offer in Iraq’s semi-autonomous northern region.

Gulf Keystone will contest claims made by Excalibur Ventures LLC at the English Commercial Court. The claimant, which commenced legal action in 2010, asserts it is entitled to an interest of up to 30 percent in all of Gulf Keystone’s blocks in Kurdistan.

Gulf Keystone’s prize asset in Kurdistan is the Shaikan field, which could hold up to 15 billion barrels of oil – a volume which would make it one of the biggest discoveries made anywhere in recent years.

Under legal orders, Excalibur has paid 6 million pounds ($9.6 million) to the court as security for Gulf Keystone’s legal costs, and 3.5 million as security for the costs of Texas Keystone, a U.S.-based company against which it has also made the claims.

Texas Keystone, a company founded by Gulf Keystone Chief Executive Todd Kozel and of which he is still a director, holds a small interest in the Shaikan field in trust for Gulf Keystone.

Kozel, whose expensive divorce attracted media coverage nine months ago, is one of Britain’s highest-paid executives, having earned around $20 million in 2011.

The court case, which is expected to take between 10 and 12 weeks, was scheduled to start on Wednesday but was delayed by the judge.

Shares in Gulf Keystone closed at 205.75 pence on Tuesday, down over 50 percent from an all-time high reached in February, and valuing the company at about 1.75 billion pounds.

U.S. secret mission sent to Jordan to control Syrian chemical weapons: report

The United States military has secretly sent a task force of more than 150 planners and other specialists to Jordan to help the armed forces there to prepare for the possibility that Syria could lose control of its chemical weapons and be positioned should the turmoil in Syria expand into a wider conflict, a report published by the New York Times on Wednesday said.

The secret mission, led by a senior American officer, will also help in handling the estimated 180,000 Syrian refugees who have crossed the border and are severely straining the country’s resources, the report said.
The task force is based at a Jordanian military training center built into an old rock quarry north of Amman.

According to the report, U.S. officials familiar with the operation said the mission includes drawing up plans to try to insulate Jordan, a strong U.S., from the upheaval in Syria and to avoid the kind of clashes now occurring along the border of Syria and Turkey.

“We have been working closely with our Jordanian partners on a variety of issues related to Syria for some time now,” George Little, the Pentagon press secretary, was quoted as saying by the New York Times. He added that a specific concern was the security of Syria’s stockpiles of chemical and biological weapons. “As we’ve said before, we have been planning for various contingencies, both unilaterally and with our regional partners.”

The Obama administration has declined to intervene in the Syrian conflict beyond providing communications equipment and other non-lethal assistance to the rebels. However, the outpost near Amman could play a broader role should U.S. policy change.

The New York Times mentioned that there were no comments on the U.S. military operation from neither the Pentagon nor the Jordanian Embassy in Washington.

Analysts have always said that the Syrian regime of President Bashar al-Assad might deliberately force the Syrian conflict to spill over beyond the Syrian borders in order to keep the world’s attention away from the violence committed against civilians inside Syrian.

Over the past week, Syria and Turkey have exchanged artillery and mortar fire across Syria’s northern border. In western Syria, intense fighting recently broke out in villages near the border crossing that leads to the Bekaa Valley in Lebanon. To the east, the Syrian government has lost control of some border crossings, including the one near al-Qaim in Iraq.

Recent scuffles have also broken out between the Syrian military and Jordanians guarding the country’s northern border, where many families have ties to Syria.

Jordan, which was one of the first Arab countries to call for Assad’s resignation, has become increasingly concerned that Islamic armed groups, coming to join the fight in Syria, could cross the porous border between the two countries.

Al Arabiya has recently revealed that Assad gave instructions for his agents to try to ignite unrest in Jordan. According to “classified intelligence documents” leaked to Al Arabiya, Assad gave orders to provide peaceful protesters, who call for reform in Jordan, with weapons.

According to the New York Times report, the U.S. mission in Jordan quietly began this summer. In May, the U.S. organized a major training exercise, which was dubbed Eager Lion. About 12,000 troops from 19 countries, including Special Forces troops, participated in the exercise.

After it ended, the small American contingent stayed on and the task force was established at a Jordanian training center north of Amman. It includes communications specialists, logistics experts, planners, trainers and headquarters staff members, the report mentioned citing American officials.

Defense Secretary Leon E. Panetta met in Amman in August with King Abdullah II of Jordan. Panetta was then followed in September by Gen. James N. Mattis, the head of Central Command, who met with senior Jordanian officials in Amman.

Members of the American task force are spending the bulk of their time working with the Jordanian military on logistics — figuring out how to deploy tons of food, water and latrines to the border, for example, and training the Jordanian military to handle the refugees, the report said.

Jordan is currently hosting around 100,000 Syrians who have either registered or are awaiting registration, the United Nations said.

Royal Dutch Shell PLC (RDSA) has drilled more than 100 wells in Jordan in the two years since it a concession agreement to explore for oil from the country’s vast oil shale reserves, a person familiar with the project said.

Shell signed a production-sharing agreement with Jordan in May 2009 and pledged to spend some $500 million for exploration, assessment and designs on the project. The project aims at exploring for and, if successful, developing and producing oil from Jordan’s vast oil shale resources that are estimated at 40 billion metric tons. Many analysts now see oil shale–an unconventional form of oil contained in difficult-to-extract reservoirs–as a serious rival to crude.

Shell is mobilizing two rigs in the project that covers an area of 22,000 square kilometers from northern Jordan and west Safawi to Azraq in the middle and Sirhan and al-Jafer in the south. A third rig will be mobilized next year, the person told Dow Jones Newswires.

If the exploration proves successful Shell would invest billions of dollars and produce thousands of barrels of oil a day, the person said. Jordan signed similar agreements with companies such as U.K.-registered Jordan Energy & Mining Ltd., or JEML, and Estonian EESTi Energy.

Jordan, home to around 6 million people, imports some 100,000 barrels of oil a day, which constitutes around 98% of its energy needs.

BP last week began drilling the first well in its concession in the Risha natural gas field in eastern Jordan, near the border with Iraq, the British oil major said on Monday.

The drilling follows two years of preparation and a “very successful 5,000 square km seismic acquisition program in 2011”, BP said.

The well is expected to take three to four months to complete, and a number of international oil and gas service contractors as well as local firms are involved, it said.

Jordanian officials hope intensive exploration and drilling at Risha will lead to the discovery of extensive recoverable gas reserves, which will help cut dependence on oil imports to fuel Jordan’s power sector and industries.

Risha, which was discovered in 1987, has not delivered encouraging exploration results in the past.

In 2009, BP was given up to four years to spend at least $237 million to explore and evaluate the Risha block, which covers an area of 7,000 square km, Jordanian officials said.

If the exploration leads to the discovery of large commercially viable reserves of natural gas, officials said BP would enter a second phase to invest billions of dollars in developing the field.

BP said the seismic survey “was one of the largest ever acquired in the Middle East and one of the safest and highest-productivity surveys acquired in BP history.”

The government strategy calls for Risha to produce 330 million cubic feet of gas per day by 2015. The field has a current modest daily output of about 18 million cubic feet.

The kingdom, which imports most of its energy, is struggling to meet electricity demand, which is growing by more than 7 percent per year, due to fast growing population and rising industrial needs.

Zion Oil Executes Memorandum of Understanding Regarding Drilling Partnership

Dallas, Texas and Caesarea Israel – June 4, 2012 – Zion Oil & Gas, Inc. (“Zion Oil”) (NASDAQ GM: ZN) announced today that the Company recently signed a Memorandum of Understanding (MoU) with Lapidoth Israel Oil Prospectors Corp. Ltd. (“Lapidoth”), a forerunner of onshore oil prospecting in Israel. Lapidoth was incorporated in 1959 and its securities are traded on the Tel Aviv Stock Exchange.

The MoU, effective June 4, 2012, outlines plans to establish a company, tentatively named “Zion-Lapidoth Drilling”, which is to locate and purchase a drilling rig suitable for drilling wells to a depth of up to 25,000 feet. The MoU contemplates that Zion-Lapidoth Drilling will be 50% owned by Zion Oil and 50% by Lapidoth. The anticipated cost of the drilling rig is up to US$ 15 million and each party will share equally in the financing of Zion-Lapidoth Drilling.

The MoU provides that Zion Oil will retain Zion-Lapidoth Drilling for its drilling program and when not required by Zion Oil, Zion-Lapidoth Drilling may lease the drilling rig to third party oil and gas drilling entities.

The MoU is subject to certain standard conditions, including the execution of definitive purchase agreements, obtaining required approvals and the completion of acceptable due diligence by the parties. Additionally, the implementation of the MoU is subject to Zion raising at least US$ 10 million within the next 12 months.

The MoU provides that for the next 12 months Lapidoth will have a right of first refusal to drill wells, as needed, in accordance with Zion Oil’s work program.

Zion’s Founder and Chairman, John Brown, said today, “The signing of this MoU marks a significant milestone in the life of Zion Oil & Gas. We are looking forward to the future expectantly and the partnership with Lapidoth Israel Oil Prospectors Corp. Ltd helps solidify our commitment to drill our prospective exploratory wells.”

Zion’s Chief Executive Officer, Richard Rinberg, noted, “The partnership with Lapidoth helps to alleviate a longstanding concern about our ability to continue to drill exploratory wells in Israel without dependence on an outside third party. Zion will also benefit from Lapidoth’s significant experience in operating drilling projects in Israel. We believe that the ultimate establishment of Zion-Lapidoth Drilling will take Zion Oil, as a business, to a completely new level.

We remain excited about the possibility of recovering hydrocarbons on our license areas, onshore Israel, especially due to the U.S. Geological Survey report, published in April 2010, containing their assessment that there may be 1.7 billion barrels of recoverable undiscovered oil and 122 trillion cubic feet of recoverable gas in the Levant Basin, as all of Zion’s exploration rights fall within the area of the Levant Basin.”

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW, ZNWAZ and ZNWAL”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Haifa and Tel Aviv. It currently holds three petroleum exploration licenses, the Joseph License (on approximately 83,272 acres) and the Asher-Menashe License (on approximately 78,824 acres) between Netanya, in the south, and Haifa, in the north and the Jordan Valley License (on approximately 55,845 acres), just south of the Sea of Galilee. The total license area amounts to approximately 217,941 acres.

FORWARD LOOKING STATEMENTS: Statements in this communication that are not historical fact, including statements regarding Zion’s planned operations, geophysical and geological data and interpretation, the successful establishment of the drilling subsidiary and the negotiation and execution of definitive agreements with Lapidoth with respect thereto, the presence or recoverability of hydrocarbons, sufficiency of cash reserves, ability to raise additional capital and timing and potential results thereof and plans contingent thereon are forward-looking statements as defined in the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on assumptions that are subject to significant known and unknown risks, uncertainties and other unpredictable factors, many of which are described in Zion’s periodic reports filed with the SEC and are beyond Zion’s control. These risks could cause Zion’s actual performance to differ materially from the results predicted by these forward-looking statements. Zion can give no assurance that the expectations reflected in these statements will prove to be correct and assumes no responsibility to update these statements.


Russia’s Gazprom ,Barroso,,The Iraqi Kurds and the Moscow Corruption – The Gazprom Cables

BAGHDAD (AP) — A Middle East subsidiary of Russia’s Gazprom Neft has inked two oil deals with Iraq’s self-ruled northern Kurdish region, becoming the fourth major oil company to enter into agreements with Iraqi Kurds that bypass the central government in Baghdad.

The Kurds and the central government are at loggerheads over rights to develop resources. Baghdad wants to manage its energy resources nationwide, but Kurds insist the constitution doesn’t require them to go through Baghdad.

Since the 2003 U.S.-led invasion, the Kurds have signed scores of oil deals with small and mid-sized oil companies. But the entry of the oil majors may be a game changer that could lead to de facto policies the Kurds have long sought.

In a statement issued on Wednesday, the St. Petersburg-based company said it has acquired a 40 percent share in the 1,780-square-kilometer (687-square-mile) Garmian block. The Canada-based WesternZagros company will also hold a 40 percent share.

In the second deal, the company will hold an 80 percent share in the 474-square-kilometer (183-square-mile) Shakal block. The Kurdish Regional Government will hold a 20 percent share in each contract.

Both blocks are located in the southeastern part of the region and are expected to hold about 3.6 billion barrels of oil reserves. Gazprom’s up-front payment is to be around $260 million.

“Gazprom Neft considers the territory of the Kurdistan Region of Iraq promising for further geological study and consequent production at the fields,” First Deputy CEO, Vadim Yakovlev said.

With its latest deals, Gazprom has joined France’s Total S.A., U.S. oil majors Chevron Corp. and Exxon Mobil Corp. who have already made their own forays into the region.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the Kurdish government to prevent them from working elsewhere in the country or purchase crude oil.

But in the case of Exxon Mobil, the Iraqi government has had a light hand. Baghdad prevented the U.S. company from taking part in Iraq’s fourth energy bidding round in May but has not touched its deal to develop the 8.6 billion West Qurna field near the southern city of Basra along with Royal Dutch Shell PLC.

No moves have been made against Total, which has a share in a consortium led by China’s National Petroleum Corporation to develop the 4.945 billion barrel Halfaya field in the south. Gazprom is developing the 100 million barrel Badra field in central Iraq.

Baghdad has so far only blacklisted Chevron, which has no deals with the government.

There is considerable incentive to work directly with the Kurds — unlike the flat fee the central government pays for each of barrel of oil extracted, the Kurds offer lucrative contracts allowing the developers to claim a share in reserves and the oil produced.

Also Wednesday, the Iraqi Kurds announced that they will resume crude oil exports from their region in the first week of August after they were halted in April over a payment row with Baghdad.

In 2011, the two administrations struck a tentative deal by which the Kurds send oil to Baghdad, which then sells it and each side then takes 50 percent of the revenues. But exports were halted in April by the Kurds who claimed that Baghdad failed to send them the money. In return, Baghdad accused the Kurds of keeping billions of dollars that ought to go to government coffers and also of smuggling oil.

