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Are we worried yet? Or more on Gazprom etc.
Posted by Heading Out on April 17, 2006 - 10:52pm
Lest anyone think that I am alone in a concern on the increasing hold that Gazprom is taking over not only the supply, but also the distribution networks for natural gas, there come a Moscow Times article, itself quoting a Financial Times article, on the subject. More particularly
British Trade and Industry Minister Alan Johnson had eight meetings this year on how to block a potential takeover of British utility Centrica, the country's biggest gas supplier, by Gazprom, the Financial Times said on Monday.. Doubts about the reliability of Russian supplies are now also arising in Korea who had been hoping to get some of the supply that would be coming to China from Russia through new pipelines. But:
... after three years of a stalemate on plans to open up the huge Kovykta gas field, South Korea, which depends on imported LNG for almost 13 percent of its energy needs, is unwilling to hinge its energy security on a Russian vow.
The need for long-term contracts, which Dave and Chris have commented on before, is now becoming increasingly evident to the Koreans, who had, until now planned on working through the spot market until the pipeline from Kovykta was built, expensive though that option has been. Since the pipeline is now not expected before 2015, the Koreans are having to rethink.
Given the typical five-year lead time required to secure long-term LNG contracts, KOGAS must decide soon if it hopes to secure any new supplies before 2012. "South Korean gas demand is increasing fast, so if they just keep waiting for pipeline gas and if they do not sign new LNG contracts, they will lose LNG supplies to other countries," said the analyst. South Korea has long-term contracts with suppliers such as Qatar, Malaysia and Indonesia due to end within two years.And in case you miss the point:
"Russia has used gas as a political weapon to put pressure on other members of the former Soviet Union," an official at South Korea's Energy Ministry said in an interview. "We have to prepare for such a case."Just, perhaps as Belarus is having to plan now, since it has until the end of the month to propose some alternative to Gazprom that will otherwise see them paying European prices for gas by next year. As the article notes, however, and as has been commented on earlier
Many analysts interpreted the move as a ploy by Moscow to acquire control over Belarusian pipeline operator Beltransgaz, which transports Russian gas to lucrative Western markets.So it seems there may be some reason for concern in the UK, which, after all, has now had to start importing more gas, and as Forbes notes
The U.K. is the most liberalized of the EU energy markets, the spokesman pointed out, adding that the British government was "comfortable with EU companies taking stakes in our energy companies". Comfortable with Gazprom though? "It would need to be looked at properly by the competition authorities," he repeated. "I'm not differentiating here."The Chinese are, of course, not putting all their eggs in one basket, and have just launched the largest drilling platform in Asia. It is going to be barged out to the Panyu gas field , where drilling is going to start in September. Once this, and the adjacent Huizhou fields are developed the gas will be fed, by a 225-mile pipeline, to Guangdong, at the rate of around 1.6 bcm per year. Chinese gas production from offshore is thus bound to increase, although the story that they are also producing from the Chunxiao field is of concern to the Japanese since the field lies in disputed territory. (Rigzone has a map here) Perhaps this behavior is not surprising since, as Alexander's noted
Business Week characterized CNOOC as "the most ambitious Chinese player in the oil patch." In its 2004 annual report, CNOOC reported net reserves in China of 1.354 bn bbl oil and 4.325 tcf natural gas.The banning of shipping from the area cannot, however, be taken as a good sign.
Five field areas currently produce in the eastern part of the South China Sea: Huizhou, Xijiang, Liuhua, Lufeng, and Panyu. CNOOC reports net reserves of about 290 mm boe, including 1 68 mm bbl oil and 73 1 bn cf natural gas for the eastern South China Sea fields as of Dec. 31, 2004. Genting oil & GQS China Ltd. drilled the ZG:1OG-I well in the Zhuangxi Buried Hill oil field with this land rig in Shandong Province, near Bohai Bay.
