Dubai Will Expedite Exploration of Offshore Discovery

Dubai, the second-largest sheikhdom in the United Arab Emirates, will explore a new offshore crude oil deposit to determine its benefit to the national economy “as soon as possible,” the government said. The emirate’s Oil Department will begin assessing “the size of oil reserves and define the possible energy production for the new field in the short- and long-term,” the office of ruler Sheikh Mohammed bin Rashid al Maktoum said today.

The U.A.E. holds about 8 percent of the world’s oil reserves, with most of the federation’s deposits held by Abu Dhabi. Dubai, which has four other offshore crude deposits, may exhaust its reserves in about 20 years. The emirate also imports natural gas from Qatar for its power plants and industry.

The prospect of boosting crude production could add to the emirate’s future export revenue at a time when it’s struggling to renegotiate payment terms on its debt. The find may “provide a new source of income, enhancing the comprehensive development of Dubai,” the ruler’s office said in the e-mailed statement.

 

“Offshore fields are complex and generally need about three to five years to be developed,” said Dalton Garis, an associate professor of economics at the Petroleum Institute in Abu Dhabi. “Once they have enough data the oil is there, they would have an asset that is known and against which they could take long-term, low interest loans.”

Beyond the black stuff: Big Oil is being forced rethink its future

In the long term, however, the firms’ success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year.

 

But there are limits to what money can buy.

South African Power Use Gains Most in Seven Years

South African power consumption surged an annual 7.5 percent in December, the biggest increase in seven years, as mining output recovered from a slump in the same period of 2008. Electricity production rose 7.2 percent over the same period, the largest increase since February 2004, Statistics South Africa said on its Web site today. Last month’s increase in consumption was the largest since December 2002.

 

Power consumption has increased since the middle of last year as the global recession eased, spurring demand for steel, platinum and gold. Eskom Holdings Ltd., the state-owned electricity utility that supplies 95 percent of the country’s demand, said on Jan. 28 that power demand increased 9 percent in January from a year ago.

Euro Drops to 8-Month Low on Sovereign Concern; Yen Declines

The euro tumbled to its lowest level in more than eight months against the dollar amid concern widening deficits will hamper Europe’s economic recovery. The 16-nation euro headed for a fourth weekly decline against the dollar and yen after credit risk on European sovereigns surged and before reports forecast to show slowing growth in Germany, the region’s biggest economy. The yen weakened against the euro and dollar amid speculation traders sold the currency to profit from its surge yesterday.

‘Stay Away’

“I would want to stay away from the euro, the euro-zone and some of the emerging European currencies,” Michael Gomez, co-head of emerging markets at Newport Beach, California-based Pacific Investment Management Co., said yesterday at a conference in Moscow. “When you look at the state of balance sheets in Europe, when you look at the state of pegs and quasi- pegs across the region, that hinders the ability for adjustment.”

El Nino May Fade, Boosting Odds of Atlantic Storms

The El Nino warming phenomenon will likely fade in the Pacific sometime in the next six months, the U.S. Climate Prediction Center said today, increasing the chances of an above-average hurricane year in the Atlantic. Models indicate the Pacific Ocean temperatures may return to normal between April and June, although forecasters are uncertain exactly when, according to a CPC statement.

 

If El Nino fades in June, it is one factor that may mean more Atlantic storms this year, said David Streit, a senior meteorologist for Commodity Weather Group Llc in Bethesda, Maryland. The Atlantic hurricane season runs from June 1 through Nov. 30. “With the loss of El Nino altogether, that will definitely help to give greater numbers than you would see in normal seasons,” Streit said.