The Kurdish statement said the exports will start at 100,000 barrels a day for a month as a “confidence-building” measure and if payments were forthcoming, they could move swiftly up to 200,000 bpd. If not, the exports will be halted again.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

The original goal was to boost daily production from about 3 million barrels now to 12 million barrels by 2017. That may be revised downward to fewer than 10 million barrels however, given infrastructure bottlenecks and a possible falloff in demand on international markets [source]

BARROSO AND PUTIN LOCK HORNS ON GAZPROM

Putin has signed a decree giving the government the right to protect natural gas
giant Gazprom from a stupid antitrust probe of Barroso. Galileo muttered the
phrase Eppur si muove, And yet it moves, after being forced
to recant in 1633, before the Inquisition, his belief that the Earth moves
around the Sun. Similarly the new inquisition of regulators forces executives
to admit something they did not do, in order to get smaller penalties. Eppur si
muove!

There is an Antitrust Armageddon in Europe between tiptop companies and Fourth
Reich(EU). Eurokleptocrats are willing to do anything in order to get kickbacks
from industry leaders. The European antitrust laws have the unfortunate
consequence of harming Europeans by chilling innovation and discouraging
competition. Instead of protecting competition, EU laws protect competitors who
give kickbacks to kleptocrats! Kickback is the lubricant that allows a European
industry to run smoothly! No European machinery can run without lubricant! Eppur
si muove!

The new Russian law prohibits companies deemed strategic from disclosing
information, disposing of assets or amending agreements without Russian
authorities’ ratification in the case that the claims are initiated by foreign
states or entities.

European antitrust law is wielded most often by favor-seeking businessmen and
their kleptocrat allies. Instead of focusing on new and better products,
disgruntled rivals try to exploit the law by consorting with kleptocrats. EU
officials routinely direct antitrust regulators to bend the rules in pursuit of
political ends. In reality, the threat of abusive EC power is far larger than
the threat of oligopoly. Eppur si muove!

Gazprom declares it is incorporated beyond EU jurisdiction, and is a company
which under Russian law exercises functions of public importance and has the
status of a strategic organization controlled by the state.

When a company is forward-thinking, proactive, innovative, and productive, it
will produce good products that customers want to buy. As a result, it will win a
large market share. If the company is much better than its competitors, it might
win most, or almost all, of the market. This is the case with Microsoft. It has
earned its market share by producing good products that customers want to buy.

Barroso is investigating whether Gazprom, the world’s largest gas exporter,
resorted to unfair competition and price-fixing in Central and Eastern Europe’s
natural gas markets. The EU, which gets 25% of its gas from Russia, wrongfully
claims that Gazprom has hindered the free flow of gas across its member states,
preventing supply diversification and limiting customer choice in delivery
points. Barroso also suspects Gazprom of imposing unfair costs on its customers
by linking the prices of gas and oil.

A company that wins a large market through its own productive efforts deserves
accolades. This is because justice, morally, tells us that we must reward the
good. However, to the government, a large market share is taken as evidence of
anti-competitive behavior, which makes the company a target for antitrust
action. This seems to be the motive behind the antitrust suits against Microsoft
and Google.

Barroso notes Gazprom’s long-term supply contracts linking gas prices to oil
prices are no longer justified because of the appearance of a spot market for
gas and increased supplies of shale gas. Gazprom may face a
fourteen-billion-euro penalty, according to estimates based on the fact that
companies found to breach EU competition rules can be fined as much as 10% of
annual revenue.

European antitrust laws lead to huge corruption, because government officials
ask for kickbacks in order to erase the alleged violation. The standard kickback
in EU is 10% of the erased penalty! Many Greek officials were caught on tape
asking for the corrupt tithe! Many European political parties make up their
election expenses from kickbacks on antitrust cases! This is the worst possible
blackmail, where tiptop ethical companies are held hostage by European
kleptocrats. Eppur si muove!

Putin warns Barroso that there would be losses on both sides if the thorny issue
isn’t tackled. Putin accuses Barroso of trying to burden Russia with the
subsidizing of formerly communist EU states by forcing Gazprom to reduce prices
for customers in Eastern and Central Europe. Gazprom says the Barroso
investigation is an attempt to reduce gas prices, and it won’t give discounts to
Barroso without the Russian government’s go-ahead. [source]

The Gazprom Cables ‘Not a Competitive Global Company’

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.

June 10, 2009, Moscow: “Too many political constraints”
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.06.2009 11:02

09MOSCOW2528

Embassy Moscow

CONFIDENTIAL

09MOSCOW367|09MOSCOW403|09MOSCOW971

VZCZCXYZ0000

PP RUEHWEB

DE RUEHMO #2528/01 2791102

ZNY CCCCC ZZH

P 061102Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 4993

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART ONE

REF: A. MOSCOW 971

C o n f i d e n t i a l moscow 002528

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and wright, s/eee

morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/05/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part one

Ref: a. Moscow 971

b. Moscow 403

c. Moscow 367

Classified By: Econ MC Matthias J. Mitman for Reasons 1.4 (b/d)

1. (U) This is the first of a two-part report on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

summary

——-

2. (SBU) Far from reaching its ambitions of becoming “the

most valuable company in the world,” Gazprom’s fortunes have

reversed dramatically in the past year. The company’s market

value, production, and sales have all plummeted since the

onset of the economic crisis. With dramatically reduced

cash-flow, the company has been forced to cut back on capital

expenditures and its ambitions, despite political rhetoric to

the contrary. However, as we will examine in part two of

this report, Gazprom’s problems are likely longer term. End

summary.

————————————

massive reversal in major indicators

————————————

3. (U) Major indicators of Gazprom’s performance have all

reversed course dramatically in the past year. (Note:

Figures in this report are taken from Gazprom reports,

statements, and presentations, unless otherwise indicated.

End note.)

Market capitalization —

4. (U) At its peak in May 2008, Gazprom’s market valuation,

based on the small percentage of its shares that trade

publicly, was over $350 billion, and company president Alexey

Miller declared Gazprom would become “the most valuable

company in the world.” Miller suggested Gazprom’s market

capitalization would reach $1 trillion in the near future.

By May 2009, in the midst of the global economic and

financial crisis, the company’s market capitalization had

dropped to its recent low of approximately $75 billion, but

has since rebounded to approximately $120 billion.

Production —

5. (U) Gazprom’s gas production peaked in 2006, at 556

billion cubic meters (bcm). In 2008, it was 550 bcm. In the

first seven months of 2009, however, Gazprom’s production was

down almost 25% over the same period in 2008. As of

September 2009, Gazprom expects 2009 production to reach just

474 bcm, and many analysts believe that figure to be overly

optimistic. In a September note on Gazprom, investment bank

Troika Dialog predicted Gazprom would have difficulty even

reaching 460 bcm. On the low end, some analysts estimate

Gazprom could produce just 450 bcm or less in 2009 — a 100

bcm or more decline from its peak production. Even this

massive drop in production is masked to some degree by the

halt in gas imports from Turkmenistan since April (ref A).

In 2008, Gazprom imported 42 bcm from Turkmenistan, nearly

all of which was re-exported to Ukraine. Having halted these

imports, Gazprom itself is supplying the Ukrainian market out

of Russian production.

Revenues —

6. (U) The Russian Customs Service reports that Russian gas

export revenues were down 50% in the first 7 months of 2009,

compared to the same period in 2008, a decline of almost $20

billion. While Gazprom’s official results for 2009 will not

be published until well into 2010, a back-of-the-envelope

calculation using Gazprom’s own projections for average price

and volumes of exports to Europe in 2009 (ref C) indicates

the company might receive about $30 billion less from exports

to Europe in 2009 than in 2008. This represents a loss of

about 2% of Russian GDP and is in line with estimates from

various analysts. (Note: Given the relative significance of

export sales to Europe (excluding FSU), the relative

reliability of the figures, and to avoid exchange rate

complications, we focus only on export revenues here.

According to its recent bond prospectus, Gazprom’s exports

are divided into sales to the FSU, and to Europe. Sales to

the FSU and Europe represent 16% and 63%, respectively, of

its sales by revenue — meaning exports represent 79% of

Gazprom’s revenues. End note.)

Domestic sales —

7. (U) Gazprom’s domestic sales are not down as dramatically

as one would expect given the economic crisis, due primarily

to artificially low domestic prices, which prop up demand.

While Gazprom has not yet reported official results for the

first half of 2009 (1H09), various analysts predict a drop of

about 10% in gas volumes to the domestic market.

Export volumes —

8. (U) Gazprom’s overall exports peaked in 2008 at 281 bcm.

Gazprom’s sales to the FSU peaked in 2007, at 101 bcm,

dropping slightly to 97 bcm in 2008. Sales to the rest of

Europe peaked in 2008, at 184 bcm. (Note: Interim

statements regarding 2009 sales often do not coincide in

definition with audited annual reports. Thus 1H09 sales

estimates only give an indication of the trend and are not an

exact comparison with 2008 figures. Gazprom has not yet

released official results for 1H09 and only released first

quarter (1Q09) results on August 26. End note.) Through

1H09, Gazprom has said it shipped about 33% less gas to

European customers than in 1H08. In a recent statement, the

company said its exports to the FSU in 1H09 dropped 54%

compared to 1H08. A weighted average of those estimates

indicates overall exports shrunk by about 40% 1H09.

9. (U) As Gazprom and many analysts point out, however, 2H09

should be much better for Gazprom exports as many European

customers restrained purchases in 1H09, knowing that prices

— which are tied to oil prices with a six to nine month lag

— would drop dramatically in 3Q09. Furthermore, export

volumes in 2H08 were already dropping rapidly due to the

economic crisis and high gas prices that were reaching their

peak in 4Q08. Results for 1H09 were also significantly

affected by the 21 day gas cutoff to Ukraine and 10 day

cutoff to Europe in January. That said, 2009 will still be a

dismal year for Gazprom export volumes.

—————

forced cutbacks

—————

10. (C) Facing financial realities, Gazprom recently cut its

capital expenditure budget by $7.5 billion, or about 25%,

including cuts to Shtokman and Yamal development. However,

Gazprom and GOR leadership continue to take the tack that

“everything is fine” (ref B). One attendee at the recent

gathering of the “Valdai” group of international Russia

experts told us that Gazprom CEO Alexey Miller told the group

that the company’s plans for the Nord Stream and South Stream

gas pipelines, and for the development of the Shtokman and

Yamal gas fields are “all on track.”

11. (C)xxxxxxxxxxxx told us recently that

Miller’s and other GOR leaders’ public statements on Gazprom

should be ignored. xxxxxxxxxxxx said these leaders understand well

that Gazprom is in trouble but they just don’t know what to

do about it.

12. (C) According to xxxxxxxxxxxx, Gazprom simply doesn’t have the

money to move forward on all its so-called “priorities,” and

it will need to choose which are most important, while facing

insatiable political demands on its revenue streams. xxxxxxxxxxxx, told us

recently that he believes Gazprom has “a heck of a lot of

cost-cutting capacity” still available, but that the company

has too many political constraints preventing it from taking

the most necessary and painful measures. Furthermore, he

figures the company needs to spend about $5 to $8 billion a

year just to maintain its aging system and that these costs

will rise in the future. xxxxxxxxxxxx is thus also very

skeptical of Gazprom’s other major commitments such as South

Stream and Shtokman.

——-

comment

——-

13. (C) Gazprom’s capital expenditure cuts reflect an

understanding that, public rhetoric aside, the company can’t

spend money it doesn’t have. However, Gazprom’s longer-run

problems are largely beyond its control and require

fundamental reforms that will be difficult to achieve. In

part two of this report, we examine the constraints to

Gazprom’s return to dominance.

Beyrle

Gazprom headquarters in Moscow: “Private bank accounts and dirty deals”

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.
Info

High-ranking representatives of Russian gas giant Gazprom are hard to pin down for appointments. So when American diplomats finally got the chance, they cut right to the chase: What are the giant energy company’s actual business aims?

The Gazprom man was candid. The first priority, he said according to US diplomatic cables obtained by WikiLeaks and shared with SPIEGEL and other partners, is to provide reliable and affordable gas to the domestic population. The second, he said is to “fulfill its social obligations,” including charitable projects all across Russia.

The American envoys persisted in their questioning. Was it not also the goal of the company to maximize its shareholder value and its market share? Yes, of course. The cable cites the official also adding a third priority to his company’s goal: to maximize “control over global energy resources.”

A “Gazprom official describes the company as a socialist rent-seeking monopolist,” the US envoys reported after a September 2008 meeting in a dispatch cabled to Washington.

‘Huge Wealth, but Inefficient’

That’s the tenor of a number of secret US Embassy reports about the model Russian company, cables that are filled with critical American assessments about a bureaucracy that has gone overboard and a mafia-like political system in Russia.

But the assessments are particularly pointed when it comes to Gazprom, the company the Russians themselves most like to celebrate and to deploy in their battle to regain lost power in the world. Even as recently as May 2008, Chairman Alexei Miller was pledging that Gazprom would soon be “the most valuable company in the world,” with market capitalization that would reach $1 trillion in the near future. But around one year later, in the midst of the global economic and financial crisis, the company’s market capitalization had dropped to $75 billion.

“Gazprom is,” the Americans summed up in one cable, “what one would expect of a state-owned monopoly sitting atop huge wealth — inefficient, politically driven, and corrupt.” The American diplomats also painstakingly detailed the sectors in which the energy giant is engaged in and in which falling gas prices are creating problems for it.

Falling Demand for Gas

Their results are sobering. One 2009 cable states: “Far from reaching its ambitions of becoming ‘the most valuable company in the world,’ Gazprom’s fortunes have reversed dramatically this year. The company’s market value, production, and sales have all plummeted since the onset of the economic crisis.” With dramatically reduced cash-flow, the cable reads, the company has been forced to cut back on capital expenditures and its ambitions, despite political rhetoric to the contrary.

