Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Iraq Oil to Rival Saudi Arabia

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BAGHDAD – What was once considered a pipe-dream could become reality: after decades of dictatorship, war and international sanctions, Iraq’s massive oil reserves are set to be tapped proper and the country once known for two overflowing rivers could be crowned oil king.

If the seven oil projects awarded to foreign oil companies this weekend, and the three from an auction earlier this year, develop as planned, within eight years, Iraq will see its oil production capacity leap to more than 12 million barrels per day (bpd). 

“We think it is a big victory for Iraq to be able to be a leader in the world,” Iraqi Oil Minister, Hussain al-Shahristani, said after the auction.

Saudi Arabia, the world’s largest producer at 8.18 million bpd, has a capacity of just over 11 million bpd today, after slower demand growth halted plans to expand to 12.5 million bpd by the end of this year.

Iraq – behind Saudi Arabia and Iran – has the world’s third largest proven oil reserves, with potentially more remaining to be found. Currently, however, its 115 billion barrels below ground pump at just 2.4 million bpd, with production hampered by political, structural and security problems that could moot the enthusiasm from this weekend’s auction.

Out of the 10 oil projects on offer during the two-day auction, seven were awarded to a dozen companies. Three fields up for grabs in a June 30 auction were awarded, with one deal already finalized. And there are more than 60 fields discovered but not yet developed. These include two that the ministry is negotiating directly with foreign companies outside of an auction process.

Currently, Iraq relies on oil revenue for 95 percent of its revenue. This will increase if the fields develop as planned. Only after, however, Iraq reimburses companies for their investment and pays them a relatively small fee per barrel of increased output.

But this is Iraq, where, aside from this weekend’s bidding round, it seems nothing goes according to schedule.

Since late 2006, a new oil law to replace current oil governance – an often vague and conflicting mix of the 2005 Constitution and laws left from previous eras – has been delayed by political squabbles. Laws reestablishing the national oil company, reorganizing the oil ministry and formalizing revenue redistribution, are also languishing.

Iraq’s Kurds, who favor heavy decentralization, and nationalist Arabs, who want strong state control, have both questioned Shahristani’s oil deals. Some have called them illegal.

In press conferences and speeches before the auction, both Prime Minister Nouri al-Maliki and Oil Minister Shahristani, reiterated the government’s pledge that the deals would remain valid – no matter what happens in the March 7 national election.

Legal cover has been as much of a concern to foreign oil companies as physical security. Three days before the first field was put on the block, five bombs killed more than 120 people. Iraq’s northern export pipeline was offline for a week, during both October and November, due to sabotage.

“The contract specifies very clearly the responsibilities of the companies and the security for the fields is the responsibility of the Iraqi government but if the oil companies require specific security for their personnel or their activities, that is their responsibility,” said Shahristani.

“We will make necessary precautions to deal with it,” said Torgeir Kydland, the senior vice president for Iraq at Statoil, the Norwegian firm which partnered with Russia’s Lukoil to increase production at the West Qurna-Phase 2 project from nearly nothing now to 1.8 million bpd.

That additional crude, however, now needs somewhere to go. And throughout the value chain, there are missing links. Iraq needs to upgrade refineries, build more storage units, and create a larger capacity transport infrastructure. Following wars and sanctions, everything needs repair and modern technology.

Iraq cannot export much more than it does already; depending on which segment of the pipeline system, either repairs have not been made or an increase in oil flow risks all-out rupture.

“The amount of work required for the infrastructure to handle such a massive production and to transport it and to export it is huge,” said Shahristani. He said a pipeline and export master plan will be completed soon after assessing the needs of the fields awarded for development.

“There will be another port there and also a network of pipelines extended from the north of Iraq to the south and from the east to the west of Iraq to export oil from different areas,” he said. Such a move will diversify recipients, increase delivery to those already served, and allow it to separate the different qualities of crude instead of selling it as a concoction of one.

And when it makes significant gains in production, it will have to find its place within OPEC’s quota system, which Iraq – a founding member – has been excused from because capacity was cut by wars and sanctions. Shahristani said the 12 million bpd target will merely be Iraq’s capacity, and that actual output will be based on market demands and aligned with OPEC. There is language in the contracts that compensates foreign companies if production is reduced, he said.

