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The new gas war

by Jerome a Paris Sun Apr 30th, 2006 at 08:50:22 AM EST

No, probably not the one you were thinking about...

I have in mind the recent war of words between Europe, led by Tony Blair, and Russia about natural gas. Recent news suggest that this new kind of cold war has now expanded to include the Bush administration on the side of Blair and Iran on the side of Russia.

In the current context of tensions with Iran on the nuclear front, I find this very worrying, and absolutely irresponsible form our leaders in Europe and now the US.


The episodes so far:

  • Russia temporarily cut gas to Ukraine in January to get higher prices on the gas it delivered to that country. Even though Russia reestablished gas as soon as the Western countries complained (because Ukraine siphoned off some gas fro m Europe-bound exports going through its territory), and thus signalled that its priority would always be the reliability of its supplies, this was seen in the West as Russia flexing its "gas weapon" (see Russian-Ukrainian gas deal - what's behind it? (Jan. 4));

  • the UK is running out of natural gas faster than expected, as North Sea production is now in rapid decline. This has created, in the absence of available alternatives (and also due to an accident as a storage facility) some brutal natural gas price spikes (up to the equivalent of 240$/bl of oil equivalent - see Countdown to 100$ oil (22) - gas shortages in the UK - 240$/boe), and panic within the Blair government, worried that it would be blamed for its lack of foresight. (see EU Energy reform = give Britain access to the continent's cheap spare capacity);

  • Blair tried to put the blame on "European protectionism" and companies from France, Belgium or elsewhere supposedly hoarding the gas for nationalistic reasons rather than selling it to the UK at higher prices. He called for further deregulation, and for European authorities to crack down on the evil continental protectionists (when it is actually European energy liberalisation that forbids gas deliveries to the UK!

  • at the same time, it suggested creating a single European negotiator to get a better deal with the Russian monopoly exporter, while encouraging longstanding EU efforts to get Russia to open up its pipeline network to Western companies (see The marketistas want to break Gazprom);

  • Blair's hypocrisy was revealed in all its splendor when it turned out that the UK government had actually tried to block the takeover of Centrica, a UK gas distributor, by Gazprom, for purely nationalistic reasons (see A European government caught being protectionist);

  • Gazprom, miffed by these revelations, and already annoyed by the atmosphere of hostility against them, and the calls for diversification away from Russian gas, started saying that it should also start diversifying away from European clients and find new ones in the USA (via LNG) or in China (via new pipelines) (see UK protectionism threatens European gas supplies);

  • the English press started publishing hysterical studies about Europe running out of gas and increasingly dependent on unreliable and increasingly dictatorial Russia, about Putin wielding the energy weapon against the clueless Europeans, and, again, the need to diversify away from Russian gas (not, mind you, by actually using less gas, but by finding it elsewhere, like the Caspian or Iran);

Iran, did you say Iran? Oops.

And this brings us to the stories of this week-end:


EU meeting 'persuaded Putin to sign Chinese gas deal' (Financial Times, 29 April)

A meeting between Vladimir Putin and Jose Manuel Barroso, European Commission president, had been a "final straw" in persuading the Russian president to sign a big gas deal with China, Gazprom's chief executive told European ambassadors last week

Alexei Miller said Mr Putin had been "taken aback" by what he understood as suggestions from Mr Barroso that the European Union wanted to keep Gazprom's share of the EU gas market within certain limits, and might use competition policy tools to do so.

The two presidents' Moscow meeting on March 17 helped confirm Mr Putin's decision to conclude a long-stalled framework agreement to supply gas to China when he visited Beijing five days later, Mr Miller added.

Mr Miller had lunch with EU ambassadors and diplomats in Moscow 11 days ago. The lunch spawned a Gazprom press release in which Mr Miller warned that the Russian gas monopoly might shift the focus of its expansion to North America and China if its European growth plans were blocked.

One diplomat and another person familiar with events at the lunch said that Mr Miller devoted only a small part of his 90-minute talk to the warning. Many comments aimed to reassure ambassadors that Gazprom would be a reliable supplier, these people said.

