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Triple Crunch Log                                                                                                            

shakedown.” (He also said “slush fund”). After a storm of criticism from Democrats and Republicans alike (to some of which I listened on C-Span) Barton later apologised for this apology.482 Throughout the hearing Hayward maintains steady eye contact with his enraged critics. “But his nerves were betrayed by his fingers, which appeared to be busily crocheting a pair of invisible socks.”483

Kuwait parliament to debate power cuts amid record heat. Kuwait's parliament will hold an emergency session at the weekend. Power consumption has almost reached the maximum production capacity, and there have been repeated power cuts in dozens of residential areas. The temperature soared to 51 degrees Celsius (123.8 Fahrenheit) in Kuwait City, early for this time of year. No new power plants have been built since 1988.484


Macondo oilfield contains enough oil for an out of control well to go on spewing for 2 to 4 years, says an oilfield expert: Philip Johnson, professor of petroleum engineering at the University of Alabama. This is based on Hyward’s testimonty that there is still 50 million barrels of recoverable oil in the field, and the US government’s estimate of 60,000 barrels a day escaping485

Bank Matt Simmons founded distances itself from his opinions on Macondo spill. Matt Simmons has for several weeks been voicing the view that the Macondo well casing itself is damaged (if correct, a horrific escalation of the problem). He has also advocated the use of a nuclear explosion to stop the spill.486

Energy and Capital in an e-mail to its readers: it’s bound to get much worse. Aluding to emerging testimony from scientists that there is more than one leak: “Exxon fought tooth and nail for its shareholders; it appealed court rulings for 19 years. Union Carbide wasn't settled for 25 years. BP is rolling over like a simpering dog. Why? The only reason I can think of is that the company knows — better if not as well as the Obama administration does — that it will get worse. Much worse.”

Government’s cancellation of £80m loan to Sheffield Forgemasters means no EDF reactor by 2017. Chris Goodall: “The only other company currently making forgings of sufficient size for an international market, Japan Steel Works, has recently tripled its capacity to make 10 pressure vessels a year. But last year 11 new nuclear power stations were begun around the world and the pace is accelerating. 55 reactors were in full planning at the end of 2009 and in the US over 30 licence applications are under active discussion. Without the new investment by Sheffield Forgemasters, the waiting list for pressure vessels means that EDF's plan to build at least one nuclear power plant in the UK by 2017 will be unattainable.”487

19.6.10. Tony Hayward spotted on his yacht on the Isle of Wight, inflaming Obama officials and no doubt ordinary Americans in the process.

20.6.10. BP accused of lying to Congress by Ed Markey. He says an internal document shows BP’s assessment of the size of the spill was 20 times its public estimate (up to 100,000 barrels a day as opposed to 5,000). “This document raises very troubling questions about what BP knew and when they knew it. It is clear that, from the beginning, BP has not been straightforward with the government or the American people about the true size of this spill.”488

Hayward must travel to Moscow to reassure Medvedev that BP is not on the verge of collapse and continue to be a reliable partner in Russian oil production. Talk of asset sales is unsettling the Russians. BP produces one in every four of its barrels there.489

Oil companies are keeping rigs on reserve in the Gulf, having been told that the moratorium could end early. Obama officials have told the non-BP companies behind closed doors that they can’t live with the economic downsides of the ban, given 10% US unemployment etc. There are 32 deep-water rigs inactive in the Gulf that the companies had been threatening to send elsewhere.490

Anger grows across the world at the cost of “frontier oil.” The Gulf of Mexico tops a long list of arenas where NGOs accuse the oil industry of destroying land and livelihoods..491

21.6.10. Anadarko turns on BP. The CEO of the company owning 25% of the Macondo well says he is shocked by the revelations about BP’s “reckless” operation of the well, which “likely represent gross negligence or wilfull misconduct.” In using this language the company is trying to invoke a clause in the joint operating agreement that would get if off the hook on a share of costs. BP issues a furious rebuttal.492

22.6.10. Rig worker spotted oil leak on the blowout preventer “weeks before blast” and informed BP. They switched off the faulty part – a control pod – rather than repair it. So Tyrone Benton tells Panorama.493

Belarus turns off flow of Russian gas to Europe. This after Russia cut the flow of gas to Belarus by 15% yesterday in the latest dispute over unpaid bills. Gazprom says Belarus owes for consumption. Belarus says Gazprom owes for transit fees. President Medvedev: “Gazprom can't accept anything but cash - neither pies, nor butter, nor cheese, nor pancakes.” President Lukashenko: “When they are trying to insult us with meat chops, sausage, butter or pancakes we consider it as an insult for the Belarussian people.” Russia supplies 25% of Europe’s gas, 20% of which crosses Belarus.494

23.6.10. Oil industry persuades a Louisiana judge to overturn Obama’s ban on deepwater drilling. Lawyers representing the companies argue that “a whole ecosystem of business” is at threat.495 Judge is found to have shares in Halliburton, Transocean and other offshore companies. The administration will appeal.496

Analysts warn that only Shell, Chevron, and ExxonMobil will have the ability to drill the Gulf if the liability cap is hiked from $75m to the billions, or even effectively removed. Other smaller companies are likely to be driven away by the risk.497

Does BP’s debt threaten other companies outside the oil sector? FT:  “Alphaville reports that Moody’s, the rating agency, has listed several synthetic collateralised debt obligations (CDOs) that contain relatively high exposure to the debt default insurance of BP and other companies involved in the ill-fated Deepwater Horizon/Macondo project, such as Transocean and Anadarko. This has led to some slightly fuzzy fears that even companies completely unassociated with the oil and gas industry, whose debt default insurance happens to be in the same structured finance products as BP et al’s, will be affected. The logic being: if the costs of the Deepwater Horizon disaster were sufficient to trigger some kind of a credit/default event on one of the associated oil firms, that could lead to the synthetic CDOs in which they feature being liquidated, dragging the other referenced companies’ credit with them.”498

China set to become largest importer of thermal coal, only three years after becoming an importer. The IEA says it should overtake Japan this year. Greg Boyce, chief executive of Peabody Energy, told investors recently that the world economy was at “the early stages of a long-term supercycle for coal”. The IEA expects

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