The US diplomats described Gazprom’s problems as likely being “longer term,” and not just a by-product of the crisis. That’s because demand for gas in Germany and Europe is in decline because industrial production there and across Europe has become more efficient.

At the same time, a cable noted, few new markets are opening up in the former Soviet states. Ukraine, for example, indicated it was considering halving its gas purchases. Gazprom Chairman Miller has for some time now been longing to establish a new market in the US but, as a cable states, the country is “looking more and more saturated every day with ever larger estimates for domestic production.”

According to the assessment by the US diplomats, Gazprom’s greatest problem is the company’s own Byzantine structures. “Gazprom is not a competitive global company,” the assessment reads, despite sitting on the world’s largest gas reserves. “Gazprom is the legacy of the old Soviet Ministry of Gas and still operates much the same way.”

A Top Executive with a Love for Hockey

There were many indications that this was the case. The Americans learned from an informant that a senior partner in an international accountancy firm needed two years just to unravel Gazprom’s holdings. The empire included one of Russia’s largest banks, an important Russian media company and a major construction firm.

Originals: Key Gazprom Cables

July 10, 2009, Moscow: “Huge wealth … corrupt’
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.07.2009 13:42

09MOSCOW2541

Embassy Moscow

CONFIDENTIAL

09MOSCOW2528|09MOSCOW854|09VLADIVOSTOK110

VZCZCXRO4339

PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR

DE RUEHMO #2541/01 2801342

ZNY CCCCC ZZH

P 071342Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 5023

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART TWO; COMEBACK

REF: A. MOSCOW 2528

C o n f i d e n t i a l section 01 of 04 moscow 002541

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and greenstein,

s/eee morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/06/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part two; comeback

unlikely

Ref: a. Moscow 2528

b. Vladivostok 110

c. Moscow 854

Classified By: Ambassador John R. Beyrle for Reasons 1.4 (b/d)

1. (U) This is part two of a two-part cable on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

Summary

——-

2. (C) Gazprom faces many external and internal constraints

to renewed growth, following a dismal year in which all main

indicators of its performance deteriorated dramatically. The

globalizing gas market, a gas glut that shows no signs of

reversal, and politicized management likely mean that Gazprom

will not reach the heights of revenues and power achieved at

its peak in 2008. Unfortunately, the types of reforms (e.g.

privatization) that would result in a more valuable and

productive gas industry are stymied by the GOR’s seemingly

firm belief in a state-controlled sector. While Gazprom will

remain a major economic force, its influence on GOR policy

and its relative role in the Russian economy likely will

diminish in the short- and medium-term. End summary.

———————————

external constraints to a rebound

———————————

3. (SBU) Gazprom’s current problems (ref A) are not solely

the result of one-off contractions in demand due to the

economic crisis. Gazprom faces a fundamental shift in the

gas demand picture at a time of increasing competition.

Demand stabilization and decline —

4. (SBU) xxxxxxxxxxxx told us recently that Gazprom was simply unprepared

for the inevitable leveling off and current decline in

European gas demand. He explained that Gazprom’s management

has only known rapidly rising European demand for Russian gas

as most European countries “gassified” their economies over

the past two decades. He noted that anyone looking at the

trend could have been excused for thinking it would continue

perpetually; but now the period of gassification is over.

According to xxxxxxxxxxxx demand for gas in Germany is

actually in decline, as industrial production in Germany (and

across Europe) has become more efficient and as much of it

has been outsourced.

Competition —

5. (SBU) Gazprom not only faces a demand problem, but also

competition from an increasingly globalized gas market —

“for the next 5 to 10 years, gas will clearly be a buyers

market,” said xxxxxxxxxxxx has calculated (using data

from the BP Statistical Review of World Energy) that

Gazprom’s share of EU 27 gas imports has dropped steadily

from about 50% in the mid-90s (when gassification increased

demand) to just 34% in 2009. xxxxxxxxxxxx expects Gazprom’s share to

decline to about 30% and stabilize at that level. xxxxxxxxxxxx also

calculated that LNG’s contribution to EU imports over the

last decade has increased from about 10% to about 20%, a

figure he projected to continue to grow. In addition,

Gazprom will have to cope with massive new volumes of LNG on

the global market from projects already underway in Qatar and

elsewhere (ref C).

No help from other markets —

6. (C) Gazprom is unlikely to get any relief from its former

Soviet Union(FSU) customers either. Despite the likely rise

to “market prices” for gas sales to the FSU, lower demand

will continue to hurt Gazprom. Ukraine, Gazprom’s major

export market outside of non-FSU Europe, earlier signed a

take-or-pay contract which outlines a minimum amount of gas

which Ukraine is obliged to purchase from Russia. Ukraine

Moscow 00002541 002 of 004

has recently indicated it might take as little as 50% of the

52 bcm of gas it had earlier agreed to buy in 2010. Russian

government officials remain concerned over Ukraine’s ability

to pay for gas this winter and are already signaling they are

prepared to shut off exports to Ukraine in the event of

non-payment.

7. (SBU) Global markets will also offer little hope for

Gazprom, at least in the medium-term. Gazprom executives

have often expressed the expectation that the company would

become a global gas supplier, perhaps through newly expanded

LNG capacity. However, their preferred future export

destination, the U.S., is looking more and more saturated

every day with ever larger estimates for domestic production.

In a recent meeting with Embassy officials in Sakhalin,

Shell oil representatives stated that no LNG had been shipped

from the Sakhalin II facility to the U.S. due to soft prices

in that market. Much of this LNG has been shipped to Japan

instead.

Domestic market —

8. (SBU) Gazprom often touts future revenue gains from

domestic market price liberalization. However, it neglects

to account for demand elasticity in the wake of sharp

proposed increases in prices. With one of the most energy

intensive economies in the world, future hikes in domestic

gas prices would likely cut domestic demand substantially, as

evidenced in other countries that have implemented rational

pricing. Thus Gazprom’s revenue gains from higher domestic

prices would be at least partly offset by lower sales volumes.

External politics —

9. (SBU) In addition to the headwinds from market forces,

Gazprom faces the political and PR difficulties in external

markets that it has largely brought on itself through the gas

cutoffs of 2009 and 2006. Despite some pain in certain

Central and Eastern European countries, Ovchinnikov

explained, the 2009 gas cutoff showed that Europe could get

by without Russian gas. This should bolster EU determination

to minimize its dependence on Russian gas, and to explore new

options to diversify energy supplies.

——————————

internal constraints to growth

——————————

The Ministry of Gas —

10. (SBU) A Gazprom that behaved more like a competitive

global company would probably find a new path to growth more

quickly. But Gazprom is not a competitive global company,

despite sitting on the world’s largest gas reserves. Gazprom

is a legacy of the old Soviet Ministry of Gas and it still

operates much the same way. As a Gazprom executive himself

admitted to us, the company’s first two priorities are to

provide reliable and affordable gas to the domestic

population, to “fulfill its social obligations.” One contact

with direct information told us it took a senior partner from

a major accounting firm two years of full-time investigation

just to unravel Gazprom’s holdings, which include one of

Russia’s largest banks, one of Russia’s major media

companies, and a major construction company.

Technologically backward —

11. (SBU) Gazprom’s legacy and the government’s ownership of

the company also mean that it must act in the interests of

its political masters, even at the expense of sound economic

decision-making. From building unneeded pipelines (ref B) to

maintaining employment at some unneeded facilities, Gazprom

declines to solely act on financial and economic grounds. As

a state-controlled monopoly during the flush times of the

past decade, Gazprom had little incentive to develop new

technologies and capabilities long enjoyed by other global

oil and gas companies. Despite management’s interest in

expanding Gazprom’s LNG capacity, the company has only one

LNG export terminal, which it took over by forcibly becoming

the majority owner in a Shell-led consortium. Rapid

Moscow 00002541 003 of 004

expansion of LNG export capacity is unlikely without the help

of international oil companies (IOCs), who are still trying

to find an acceptable future working model in Russia.

Inability to adapt —

12. (SBU) Gazprom’s inability to meet competitive pressures

is apparent in the current European gas market. According to

xxxxxxxxxxxx Gazprom is the only major European supplier that

has had to cut production. xxxxxxxxxxxx blames Gazprom’s “self

inflicting wound” of tying gas prices to oil prices. He said

this convention dates back to when gas was a substitute for

fuel oil for heating. xxxxxxxxxxxx explained that this oil

price link has made Gazprom the high-price supplier in

Europe, a situation that is likely to continue into the near

future. xxxxxxxxxxxx said that with European gas demand unlikely to

recover to pre-crisis levels until 2013 and Europe facing

“excess supply” for at least the next decade, Gazprom will

have a very tough time just maintaining market share. A

major oil company senior executive echoed this analysis in a

recent meeting with us, noting “if you are a European

consumer, the last molecule of gas you want to buy is from

Gazprom.”

—————————————

possible tensions, but reforms unlikely

—————————————

13. (SBU) The tough times may be creating (or exacerbating)

tensions within Gazprom and the GOR over the company’s

future. Several contacts have told us they have heard of

such tensions. One Russian company executive said he has

heard that xxxxxxxxxxxx has been pushing for dismantling

Gazprom, to at least take away its control over the domestic

gas pipeline system. An executive at a Western company told

us recently that there are two camps within the upper levels

of the GOR on the issue of Gazprom’s direction. One camp

favors the current “one national company” approach, while the

other favors competition to spur a more efficient and modern

gas sector. Unfortunately, this executive explained, “the

number one factor” in managing Gazprom from the GOR

perspective is “how to increase government revenues from the

company.”

14. (C) xxxxxxxxxxxx, brushed off rumors of infighting

at Gazprom as nothing new. xxxxxxxxxxxx said there has always been

infighting at the company because it is such a bureaucratic

behemoth. “Everyone is always looking to make others look

bad in order to move ahead themselves,” xxxxxxxxxxxx said. While

xxxxxxxxxxxx acknowledged Gazprom’s substantial problems, xxxxxxxxxxxx did

not think any major reforms would be forthcoming.

15. (SBU) Rumors aside, nobody with whom we have talked

believes Gazprom is in any danger of losing its monopoly on

exports or its preferred status within the Russian economy.

Nor is the government likely to give up control of the

company anytime soon. Without such fundamental reforms, it

is difficult to see how Gazprom can transform itself into a

modern corporation in the current environment.

——-

comment

——-

16. (C) Gazprom is what one would expect of a state-owned

monopoly sitting atop huge wealth — inefficient, politically

driven, and corrupt. For years, with its exports and export

prices rising rapidly, it could easily pretend that all was

well and that the future was bright. That pretense may now

be giving way to the new reality of declining sales, lost

market share, and an inability to maneuver adeptly in the

face of global competition. Although Gazprom will likely

muddle along as a major corporation and major contributor of

jobs and budget funds, its economic contribution will likely

be diminished. While Gazprom can still shut off gas to

Ukraine or to other parts of Europe, each such threat further

undermines the company’s credibility as a reliable energy

supplier, and underscores the fact that Gazprom is

Moscow 00002541 004 of 004

politically subordinate to the Kremlin. Gazprom’s influence,

both domestic and international, has been directly tied to

its cash flow — money that funds employment, suppliers,

budgets, charities, foreign ventures, and, surely, many

private bank accounts and dirty deals. Unfortunately for

Gazprom and for the GOR, the massive revenues and profits

that the company produced in 2008 are unlikely to return

anytime soon. End comment.

Beyrle

Experts estimated that the company had to also spend between $5 billion and $8 billion on keeping its aging infrastructure in good working order — costs that will only increase in the future. A prominent Western oil executive told the US diplomats that while drilling a borehole in Canada only took 10 days in Russia it took twice as long.

A meeting with top Gazprom executives, such as Deputy CEO Alexander Medvedev, were also sobering. In a discussion with US diplomats, the hockey fan complained that there was still no cooperation between the Russian and American hockey leagues — and fulminated against Ukraine, which he claimed had orchestrated the gas dispute with Russia.

The Americans’ conclusion is devastating: “Gazprom’s legacy and the government’s ownership of the company … mean that it must act in the interests of its political masters, even at the expense of sound economic decision-making.” The company had made funds available for many “private bank accounts and dirty deals,” one cable wrote, though it lacked any concrete proof for this claim. Gazprom itself has consistently defended itself against accusations of corruption.

In any case, the Gazprom money was not flowing as much as previously, the US diplomats wrote. “Unfortunately for Gazprom and for the Russian government, the massive revenues and profits that the company produced in 2008 are unlikely to return anytime soon,” one cable reported. Although Gazprom would remain a major company, its economic contribution was likely to be diminished, the US diplomats concluded.
[read the full article]

 


Blood for Oil: Oil & Gas Interests vs. People and the Environment

Where are oil and gas extraction connected to human rights abuses?

Where isn’t it? Oil extraction is a very capital-intensive undertaking, dominated by large corporations and centralized governments, and usually requiring cooperation between the two. Often, the rights, health, and even lives of the local population are ignored, abused or assaulted.

Environmental degradation is usually one of the major problems with drilling and pipeline projects. Contamination of land and water supplies is an immediate threat to human survival.

When the local populace objects strongly enough, the investing corporation might get nervous about the security of their equipment and pipelines, prompting the cooperating government to crack down on the local population in order to maintain the presence of the corporation.

In other cases, the desire to control oil reserves is just another motivating factor for a repressive government…

ExxonMobil has contributed $5 million to the Tsunami relief efforts. In Aceh, the company operates one of the largest gas fields in the world and they’re being sued for gross human rights violations. We speak with a lawyer who has just returned from Indonesia where he was interviewing witnesses against ExxonMobil from Aceh. [includes rush transcript]

Transcript

“AMY GOODMAN: We’re joined by Bama Athreya, who is the Deputy Director of the International Labor Rights Fund, as well as Derek Baxter, who is a lawyer with that group. He has just returned from Indonesia, where he was speaking with people who are involved in the lawsuit. We want to welcome you both to Democracy Now!, and begin with Derek Baxter. Welcome.

DEREK BAXTER: Thank you.