They added that the Gazprom chief did not criticise individual states. Mr Miller's warning had been interpreted in part as a response to moves by countries such as France to protect national energy champions, and reports that the UK had examined ways of blocking a mooted Gazprom bid for Centrica, the biggest UK gas supplier. Tony Blair, the UK prime minister, later signalled that his government would not attempt such action.

A couple of points:

  • Barroso is Blair's pal at the EU, so anything he does or says these days can safely be assumed to be agreed with Blair;

  • the attempt to blame French protectionism here is particularly cheeky, as Gazprom's reactions have been very directly triggered by UK decisions regarding Centrica, and Barroso declarations regarding Russia's "need" to open its gas pipelines versus Europe's legitimate reasons not to open its downstream gas distribution markets to Gazprom. France has had the same confrontational policy viz. Gazprom for the past 30 years and nothing has changed there - and the two countries trade gas nevertheless in a very stable relationship, because there are no hidden expectations.

  • the "contract" with China is far from being a contract yet. It's yet another declaration of intent. A gas contract and, more importantly, a pipeline are still far off as the Chinese are not willing to commit to the volumes of gas and prices required to finance such a pipeline. (see A pipeline is like a marriage with kids (Dec. 16))

And now we bring the US and Iran in the game...


US seeks to limit Gazprom hold on Europe (Financial Times, 29 April)

The Bush administration is seeking to curb Moscow's influence in the Caucasus and central Asia and weaken Gazprom's growing hold over gas supplies to Europe with an effort to promote new oil and gas corridors that would bypass Russia and exclude Iran.

US intentions were highlighted on Friday when President George W. Bush welcomed President Ilham Aliyev of Azerbaijan to the White House, stressing the importance of their security and energy relationship.

Next week's visit to Kazakhstan by Dick Cheney, the vice president, is further evidence that the US wants to shore up ties with key partners in central Asia, having lost access to a major military base in Uzbekistan last year. The vice president will use the visit to press for closer energy ties between Kazakhstan and Europe.

Currently, BP is building a gas pipeline from Azerbaijan to Turkey (in addition, and in parallel, to the BTC, an oil pipeline), which will create a potential new route for gas to Europe, as there are serious talks under way (project Nabucco) to build a new gas pipeline from Turkey to Austria. Thus, natural gas from neither Russia nor Iran could be - and will indeed be - provided to Western Europe (but in fairly small volumes to start with).


But analysts are concerned that an overall hardening of US policy towards Moscow could drive Russia and Iran, which together hold nearly half the world's gas reserves, into an energy-based alliance.

A senior financier told the Financial Times that Iran, which is competing with Gazprom to provide gas to the Caucasus, was considering a switch in policy by selling its gas to Russia through central Asia because the US was blocking its access to Europe and India.

Two things here:

  • Iran has been unable to negotiate any gas deals because it has not yet accepted the contractual requisites to build a full gas "chain", and has only itself to blame for failing to develop export markets, whether by pipeline or by LNG. So its declarations of intent here have to be taken with a grain of salt here, because they have so obviously failed to deliver on their previous announcements (and I know, I went several times to Tehran in 1998-2000 when they had big LNG plans - which they have so far completely failed to take anywhere. It would have been easy to finance and build, but they refused the structures that are required in that business);

  • it is nevertheless interesting that Iran and Russia make such public noises of cooperation in that sector, even if they don't actually deliver on them. It works to create a frenzy in our gullible media, and it feeds into our politicians who can act tough and manly to take care of our "energy security". But it creates a vicious circle: if we believe these announcements, and start making our own to "protect" ourselves, we make it more likely that these things will actually happen.


Lack of investment by Gazprom, which supplies Europe with about a quarter of its gas, means that Russia will be increasingly reliant on buying gas from central Asia or Iran to help meet its subsidised domestic needs and export commitments. Cliff Kupchan, analyst with the Eurasia Group consultancy, said he had a different understanding: that Russia and Iran would co-ordinate their gas export policies, with Moscow selling to the west and Iran to the east.

