Foreign Reports
Encyclopedia
Foreign Reports Inc. is a Washington, D.C.-based consulting firm for the oil industry, founded in 1956. Foreign Reports advises energy companies, governments, and financial institutions on world energy issues, with a specialization on the Middle East
. The President of the firm is Nathaniel Kern
.
, in which capacity he traveled extensively throughout the world, but especially in the Far and Middle East.
Newsweek
and Time Magazine during that period were practically the sole elements of the U.S. news media reporting on world activities in a timely fashion. As Foreign Editor, Harry Kern also was Editor-in-Chief of the magazine’s International Edition and thus had the privilege of picking who or what would adorn the cover of those editions. Since various foreign leaders, or aspiring ones, angled to get their pictures on the front of Newsweek
, Kern was a popular visitor in many foreign capitals. In the process, he managed to befriend both current and future leaders and to gain insights into how their policies were developed.
Foreign Reports grew out of these unique circumstances, as Kern saw a need among growing multinational companies with sizable stakes around the world for a level of international political reporting that surpassed what was then being carried in the daily newspapers of the period. From Newsweek
, he brought with him to Foreign Reports two bureau chiefs, one in Beirut
and one in Tokyo
. From these "bureaus" of Foreign Reports came a steady stream of insightful reporting on the regions they covered. Among its initial major subscribers were the world’s major oil companies, but also other industrial and banking concerns.
” that have afflicted the Middle East over the years—the 1956 Suez Crisis
, with its concomitant closure of the Suez Canal
, which was a great boon to notable tanker owners of the time, who were avid clients of Foreign Reports.
Since that time, Foreign Reports has closely covered for its subscribers all the major and minor crises that have bedeviled world oil markets ever since, as well as the broad geopolitical trends that have affected markets and business conditions. The methods it uses to anticipate the unanticipated are relatively straight-forward and avoid being unduly alarmist. They are methods that have been refined over time.
Most every crisis begins with a series of rumbles, and the rumbles have to be distinguished from mere bluster and bombast. Knowing who the players are, how they think, what they confide in others, their history of risk-taking and their own domestic political requirements is essential. As any potential crisis builds, often over a period of months, Foreign Reports writes up a contemporaneous narrative, covering the story as it develops, often focusing on key details, which, only later, historians pick up on and piece together.
, with its vast reserves of petroleum
, was an obvious early focus of Foreign Reports, especially as the firm’s subscribers had substantial equity interests in oil concessions in that volatile part of the world, where Kern
remained a frequent visitor to many of the key players—the Shah
of Iran
, Gamal Abdul Nasser of revolutionary Egypt
, Crown Prince Faisal of Saudi Arabia, etc. Kern also maintained close relationships with the leading foreign policy actors in the Eisenhower Administration, notably Secretary of State John Foster Dulles
and his brother, CIA Director Allen Dulles, forging a long relationship with U.S. intelligence, both in Washington and in the Agency’s foreign “stations.”
Nathaniel Kern
(also Nat Kern) joined his father at Foreign Reports in 1972 after graduating from Princeton University
and attending the University of Riyadh from 1970-71 as the first non-Arab student. By the time he graduated and joined the firm, rumblings of the first full-scale “energy crisis
” had begun and the role of Saudi Arabia
on the world scene began to be transformed.
Within two years of Nat's joining the firm, the world of oil and the Middle East
had changed dramatically, with prices skyrocketing and the volumes of crude oil being produced in Saudi Arabia
growing steadily. The firm’s business branched out from providing political reporting on oil in the Middle East into also providing business development assistance to firms wishing to break into new markets in the Middle East
, primarily, though not exclusively, in Saudi Arabia
. The main areas the firm concentrated in were competitive bidding opportunities in the power and desalination
markets. This required an understanding of the technologies, engineering and procurement issues inherent in complex projects, and Foreign Reports brought on board the necessary skilled individuals in these areas.
Nat Kern was a frequent visitor to Iraq
during the 1980-1988 Iran-Iraq war
, at a time when U.S.-Iraqi relations were improving, and was tasked by the U.S. government with maintaining ties with certain key Iraqi officials from 1991 onwards, at a time when the U.S. government maintained a policy of shunning any official contact with the Iraqi government.