AMY GOODMAN: It’s good to have you with us, Derek. I wanted to start off by saying that we did invite ExxonMobil on the program. They said at first they would participate in the program, if we were just talking about their contribution, ExxonMobil’s contribution to the relief efforts. They’re one of the largest corporate contributors to the relief efforts. They have pledged more than — they have pledged $5 million. They did write us an email. They said, “I’m surprised your program would choose to divert attention from the unprecedented outpouring of support and coordination among multinational and local relief agencies in Indonesia, by pursuing an ambush interview with one of the largest corporate contributors to those efforts.” Derek Baxter, can you respond?

DEREK BAXTER: Well, we welcome ExxonMobil’s contribution, but ExxonMobil, we have to remember, has a long debt to the Acehnese people. They are by far the largest corporation operating in Aceh. The amount of profit that they derive from this region is enormous. It dwarfs any other industry in the area. While we’re glad that they’re helping, sadly, all too long, Exxon has been part of the problem in Aceh. As our lawsuit has alleged, Exxon has knowingly operated its facilities, its natural gas facilities on the northeastern coast of Aceh. They have done so by hiring the Indonesian military forces to provide security, knowing all along, as is a matter of public record, that the Indonesian military’s record in that area has been a very difficult one. The military has committed many human rights abuses against the people of Aceh in that area. Their collaboration with ExxonMobil has only worsened the problem.

AMY GOODMAN: Derek Baxter, you recently returned, in fact, what, just a week before the tsunami hit, from Indonesia. Can you talk about what you were doing there?

DEREK BAXTER: Certainly. I was very close to Aceh, and part of the problem in actually going to Aceh is that the Indonesian government has not regularly allowed foreigners, journalists, NGOs, etc., to enter without securing special permission, which is very difficult to get. So I was in North Sumatra, very close to Aceh. I met with numerous people, villagers who lived very close to the ExxonMobil facilities in Aceh, who traveled at great personal risk to themselves to North Sumatra, the area where I was, to meet with me. They told me of continuing human rights abuses. Just on the eve of the tsunami, the human rights situation in that part of Aceh was severe, and if anything, it was worsening. I spoke with people who told me that military assigned to protect the ExxonMobil facilities accosted them, extorted them, asked them regularly for contributions of money, of rice, of possessions, which these people had very little, and if there was any protest, they would often be attacked. They would be hauled away from their families, beaten. I spoke to a very young man who had been shot in the right knee, very gruesome. But these atrocities were commonplace. They didn’t surprise anybody that I was talking to, because sadly, in that area, right by the ExxonMobil facilities, those abuses of that type have been going on for years, for the entire last decade. We have even heard reports, which we’re trying to verify, that five people were killed actually on the liquification plant that ExxonMobil helps to operate. As we have — as the ILRF have noted in the lawsuit which we filed in 2001, the torture and murder, disappearance, sexual assault of people, Acehnese, living close to these ExxonMobil facilities was all too routine over the last years.

AMY GOODMAN: Derek Baxter, if you are talking about the Indonesian military, why do you hold ExxonMobil accountable?

DEREK BAXTER: That’s an excellent question, and we’re not seeking to hold them accountable for everything, obviously, that happens in Aceh. There’s a long, ongoing civil strife in that area, but in this particular area, ExxonMobil has contracted, as we have said and alleged in our complaint, they have contracted with the Indonesian military to provide security just for the ExxonMobil facilities. We have alleged that this relationship with the Indonesian military includes providing money, directly to them, it includes building — constructing buildings on ExxonMobil grounds, which the military has used for the torture and disappearance of Acehnese. It includes providing excavating equipment, which ExxonMobil has provided to the military, in which we have alleged the military has then used to construct mass graves of the victims. It’s a very close, ongoing relationship, and you have to remember that ExxonMobil wields enormous financial power in this region, and if they are choosing to utilize the military force that has been criticized by many human rights groups for their violations, then we believe, and we believe the law will hold us out on this point, that ExxonMobil will be legally liable for these violations.

AMY GOODMAN: Derek Baxter, we have to break. When we come back, we will also talk with Bama Athreya, about the overall region. Today, there’s a piece in the Washington Post that talks about the collaboration between the U.S. military right now and the Indonesian military. Yesterday we went up to the U.N. mission — to the Indonesian mission to the United Nations where there was a gathering of Acehnese refugees who were encouraging international aid organizations not to funnel their money through the Indonesian government. And they were calling on the Indonesian military not to stop the aid going into Aceh.

[break]

AMY GOODMAN: As we continue to discuss one of the largest corporate contributors to the relief efforts, ExxonMobil — $5 million they say they are giving, we wish we could have them on the program. They declined to participate, but we are talking about an ongoing lawsuit that involves ExxonMobil and its running of one of the largest gas fields in the world in Aceh. I believe that its facility there was not actually damaged by the tsunami. We’re joined in Washington studios by two members of the International Labor Rights Fund. We’re joined by the Deputy Director of the International Fund, Bama Athreya, as well as Derek Baxter, who is the lawyer who’s just returned from Indonesia, a week before the tsunami, interviewing people who are participating in the lawsuit against the — against ExxonMobil. I was wondering, Bama Athreya, if you could put this in the context of Indonesia, which you have worked on for many years, and in the context of what’s happening right now, the massive — well, the cataclysm that has taken place and what is taking place in Aceh.

BAMA ATHREYA: Sure. That’s a big question, Amy, and I’ll try and focus it a little bit on the things that you just mentioned. You had mentioned that there has been a call from a number of activists to insure that the aid that people are so very generously giving to the victims of the tsunami is not all funneled through the Indonesian military. And, on context, I think it’s important for people here, who are, you know, giving very generously on a personal level to recognize the political context in Aceh. The Indonesian military has been operating basically a war against a separatist movement in Aceh for decades now. And that has had a lot of fallout in terms of human rights violations against innocent civilians throughout Aceh. It’s also important to remember that the Indonesian military itself are an extremely corrupt institution. It’s estimated that only about 40% of the military’s basic operating costs are paid for by the Indonesian government. That means they get the other 60% through extortion. You mentioned that ExxonMobil’s given $5 million to the relief effort. Well, we would sure love to know how much ExxonMobil’s has given to the Indonesian military over the years. We know they’ve paid them. We know they’ve given them logistical support. We know they’ve housed them. I’m just guessing that their donations, if you’d like to call it that, to the Indonesian military over the years have been far in excess of the $5 million they’re now giving to the poor victims in Aceh. So, we’re looking at a context where we’ve got a very corrupt institution, the Indonesian military, which has been extorting local Acehnese villagers, which has been running drug operations and prostitution rings in Aceh, which has been involved in illegal timber operations in Aceh; and now we’re going to trust this same institution to be the folks who deliver the aid to the Acehnese victims? It’s not a great idea, Amy, and I think that’s one of the reasons why we share the position of some of our human rights colleagues here in the U.S. that there have got to be some transparent systems in place to deliver aid to make sure those people in Aceh that have suffered the most really, truly get the food and the medicine that people are donating.

AMY GOODMAN: As you mentioned, Bama, Acehnese and human rights groups have been protesting the funneling of aid to the Indonesian military. Yesterday outside the Indonesian mission to the U.N., a gathering of Acehnese refugees took place. They marched from the U.N. to thank them for supporting huge relief efforts in Indonesia, but then marched over to the Indonesian Mission to the U.N., condemning what they called the Indonesian government’s haphazard response to the tsunami. They accuse the Indonesian armed forces of continuing their military operations in Aceh, and of preventing the delivery of aid to victims of the earthquake and tsunami. The refugees charged that rather than helping the people, in a number of areas the troops are intimidating villagers, scaring away —them away from their villages, looting their homes, stealing food. They called on the military to implement an immediate cease-fire.”

Today, as the United Nations puts the confirmed death toll from the Asian Tsunami at more than 150,000, we are going to continue our special coverage of the devestation in the hardest hit area, the Aceh region of Indonesia where the death toll is expected soon to rise above 100,000. In a few moments we are going to be joined by two Acehnese activists who were out in front of the Indonesian Mission to the UN protesting yesterday against the Indonesian military regime. But first, we turn to a story that has gotten almost no attention and that is the story of the oil giant Exxon-Mobil, a corporation that has a massive investment in Aceh. According to some estimates, ExxonMobil has extracted some $40 billion from its operations in Aceh, Indonesia.

According to human rights groups, ExxonMobil has hired military units of the Indonesian national army to provide “security” for their gas extraction and liquification project in the region. Members of these military units regularly have perpetrated ongoing and severe human rights abuses against local villagers, including murder, rape, torture, destruction of property and other acts of terror. Human rights groups further charge that ExxonMobil has continued to finance the military and to provide company equipment and facilities that have been used by the Indonesian military to commit atrocities and cover them up through the use of mass graves.

For years, the Washington DC-based International Labor Rights Fund has fought a series of legal battles to hold ExxonMobil responsible for its record in Aceh. One of the group’s lawyers was in Aceh interviewing witnesses just days before the Tsunami hit.

Derek Baxter, a lawyer for the International Labor Rights Fund in Washington, D.C.

Bama Athreya, Deputy Director of the International Labor Rights Fund in Washington, D.C.