The first sentence is something I disagree profoundly with. Gazprom has no shortage of gas; it is not producing more because it has no market for more gas today. Any additional gas it produces today would be delivered at cheap fixed tariffs on the domestic market because Gazprom already exports all the Europe will take. It is busy building new export routes (the pipeline under the Baltic Sea to Germany) to increase capacity and future deliveries, and it will increase production then to fulfill its commitments. Similarly, it needs to develop contracts with China to build the pipeline before it makes sense for it to increase production.

The second sentence, about sharing the market, might make sense if the Russian-Iranian alliance does gel. But that means that we will have pushed them in each others' arms because the two countries, as the holders of the biggest gas reserves, are structurally competitors for export markets. That would a terrible outcome for us, but one that our clueless and "tough" politicians seem intent to achieve in record time.


The stage is set for a bidding war between Russia, China and western energy companies over central Asian oil and gas.

Deals are proceeding at a bewildering speed. Turkmenistan signed a framework deal in Beijing this month to sell gas to China, while Nursultan Nazarbayev, Kazakhstan president, visited Moscow for an agreement to double the capacity of a major oil pipeline for exports to Russia.

But the US wants Kazakhstan to look in a different direction, with officials outlining their desire to see a gas pipeline from Kazakhstan's Kashagan field across the Caspian, linking with Azerbaijan's Shah Deniz field and then heading west to Europe via Georgia rather than north through Russia.

Remember that, in the gas business, there are lots more announcements than actual transactions. The above sentence, as all too often in the press, mixes oil and gas together although they are almost totally separate businesses. Kashagan is mostly an oil field. There is a gas field not too far away, called Karachaganak, developed by BG, Agip and Chevron, which would need a gas export route and might benefit from exports via Azerbaijan. But it's silly to mix the two. (see Caspian Oil - a Sunday Special for more background on the main Caspian oil&gas fields).

As I have posted in this diary (Pipeline economics - why the Afghan pipeline will NOT be built), no gas pipeline form Turkmenistan will be built for a long, long time because it makes no sense whatsoever to do so, while an existing, and mostly empty pipeline going to Russia already exisitng and allowing Russia to undercut any potential other buyer of Turkmen gas, which would need to pay for a new several-billion-dollar pipeline in addition to paying for the gas, and thus could not compete wiht the Russian price for the gas).

So most of these announcements are just fluff. (If you do not believe me, just google "PSG", a pipeline project form Turkmenistan to Turkey that was long pushed by the US in the late 90s against the Russian Blue Stream. Anyone knowing the business knew that one would be built (and indeed it was), and another would not (and indeed it wasn't) and yet for years the press was full of stories about the PSG being the future and the Blue Stream being a pie-in-the sky dream. Please trust me over breathless announcements in the press on this. It's my job.

What I see so far is an ugly war of words waged in public with little regard for the underlying (and complex) reality of the gas business. This might be mostly harmless if we were not in a context of tensions with Iran on the nuclear front where Russia plays a vital role. Russia can play a useful role in the negotiations with Iran, but if it gets pushed into the Iranian side because of the hostility and hypocrisy it sees from the West on the gas front, we'll have lost yet another occasion to find a peaceful accomodation with Iran.

Display:
and link to dKos crosspost: http://www.dailykos.com/story/2006/4/30/85058/8481.

Noter to Migeru and others: this "statistical tip jar" is just to know that you read the story, found it interesting, and would like to read more on such topics in the future. It's just a way to know if I bore you to death with all these pipeline/gas/oil stories or not.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 08:57:49 AM EST
Speaking for myself, I am interested in your views on energy, particularly as they relate to Gazprom, though I wonder how much concern there should be that Russia could "get pushed onto the Iranian side."

Hostililty and hypocrisy is something Russia is accustomed to seeing from the West. I do not see any substantive economic or political alliance between Russia and Iran, not when Iranian-backed Islamic extremists continue to meddle in Chechnya.


"When men yield up the privilege of thinking, the last shadow of liberty quits the horizon." Thomas Paine

by Noel Guinane (noel at bloodandtreasure.com) on Sun Apr 30th, 2006 at 10:57:22 AM EST
[ Parent ]
True, it's not an easy realtionship and, as I wrote, they are direct competitiors. But if we get Russia pissed so badly at us that they start talking about this, I do find it worrying. Of course there is certainly a lot of bluster in it, but as it seems to be in the interest of our media to believe that hype and make it even bigger, this could snowball badly, especially when underlying issues seem to be so badly misundersttod by everybody.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 02:17:16 PM EST
[ Parent ]
I'd like to understand why you find it worrying because it is possible I do not understand the situation so well.