OPEC
did not institute its first quotas until 1982, just as crude oil prices were beginning to come under downward pressure in the market. When prices did eventually start to crash in late November 1985, no other reporting service in the industry had so closely chronicled how that crash would materialize as Foreign Reports had done. The firm had watched intensely how then Saudi Petroleum Minister Ahmed Zaki Yamani
had wrestled over new ways to price Saudi Arabia’s oil as he cruised the Mediterranean on his yacht during August 1985. Foreign Reports was the first to report that Yamani, just before that Labor Day, had got off his yacht and signed “net-back pricing deals” with his main international customers. These deals that would cut all previous supports for crude oil prices and lead prices from the high $20s to the single digits within nine months. Incredibly, in those early days of the NYMEX, futures prices did not start to decline until the day after Thanksgiving.
As the pace and sophistication of NYMEX trading has accelerated greatly since those days, and as access to the incredible amounts of information over the internet has exploded, the services that Foreign Reports has offered have also changed, while still staying with time-tested methods: follow the narrative; know the actors; know their characters; understand the rules; understand cultures and histories; pay ever increasing attention to separating the wheat from the chaff in an information-laden age; and communicate concisely and clearly.
, Iran
, Saudi Arabia
, Nigeria
, and Venezuela
. The firm also reports on OPEC politics and examines what oil production decisions might be looming in the near future. Executive
and legislative activities in the U.S. which affect world oil markets are also often reported on.
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
. The President of the firm is Nathaniel Kern
Nathaniel Kern
Nathaniel Kern, also known as Nat Kern, is President of Foreign Reports Inc., a consulting firm founded in 1956 to provide political reporting and analysis for the oil industry. He has been with the firm since 1972, becoming Vice President in 1975 and President in 1990...
.
Overview
Foreign Reports Inc. has been in this business for more than 50 years and counts among its subscribers many of the world’s largest oil companies—both international and national—as well as many other financial institutions. It reports on political developments that are highly relevant to oil markets, crude oil price formation, and related macroeconomic variables.Methods
In providing political intelligence and analysis of world oil markets, Foreign Reports uses three simple tools:- Focus: Its Reports focus on political questions that impact oil markets. They are brief (rarely more than two pages), single-topic reports and are transmitted three to five times a week to its clients. They filter out the mass of extraneous intelligence which accumulates every day in today's world.
- Facts: The Reports do more than focus on what is truly relevant; they are also the product of intensive efforts to go to difficult-to-access sources to find out what political decisions are being made and why they are being made. Sources are more comfortable and more open in talking with Foreign Reports because they know that their identities will be protected and that the information they provide will receive highly limited circulation.
- Analysis: Frequently the focus and the facts are not enough to predict uncertain outcomes. Foreign Reports uses its expertise and experience in world oil markets to create a focused product that is relevant to these markets.
History
Foreign Reports Inc. was founded in 1956 by Harry Kern, who had previously been Foreign Editor of NewsweekNewsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
, in which capacity he traveled extensively throughout the world, but especially in the Far and Middle East.
Newsweek
Newsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
and Time Magazine during that period were practically the sole elements of the U.S. news media reporting on world activities in a timely fashion. As Foreign Editor, Harry Kern also was Editor-in-Chief of the magazine’s International Edition and thus had the privilege of picking who or what would adorn the cover of those editions. Since various foreign leaders, or aspiring ones, angled to get their pictures on the front of Newsweek
Newsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
, Kern was a popular visitor in many foreign capitals. In the process, he managed to befriend both current and future leaders and to gain insights into how their policies were developed.
Foreign Reports grew out of these unique circumstances, as Kern saw a need among growing multinational companies with sizable stakes around the world for a level of international political reporting that surpassed what was then being carried in the daily newspapers of the period. From Newsweek
Newsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
, he brought with him to Foreign Reports two bureau chiefs, one in Beirut
Beirut
Beirut is the capital and largest city of Lebanon, with a population ranging from 1 million to more than 2 million . Located on a peninsula at the midpoint of Lebanon's Mediterranean coastline, it serves as the country's largest and main seaport, and also forms the Beirut Metropolitan...
and one in Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
. From these "bureaus" of Foreign Reports came a steady stream of insightful reporting on the regions they covered. Among its initial major subscribers were the world’s major oil companies, but also other industrial and banking concerns.
Oil Crises
In the year of its founding, Foreign Reports benefited from one of the first “oil crises1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
” that have afflicted the Middle East over the years—the 1956 Suez Crisis
Suez Crisis
The Suez Crisis, also referred to as the Tripartite Aggression, Suez War was an offensive war fought by France, the United Kingdom, and Israel against Egypt beginning on 29 October 1956. Less than a day after Israel invaded Egypt, Britain and France issued a joint ultimatum to Egypt and Israel,...
, with its concomitant closure of the Suez Canal
Suez Canal
The Suez Canal , also known by the nickname "The Highway to India", is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea. Opened in November 1869 after 10 years of construction work, it allows water transportation between Europe and Asia without navigation...