And it should also be noted, looking down the road, that Aramco have signed contracts to increase production at Shaybah (their field in the Empty Quarter) by 250,000 bd in 2008. The oil is of high quality
Shaybah field, discovered in 1968 and brought on stream in 1998, is 13 km wide and 64 km long. The field produces 42º gravity Arab Extra Light crude oil from Shuaiba pay at an average depth of 4,650 ft. The crude is virtually sulfur-free and high in its gasoline fraction (OGJ, Apr. 5, 2004, p. 18).If we could only have confidence that this would do more than hold depletion to 2% a year. They have also discovered a new gas field. It is, however, the level of drilling intensity in the Middle East that is driving up the price of drilling rigs, as commented on by Elizaphanian, who drew our attention to the fact that BP are having to pay treble the current rate to a new level of $520,000 a day to retain a drillship in the GOMEX. Hope it is successful!
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—Theodore Roosevelt
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MSN has a web piece that mentions Peak oil.
http://moneycentral.msn.com/content/P148489.asp
there will be a gap between the end of oil and a conversion to less destructive forms of energy. In this gap, all hell may break loose.
From Gazprom CEO Alexei Miller met with Iranian Ambassador to Russia.
And here's AlexeyGazprom CEO Alexey Miller
Sibneft to change name to Gazpromneft in May - Gazprom CEO
Gazprom here, there and everywhere, corrupt and an unreliable supplier. My God, it's everywhere you look! Eni CEO says no deal yet with Russia's Gazprom. I could go on and on and on....What does "neft" mean in Russian anyway? Why does it strike me that it rhymes with "theft"?
I think if I was Russia, I would try to hold onto the resources as long as possible and would only sell when necessary to honor existing contracts.
Also Russia is rapidly approaching the second peak of production for oil. What will this mean in terms of their own needs for their gas?
Well, given that the previous deal fell through, shouldn't sensible businessmen negotiate more thoroughfully this time? Why should anyone be worried about this due diligence?
And BTW, 'neft' is 'oil' in Russian. It doesn't rhyme with 'theft', which is 'vorovstvo' in Russian. Anyone could go on and find an infinite number of interesting rhymes across dissimilar languages, but is it really necessary to put these shades of racism into writing?
Racism? Give me a break.
Is it racism is if criticize ExxonMobil? Or Gazprom? These are corporations. Since Russia holds 1/4 of the world's natural gas reserves, they are engaged in monopolistic practices and pressuring many countries who need the gas or would like to sell their own gas, as in the FSU.
Exactly. But 'neft' is a word. From a language. Which is spoken by people. And jokes about peoples are best left to the peoples themselves - not to the others.
Anyway, break given :-)
I am sometimes equally harsh in my views and remarks about IOCs like BP, ExxonMobil, etc. and state-owned NOCs like SaudiAramco. Gazprom is now very powerful and with power comes corruption. As for the West's "record of dirty dealing", I take that as a given.
It is never valid to make the argument that somebody (in this case Gazprom) is OK because others are worse.
On a related note, you might read Reheating the Cold War by M K Bhadrakumar from the Asian Times, one of my favorite sources.
And there is much more. So, our current beloved administration and their neocon minions have decided to take a hostile position in regard to Russia's policies (and of course, their energy practices). This is exactly the opposite of what US policy should be--which should be cooperation and diplomacy.But underlying some of these comments in this thread is the idea that I have something against the Russians. Nothing could be further from the truth. Moreover, I actually did a post on Russia in which I tried to do a detailed objective examination of their oil reserves and future capacity.
Finally, I realize that Putin is very popular in Russia and if that is the way they want to run their government, it's fine with me. My only concern with them is that their internal energy policies may be misguided.
best, Dave
I think you are doing a great job. But your one of the Big Beasts, and I think you can shrug off a little criticism now and then, no? Here on TOD we all seem to be on the same side, sort of, and contrary positions and perspectives only keep us all on our toes so to speak.
Yes, I'm an Excitable Boy as Warren Zevon wrote (now deceased, unfortunately).