From what I can tell, when Russia via Gazprom attempts to buy gas networks in Europe, it may legitimately claim a double standard when the Europeans block it, but the Europeans can lay claim to a similar discriminatory policy when Gazprom refuses to allow European firms to develop Russian gas fields, as it has done. Add to this Russia's recent attempt to shut off gas supplies to the Ukraine, using the "gas tap" as a pressure tactic, and the West's distrust of Russia seems justified.

I suspect Putin's position on Iran is not so benign. Even if it were, I do not think Russia's ability to broker a peaceful resolution is as strong as our media would have us believe.


"When men yield up the privilege of thinking, the last shadow of liberty quits the horizon." Thomas Paine

by Noel Guinane (noel at bloodandtreasure.com) on Sun Apr 30th, 2006 at 04:08:18 PM EST
[ Parent ]
(just like France) is not claiming that liberalizing is better, he's only fighting for what he perceives are the national interests of his country in a consistent fashion.

Those that call for liberalisation, and go protectionist when it's on their turf, are just hypocrites, and Putin is right to point that out, and I wish French authorities would point it out more explicitly more often.

Blair says, I'm a liberaliser, I'm fine with foreign companies buying British ones, and you should be fine with foreign companies buying yours. Putin says: I won't open my market, but if you open yours, why wouldn't I take advantage of it (after all, it's to your advantage)?

(At least the Economist is coherent about this - they have always said that opening up British markets and companies was a good thing per se, even if it was not reciprocated).

Putin is taking advantage of the situation, but he is not inconsistent. Blair is inconsistent and hypocritical

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 04:30:49 PM EST
[ Parent ]
Sorry: my first sentence should start with "Putin..."

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 04:58:04 PM EST
[ Parent ]
I agree with your assessment of Blair, but I cannot see Putin getting into bed with Ahmadinejad nor how Russia can play a useful role in the negotiations with Iran.

I think it is a misconception to think that peace can be achieved through trade. Nations trade with each other in the hopes of making money. If a nation has aggressive ambitions, it will use the money it makes to fund those ambitions. Trading relationships are never enough to restrain it from aggressively pursuing its ambitions. As Konrad Adenauer said: "Trade is trade."


"When men yield up the privilege of thinking, the last shadow of liberty quits the horizon." Thomas Paine

by Noel Guinane (noel at bloodandtreasure.com) on Sun Apr 30th, 2006 at 05:07:47 PM EST
[ Parent ]
I am definitely not saying that peace can be achieved through trade. What I am saying is that if we alienate Russia on the gas side for stupid reasons, we may pay it in the form of less cooperation on the nuclear file. They don't care about Iran per se; they do care how they can use the leverage they have there for other gains with the west, or conversely to punish the West for other aggression by withholding such leverage.

It's all about tradeoffs, and we're adding to the negaotve ledge for Russia - for what I see as totalyl stupid and needless reasons, as Russia has no need and no reason to go in a gas war with their only client.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 05:44:19 PM EST
[ Parent ]
I agree that it does not make sense to antagonize Russia, but am curious to know what cooperation Russia can provide when it comes to Iran and the nuclear file. Do you mean it could tell what weapons or parts of weapons Russian states have in the past clandestinely sold to Iran? Or that it could turn around and to spite the West suddenly sell it weapons grade uranium, running the risk that an Iranian nuclear or dirty bomb would be used against them, perhaps by Chechnyan terrorists?

I'd like a peaceful resolution to Iran and would like to know more about the leverage Russia has here.

"When men yield up the privilege of thinking, the last shadow of liberty quits the horizon." Thomas Paine

by Noel Guinane (noel at bloodandtreasure.com) on Sun Apr 30th, 2006 at 06:37:06 PM EST
[ Parent ]
It's just a way to know if I bore you to death with all these pipeline/gas/oil stories or not.

