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.

Pensions: Illinois' solution

Via MSN we learn the plan that Governor J.B. Pritzker hopes to implement to resolve the Illinois' pension problem.

The potential solutions:

1. Graduated income taxes versus their current flat tax.

2. Allowing more time to get to 90% funding -- shifting the target from 2045 to 2052.

3. Selling state assets.

Venezuela: Fleeing Oil Workers

The Associated Press has an article up regarding fleeing Venezuelan oil workers. The first wave of fleeing oil workers occurred in 2003 after a strike and crackdown by Maduro and has since continued. Some interesting quotes:

While the most-talented engineers left long ago — many contributing to a production boom in neighboring Colombia — there’s still demand for labor throughout the industry. “We’re still in a talent-short market, especially with people willing to go into hardship locations — like Kurdistan,” said Dane Groeneveld, CEO at California-based PTS Advance, an oil industry recruiter, referring to Iraq’s Kurdish region.

Reuters, back in late December, had an article about Venezuela's oil sector. Per the article, Venezuela's PDVSA employed 152,072 in 2014. It estimates around 106,518 were employed as of 2018. That's a 40,000 drop.

Venezuela: International Affairs

Bloomberg has an interesting opinion piece about the international affairs surrounding Venezuela. This largely revolves around the US, China and Russia:

All this constitutes the backdrop to the Venezuelan crisis. The growth of Russian and Chinese influence in Latin America broadly, and Venezuela specifically, is a key reason the Trump administration has so uncharacteristically taken up the banner of human rights and democracy. By imposing harsh economic sanctions, calling for the military to desert Maduro, and backing the political opposition led by the Juan Guiadó, the Trump administration is seeking to deprive Moscow, Beijing and Havana of a critical partner in Latin America. And while Russia and China have responded very differently to this crisis, both are working, in their own ways, to protect that partner.

This is basically why I'm skeptical that Maduro will be forced out of power. Or if he is, he will simply be replaced with someone who is supported by China and Russia. This leaves out Guiado who is supported by the US and other countries excluding China and Russia.

Pension Tidbits

With the stock market having taken a nose dive in December and then bouncing straight up in January, it is interesting to read news on the situation around pensions.

Here's three articles that I found interesting:

This one is rather minor, but being from California and reading about the situation around PG&E, I had to read this article from The Sacramento Bee:

The California Public Employees’ Retirement System, which manages about $350 billion in investments, owned about 1.8 million shares of PG&E Corp. at the end of November, according to the latest figures available from the fund. At the time, the shares were worth about $47 million. CalPERS also owned Pacific Gas and Electric Co. securities worth about $35 million, according to the fund.

At the end of November, the stock price was around $26. At the end of January, it was around $13. If CalPERS still own the stock, it would equate to a loss of around $23 million. Not even a 0.1% hit to the fund. But then I guess when you're trying to hit a 7% return, even 0.1% counts.

Pensions: CalPERs returns

Pensions & Investments reported the following regarding 2018 and prior trends:

CalPERS earned -3.9% in the year, 6.3% for the three years and 5.1% for the five years ended Dec. 31, CEO Marcie Frost told the board for the $348.7 billion pension fund at its meeting Tuesday. The 10-year return ending Dec. 31 was 7.9%.

In his first presentation to the board, newly named Chief Investment Officer Yu Ben Meng said that based on performance, CalPERS is currently 65% or 66% funded. By comparison, the Sacramento fund was an estimated 71% funded as of June 30.

So the -3.9% 2018 performance also hit the funded amount pretty hard.

I want to key in on the 10-year return of 7.9% as short term variances can always be expected. With that said, Chief Investment Officer provides some additional information:

Libya: El Sharara oilfield

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 . . .

I've briefly mentioned the El Sharara oilfield in my blog. Back in late 2017, there were protests at the oilfield around allocation of oil money to South Libya.

Fast forward to 2019. Reuters reported January 15th that the LNA "launched a military operation in southern Libya to secure oil and gas facilities and fight extremists, a spokesman said on Tuesday, a move that may alarm the authorities in Tripoli in the west."

The article goes on to explain that Haftar had sent troops to the city of Sabha. This was not the first time the LNA sent troops to Sabha. In March 2018, I wrote a post about how LNA troops were fighting in the city.

