Libya: Haftar heading to Tripoli?

Both Reuters and Bloomberg both wrote articles about the possibility of the Libyan National Army (LNA), led by Khalifa Haftar, marching on Tripoli. As a reminder, the LNA is based in Benghazi, eastern Libya.

Reuters was up first on March 9th. It is mentioned that this was all set in motion by the actions that the LNA took recently in southern Libya. This military move caused concern at the U.N., which backs the Tripoli government. And I suppose that with the success in taking control of oil wells in the south, the LNA got a boost in confidence to aim for total control of Libya.

He [Khalifa Haftar] has not said whether he wants to march on Tripoli, which would dramatically escalate tensions. But his Libyan National Army (LNA) has hinted heavily that it might do so — if Haftar is not recognized as the country’s overall military commander, his aim since he began assembling the force in 2014. “The same sources said there is coordination with some units inside Tripoli and its suburbs for the army to enter Tripoli.”

California State Workers: salary spiking by not taking vacation

The LA Times has a recent article about how state workers aren't taking vacation time and therefore increasing their payout at the time of their retirement.

Now I'm not going to condemn someone for saving some vacation days. I've been paid for unused vacation time from every job I've left. What is concerning is the degree to which some individuals are doing to save their vacation time.

Just some high level facts from the article.

The state owes $3.5 billion for unused vacation time. Annual payouts have increased from $167 million in 2008 to $299 million in 2018. The article seems to hint at two possible reasons why there is this dramatic payout increase. First, Baby Boomers are retiring. Second, the state is starting to offer payouts of up to 80 hours per year.

Per the article, here are the rules in place and the fact that they aren't being followed:

California mandates that vacation balances for most employees be capped at 640 hours. Sporadic enforcement of the rule, coupled with an increasing number of state workers retiring, has led to a 60% rise in the number of six-figure payouts since 2012, when 280 employees each cashed in unused paid leave totaling $100,000 or more, The Times’ analysis found.

Venezuela: Migration/Conoco Phillips/Oil Production Forecast

Migration

Yahoo had the following to say about migration out of Venezuela:

"Without any significant change that could reverse the economic, political and social crisis in Venezuela, the total number of migrants and refugees could reach between 5.39 and 5.75 million by the end of 2019," said the report commissioned by OAS Secretary General Luis Almagro.

This seems to increase the range that the Miami Herald wrote in December when they stated that the U.N. Refugee Agency had an estimate of 5.4 million by the end of 2019.

The Yahoo article seems to have an estimate of anywhere between 2.7 million to 3.4 million have already fled Venezuela from between 2015 and 2018. Not sure which numbers are from where, but one comes from the Organization of American States while the other comes from the United Nations.

WSJ: Another Shale Take Down Article

The Wall Street Journal has written another article on shale. They previously wrote an article about how shale production estimates were too aggressive. Now this article is about the parent-child problem. For shale, the parent is the original drilled well while the child are wells drilled near to the original well. From the article, it appears that child wells are drilled anywhere from 275 feet to 600 feet from the parent.

Some thoughts from the article:

1. The argument that wells could be drilled closer together and yet produce the same amount of oil resulted in shale corporations to raise close to $57 billion in equity and debt in 2016.

2. The article discusses how Laredo touted it could drill 32 wells on a unit. Now they've reduced that to between 16 and 24 wells. Since the promise was that each well could pump 1.3 million barrels of oil and gas that means that their forecasts are off by at least 10.4 million barrels per unit (1.3 x (32 - 24)).

ISIS: How countries are dealing with returning ISIS fighters

Recently, I've been reading articles about how countries are dealing with citizens who are returning (wish to return) after fighting (being a part) of ISIS.

Here's a look at three countries:

Sweden:

From The Local:

None of the 150 Swedish citizens who have returned home after joining the terror group Islamic State have been convicted of crimes committed while abroad. While some European countries are investigating all returning foreign fighters, Sweden is not . . . In Sweden, however, suspicion of a specific crime is required in order to initiate a preliminary investigation. If there is no concrete information to work off, the police's ability to access any digital evidence, for example in returning foreign fighters’ phones, decreases drastically.

It would appear that Sweden is prevented from investigating ISIS fighters due to existing law. Sweden wishes to make changes to that law.

Oil Tidbits: International Maritime Organization Ruling and Shale

Maritime Organization Ruling

Come January 2020, the International Maritime Organization ruling regarding global shipping goes into effect. The ruling will cut the sulfur content in maritime fuel from 3.5% to 0.5%. It was first announced in 2008 that this would be going into effect. The target date of 2020 was set in 2016. Though the ruling was set in 2016, it wasn't until recently that economist Philip Verleger raised the red flag about the ramifications of this ruling. He argued that oil prices could hit $200 due to the ruling.

As for the shipping industry, there are three ways to meet the sulfur cuts:

1. Put scrubbers on their ships, which helps reduce the sulfur content.
2. Switch to LNG.
3. Buy lower sulfur content fuel.

Back in a December blogpost on the topic, I mentioned that scrubbers may not be an option as Singapore stated they wouldn't allow the discharge of wastewater that comes from scrubber use.

Splash has an update that looks more favorable on the use of scrubbers:

Japanese authorities have declared washwater discharge from open-loop scrubbers to be not harmful to the environment, lending credence to a three-year study on the topic carried out by cruise giant Carnival, which was unveiled last week. Open-loop scrubbers have come under enormous scrutiny in the past 12 months with key shipping locations such as Singapore, China and Fujairah banning the technology. However, Japan, home to the world’s second largest merchant fleet, has come out in favour of them. 

After Singapore came out against the use of scrubbers, so did China and Fujairah (UAE). Japan is now saying that they will allow wastewater discharge. Of course, note the last sentence of the quote: second largest merchant fleet. There might be a reason why they're open to scrubbers. It'll be interesting to see how other nations deal with this scrubbers/no scrubbers argument as 2020 nears.

Shale Oil: Production Increases/Capital Budgets Cut

Bloomberg has an article up on shale production growth, which it states is growing at double-digits:

Growth is slowing but still strong: the U.S. will add about 1.45 million barrels of oil a day on average this year, down from 1.6 million in 2018, according to the Energy Information Administration.

The tumble in oil prices at the end of 2018, combined with investor demands for fiscal discipline, has prompted most shale executives to only invest what they earn in cash flow, ending years of debt-fueled growth . . . On average, U.S. explorers have cut their capital budgets 4 percent but are predicting a 7 percent increase in production, according to RS Energy Group, a Calgary-based researcher.

The U.S. will likely pump a record 12.4 million barrels a day this year, 13 percent higher than in 2018, according to the EIA.

LIbya: LIbyan National Army and Growing Power of Eastern Libya

Brief info on Libya before going into my blog:

The UN backed government in Tripoli is called the Government of National Account (GNA).

There is a rival government in Benghazi called the Libyan National Army (LNA). Khalifa Haftar is the leader of that government.

Okay . . .

Reuters has an of interesting article up on Libya. This one focuses on the tensions between those who want military rule and those who want democracy in the east. Yet there are some other interesting comments from the article:

But the scars of war in Benghazi show the difficulties of reconciling two rival camps - former soldiers and tribesmen in eastern Libya versus Islamists and urban elites in the west . . . Many Haftar supporters see little point in reconciling with opponents, whom they call “terrorists” or “Muslim Brothers”.

His forces depend on tribal alliances in eastern Libya. They have put out feelers to the west, where some have voiced support for Haftar, but their power base is in the east. 

The Tripoli-based central bank had almost $75 billion in foreign reserves but sends little cash to the eastern government, working only with the internationally recognised administration in Tripoli.