As a newcomer to ET, Jerome, let me tell you it is quite the oppposite. Ref this extract from today's Le Monde, an article by Eric Le Boucher :

Regardez simplement les événements depuis huit jours : les menaces s'accumulent - celle de l'Iran, celles non moins violentes de Poutine ; Chine et Etats-Unis causent seuls de l'avenir de la planète ; les organisations multilatérales prennent l'eau - le FMI s'interroge sur sa raison d'être, l'OMC va à l'échec ; l'Europe est au point mort ; le pétrole flambe ; l'euro regrimpe vers ses sommets. Mais la France ne voit rien, ne parle de rien, ne compte pour rien. Elle passe de la crise des banlieues à celle du CPE, du Clemenceau à l'affaire Clearstream.

"France sees nothing, talks about nothing, counts for nil. She goes from the suburbs crisis to that of the CPE, from the Clemenceau to the Clearstream affaire."

And he forgot those events which are shaping the future of our industry, right now, and which go almost totally unreported in our beloved media : Will someone tell me what is everyone's agenda in those very large manoeuvres between BA, EADS, Lagardère, Thalès ?

So, and this is valid for all those regular contributors to ET which I read with what sometimes amount to fascination - no, I will not name names - be they about technology, history, politics, economy : you will never ever bore anyone when you write eloquently about a subject you obviously master.

My 2 € cts...

by balbuz on Sun Apr 30th, 2006 at 11:06:54 AM EST
[ Parent ]
Le Boucher is the resident "reformist" in Le Monde. In recent times, he has been pushing relentlessly the story of France's decline, lack of "reform", rigidity, etc... It's become tiresome.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 02:18:41 PM EST
[ Parent ]
Thank you, Jerome. A very interesting read. The issue is very much on my "news agenda." For obvious reasons.

In a couple of days I'll be going home, where we do have the internet, but where this fact doesn't automatically mean more information.

Being "outside," I get to read a lot of alternative news on what is happening in Kazakhstan. When I'm "in," things I hear make me sick - they are so sugary and so not true (sometimes)...

Have a great summer. I'll try to visit every now and then. But with my work schedule...

A patriot must always be ready to defend his country against his government -- Edward Abbey

by serik berik (serik[dot]berik on Gmail) on Sun Apr 30th, 2006 at 11:28:21 AM EST
[ Parent ]
Pipe lines..pipelines.. ay migeru.

Well Jerome.. One question.

How much reserves does Russia have? How many years can they supply Europe and Russia at the present consumption level?

Gas normally has a very sharp inmediate decline.. so is there any guess about it? Could gas be the fuel of transition for cars if no gas is used for electric generation (we will leave nuclear, coal and wind for it)? This is, how many year of reserves has Russia has in terms of tep.. or in other way, can it supply 50% of the present European energy consumption in gasoline for twenty years?

Well a subject for your next great diary.....that we always love.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Apr 30th, 2006 at 12:13:13 PM EST
[ Parent ]
They have about 200 bboe of gas reserves, i.e. about as much as Saudi Arabia has of oil.

At current production levels, they have more than 60 years of production. Europe only gets 20% of that production. Even if production and exports increase to some extent, I seriously doubt that any energy crisis will be tirggered first by lack of gas from Russia.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 02:21:05 PM EST
[ Parent ]
This kind of information is priceless...you know it.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Apr 30th, 2006 at 06:09:45 PM EST
[ Parent ]
Go on with energy discussions, Jerôme, I'm interested.

Dealing with the future of gas, have you been looking into that kind of things, I think it's big:


Sasol Chevron Embarks on Unique South Africa to Qatar Challenge to Test GTL Fuel



The team has been challenged by Sasol Chevron to complete the 11,000 km
journey, across six countries in Africa and some of the toughest conditions on
the planet, in 46 days, arriving in Doha, Qatar by 5th June for the official
opening of the US$950 million ORYX GTL production facility.

.....

A joint venture between the state-owned petroleum company Qatar Petroleum
(51%) and Sasol (49%), ORYX GTL in Qatar is the first low-temperature  
Fischer-Tropsch GTL plant outside South Africa dedicated to the production of
new generation GTL diesel and the world's first commercial GTL facility. The
plant will use Sasol's proprietary Fischer-Tropsch technology. London-based
Sasol Chevron will market the high-quality, environmentally-friendly
GTL diesel worldwide later this year.