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”When, in November 2001, the French publishing house Denoel published Ben Laden, La Verite Interdite, (Bin Laden, the Forbidden Truth), the French daily Le Monde predicted “this book will create sensation!” On the contrary, no sensation was created, since no publisher in the United States or any other English speaking country was interested in touching this hot iron. Fortunately, Europe is different. The Swiss publisher Pendo published the book in German under the title Verbotene Wahrheit. The only difference is the subtitle: Entanglement of USA with Osama Bin Laden. Allegedly, The Forbidden Truth will appear in an English edition in July of this year.
For political observers with a little sense of smell, the second Bush administration has had, from its first day in office, the strong odor of oil. The Bush family’s association with oil-related industries; George Jr.’s role as founder and executive director of Arbusto Energy Inc. and later Harken Energy Inc., both partly financed by some suspicious Saudi Arabian figures; his insistence on exploring for oil in Alaska, in spite of the negative environmental impact; and the members of his administration-all smell of oil.
Vice President Dick Cheney was, until his settlement in the White House, Chief Executive of the world’s largest oil-service company, Halliburton. With such a background, it was hardly strange that his first activity as Vice President was the creation of the Energy Policy Task Force. This was the bridge between government and the energy industry. The result of the cooperation between Washington and power producers and traders is now well known. Cheney’s involvement with the Enron corporation and his various meetings with the principals of this best-known player of the power privatization game, has dominated the business pages for months.
Congress finally invited the officials of Enron to a congressional hearing. The hearing became a senseless show, as Enron executives refused to answer any question. By revealing the corrupt policies of Enron, such as creation of a false energy crisis in California, a more thorough investigation became necessary, in spite of White House resistance. Since the repeated requests of congressional investigators remained without response, on May 24, 2002, Senator Joseph Lieberman (Dem.Conn.), chair of the Senate Governmental Affairs Committee, subpoenaed the White House for an array of Enron-related documents. That evening, the committee received a bunch of papers. Senator Lieberman said, “in many cases, they’ve left out details the committee asked for, such as who attended meetings or took part in communications and when all of the communications occurred.” Points of interest revealed by the documents include:
Portions of the chronology document the deep ties between the Bush administration and Enron, including three phone conversations between former Enron chairman Kenneth L. Lay and Bush’s senior adviser, Karl Rove. Enron’s top executives were some of Bush’s earliest and most generous supporters, and pursued a broad agenda with the administration that ended only after its huge losses and accounting irregularities became public. Robeff McNally a special assistant to Bush on energy policy met with Enron representatives several times and received at least one e-mail from Enron’s Chief Washington lobbyist. Enron officials briefed members of Cheney’s energy task force about a liquefied natural gas project in Venezuela. The chronology does not say why the company felt it necessary to inform the White House about the project.
Let us return to Forbidden Truth: Many names in this administration are worth mentioning that will highlight the Bush people’s oil connection, but let it suffice to point out the star of Bush’s cabinet, Ms. Condoleezza Rice. The mainstream media of the country present Bush & National Security Adviser as a Russian specialist with credentials from Stanford. But the media gloss over other known facts. For instance, the media seldom mention that Ms. Rice, from 1991 to 2000, served on the Board of Directors of the Chevron Group, one of the world’s largest oil conglomerates. She was, before everything, responsible for the areas of Kazakhstan and Pakistan.
The question is, how do Rice’s current activities differ from her past efforts on the Board of Directors of Chevron? And this question is naturally not restricted to her, since in the case of other Bush administration members, it appears that only their office address has changed. Again Brissard and Dasquie: “The men and women who settled on January 26, 2001 in the White House were not as isolationist as one could assume, since their international relations easily smell of oil.”
Bush’s close connection with energy markets, and the undeniable involvement of Dick Cheney in the Enron scandal are the inescapable background to the sudden upheaval in Venezuela which resulted in the incarceration of President Hugo Chavez. This country on the northern rim of South America within a short distance from the U.S. shores, is fourth in international oil production, with a daily export of approximately two million barrels to the United States.
A NIGHTMARE RESURRECTED
For me, and I believe for many politically aware people around the world, those headlines of the U.S. press, gleefully reporting the forced resignation of the Venezuelan President by a military coup, awakened a past nightmare. That nightmare was the overthrow of the popular and democratically elected government of Prime Minister Dr. Mohammad Mossadeq by a coup, organized by the CIA 50 years ago in August 1953. By closely reading the reports of different phases of the Venezuelan event, one finds many similarities with what happened in Iran half a century ago.
The Wall Street Journal’s man in Caracas, Marc Lifsher, reported on April 12, under the headline “Venezuelan Crisis Deepens, Cutting Oil Flow and Threatening Chavez.” The first two paragraphs reported “a prolonged national strike and violent demonstrations…choking off…oil exports to U.S….” the rumors that “President Hugo Chavez had agreed to leave the country” and a clash between the demonstrators and supporters of the President. The clues and motifs of the event are given in the next paragraph:
The demonstrations and a crippling strike across this nation of 24 million threaten to loosen Mr. Chavez’s grip on power. The protests are the fruit of an unusual alliance between big business and labor, led by a burly 56-year old former refinery cleaner named Carlos Ortega…. The actions have bottled up oil output, jolted global oil markets and stunned a government that Washington considers a political pariah. U.S. officials dislike the Venezuelan ruler for his national oil policy.
NOW AND THEN
Chavez’s national oil policy is the same crime for which Dr. Mossadeq was punished with the first covert action of the CIA. Let’s not forget that the CIA success in Iran became a model later used in Guatemala, Ghana, Congo, Chile and many other places in the world. Marc Lifsher described Chavez’s policy as follows:
Mr. Chavez’s prickly nationalism has made him a big irritant for Washington and a bit of a wild card on the global oil scene. He has increased royalties charged to foreign oil investors and shifted Venezuelan’s traditional high-production, low-price oil policy by aligning with OPEC in an effort to push prices higher. Apart from that, there’s evidence that Mr. Chavez has consorted with Marxist guerrillas in neighboring Colombia, where the U.S. is backing the government in a $1.3 billion assistance program. Mr. Chavez has also maintained warm relations with a host of leaders whom the U.S. considers pariahs, including Fidel Castro, Saddam Hussein and Muammar el-Qaddafi.
In the 1950s, except for the Soviet Union, not many “pariahs” existed. In his book Countercoup, Mr. Kermit Roosevelt, “field commander” of the coup, asserted that, at the time of the CIA coup in Iran, Dr. Mossadeq “had formed an alliance of his own with the Soviet Union to achieve the result he wanted.” This was not true.
A clearer picture of Dr. Mossadeq can be found in the carefully documented book The Eagle and the Lion:
… Mossadeq was no more stubborn than the British… Besides his personal convictions in these matters, Mossadeq’s unyielding position was essential within the context of the social forces then at work in Iran. The communist left, the growing nationalist middle, and the xenophobic religious right exerted continual fierce pressure…. In a secret meeting of the Majlis [Iranian parliament] Oil Commission in 1951, he argued that in order to defeat communism, reforms were necessary. In order to implement reforms, money was essential. In order to obtain money nationalization was vital…
Based upon those facts, the previous administration of Truman/Acheson hesitated to interfere in the controversies between Iran and the U.K. For the Republican administration of Eisenhower/Dulles, with their so-called concern about communism, the logical reasoning of Mossadeq did not have any validity. Consequently, his oil policy, focused on the nationalization of Iranian oil, sufficed to make him accused of being a communist who consorted with the Soviet Union. Fifty years ago, Iranian oil was very important for the United States-important enough to make it ready to overthrow a democratic government. When we understand that most Venezuelan oil is consumed by the U.S., and some Texas refineries are actually dependent upon this source, the current U.S. position toward Venezuela becomes similarly clear.
The importance of Venezuelan oil for the U.S. was reported by the Wall Street Journals man in Caracas:
Venezuela…has long been a strategic source of crude oil of the U.S. and is only a few days tanker run to refineries in Louisiana and Texas. Petroleos De Venezuela, S.A. (PDVSA) wholly owns Citgo, a Tulsa, Oklahoma-based company that operates a number of refineries and 14,000 service stations…. Venezuela regularly ranks among the top four foreign sources of U.S. oil and usually shipped to the U.S. about 1.7 million barrels a day of crude oil and refined products like gasoline. Many of the U.S. refineries are specially engineered to handle heavy Venezuelan crude and could find themselves facing shortage in the coming weeks if Venezuela doesn’t resume full production and exportation.
The reaction of the administration in Washington and the corporate media to the Venezuelan event was practically identical. Here, the Washington Post can serve as a sample of the American press. On April 13, 2002, the paper had three reports and one editorial about Venezuela. The report of Scott Wilson from Caracas under the headline “Leader of Venezuela Is Forced To Resign” informed the readers in the first two paragraphs:
…President Hugo Chavez, the former paratrooper whose leftist politics roiled this oil-rich country for three years, resigned this moming hours after military leaders seized control of the country. His resignation followed anti-government protests that left more than a dozen people dead…. An interim government headed by Pedro Carmona, leader of the country’s largest business group, was sworn in at the presidential palace this afternoon in a ceremony attended by a cross section of Venezuela’s civil society Backed by the country’s top generals, who will join him on the governing junta, Carmona declared Chavez’s two-year-old constitution invalid, dissolved the Chavez-controlled legislature and Supreme Court, and pledged to hold new presidential and legislative elections within a year.
LEGALITY OR LEGITIMACY?
The second report of Scott Wilson was titled “Chavez’s Gloomy Legacy for The Left.” Wilson presents Chavez as a man “…superimposed between the guerrilla heroes of old-the face of a new generation of leftist Latin American leaders ready to antagonize the United States,” with a bleak legacy for the radical left of Latin America, “…now pushing against the prevailing political current of free trade, capitalism and a general nod to U.S. interest.” Two citations in that analysis which sound like music to Washington’s ears are very revealing. The first is from an official of the state oil company who said “Cuba would not get one more drop of Venezuelan oil,” and the second is from Anibal Romero, professor of political science at Simon Bolivar University. Professor Romero, like Francis Fukuyama or Dinesh D’Souza, is the sort of ideologue much in demand at Washington think-tanks. His lecture about the Venezuelan event:
The lesson here is that charismatic demagogues can still win elections in poor countries. The economic and social instability is still with us. The field is still open to the successful appearance of these figures that, by distorting reality and securing the hearts and minds of the uneducated, win election….Chavez showed what was wrong with a U.S. policy that endorses democratic government regardless of how it is carried out. Democracies operate differently in each country and should be treated differently as a result. It is a great improvement that the U.S. is committed to democracy and the rule of law in Latin America, and it’s a big change from the past. But this is not a policy that should be implemented indiscriminately Legality is one thing, legitimacy is another.
The White House was apparently familiar with the opinion of Professor Romero, as becomes clear from the statement of Scott Wilson:
The emerging response to Chavez’s forced resignation, which he tendered to three generals this moming, highlights how fragile democracy is in an Andean region that has had three presidents ousted by coup or popular protest in the last three years. U.S. officials declined today to call Chavez’s removal a coup, even as the leaders from 19 Latin American nations condemned ‘the constitutional interruption in Venezuela.
U.S. CONTACT WITH THE OPPOSITION
According to Wilson’s first report, some members of the opposition contacted the U.S. Embassy in Caracas in the weeks before the event. They were seeking U.S. support for toppling Chavez. One U.S. official confirmed the contact: “The opposition has been coming in with an assortment of… what if this happened? What if that happened? What if you held it up and looked at it sideways? To every scenario we say no. We know what a coup looks like, and we won’t support it.”
The third article, by Peter Slevin and Karen DeYoung, has one purpose: washing the administration’s hands. This is reflected in the headline: “Chavez Provoked His Removal, U.S. Officials Say,” which repeats what Ari Fleisher said the previous day: The Bush administration yesterday blamed former Venezuelan president Hugo Chavez for the events that led to his forced resignation and arrest, calling his toppling by the nation’s military a “change of government” rather than a coup. Officials said Chavez’s departure was the will of Venezuela’s people. Wonderful how the will of Venezuela’s people so closely parallels the designs of the Bush administration.
Chavez lost his job ‘…as a result of the message of the Venezuelan people,’ said White House spokesman Ari Fleischer… [He] said the Chavez government tried to suppress peaceful demonstrations, ordered its supporters to fire on unarmed protesters and blocked media broadcasts of the events.
In addition to such reporting and analysis, the Washington Post felt it necessary to clarify the paper’s position in the case of the Venezuelan change of government. The Post published an editorial that tries to demonstrate the paper’s patriotism without compromising its so-called liberal face. The opening paragraph is a masterwork of hypocrisy.
Any interruption of democracy in Latin America is wrong, the more so when it involves the military. The region’s history of military coups is too long and tragic, and the consolidation of democracy too recent, for any unconstitutional takeover to be condoned.
This is a beautiful opening for an editorial. Unfortunately, its validity is not always guaranteed, and under some circumstances there is legitimate reason to ignore the consolidation of democracy. The editorial presented the difference between legality and legitimacy in the following sentence:
But first facts from Venezuela suggest that the violation of democracy that led to ouster of President Hugo Chavez Thursday night was initiated not by the army but by Mr. Chavez himself. Confronted by tens of thousands of peaceful demonstrators protesting his increasingly destructive policies, Mr. Chavez forced television stations off the air and allegedly ordered snipers and other armed loyalists at the presidential palace to open fire. More than a dozen people were killed and scores wounded. It was only then the military commanders demanded the president resignation; they would not, they said, tolerate his attempt to stop his opposition with bullets.
The editorial admits that “There is no question that democracy brought Mr. Chavez to power three years ago.” But it tries to rationalize his removal by military means by proclaiming:
Along the way Mr. Chavez seriously compromised the integrity of democratic institutions such as Congress and the Courts And unfortunately for the poor, who make up 80 percent of the population of an oil-rich country, Mr. Chavez was a terrible leader. l 8
The jubilant atmosphere in Washington and the corporate media was short-lived. The next day’s headlines were unexpectedly sober. Many dailies in the U.S. followed the Post’s lead and joined in the White House jubilation by repeating Ari Fleischer’s daily statements. On April 16, the New York Times, at least, confessed the error of its editorial of April 14.
Scott Wilson of the Washington Post gave a precise picture of the event. In his previous report, he called “…the media, labor unions and the Catholic Church…” enemies of the Chavez government. In the subsequent report, he informed the readers that in the Fall, two officers, Pedro Soto and Carlos Molina from Air Force and Marines respectively, began to organize a group of officers for a plot to topple Chavez. The plot was discovered and the two officers were forced out of service. But their idea was supported by two high-ranking officers, General Rafael D. Bustillos of the army, and Vice Admiral Hector Ramirez of the navy. After the coup, Hector Ramirez became defense minister, and Rafael Bustillos became interior and justice minister in the interim government of Pedro Carmona. Scott Wilson found out later that Soto and Molina received $100,000 each from a Miami Bank. The New York Times, under the title “Bush Officials Met With Venezuelan Who Ousted Leader” quoted a Pentagon spokesperson saying that U.S. military officials were not discouraging coup plotters, and were sending informal signals that they don’t like Chavez.
TUMULTUOUS 48 HOURS IN 2002
According to the official story of the interim government, on Thursday, April 11th, about 3:00 p.m., demonstrators opposing Chavez arrived at the presidential palace. Chavez, concerned about the loyalty of some high-ranking military officers, called directly the commander of 3rd division in Caracas, asking for 30 tanks to defend the palace, Miraflores. As Chief of the Armed Forces Lucas Rincon received the order, he stopped it and sent only seven tanks. About one hour later, Hector Ramirez, as the new minister of defense, accompanied by a group of officers, appeared on television, denounced Chavez as dictator and demanded his resignation. On Friday, April 12th, the military named Pedro Carmona interim President, claiming that Chavez had resigned. Carmona immediately dissolved the Congress and Supreme Court. The United States, unsurprisingly, endorsed the interim government. Latin American leaders refused to support the coup. As the coup was stimulating harsh international criticism, the supporters of Chavez took to the streets surrounding the presidential palace demanding his return to office. The insistence of Chavez supporters day and night around the palace forced some part of the military to reconsider their position. A series of rebellions among army units warned the Carmona clique and cooperating officers.