Shrug off? When somebody implies you are "racist" or anti-Russian for criticizing Gazprom? Yes, I need a thicker skin. Just having a tough time in my life write now. Psychological defences are down or non-existent. But, thanks for you advice, writerman. Sometimes I disagree with you (ie. genocide) but you've made some brilliant comments, especially on the post I did recently on Iran. I appreciate your input.
best, Dave
My brain and my hands often seem to exists in different time-zones when I'm typing too.
Regime change in Russia does seem to be on the agenda further down the line.
That's when we've finished democratizing the Middle East, have won the Long War on Terror, established a friendly government in Venezuela and contained the historic challange of a resurgent China! We are certainly going to be busy 'ruling the world' in the coming years.
I have a speculative flight of fancy about how American politics may develop in the future. I believe we may see a split between the 'Merchants' and the 'Militarists' across party lines.
In relation to Iran, another strange thing happened yesterday, which I'm having some trouble with, because it seems weired, and has made be question my memory.
I was looking at the BBC's website yesterday and noticed a very interesting lead piece containing a reference to a journalist's direct question to Bush about plans to use nuclear weapons against Iran. According to the BBC piece Bush once again did not use this opportunity, when asked directly about the nuclear weapons option, to catagorically deny that the United States would ever use nukes against a non-nuclear power. Instead, Bush replied that all options, including the use of force, are still 'on the table' to prevent Iran from developing nuclear weapons. However, he insisted the US was trying to resolve the issue diplomatically.
Now, this is a very clear answer to a very clear question from Bush. He's saying, 'No, we have not ruled out using nuclear weapons against Iran.' It's also a really big strategic and moral shift in American military policy, away from the stance of vowing not to use nuclear weapons against non-nuclear countries. The question arises, should a responsible President use this kind of forum to announce such important changes in American nuclear policy? Is Bush aware of the seriousness of these kinds of 'reckless' statements in the current climate? Does Bush know what the hell he is talking about? Should one talk about nuclear weapons like this at all?
I thought this was an interesting piece, especially on the BBC, which has a tendancy to 'smooth things over' in relation to Bush. So today I went back for a quick look at the piece, as other sources had picked up on 'Bush refuses to rule out nuclear strike on Iran.' Well, strangely, the BBC story had been changed when I looked this morning! The reference to the direct question about the use of nukes on Iran had been carefully removed. The rest of the piece was the same as yesterday though.
I'm not sure how much one should read into something like this. I think one could see this as a kind of 'censorhip' of a statement which is rightly regarded as being beyond the pale. I did think that it might interest you though.
In my ideal world Warren Zevon would sell as many records as Bruce Springsteen.
Smil writes that the Haber-Bosch process for synthesizing ammonia is responsible for 40% of our population size and 40% of the human dietary protein supply worldwide and that low income countries consume two-thirds of the world's nitrogen fertilizers. He writes that 7% of the annual production of natural gas would be required to fix fertilizer nitrogen if it were both the input source of hydrogen and the energy source for the process and that it takes as much energy per ton as steel.
He also wrote that the world had abundant natural gas resources that were 1.1 to 1.7 times as large as that already extracted or in proven reserves, "additional natural gas resources are conservatively estimated to total another 200-300 (years)" and that, devoid of gas, coal or biomass could be used instead as more costly input sources. Thus he saw no cause for concern when he wrote the paper.
What is interesting is the British and Italian concerns - both countries noted for their steadfast devotion to ensuring Iraq's energy supplies would be available for their use. As noted before, military activity tends to be a poor way to extract natural resources.
And in this context, it would be interesting to see who is supplying Russia the necessary infrastructure - in other words, those people with something to offer the Russians seem less concerned than those that don't. I guess because threatening the Russians with military action just seems so futile.
Not that anyone is thrilled by dealing with the Russians - it is a pretty difficult environment by any measure. The person I knew in the fertilizer business in the mid-90s used to talk about how entire trains would 'appear' and 'disappear' - and how he was generally better, as a German-Russian with lots of dollars on hand, at having them appear at his loading facility, regardless of where they should have been. The concept is amazing, when you actually think about it - a rail system is not comparable to trucks on a highway.
