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Russian economy succumbs to the oil curse
Ambrose Evans-Pritchard, Telegraph (UK)
Moscow is the most expensive city in the world, like Tokyo before the Nikkei bubble burst. A taxi from Domodedovo airport to the Kremlin costs $170 (£86). Property in Ostozhenka trumps Chelsea. Space fetches $30,000 a square metre.
Nice Tsarist flats fetch $3m to $4m. Even Bolshevik boxes are booming. Moscow boasts 150,000 home millionaires in dollars, says Sergei Polonsky, the Mirax Group tycoon. In a good year, prices double.
This is the curse of commodity wealth, the "Dutch Disease" that eats at the competitive foundations of an economy and incubates a parasite culture. No doubt Russia's scientists, engineers, and cyber talent, will enrich the country, but first it must overcome the toxic effects of oil at $90 a barrel.
"We can no longer afford to buy Russian equipment," said Yevgeny Ivanov, head of Polyus Gold.
"The prices here are one and a half times higher than abroad so we're having to break our rigid rule and turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up with us through higher prices. It is a disheartening picture," he said.
"There's no infrastructure, no power, no roads. Electricity costs twice what they pay in Alaska and Canada. We face a Soviet bureaucracy passing decrees that make you weep," he said.
(2 February 2008)
'Huge' gas field found off Iran
A gas field with huge reserves has been discovered in the Gulf off the coast of Iran, Gholam Hossein Nozari, the Iranian oil minister has said.
"A gas field with an estimated reserve of 11 trillion cubic feet (311 billion cubic metres) was found by an Indian company in the Persian Gulf," Nozari said on Saturday.
Nozari declined to reveal the name of the company but said "there will be talks with the discovering company for [the field's] development if they are interested".
Iran has the world's second-largest proven gas reserves after Russia and it has ambitions to export gas to a host of countries including Armenia, Pakistan and Syria.
However, it has failed to become a major international exporter because of a lack of foreign investment and slow progress in exploiting its fields.
Despite its export plans, Iran had recently been forced to import gas from neighbouring Turkmenistan because of high domestic consumption.
Iran's only gas exports are to Turkey which usually receives around 20 million cubic metres (700 million cubic feet) each day.
In January however, Iran had to cut its exports to Turkey for three weeks due to the lack of gas from Turkmenistan and severe cold weather.
(2 February 2008)
A Frail Economy Raises Pressure on Iran’s Rulers
Michael Slackman, New York Times
In one of the coldest winters Iranians have experienced in recent memory, the government is failing to provide natural gas to tens of thousands of people across the country, leaving some for days or even weeks with no heat at all. Here in the capital, rolling blackouts every night for a month have left people without electricity, and heat, for hours at a time.
The heating crisis in this oil-exporting nation is adding to Iranians’ increasing awareness of the contrast between their growing influence abroad and frailty at home, according to government officials, diplomats and political analysts interviewed here.
From fundamentalists to reformists, people here are talking more loudly about the need for a more pragmatic approach, one that tones down the anti-Western rhetoric, at least a bit, and focuses more on improving management of the country and restoring Iran’s economic health.
(3 February 2008)
Canada's Shifting Sands
The Globe & Mail via Big Gav's Peak Energy
The Globe And Mail has an excellent series of articles on Canada's burgeoning tar sands industry called "Shifting Sands".
* Shifting sands: Part I: Alberta's oil sands changed Canada
* Shifting Sands, Part II: Black gold, Texas tea
* Shifting Sands: Part III: Hollowing out small towns down East
* Shifting Sands, Part IV: The two Albertas forcefully collide
* Shifting sands, Part V: Will Canada avoid the 'Dutch disease?'
* Shifting sands, Part VI: A huge clean-up project for the future
* Shifting Sands: Part VII: Looking for solutions to the carbon conundrum
Plus some related content:
* Oil wealth has ignited the loonie, hurting exports, and the higher energy prices are squeezing profits
* An economy that pins its hopes on something as volatile as oil is asking for trouble.
* Canada as an 'energy superpower?'
(3 February 2008)
Photo and excerpts at Big Gav's post, which is entitled "An empire from a tub of goo." -BA
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