Mark Lifsher’s report in the Wall Street Journal, cynically titled “In Under 48 Hours, Venezuelans Have Enough of a Coup,” describes the events as follows:
When a group of military men and the head of Venezuela’s main business association ousted leftist President Hugo Chavez last week, the coup-plotters denounced the former paratrooper as a dictator….But once in power the plotters revealed that they too were undemocratic-and lacking in Mr. Chavez’s flair with Venezuela’s aggrieved working class. The brief government, headed by business leader Pedro Carmona, immediately issued a decree shutting down the Congress, suspending the Supreme Court and authorizing the firing of elected officials, including state governors and mayors.
Both the Washington Post, and the Wall Street Journal interviewed Anibal Romero, professor of political science. After Chavez returned to power, the professor said he has been . . . immensely strengthened both domestically and internationally he is a martyr who’s come back from the grave. This is not simply a setback but is a tragedy and it’s going to take the opposition a long time and enormous effort to rebuild.
TUMULTUOUS 48 HOURS IN 1952
The fact is that the 16th parliament of Iran generally supported the view of Mossadeq. But the election for the 17th parliament was a great risk, since all his opponents such as the Shah, the military and the clerics (including Ayatollah Khomeini) were mobilized to destroy his legislative support. The loyalty of high-ranking officers of all branches of the military to the Imperial Court, and their broad influence over regional governments was a well-known fact. To encounter such sabotage, Dr. Mossadeq did not have any other choice than to break this cycle. In this light, Amir Arjomand analyzes the situation at that time:
Furthermore, Mossadeq also sought to restrict the neo-patrimonial powers of the Shah and to reduce him to a constitutional monarch and a ceremonial figurehead. To achieve this constitutional goal, he forced a showdown with the Shah in July 1 952.
As the Shah refused the Prime Minister’s demand, Mossadeq resigned. For this the British and the Shah had waited a long time. The Shah immediately nominated Ahmad Ghavam as prime minister. This was clearly against the existing Iranian Constitution at that time, and was demonstrably a coup d’etat. Much as it happened in Venezuela in April 2002, mass demonstrations in Tehran and other major cities, forced the Shah to dismiss Ghavam and invite Dr. Mossadeq back. This spontaneous demonstration of the people was a real countercoup.
CONCILIATORY COMEBACK
In spite of condemnation by 19 Latin American leaders, the White House stuck to its position. The day Chavez reclaimed the presidency, the White House released the following statement:
The people of Venezuela have sent a clear message to President Chavez that they want both democracy and reform. The Chavez administration has an opportunity to respond to this message by correcting its course of governing in a fully democratic manner.
Although Chavez’s first speeches were conciliatory, the relationship between the two countries has been damaged. On the first day of his return to power, Chavez made the following appeal: “Organize yourselves, members of the opposition! Engage in politics that is fair, just and legal!” Three weeks later, on May 3, Chavez gave an interview primarily focused on future relations between the two countries. He discussed not only the role of the U.S. in the coup, but also the existence of a plan to assassinate him. The indirect message in this interview was to Washington, where political assassination has been outlawed for thirty years.
The evidence includes information collected from a coastal radar installation that tracked a foreign military ship and aircraft operating in and over Venezuelan waters a day after his ouster. The ship, helicopter and plane-identified by their transponder codes as military-disappeared from the radar the moming he returned from his imprisonment on the island of La Orchila, he said….ln addition, Chavez said, an American was involved in what he characterized as an assassination plot against him uncovered in Costa Rica four months ago. He said the details of the plan revealed at the time essentially predicted what transpired on April 11, when a protest march on the presidential palace turned violent and led to his arrest by senior military officers.
The revelation of the alleged assassination plan occurred as Chavez and his family were vacationing in January 2002. Chavez received a phone call from his foreign minister, urging him to return to Caracas. On his arrival, discovery of the plot was disclosed. The unexpected breakdown of interim government was very puzzling. But, having knowledge of such a plan; observing the mutiny of some officers; and knowing about the contact of the opposition members with U.S. officials, in Caracas as well as in Washington; the Chavez administration was fully aware of the threat of a coup, and prepared a thorough defense.
On May 13th the Guardian corroborated this by publishing an investigative report. The Guardian had reported one month earlier that a former U.S. intelligence officer claimed that the overthrow of Chavez has been considered by the U.S. for nearly a year. The report did not find any echo, although it revealed that the Chavez administration received an advance warning of a coup attempt from the Venezuelan Ali Rodriguez, the secretary general of OPEC. This advance warning, first reported on the BBC program “Newsnight” allowed the Chavez administration to counter the coup by an extraordinary plan.
Mr. Rodriguez, a former leftwing guerrilla, telephoned Mr. Chavez from the Vienna headquarters of the Organization of Petroleum Exporting Countries…several days before the attempted overthrow in April. He said OPEC had learned that… Libya and Iraq, planned to call for a new oil embargo against the United States because of its support for Israel.
The sudden collapse of the coup was for a time a mystery. According to Chavez insiders, several hundred Chavista troops were already hidden in the basement of the presidential palace. At the time of coup, Mr. Juan Barreto, a Chavista member of the National Assembly was trapped along with Chavez in Miraflores. Mr. Barreto said that Jose Baduel, chief of the paratroop division loyal to Mr. Chavez, had waited until Mr. Carmona was inside Miraflores. Mr. Baduel then phoned Mr. Carmona to tell him that, with troops virtually under his chair, he was as much a hostage as Mr. Chavez. He gave Mr. Carmona 24 hours to return Mr. Chavez alive. Escape from Miraflores was impossible for Mr. Carmona. The building was surrounded by hundreds of thousands of pro-Chavez demonstrators who, alerted by a sympathetic foreign affairs minister, had marched on it from the Ranchos, the poorest barrios.
COUP AND COUNTERCOUP
According to an interview with President Chavez on BBC’s “Newsnight,” his administration has
… written proof of the time of the entries and exits of two U.S. military officers into the headquarters of the coup plotters-their names, whom they met with, what they said-proof on video and on still photographs.
Here lies the key difference between the first American coup in August 1953, in Iran, and the last in April 2002, in Venezuela. Apparently, based upon early warning, the Chavez administration had a precise plan, not only to counter the coup, but also to document it.
Dr. Mossadeq also had such information, and somehow was prepared to counter the coup and ordered the arrest of a senior coup plotter. But he did not believe that the plot would continue after that arrest. One American researcher in the field of U.S. policy toward Iran gives the following picture of the first phase of the coup:
Well, the coup was supposed to take place on the night of August 15-16. The main plan was that selected military units would take certain actions and in particular certain officers would go and arrest Mossadeq, and so they did. But the Prime Minister had learned about this, apparently through Tudeh party informants in the U.S. Embassy who had passed the word to their party and the Tudeh passed it on to Mossadeq. This is apparently how it happened, although this is not certain. Anyway Mossadeq somehow knew; he was expecting visitors and he knew that they were coming to arrest him. So when the officer arrived, he had him arrested, and then a number of other things didn’t work out very well. There were military units that were supposed to occupy certain locations in Tehran, but officers got cold feet. So the initial coup plan which was scheduled to occur on the night of August 15-16 quickly fell apart 26
Although at that time, Mossadeq could have unmasked the coup plotters, and used his enormous popularity to mobilize people against them and enhance his national movement, he didn’t do anything. The reasons for Mossadeq’s inconsistency are both personal and historical.
Like many politicians of the l9th century (this year marks the 120th anniversary of his birth), Mossadeq viewed politics as an inescapably moral enterprise. He was one of the rare Iranian politicians who opposed Reza Khan, founder of Pahlavi dynasty and father of Mohammad Reza Shah, who was key to the plot against him. During the reign of Reza Shah, Mossadeq was for many years under house arrest until the occupation of Iran during World War II by the allied forces and the subsequent expulsion of Reza Shah from Iran.
On September 17, 1941, Mohammad Reza Shah’s inauguration began with his oath before parliament to be faithful to and supportive of the Iranian constitution. Mossadeq was now freed, and soon elected to parliament. He once told the young Shah that he had sworn to be faithful to the Iranian monarchy. For him it was immoral to break this oath, although the Shah was breaking his oath to be faithful to the constitution.
Mossadeq took a positive view of the United States. (Even Ho Chi Minh believed the Truman administration might help free his nation from the yoke of French colonialism.) In contrast to European countries like England, France, Netherlands, Belgium, and Portugal, in Mossadeq’s view the United States never had any colony. For Dr. Mossadeq’s hope of ending the dominance of England and nationalizing Iranian oil, the U.S. appeared to be a helpful ally. Because of this viewpoint and despite copious evidence, Mossadeq did not want to believe that the U.S. would assist in a coup in favor of British oil interests. In the end, the fact is that Mossadeq’s passivity resulted in the continuation of the coup in its second phase by CIA man Kermit Roosevelt, as described by James A. Bill:
The first act of Operation Ajax failed when Mossadeq got word that he was to be ousted. Colonel Nimatullah Nassiri, the officer who tried to serve him with political eviction orders signed by the shah, was arrested on the spot, and the shah made a hasty flight out of the country on August 16, 1953. Rather than cancel the operation at this point, Roosevelt took it upon himself to move forward with plans to call into the street his paid mobs from south Tehran along with the royalist military officers led by Gen. Fazlollah Zahedi… After much confusion and street fighting, the royalists won the day and on August 19, Muhammad Mossadeq was forced to flee his residence and was arrested soon thereafter. On August 22, the shah flew back to Iran in triumph.
To justify the second phase of the initial coup, which crumbled, Mr. Roosevelt coined the name “Countercoup” for its followup. Unfortunately, James A. Bill and others have followed his lead.
According to the pre-coup Iranian constitution in place in l953, the prime minister could resign, or his government might fall upon a no-confidence vote of parliament. In either case, parliament alone had the right to nominate his successor. The Shah would then invite the nominee to appoint the next government. This was a pro forma role for the Shah. He did not have the power to veto the nomination of parliament. In the first phase of the coup, the officer who was designated to arrest Mossadeq carried a decree with him signed by the Shah, dismissing Dr. Mossadeq as prime minister, and appointing Gen. Fazlollah Zahedi-who was on the payroll of the CIA. This act by the Shah was an outright violation of the constitution, and a real coup d’etat. Hence the arrest of the officer sent to arrest Dr. Mossadeq, was a real countercoup. Referring to Kermit Roosevelt’s overthrow of Mossadeq as a “countercoup” is nothing but a public relations fraud.
The resistance of Hugo Chavez’s administration and the Venezuelan people can be legitimately called a countercoup. Organizing a coup today is not as easy as it was in 1953 Iran, where most participants were paid only thirty cents for their destructive role. Kermit Roosevelt professed amusement that he had a million dollar budget to overthrow Mossadeq but spent only $100,000. The reaction of most Latin American leaders showed respect for democratic principles and national rights. Some of today’s leaders of the hemisphere were former partisans of democracy who are now practicing it. As an example, it is interesting to note that the man who gave warning of the Venezuelan coup, Mr. Ali Rodriguez, secretary general of OPEC, was a former active guerrilla. The political sharpness of such people cannot be compared to the sincere belief of a 19th century social democrat like the late Dr. Mossadeq. In spite of all that, one should not take the victory of the Chavez administration as a fully guaranteed matter. As mentioned before, the first attempt against Mossadeq, a joint project of the Shah and the British in June 1952 was defeated by the people on the streets of Tehran and put Mossadeq back in power within 48 hours. But he was not immune against the subsequent attempt, in August 1953, which unfortunately succeeded. There are still many Pinochets in Latin America who would not mind going through one or more blood baths to serve their master. The recent demonstrations by black shirt wearers in Caracas on May 11 and 23, very similar to fabricated demonstrations in Mossadeq’s time should alert the Chavez administration.
The warning should not be treated as a prediction of gloom and doom, but an appeal for alertness. The Venezuelan people can and must utilize the historical experience of the millions of victims of other CIA coups around the world. Planners of a coup do not easily renounce their plans. They postpone their work only to find other ways to pursue the initial plan. They do not hesitate to use all possible avenues to reach their goal. Let us refresh our memory by a fast review of the different episodes of the British against Mossadeq.
The British knew Mossadeq very well, as a law-abiding democrat. They first took the case of nationalization of Iranian oil to the Security Council of the UN. The Council supported Mossadeq’s argument that the case was between Iran and a private company and not between two nations or governments. Britain next went to the International Court of Justice in The Hague. Mossadeq argued Iran’s case. On July 22, 1952, the majority of the Court acknowledged Iran’s rights to nationalize its own resources as a sovereign nation. Even the British judge ruled in Iran’s favor. As the British judicial arguments were exhausted, the tactics shifted to more political intrigues for overt actions inside Iran, and diplomatic initiatives to win American support for covert actions. The British were encouraged by Mossadeq’s opponents-the Shah, the military and the clerics were ready for cooperation. In this instance:
[T]he British indicated openly and frequently that no negotiations were possible with him, and that they would prefer to do business with his successor. Mossadeq’s only hope was to maintain the momentum of nationalist movement, with its built-in anti-British stance, in order to minimize his government against orchestrated parliamentary machination and other activities sponsored by the British and the Court.
History tells us that Dr. Mossadeq was not alert enough. Today, when Mr. Pedro Carmona openly boasts of backing from the United States, and eventual future attempts, it is clearly still high noon for President Chavez and his administration.
Coups do not occur in a vacuum, so the CIA has typically relied on black propaganda as a preparatory measure in every coup since l953. Disinformation, planted through news agencies or hired journalists is a very effective and important way to create the necessary social tension. Typical of such propaganda is the Washington Post characterization of Chavez’s presidency as “unfortunate for the poor who make up 80 percent of the population of an oil-rich country.” Chavez’s response to such charges was printed in Le Monde Diplomatique, but never showed up in the Washington Post:
We have lowered unemployment… created 450,000 new jobs… Venezuela moved up four places on the Human Development Index. The number of children in school has risen 25 percent. More than 1.5 million children who didn’t go to school are now in school, and receive clothing, breakfast, lunch and afternoon snacks. We have carried out massive immunization campaigns in the marginalized sector of population. Infant mortality has declined. We are building more than 135,000 housing units for poor families. We are distributing land to landless campesinos. We have created a Women’s Bank that provides micro-credit loans. In the year 2001, Venezuela was one of the countries with the highest growth rates on the continent, nearly 3 percent… We are delivering the country from prostration and backwardness.
Such a balance of achievements rarely finds the smallest reflection in the main stream media of the United States. But Mr. Stephen Johnson from the Heritage Foundation has the opportunity, as “Policy Analyst for Latin America,” to use the opinion page of Wall Street Journal to criticize President Chavez:
In October 2000, Mr. Chavez signed an agreement with Fidel Castro to provide Cuba with a sizable chunk of its oil needs in exchange for welcoming Cuban experts to train Venezuelan teachers and help develop new school curricula. In March 2001, some 10,000 parents and teachers gathered in various cities across the nation to protest what they perceived as an effort to indoctrinate their children.
The history of U.S. covert operations in the Third World shows clearly that such operations are seldom planned as one-shot deals. Coups are generally the last resort in a series of multifaceted covert operations, implemented only when all other methods have failed. Once the advantage of surprise is lost, coup planners must resort to other clever tricks as they mount their second, third or fourth attempts. One such trick is a smokescreen of saturation media coverage on a simultaneous overt operation in another part of the world. Once international attention is focused elsewhere, a blitzkrieg is unleashed. As long as the U.S. continues to rely on covert operations to achieve its goals, eternal vigilance is essential to preserving democratic gains anywhere around the world.