Shale Series Part 3 - 2019/2020 production forecasts

OilPrice.com has an interesting article up that highlights comments from Schlumberger's CEO Paal Kibsgaard.

Here are some quotes:

Kibsgaard said that spending from the shale industry could be flat or down this year relative to 2018.

Companies working through DUCs (drilled but uncompleted wells) could keep production aloft even as drilling slows, but output would likely fall relative to 2018, while decelerating further in 2020.

From a conference call with analysts: “It is also worth noting that with the continued growth in U.S. shale production, an increasing percentage of the new wells drilled are being consumed to offset the steep decline from the existing production base,” Kibsgaard told shareholders and analysts on Schlumberger’s earnings call. “The third party analysis shows that in 2018, this number was 54% of total CapEx and is expected to increase to 75% in 2021, clearly demonstrating the unavoidable treadmill effect of shale oil production.”

Shale Series Part 2 - Constraints: water and money

Recently, the Wall Street Journal discussed the fact that shale forecasts are over-stated by 10%.

What are some other interesting facts about the future of shale?

OilPrice.com has an interesting article up on constraints. Water constraints to be specific:

Water already accounts for about 15 percent of the cost of a shale well, according to analysts at Morgan Stanley. “In the Permian, total spending on water is expected to double over the next 5 years, to $22B, with E&Ps on avg using 50 barrels (bbls) of water for each lateral foot completed,” the investment bank wrote in a new report . . . Last year, Wood Mackenzie said that the rising cost of water disposal alone would increase the breakeven price in the Permian by between $3 and $6 per barrel, potentially shaving off future Permian oil production by around 400,000 bpd by 2025.

That's an interesting constraint that to some degree shale producers can't control. For example, oil pipelines are an issue, but that can be resolved by just building out pipelines. One really can't control the rain. Should there be a significant drought that hits the shale region, it could cause problems for shale production.

Another constraint out there is capital. Continental Resources chief executive Harold Hamm argued that US shale growth could come in at 50% less than the growth at the start of the year due to difficulty in raising capital:

Shale Series Part 1 - Art Berman discusses recent WSJ article on shale production

The Wall Street Journal recently wrote an article stating that shale production was coming in at around 10% less than forecasted. Art Berman recently discussed this on Peak Prosperity. Art Berman is a geologist who is an oil expert. He's been saying for awhile that shale production was coming in lower than anticipated. Here some of his thoughts on the article:

1. He believes the gap is really greater than 10%.

2. This is based on what the definition of "average" means. He suspects that the data given to the Wall Street Journal was cherry picked. That is, they were coming up with the 10% based on the best locations. He's looked at total wells drilled and therefore is coming up with a much lower figure.

Venezuela: Thoughts on Protests

The LA Times has been covering the situation in Venezuela. (Here are a couple links: Jan 22 and Jan 25).

The current anti-Maduro protests appear to have started based on:

The march is coming at a critical moment, with Maduro seemingly off balance after several dozen mutinous national guard soldiers stormed a military post in central Caracas, seizing weapons and calling on other members of the armed forces for support. The government quickly put down the uprising, arresting 27 and dismissing it as an isolated incident.

From this, the president of the National Assembly, Juan Guaido, declared himself the leader of the country:

In his first public speech since Wednesday, when he proclaimed himself Venezuela’s legitimate leader in a massive protest march in the capital, Caracas, the 35-year-old president of the National Assembly tried to capitalize on discontent with the Maduro government while making the case that a better future was within reach.

Let's first remember that Venezuela had massive protests in 2017, which ultimately failed to over-throw Maduro. So what do I think the chances are for Guaido to force Maduro out of power?

Libya: Notes on what is going on in Tripoli

This post is an update about what is going on in Tripoli.

Back on Dec 12th, Reuters had an article up on the situation in Tripoli. It is filled with names and details so is a little hard to follow. Here's me trying to simplify:

Tripoli Revolutionaries Brigade (headed by Haithem Tajouri). Tajouri had left the country for a month and returned "dressed in blue Emirati robes." That led to speculation that he was aligned with the UAE, which just so happens to back Khalifa Haftar in the east.

Rada (headed by Abdulraouf Kara). Their base is at the airport and is linked to other militias outside the capital that hold ultraconservative religious ideology.