Nah, can't be.
As for fertilizer - that seems to be a much more interesting question, with the poorest nations using the most (whether surprisingly or not is open). I have actually put a bit away (maybe 20 kilos - a trivial amount for a nitrogen fix), but until now, the composting has worked just fine.
A quick preview we saw this winter with Ukraine. Wonder what will it look like in the winters to come.
I don't really have a country, a language, or a home anymore, and my 'cultural history' is complicated and spread over Europe. I don't have a flag and I don't want one - unless it's black. So 'patriotism' means nothing to me and I feel loyalty to no place or people, apart from a vague dream relating to something called 'Europe.' I also have sympathy for 'anarchism', a label which I denied for years, prefering something more 'realistic'. Now, I fear the time of 'realism' is coming to an end. I'm also sceptical about both 'capitalist' and 'socialist' economic theories and practices. The Market should be our slave or servant, never our master. Therefore I feel pretty 'neutral' or 'outside' a lot of 'conflicts' one sees around us. I instinctively distrust all organised state power and I suppose I see society as a kind of 'open prison' designed to perpetuate the rule of an elite over the masses. 'Democracy' has become a kind of 'theatre of the absurd.' I fear I may even believe that 'propery is theft' in my heart of hearts. I imagine, given how I earn my living and what I do with my time, that I may be guilty of being a detached, privileged, 'aristocratic' observer of a deeply flawed world. I think I could easily take on the mantle of being a 'neo-con', only the Fascist, totalitarian and authoritarian aspects of their version of 'anarchy' would stike in my craw.
Being a wandering outsider does have some advantages though. One has no Boss and falling under the spell of 'slavery' at my age, is no longer a realistic option. I have the economic means to say and think whatever I like, and I'm too old to stop now. I've also got a deep distrust of centralised state power and the political class, who appear to be both corupt, liars and increasingly act like criminals. This is the 'Mafia' theory of the State!
It strikes me that the future may really be the past.
I think we will return to an older model for international relations, let's call it 'raw imperialism' or 'imperialism with a human face.' Of course it'll be tarted up in nice clothes and fancy words and concepts, and it's such a burden for us dealing with world hunger and failed states... but it'll be the same old the use 'imperialism' just refind and re-branded. The Spanish Empire carried the Bible in one hand and the sword in the other. Blood and sermons were their primary weapons. They had faith/ideology and they had the words best army. What a winning combination. This is what Rumsfeld dreams of immitating. With a few thousand modern Conquistadores one could rule the world! They destroyed South America in order to save souls and also paid themselves handsomely in the process. We're returning to the age of hypocracy, self-delusion, ultra-violence and imperialist 'robbery.' What seems to characterise Westerners, is our ability to develop sophisticated and infinitely flexable ideologies and theories that justify our historic and actual crimes. It's perfectly understandable, though not particularly sympathetic. We do bad things in order to bring good.
I think we are seeing the start of a 'chill' developing between the 'West' and Russia. This could develop into something worse - a 'cold war.'
I don't have a crystal ball so I don't know for certain. Western Europe is going to become increasingly reliant on Russian gas and oil, that seems rather obvious. What does this mean for our future relations? Therefore it's in our interests to establish cordial, friendly, relations with the Russian government. A relationship based on mutually advantageous and stable energy supply relationships.
However, we do seem to want to criticise the Russians, at the same time as we want their oil and gas. Is this reasobable or even wise? Clearly we in the West prefer a weak and subservient Russia, this period would appear to be definitively over, a we find this both threatening, irritating and ominous.
Also Russia is increasingly adopting an independent foreign policy and developing relations with various counries based on what's best for Russian interests, which may or may not coincide with Western interests or policies.
This shouldn't surprise us and doesn't necessarilly need to concern us too much as long as we maintain friendly relations with Russia, but will we do that?