ABOUT THE AUTHOR Mahmoud Gudarzi was born in Tehran, Iran in 1932 He studied in West Germany and the U.S., taking degrees in Journalism and Education. In 50 years of journalism, he has published over 1,000 articles on Iran and problems of the Middle East He writes regularly for the weekly Shahrvand (Toronto and Dallas).”

Tar Sands 101

The Tar Sands “Gigaproject” is the largest industrial project in human history and likely also the most destructive. The tar sands mining procedure releases at least three times the CO2 emissions as regular oil production and is slated to become the single largest industrial contributor in North America to Climate Change.

The tar sands are already slated to be the cause of up to the second fastest rate of deforestation on the planet behind the Amazon Rainforest Basin. Currently approved projects will see 3 million barrels of tar sands mock crude produced daily by 2018; for each barrel of oil up to as high as five barrels of water are used.

Human health in many communities has seriously taken a turn for the worse with many causes alleged to be from tar sands production. Tar sands production has led to many serious social issues throughout Alberta, from housing crises to the vast expansion of temporary foreign worker programs that racialize and exploit so-called non-citizens. Infrastructure from pipelines to refineries to super tanker oil traffic on the seas crosses the continent in all directions to allthree major oceans and the Gulf of Mexico.

The mock oil produced primarily is consumed in the United States and helps to subsidize continued wars of aggression against other oil producing nations such as Iraq, Venezuela and Iran.

The Assumption Parish website update this morning verified Texas Brine’s exploratory well finding that Oxy Cavern #3 had failed but disagreed with the preliminary conclusion that failure was due to “regional-scale seismic activity.(earthquakes)” A portion of the update can be found below:

Assumption Parish officials have been advised by DNR that their exploratory well observers have confirmed that brine cavern #3 has failed. Per Texas Brine’s press release, “The tool used to measure cavern depth bottomed out at approximately 4,000 feet – a point estimated to be 1,300 feet higher than the floor had been measured prior to the cavern closure in 2011. This preliminary finding indicates that some type of dense material has fallen to the bottom of the cavern. A sample of the material has been retrieved from the cavern floor and will be analyzed. The retrieved material does not appear to be consistent with material normally found in brine cavern operations. We expect that the sonar inspection that is currently being conducted will provide a more detailed image of the cavern’s interior conditions and the possible source of the material at its base.” This statement confirms the suspicions of parish officials: Texas Brine Oxy Cavern #3 had failed.

It has come to our attention that Texas Brine’s press release was released to the media at 10:31 p.m. last night, prior to consulting with parish and state officials. Parish officials are not in agreement with Texas Brine’s preliminary conclusion that their well was damaged by “regional-scale seismic activity” (earthquakes). Given the confirmation of the failure of Texas Brine’s cavern, the parish will continue to look to Texas Brine for accountability and evacuee assistance. – read the full text hereread the full text here


Citizen Concerns have led the Louisiana Department of Environmental Quality(DEQ) and the Assumption Parish Sheriff's Office to conduct indoor air monitoring. Monitoring is focused on Lower Explosive Limit(LEL), Volatile Organic Compounds(VOCs) and Hydrogen Sulfide(H2S).

Oil spill stretches for miles near Exxon Nigeria field
Saturday, 01 September 2012 13:08 Reuters

An oil spill near an ExxonMobil oilfield off the southeast coast of Nigeria has spread along the shore for about 15 miles, and locals said it was killing fish they depend on to live.

Mobil Producing Nigeria, a joint venture between ExxonMobil and the state oil firm, said this month it was helping clean up an oil spill near its Ibeno field in Akwa Ibom state, though it did not know the source of the oil.

This Reuters reporter saw that water along the coast was covered with a rainbow-tinted film of oil for miles.

Exxon officials in Nigeria and in Houston could not immediately be reached to provide comment.

Oil spills are common in Nigeria, where enforcement of environmental regulations is lax and armed gangs frequently damage pipelines to steal crude.

In the Iwuokpom-Ibeno fishing community, village elder Iyang Ekong held up one of a load of crabs that a fisherman had caught that morning, only to find they were soaked in toxic oil.

“When I got I home, I realised we can’t even eat them because they smell so badly of chemicals. So we’re just going to leave them by the waterfront,” he said.

Decades of oil production in Nigeria’s swampy Niger Delta, where Africa’s second-longest river empties into the Atlantic, have turned parts of it into a wasteland of oily water and dead mangroves. Thousands of barrels are spilled every year.

The companies say oil theft by criminal gangs is responsible for most of it.

“Our fishermen noticed the oil on an outing, but the sea has started depositing crude oil along the coast, and it has filled the water,” said Samuel Ayode, chairman of the fishermen’s association of Akwa Ibom, as he repaired his fishing net on the beach. He added that it started around Aug. 10.

“No one’s done any fishing since. The fish have migrated away from the pollution.”

A landmark U.N. report in August last year slammed the government and multinational oil companies, particularly Shell , for 50 years of oil pollution that has devastated the Ogoniland region. One community is suing for compensation in a London court.

The government and oil majors have pledged to clean up the region and other parts of the delta, but locals say they have seen no evidence of action yet.

Market trader Grace Eno said fish were scarce since the spill and that fishermen were selling at much higher prices. Shrimps have doubled in price, she said, “so how can I make a profit?”


Shale gas: Halliburton’s weapon of mass devastation

 

Across the United States the exploitation of gas and oil from shale rocks using Halliburton’s hydraulic fracturing technology continues amid rising disasters.

Unregulated drilling practices, rendered legal by the “Halliburton Loophole” engineered in 2005 by Vice President Dick Cheney, have had staggering health and environmental effects.

Lured by the prospect of reducing oil dependence, President Obama has adopted an ambivalent approach, which ultimately yields ground to industry.

With the same expectancy, countries all around the world have joined the shale-gas craze, arguing that if the U.S. has been “fracking” it must be safe. Energy independence would undoubtedly represent a game changing opportunity for many countries, but at what cost?

There is a global rush to embrace a new source of extracting hydrocarbons from the Earth. From Germany to Poland and France, from China and above all in the USA where the technique of hydraulic fracturing of shale rocks is most developed, governments and major oil companies are producing huge volumes of gas.

A number of energy importing countries around the world are planning a major investment in extracting natural gas from their shale rock formations. The most ambitious plans are coming from China and from Poland in the EU.

The US Government’s Department of Energy together with a Washington energy consultancy has just released a mammoth global report estimating resources of shale gas. Significantly, the report estimates that the largest untapped shale gas reserves worldwide lie in China. The study puts Poland and France at the top of the shale gas list in the EU. The rest of Europe they estimate simply lacks the geology where substantial shale rock is present. [1]

Even in Germany some cash-strapped states are seriously looking at Shale gas. ExxonMobil, the world’s largest oil company is planning major projects in the densely-populated North-Rhein Westphalia region. The company’s head for Central Europe, Gernot Kalkoffen in a recent interview stated, “Germany is most definitely an interesting market. We cannot achieve the energy strategy shift without gas.”

ExxonMobil estimates shale gas is potentially available in six of Germany’s 16 states. [2] The US Energy Department estimates that Germany could have some 8 trillion cubic feet of technically recoverable shale gas, three years’ total consumption. Citizen protest groups and Parliamentary skepticism about health and safety of shale gas so far is braking a German shale gas bonanza. [3] Not only ExxonMobil but also BASF’s Wintershall, Gaz de France, BNK Petroleum from the US and a daughter of Britain’s Royal Dutch Shell are salivating over German shale gas prospects.

The Polish government is in a state of near euphoria over the prospects of exploiting its shale gas resources. Prime Minister Donald Tusk calls shale gas Poland’s “great chance,” because it could cut its dependence on Russian gas, create tens of thousands of jobs and fill state coffers. In tests at one well in northern Poland done last August, the Polish Geological Institute claimed that Hydraulic fracturing didn’t affect the quality or quantity of surface and ground water and didn’t cause tremors that would pose a threat to buildings or other infrastructure. The US oilfield services giant Schlumberger did the fracking. [4] Of course one test in one well is hardly conclusive, though the Tusk government doesn’t seem to care as they push Brussels to launch a major Polish shale gas exploitation program.

In China, shale gas looks about to take off as a major new focus for the country’s enormous energy requirements. The governing State Council has recently approved shale gas as an “independent mineral resource” and the Ministry of Land and Resources will conduct an appraisal of shale gas resources this year to expedite discovery and development of China shale deposits.

Until now China’s rough mountainous terrain and lack of shale gas fracking know-how has kept it out of the shale gas, with coal far the major source of electric power. The French oil giant, Total, has just signed a deal with China’s Sinopec to produce shale gas in China. China has around 31 trillion cubic meters of natural gas trapped in shale, some 50% greater than the United States according to the US Department of Energy estimate. [5] These are volumes to make the head of any respectable state official spin.

One exception to the shale gas rush is Germany where the Federal Government just decided to prohibit ExxonMobil, the world’s largest oil company, from fracking in the eastern part of the country, stating they were “very skeptical” of industry claims it would not poison ground water or cause earthquake damage. [6]
Myth and reality: The Halliburton Loophole

Fracking techniques have been around since the end of World War II. Why then suddenly is the world going gaga over shale gas hydraulic fracking? One answer is the record high oil and gas prices of the recent few years have made the costly fracking profitable. The second reason is the advance of various horizontal underground drilling techniques that allow companies like Schlumberger to enter a large shale rock formation and inject substances to “free” the trapped gas.

But the real reason for the recent explosion of fracking in the country where it has most been applied, the United States, is the passage of legislation in 2005 by the US Congress that exempts the oil industry’s hydraulic fracking activity from regulatory supervision by the US Environmental Protection Agency (EPA) under the Safe Drinking Water Act. The oil and gas industry is the only industry in America that is allowed by EPA to inject known hazardous materials — unchecked — directly into or adjacent to underground drinking water supplies. [7]

The law is known as the “Halliburton Loophole.” That’s because it was introduced on massive lobbying pressure from the company that produces the lion’s share of chemical hydraulic fracking fluids—Dick Cheney’s old company, Halliburton. When he became Vice President under George W. Bush in early 2001, Bush immediately gave Cheney responsibility for a major Energy Task Force to make a comprehensive national energy strategy. Aside from looking at Iraq oil potentials as documents later revealed, Cheney’s task force used Cheney’s considerable political muscle and industry lobbying money to win exemption from the Safe Drinking Water Act. [8].

During Cheney’s term as vice president he moved to make sure the Government’s Environmental Protection Agency (EPA) would give a green light to a major expansion of shale gas drilling in the US. In 2004 the EPA issued a study of the environmental effects of fracking. That study has been called “scientifically unsound” by EPA whistleblower Weston Wilson.

In March of 2005, EPA Inspector General Nikki Tinsley found enough evidence of potential mishandling of the EPA hydraulic fracturing study to justify a review of Wilson’s complaints. The Oil and Gas Accountability Project conducted a review of the EPA study which found that EPA removed information from earlier drafts that suggested unregulated fracturing poses a threat to human health, and that the Agency did not include information that suggests “fracturing fluids may pose a threat to drinking water long after drilling operations are completed.” [9]

The Halliburton Loophole is no minor affair. The process of hydraulic fracking to extract gas involves staggering volumes of water and of some of the most toxic chemicals known. During the uproar over the BP Deepwater Horizon Gulf of Mexico oil spill, the Obama Administration and the Energy Department formed an advisory commission on Shale Gas. Their report was released in November 2011. It was what could only be called a “whitewash” of the dangers of shale gas.

The commission was headed by former CIA director John Deuss. Deuss sits on the board of Citigroup, one of the world’s most active energy industry banks, tied to the Rockefeller family. He also sits on the board of Schlumberger, along with Halliburton, the major company doing hydraulic fracking. In fact, of the seven panel members, six had ties to the energy industry. Little surprise that the Deuss report called shale gas, “the best piece of news about energy in the last 50 years.” Deuss added, “Over the long term it has the potential to displace liquid fuels in the United States.” [10]

In the US oil industry people have forgotten the scare about oil and gas depletion, popularly known as the Peak Oil theory in their new euphoria over huge new volumes of gas and also oil obtained by fracking of shale and coal beds. Now even the Obama Administration is talking about a renaissance in domestic oil production.

The reason is the dramatic rise in domestic extraction of gas from hydraulic fracking of shale, using new fracking techniques first developed by Dick Cheney’s old company, Halliburton, made financially lucrative with the advent of $100 a barrel oil since 2008. Reportedly under pressure from then Vice President Cheney, chemical or hydraulic fracking of shale rock and coal beds has been left unregulated under what has become known as the Halliburton Loophole in the 2005 US National Energy Bill. [11]

To access the gas, the shale needs to be fractured using a mixture of hot water, sand and chemical additives, some of which are highly poisonous. Attempts by citizen organizations and individual litigants to force oil services company disclosure of the composition of chemicals used in hydraulic fracking have met a stone wall of silence. The companies argue that the chemicals are proprietary secrets and that disclosing them would hurt their competitiveness.

They also insist the process is “basically safe and that regulating it would deter domestic production.” [12] This legal sleight of hand lets the fracking lobby have their cake and eat it too. They claim it is safe, refuse to say what chemicals are used and insist it be free from the Environmental Protection Administration rules under the Safe Drinking Water Act. If they are right about how safe their chemical fracking fluids are why are they afraid of regulation like other chemical companies?

To understand what is going on, in a typical shale gas fracturing operation, a company drills a hole several thousand meters below surface; then they drill a horizontal branch perhaps one kilometer in length. As one expert described the fracking, once the horizontal drilling into the shale formation is done, “you send down a kind of subterranean pipe bomb, a small package of ball-bearing-like shrapnel and light explosives. The package is detonated, and the shrapnel pierces the bore hole, opening up small perforations in the pipe. They then pump up to 7 million gallons of a substance known as slick water to fracture the shale and release the gas. It blasts through those perforations in the pipe into the shale at such force—more than nine thousand pounds of pressure per square inch—that it shatters the shale for a few yards on either side of the pipe, allowing the gas embedded in it to rise under its own pressure and escape.” [13]

The shale rock in which the gas is trapped is so tight that it has to be broken in order for the gas to escape. Therein come the problems. A combination of sand and water laced with chemicals — including benzene — is pumped into the well bore at high pressure, shattering the rock and opening millions of tiny fissures, enabling the shale gas to seep into the pipeline.