, which was a great boon to notable tanker owners of the time, who were avid clients of Foreign Reports.
Since that time, Foreign Reports has closely covered for its subscribers all the major and minor crises that have bedeviled world oil markets ever since, as well as the broad geopolitical trends that have affected markets and business conditions. The methods it uses to anticipate the unanticipated are relatively straight-forward and avoid being unduly alarmist. They are methods that have been refined over time.
Most every crisis begins with a series of rumbles, and the rumbles have to be distinguished from mere bluster and bombast. Knowing who the players are, how they think, what they confide in others, their history of risk-taking and their own domestic political requirements is essential. As any potential crisis builds, often over a period of months, Foreign Reports writes up a contemporaneous narrative, covering the story as it develops, often focusing on key details, which, only later, historians pick up on and piece together.
Foreign Reports and the Middle East
The Middle EastMiddle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
, with its vast reserves of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
, was an obvious early focus of Foreign Reports, especially as the firm’s subscribers had substantial equity interests in oil concessions in that volatile part of the world, where Kern
Kern
Kern may refer to:* Kern , the process of adjusting the spacing between characters in a proportional font* Kern , a light infantry unit in Medieval Irish armies...
remained a frequent visitor to many of the key players—the Shah
Shah
Shāh is the title of the ruler of certain Southwest Asian and Central Asian countries, especially Persia , and derives from the Persian word shah, meaning "king".-History:...
of Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, Gamal Abdul Nasser of revolutionary Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
, Crown Prince Faisal of Saudi Arabia, etc. Kern also maintained close relationships with the leading foreign policy actors in the Eisenhower Administration, notably Secretary of State John Foster Dulles
John Foster Dulles
John Foster Dulles served as U.S. Secretary of State under President Dwight D. Eisenhower from 1953 to 1959. He was a significant figure in the early Cold War era, advocating an aggressive stance against communism throughout the world...
and his brother, CIA Director Allen Dulles, forging a long relationship with U.S. intelligence, both in Washington and in the Agency’s foreign “stations.”
Nathaniel Kern
Nathaniel Kern
Nathaniel Kern, also known as Nat Kern, is President of Foreign Reports Inc., a consulting firm founded in 1956 to provide political reporting and analysis for the oil industry. He has been with the firm since 1972, becoming Vice President in 1975 and President in 1990...
(also Nat Kern) joined his father at Foreign Reports in 1972 after graduating from Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....
and attending the University of Riyadh from 1970-71 as the first non-Arab student. By the time he graduated and joined the firm, rumblings of the first full-scale “energy crisis
Energy crisis
An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...
” had begun and the role of Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
on the world scene began to be transformed.
Within two years of Nat's joining the firm, the world of oil and the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
had changed dramatically, with prices skyrocketing and the volumes of crude oil being produced in Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
growing steadily. The firm’s business branched out from providing political reporting on oil in the Middle East into also providing business development assistance to firms wishing to break into new markets in the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
, primarily, though not exclusively, in Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
. The main areas the firm concentrated in were competitive bidding opportunities in the power and desalination
Desalination
Desalination, desalinization, or desalinisation refers to any of several processes that remove some amount of salt and other minerals from saline water...
markets. This required an understanding of the technologies, engineering and procurement issues inherent in complex projects, and Foreign Reports brought on board the necessary skilled individuals in these areas.
Nat Kern was a frequent visitor to Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
during the 1980-1988 Iran-Iraq war
Iran-Iraq War
The Iran–Iraq War was an armed conflict between the armed forces of Iraq and Iran, lasting from September 1980 to August 1988, making it the longest conventional war of the twentieth century...
, at a time when U.S.-Iraqi relations were improving, and was tasked by the U.S. government with maintaining ties with certain key Iraqi officials from 1991 onwards, at a time when the U.S. government maintained a policy of shunning any official contact with the Iraqi government.