The problem may be that Western Europe is becoming increasingly reliant on Russia and begin to prioritize its relationship to Russia relatively higher than its relationship to the United States. This is a 'normal' development, especially as the European 'street' is increasingly critical and alienated from US policies on whole range of issues. One could desribe this as a potentially historic re-orientation of Europe in an Eastern direction, but perhaps one shouldn't read too much into this.
However, I do believe that Washington is very concerned about this development and how specifically one 'discourages' it. I believe we'd prefer to see Russia as a weak supplier of raw materials, but not as an industrial and political rival. We don't want Russia as a world power again. The problem is, most Russians appear to want to make Russia strong again. This is only natural, what country would choose to be weak? It does seem that we are going to increasingly come into 'conflict' with Russia because our geopolitical interests are diverging. We are heading perhaps down different historical paths?
It would be relatively easy for us in the West to begin a campaign of criticism of aspects of Russia's internal affairs and their foreign policy, when these areas clash we our interests, but is this wise or sensible? Personally I think there are forces in the United States that want 'conflict' with both Russia and China, but at the moment we're 'occupied' in other areas.
Fake Elections: Yes and Yes
Constitution Ignored: Yes and Yes
Controlled Media: Yes and Yes
Rubber Stamp Legislature: Yes and Yes
Puppet Court System: Yes and Yes
Crony Capitalism/Oligarchy of Kleptocrats: Yes and Yes
Sponsor of false flag terrorism: Yes and Yes
Spies on own people: Yes and Yes
So far it is a dead heat between two rotten to the core systems, but wait:
*Over 2 million of their own people in prison: that would be the US
*Used WMD (thousands of tons of DU dirty bombs) in 4 recent wars (Iraq-1991, Yugoslavia, Afghanistan, Iraq-2003): yep, good old Uncle Sam
*kidnapped innocent citizens from Canada and Germany: USA, USA!
*advocates and practices torture: Ms. American Pie
*big time user of capital punishment: America the Beautiful
*wages "pre-emptive" war: Captain America
There you have it. For the last 15 years, it is clearly the US that is the rogue bull loose in the world. Modern Russia is merely an average nation with a thin pretense of democracy, run by a self interested ruling clique. I am not particularly afraid of Russia (or China or Iran) but the US really scares me.
I am proud that a NZ Navy frigate participated in exercises with Russia.
I agree with your assessment and I live in the U.S. Thanks for putting it in print. There are many people in the U.S. who agree but have been shouted down by the extreme right whenever they raise the point. Having friends tell you, "you have a problem" usually gets more results than having your enemies label you the same way.
And in the face of a global energy crunch do you supply energy to your friends and allies or to those whom you fear and loath?
Does your answer remain the same if the proposed buyer is known to be using a debased fiat currency as a means of payment?
Does your answer remain the same if by not supplying a buyer you have the opportunity to diminish that buyers potential to act as a rogue state in the global system?
it is a lot a difference between how politics is done in Russia and in the US, between the rights and liberties of the citizens in USA and Russia.
the difference is clearer when you look at countries in Eastern Europe dominated by Russians and the Western Europe under American protection/influence. Today's Russia is different in many ways from the old USSR, but in more ways is still the same. look at the way Russia is asserting his influence in the ex-sovietic space : Moldova, Ukraine, Georgia and hope everybody knows how gentle they "pacified" Chechnya.
I don't think USA under Bush's Administration has done a good job at listening and acknowledging other countries concerns but world under "Pax Americana" is a better place that the parts of the world formerly and currently under Soviet/Russian boot.
on the topic: Russia ( and Gazprom is very much equal with Kremlin) is behaving this way istorically. blackmailing small ex-comunist or ex-sovietic countries with energy ( oil, gas, electricity) is an old habit for Kremlin's nomenclature, maybe the Westerners did not know it until the last winter.
Western goverments ( and the same way Korean, chinese, etc) should be cautious and I think will be foolish for any country to rely on Russia for energy. of course world should do business with the Russians, but always be on the watch for their foul play.
This is a common thing for modern countries without significant fossil fuel reserves.
Yes we live in interesting times..