Not only does it liberate gas or in the case of Bakken, oil. It floods the shale formation with millions of gallons of toxic fluids. A study conducted by Theo Colburn, PhD, director of the Endocrine Disruption Exchange in Paonia, Colorado, identified 65 chemicals that are probable components of the fracking fluids used by shale gas drillers. These chemicals included benzene, glycol-ethers, toluene, 2-(2-methoxyethoxy) ethanol, and nonylphenols. All of those chemicals have been linked to health disorders when human exposure is too high. [14] Dr. Anthony Ingraffea, D. C. Baum Professor of Engineering at Cornell University, who has researched fracture mechanics for more than 30 years, has said that drilling and hydraulic fracturing “can liberate biogenic natural gas into a fresh water aquifer.” [15]

Not only possibly poisoning the fresh water underground aquifers, hydraulic fracking is done with such force that it has been known to cause earthquakes. In the UK, Cuadrilla was doing shale gas drilling in Lancashire. They suspended their shale gas test drilling in June 2011, following two earthquakes—one tremor of magnitude 2.3 hit the Fylde coast on 1 April, followed by a second of magnitude 1.4 on 27 May. [16] A UK Government study of the earthquakes, released in April concluded that the fracking drilling operations had caused the quakes. [17] Earthquake activity in fracking regions across the US have also been reported.

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15 of the Deadliest Corporations

These corporations, if they were individual human beings, would be locked up for life. Instead, they continue raking in the big bucks. Human rights abuses, murder, war, eco disasters, and animal exploitation keep these evil companies raking in the green. Prepare to be disgusted.

Chevron

Several big oil companies make this list, but Chevron deserves a special place in Hell. Between 1972 to 1993, Chevron (then Texaco) discharged 18 billion gallons of toxic water into the rain forests of Ecuador without any remediation, destroying the livelihoods of local farmers and sickening indigenous populations. Chevron has also done plenty of polluting right here in the U.S.: In 1998, Richmond, California sued Chevron for illegally bypassing waste water treatments and contaminating local water supplies, ditto in New Hampshire in 2003. Chevron was responsible for the death of several Nigerians who protested the company’s polluting, exploiting presence in the Nigerian Delta. Chevron paid the local militia, known for its human rights abuses, to squash the protests, and even supplied them with choppers and boats. The military opened fire on the protesters, then burned their villages to the ground.

DeBeers

Diamonds are a girl’s best friend — unless she lives in the Ivory Coast. “Blood” or “conflict” diamonds are the name given to minerals purchased from insurgencies in war-torn countries. Prior to 2000 when the U.N. finally took a stand against the practice, DeBeers was knowingly funding violent guerrilla movements in Angola, Sierra Nevada, and the Congo with its diamond purchases. In Botswana, DeBeers has been blamed for the “clearing” of land to be mined for diamonds — including the forcible removal of indigenous peoples who had lived there for thousands of years. The government allegedly cut off the tribe’s water supplies, threatened, tortured and even hanged resisters.

Tyson

Even if you don’t care about the horrendous animal abuse that has been documented in Tyson’s factory farms, you have to flinch at Tyson’s appalling environmental abuses and workers’ rights violations, as well as the fact that on several occasions, Tyson has allowed e coli tainted beef to enter the food supply. A recent study showed that Tyson’s chickens were the most salmonella-and-campylobactor filled poultry of all the major suppliers. As if that wasn’t gross enough, Tyson has been sued repeatedly for illegally dumping untreated wastewater into Tulsa’s water supply; after they were sued the first time, they simply paid the fine and continued the practice. Tyson has made people seriously ill with the ammonia from their factory farms. Tyson is infamous for knowingly hiring illegal immigrants and has even been accused of human trafficking to supply themselves with cheap labor.

Smith and Wesson

As the largest manufacturer of handguns (and sub machine guns) in the U.S., Smith and Wesson is indirectly responsible for uncountable shooting deaths — not just by the police and government agencies to which these guns are issued, but by criminals and by “accident.” In a study of the top ten guns involved in crime in the U.S., the first was the Smith & Wesson .38 Special. Numbers 6 and 7 were also Smith and Wessons. Statistically, studies have shown that guns are used more often in crime than in self-defense. Of course, “Guns don’t kill people. People kill people.” And frequently, they use Smith and Wesson guns to do so.

Phillip Morris

Phillip Morris is the largest manufacturer of cigarettes in the U.S. Cigarettes are known to cause cancer in smokers, as well as birth defects in unborn children if the mother smokes while pregnant. Cigarette smoke contains 43 known carcinogens and over 4,000 chemicals, including carbon monoxide, formaldehyde, hydrogen cyanide, nicotine, ammonia and arsenic. Nicotine, the primary psychoactive chemical in tobacco, has been shown to be psychologically addictive. Smoking raises blood pressure, affects the central nervous system, and constricts the blood vessels. Discarded cigarette butts are a major pollutant as smokers routinely toss their slow-to-degrade filters on the ground. Many of these filters make their way into salt or fresh water bodies, where their chemicals leech out into the water. Then again, cigarettes make you look cool.

Haliburton

Any corporation that has Dick Cheney as a CEO has got to be evil. Haliburton, a huge “oilfield services” company, profited big time from the U.S.’s invasion of Iraq when Cheney called in his boys to quell burning oil wells — and to “help” the Iraq oil ministry pump and distribute oil. Haliburton has also been implicated in countless oil spills, including the BP disaster of 2010.

Coca Cola

America’s favorite soft drink, deadly? Well, even if you choose to overlook the childhood obesity epidemic and how soft drinks market to children to get them to buy something really, really bad for them, Coca Cola corporation has wrought devastation in India, where its factories use up to one million liters of water per day, leaving tens of thousands of nearby residents dry during the drought months. Then the factories dispose of the wastewater improperly, contaminating whatever water is left. A lawsuit in 2001 accused Coca Cola of hiring paramilitaries in Columbia which suppressed unionization in the cola plant there through intimidation, torture and murder.

Pfizer

Big Pharma gets rich when you get sick. Pfizer, the largest pharmaceutical corporation in the U.S., pleaded guilty in 2009 to the largest health care fraud in U.S. history, receiving the largest criminal penalty ever for illegally marketing four of its drugs. It was Pfizer’s fourth such case. As if Pfizer’s massive use of animal experimentation wasn’t heart wrenching enough, Pfizer decided to use Nigerian children as guinea pigs. In 1996, Pfizer traveled to Kano, Nigeria to try out an experimental antibiotic on third-world diseases such as measles, cholera, and bacterial meningitis. They gave trovafloxacin to approximately 200 children. Dozens of them died in the experiment, while many others developed mental and physical deformities. According to the EPA, Pfizer can also proudly claim to be among the top ten companies in America causing the most air pollution.

ExxonMobil

Another oil company that makes the list, ExxonMobil is perhaps best known for the 1989 Exxon Valdez oil spill which resulted in 11 million gallons of oil contaminating Prince William Sound. But they have also been responsible for a huge oil spill in Brooklyn and for aiding in the decline of Russia’s critically endangered grey whale because of drilling in its habitat. The Political Economy Research Institute ranks ExxonMobil sixth among corporations emitting airborne pollutants in the United States. ExxonMobil counters not by cleaning up its act, but by funding scientific studies which refute global warming. ExxonMobil was targeted by human rights activists in 2001 when a lawsuit alleged that ExxonMobil hired Indonesian military who raped, tortured and murdered while serving as security at their plant in Aceh.

Caterpillar Company

Caterpillar sells all kind of tractors, trucks and machinery — including many of the vehicles, ships and submarines used by the U.S. military. Caterpillar also supplies the Israeli army with bulldozers which are used to demolish Palestinian homes — sometimes with the people still inside. In 2003 a Caterpillar bulldozer ran over and killed Rachel Corrie, an American protesting in Gaza who stood in front of the tractor to prevent the destruction of a Palestinian home.

Ringling Brothers and Barnum and Bailey

“The Cruelest Show on Earth” is famous for its abuse of wild animals. In July 2004, Clyde, a young lion traveling with Ringling, died in a poorly ventilated boxcar while the circus crossed the Mojave Desert in temperatures exceeding 100 degrees Fahrenheit. Circus elephants are routinely confined for days at a time and beaten with bullhooks and electric prods, and when they’ve had enough, they lash out. In one famous case in 1994, an elephant named Tyke killed her trainer and injured 12 spectators before being gunned down on the streets of Honolulu. Ringling Brothers and Barnum and Baily Circus also has an impressive dead human headcount because of a fire under the big top in 1944 which killed a hundred spectators — the canvas was illegally non-flame-retardant.

Monsanto

Big Agra makes the list with Monsanto, pushers of genetically modified foods, bovine growth hormones, and poison. Monsanto’s list of evils includes creating the “terminator” seed which creates plants which never fruit or flower so that farmers must purchase them anew yearly, lobbying to have “hormone-free” labels removed from the labels of milk and infant milk replacer (through bovine growth hormone is believed to be a cancer-accelerator) as well as a wide range of environmental and human health violations associated with use of Monsanto’s poisons — most notably “Agent Orange.” Between 1965 and 1972, Monsanto illegally dumped thousands of tons of highly toxic waste in UK landfills. According to the Environment Agency the chemicals were polluting groundwater and air 30 years after they were dumped. Alabama sued Monsanto for 40 years of dumping mercury and PCB into local creeks. Plus, Monsanto is infamous for sticking it to the very farmers it claims to be helping, such as when it sued and jailed a farmer for saving seed from one season’s crop to plant the next.

Nestle

Sticky-sweet image aside, Nestle’s crimes against man and nature include massive deforestation in Borneo — the habitat of the critically endangered orangutan — to grow palm oil, and buying milk from farms illegally-seized by a despot in Zimbabwe. Nestle drew fire from environmentalists for its ridiculous claims that bottled water is “eco-friendly” when the exact opposite is true. Nestle attracted worldwide boycott efforts for urging mothers in third-world countries to use their infant milk replacer instead of breastfeeding, without warning them of the possible negative effects. Supposedly, Nestle hired women to dress as nurses to hand out free infant formula, which was frequently mixed with contaminated water, or the children starved when the formula ran out and their mothers could not afford more and their breast milk had already dried up from disuse. Nestle, of course, denies contributing to the death of thousands of infants.

British Petroleum

Who can forget 2010’s oil rig explosion in the Gulf Coast which killed 11 workers and thousands of birds, sea turtles, dolphins and other animals, effectively destroying the fishing and tourism industry in the region? This was not BP’s first crime against nature. In fact, between January 1997 and March 1998, BP was responsible for a whopping 104 oil spills. Thirteen rig workers will killed in 1965 during one explosion; 15 in a 2005 explosion. Also in 2005, a BP ferry carrying oil workers crashed, killing 16. In 1991, the EPA cited BP as the most polluting company in the U.S.. In 1999, BP was charged with illegal toxic dumping in Alaska, then in 2010 for leaking highly dangerous poisons into the air in Texas. In July 2006, Colombian farmers won a settlement from BP after they accused the company of benefiting from a regime of terror carried out by Colombian government paramilitaries protecting the Ocensa pipeline. Clearly, there is no way BP will ever “make it right.”

Dyncorp

This privatized military company is often hired by the U.S. government to protect American interests overseas — and so the government can claim no responsibility for Dyncorp’s actions. Dyncorp is best known for its brutality in impoverished countries, for trafficking in child sex slaves, for slaughtering civilians in Iraq and Afghanistan, and for training rebels in Haiti. Among some stiff competition, mercenary Dyncorp may be the deadliest and most evil corporation in the United States.
Source


Monsanto's government/corporate ties

Monsanto’s Government Ties

“Agricultural biotechnology will find a supporter occupying the White House next year, regardless of which candidate win the election in November”
– Monsanto Inhouse Newsletter, 2000

A Monsanto official told the New York Times that the corporation should not have to take responsibility for the safety of its food products. “Monsanto should not have to vouchsafe the safety of biotech food,” said Phil Angell, Monsanto’s director of corporate communications. “Our interest is in selling as much of it as possible. Assuring its safety is the FDA’s job.”

It would be nice to think the FDA can be trusted with these matters, but think again. Monsanto has succeeded in insuring that government regulatory agencies let Monsanto do as it wishes. Take a look:

Prior to being the Supreme Court Judge who put GW Bush in office,Clarence Thomas was Monsanto’s lawyer.

The U.S. Secretary of Agriculture (Anne Veneman) was on the Board of Directors of Monsanto’s Calgene Corporation.
The Secretary of Defense (Donald Rumsfeld) was on the Board of Directors of Monsanto’s Searle pharmaceuticals.

The U.S. Secretary of Health, Tommy Thompson, received $50,000 in donations from Monsanto during his winning campaign for Wisconsin’s governor.
The two congressmen receiving the most donations from Monsanto during the last election were Larry Combest (Chairman of the House Agricultural Committee) and Attorney General John Ashcroft. (Source: Dairy Education Board)

In order for the FDA to determine if Monsanto’s growth hormones were safe or not, Monsanto was required to submit a scientific report on that topic. Margaret Miller, one of Monsanto’s researchers put the report together. Shortly before the report submission, Miller left Monsanto and was hired by the FDA. Her first job for the FDA was to determine whether or not to approve the report she wrote for Monsanto. In short, Monsanto approved its own report. Assisting Miller was another former Monsanto researcher, Susan Sechen. Deciding whether or not rBGH-derived milk should be labeled fell under the jurisdiction of another FDA official, Michael Taylor, who previously worked as a lawyer for Monsanto.

Organic and Natural Product Companies
Associated with Monsanto

• Brand Name(s): Arrowhead Mills, Bearitos, Breadshop, Celestial Seasonings, Earth’s Best Baby Food, Garden of Eatin, Health Valley, Imagine Foods, Terra Chips, Westbrae, Millina’s, Mountain Sun, Shari Ann’s, Walnut Acres Owned By: Hain Food Group Principle Stockholders: Bank of America, Entergy Nuclear, ExxonMobil, H.J. Heinz, Lockheed Martin, Merck, Monsanto, Pfizer, Philip Morris, Walmart, Waste Mangement Inc. Significantly Owned By: Citigroup

• Brand Name(s): Cascadian Farms, Muir Glen Owned By: Small Planet Foods Principle Stockholders: General Mills Significantly Owned By: Alcoa, Chevron, Disney, Dupont, ExxonMobil, General Electric, McDonalds, Monsanto, Nike, Pepsico, Pfizer, Philip Morris, Starbucks, Target, Texas Instruments

Source


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