Iraq is considered by Transparency International as one of the most corrupt countries in the world. And the influx of potentially hundreds of billion dollars of foreign investment into an as yet unproven government of struggling institutions is a volatile concoction producing in other developing yet resource-rich nations what has come to be known as the “resource curse.”

That is, when oil revenues aren’t used to benefit the citizens of the producing country but, rather, the elite. Investor companies are often enablers if not complicit, and their home nations approving.

The result is a populace lacking basic services and a polluted environment that soon turns into violence, destabilizing both oil operations and government. The resource curse in Iraq, however, is not inevitable. And although history is a bad indicator, in Iraq and in most oil producers, such a trend can be slowed and reversed.

“That’s why we’re glad it’s not coming on line all in one day,” said a senior U.S. official. The ministry’s Inspector General’s office is considered to be both progressive and aggressive.

The companies are expected to reach an initial agreement with the ministry by the end of the year.

“They will give us a work plan about the numbers of the fields to be developed, the expected costs, the invested money, and the number of the workers,” said Shahristani.

This is then followed by Cabinet approval and the final signing. Thirty days later the companies must pay the signature bonus, which is no less than $100 million, depending on the field. And it’s non-recoverable, as opposed to the first round where the much larger signing bonus was given as a loan.

This article was written by By Ben Lando for who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at:

The Two Sides of Oracle (By Jeff Patterson)

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A quick look at a short term trade I took yesterday in ORCL on the short side. In my experience after gap ups and when you get the formation outlined in the blue lines, its a sucker move that most always leads to a quick and abrupt correction down to the 30 or 50 day moving average in short order, which is where I will cover and go long. I am just pointing out formations that work well for me a high percentage of the time and it may seem to be counter intuitive based on recent action. None the less I am willing to stick to my high percentage set ups.

However I think ORCL will make a nice long play after the short term correction I believe is coming. I am posting two charts, daily and weekly. The weekly chart clearly shows a triple top breakout, but first they must trap the weak bulls on the daily chart with the current formation and subsequent correction before the sustained up trend truly begins.


Ice Battle 2009

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Having grown up in the Deep South in my childhood, I had almost no exposure to snow or ice. Therefore, as an adult, I really get into snow at any opportunity. Perhaps I should have born in New England instead, since that seems to be where my heart lives.

Here in North Lake Tahoe, I set out with my children to construct a snow fort in order to battle another family (friends of ours). The picture of my fort, below, doesn't do it justice – – – I am particularly proud of the impenetrable ice wall that constitutes our defense shield.

I happily walked up the stream near this fort in order to pull off solid sheets of ice from the rocks. After I assembled all these ice bricks, I poured buckets of water all over the wall, and now that a frigid night has passed, our fort is invincible.


I am also not beneath psychological warfare. After the opposing father from the other family left his fort, I gathered up some twigs and embellished the front of his edifice with a new moniker:


I imagine the dread battle will be held late this afternoon, as the sun sets beneath the Sierra mountains. One thin inch of moonlight, and the snowballs will begin to fly.

Canadian Dollar

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Below is a CAD/USD hourly futures chart (not USD/CAD as normally displayed) showing a range of about two months covering 300 points or more.

The CAD broke out overnight, but with USD strength this morning, has pulled back to retest double support at the top of the range. Even with USD strength the past week, the CAD has been stronger. Stay tuned for the next 300 point move.
CAD 12_29_2009 (60 Min) - Range - small

Below is the USD/CAD daily chart

$USDCAD 12_29_2009 (Daily) spot

2004 or 1938?

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Gary Savage has suggested that we're perhaps entering a 2004-ish market in 2010, and I can see the basis for his rationale. Here is 2002-2004, with some tinting showing the successive eras I've marked:


….and here's the current market:

Of course, the question is: when does the yellow phase into the blue? Strictly on a percentage basis, we've got more yellow in our future – maybe even another 1,000 Dow points. Anyway, this is an analog worth watching. I still have a certain degree of faith in my 1937-1942 analog, although this rally is getting a bit long in the tooth to support it indefinitely.