Changing Realities of the Oil Market
By the early 1980s, the nature of the world oil business began to change in a number of different ways, all of which affected how Foreign Reports would be able to continue to provide services to its client base. The major international oil companies were gradually losing their equity ownership of Middle East oil production and many needed to forge different kinds of relationships with producing governments. In addition, a new class of players in the oil market was gradually emerging as interest and liquidity grew in the futures market. World oil prices had been practically a secret in the early days of Foreign Reports and had been remarkably stable in general during the firm’s first 16 years, but it would be another ten years before price volatility would become a major reason for the firm to develop another service for its clients.OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
did not institute its first quotas until 1982, just as crude oil prices were beginning to come under downward pressure in the market. When prices did eventually start to crash in late November 1985, no other reporting service in the industry had so closely chronicled how that crash would materialize as Foreign Reports had done. The firm had watched intensely how then Saudi Petroleum Minister Ahmed Zaki Yamani
Ahmed Zaki Yamani
Ahmed Zaki Yamani is a Saudi Arabian politician who was Minister of Oil and Mineral Resources from 1962 until 1986 for his country, and a minister in OPEC for 25 years....
had wrestled over new ways to price Saudi Arabia’s oil as he cruised the Mediterranean on his yacht during August 1985. Foreign Reports was the first to report that Yamani, just before that Labor Day, had got off his yacht and signed “net-back pricing deals” with his main international customers. These deals that would cut all previous supports for crude oil prices and lead prices from the high $20s to the single digits within nine months. Incredibly, in those early days of the NYMEX, futures prices did not start to decline until the day after Thanksgiving.
As the pace and sophistication of NYMEX trading has accelerated greatly since those days, and as access to the incredible amounts of information over the internet has exploded, the services that Foreign Reports has offered have also changed, while still staying with time-tested methods: follow the narrative; know the actors; know their characters; understand the rules; understand cultures and histories; pay ever increasing attention to separating the wheat from the chaff in an information-laden age; and communicate concisely and clearly.
Current work
Foreign Reports continues to report on political developments that are highly relevant to oil markets, crude oil price formation, and related macroeconomic variables. It closely monitors and reports on the political and economic situations in places such as: IraqIraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
, Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
, Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
, and Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
. The firm also reports on OPEC politics and examines what oil production decisions might be looming in the near future. Executive
Executive (government)
Executive branch of Government is the part of government that has sole authority and responsibility for the daily administration of the state bureaucracy. The division of power into separate branches of government is central to the idea of the separation of powers.In many countries, the term...
and legislative activities in the U.S. which affect world oil markets are also often reported on.
- Iraq: Many of the world's major oil companies currently rely on Foreign Reports for their understanding of Iraq's political events, the status of its oil industry, and the broad trends which appear to be shaping the future of the country. With the security situation in Iraq not yet suitable for international oil companies to have much of a physical presence there, and because Western news agencies have a limited number of journalists stationed throughout the country, many energy companies, governments, and financial institutions rely extensively on the political reporting and analysis done by Foreign Reports.
- Iran: The political and economic events in Iran are often discussed, yet rarely understood. Foreign Reports has shown an ability to look beyond the bluster and bombast coming out of Iran, in an attempt to understand what is really making things work in its domestic and international affairs. Recent reports have analyzed President Ahmadinejad's unique economic policies; Iranian involvement in Iraq; the effects of sanctionsInternational sanctionsInternational sanctions are actions taken by countries against others for political reasons, either unilaterally or multilaterally.There are several types of sanctions....
and the trajectory of the nuclearNuclear energyNuclear energy usually means the part of the energy of an atomic nucleus, which can be released by fusion or fission or radioactive decay.Nuclear energy also may refer to:*Nuclear binding energy, the energy required to split a nucleus of an atom....
file; the Iranian risk premium; Iran's winter gas crisis; and Iran's inability to sell the heavy sour crude from its NowruzNowruzNowrūz is the name of the Iranian New Year in Iranian calendars and the corresponding traditional celebrations. Nowruz is also widely referred to as the Persian New Year....
and Soroush fields.
- Saudi Arabia: With extensive experience and contacts in Saudi ArabiaSaudi ArabiaThe Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
, Foreign Reports is able to report with confidence on the country with the largest oil reservesOil reservesThe total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...
, highest level of oil production, and the highest spare production capacity. Political and economic decisions made by the KingdomMonarchyA monarchy is a form of government in which the office of head of state is usually held until death or abdication and is often hereditary and includes a royal house. In some cases, the monarch is elected...
are critical to world oil markets, and Foreign Reports closely follows these developments. Recent reports have analyzed Saudi oil policies; the Saudi viewpoint on oil prices; the development of the 500,000 b/d project soon to be brought online from the Kingdom's Khursaniyah field; and the 1.2 million b/d project at the Khurais field expected to be brought online in June 2009.
External links
- Foreign Reports Inc. Homepage
- Middle East Policy Council: Saudi-U.S. Relations
- Scarborough Country: MSNBC Transcript
- CSIS Report: “Saudi Arabia’s Upstream and Downstream Expansion Plans for the Next Decade: A Saudi Perspective,” By: Nathaniel Kern and Nawaf Obeid