....

The ORYX GTL plant will scale up over the next few months to convert gas
from the North Field in the Gulf into 34,000 bpd of liquid hydrocarbons
(mainly GTL diesel). In conjunction with Sasol Chevron and Qatar Petroleum,
the intention is to increase the plant's capacity to more than 100,000 bpd.
The partners are also exploring building an integrated GTL plant with a
capacity of about 130,000 bpd in the future.

Basically, it's the switch to non-oil, synthetic, liquid fuels, now happening. Engineers knew it was cost-effective for oil > 50$ a barrel, and with the future market for oil now testifying that you can build a 5-year business plan on this assumption, the big oilcos are going at it bit time.

(Extra fun to note: they are ripping off Iran of its gas, since North Field = South Pars, dug from the other side of the gulf :-) So Mahmoud should bomb the plant quickly if he is sensible !)


Check the public presentation slides on the SasonChevrol web site: Qatar is no their only project, also Algeria, Russia... And they mention their competitors as well, overall a significant proportion of Europe's diesel fuel could be produced from gas in 2012.

Considering that it takes something like 3 barrels of oil to make a barrel of diesel fuel, it should also have a weightable impact on the oil market (easing tensions).

I checked from a few technical figures they give on the website: the energy yield is about 53% (of the Joules in the gas that end up in the diesel, the rest being lost in the process or trapped in the naphta tails). So it compares well with liquefaction (costs something like 30% of the energy, correct me if I'm wrong): both make gas storable and transportable by tankers, and GTL also makes it usable in cars, straight out of the plant.

Pierre
by Pierre on Sun Apr 30th, 2006 at 11:47:39 AM EST
This seems very promising Pierre.  Thanks for linking me to this, and then to the links provided above.  The white paper seems very good and thorough.  It's particularly good because it leverages so much of the existing infrastructure.  I guess it would be an easier conversion for EU since they are far ahead of US in % diesel use,,,,but still, even in the US a very doable conversion.

It certainly would be worth a diary, if one hasn't already been done.  But thanks for this--very helpful for me in raising my knowledge in this area.

by wchurchill on Mon May 1st, 2006 at 02:18:12 PM EST
[ Parent ]
Well, actually this has been cross-posted multiple times today, and it turns out that Jerôme already wrote a diary on this a year ago in DKos, but the URL is in yet another story, the nuclear renaissance one: DKos diary here.

As Jerôme said, the long term impacts deserve a long discussion (like possibly I imagine: binding tightly the costs of oil and gas - slowing the rise of oil and accelerating that of gas, changing notably the application mix of gas - and increasing consumption, thus depleting gas faster than anticipated - and making (dieselized-)gas a more global market than it presently is, with expensive barriers between continents).

Pierre
by Pierre on Mon May 1st, 2006 at 04:49:50 PM EST
[ Parent ]
At the risk of going of on a tangent, what do

the contractual requisites to build a full gas "chain"

entail?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Sun Apr 30th, 2006 at 01:05:12 PM EST
That deserves a long reply. I'll try.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Apr 30th, 2006 at 02:21:33 PM EST
[ Parent ]
I see a lot of posts here about how we should strive to move to renewables.  I like the stance I often on theOilDrum: we should discourage government subsidy to carbon-based energy because it will accelerate the transition.  For instance, in the US, there is a call to subsidize oil to the consumer by lowering taxes and/or issuing some refund.  This is bad because it postpones the inevitable and only encourages consumption.

So while I agree that Russo-EU or Iran-EU conflict and tension is a bad thing in general, if the result is reduced supplies of nat. gas, this is a good thing since it encourages the accelaration of renewable transition.  I understand that natural gas is "clean burning" so the carbon argument is not as applicable, but nevertheless, I think if decision makers/governmental agencies are forced to increase investment in wind, solar, etc. because non-renewable sources are more expensive, it is always a good thing.

Just my 2 cents.

by speron (speron1 at yahoo dot com) on Sun Apr 30th, 2006 at 01:35:36 PM EST
A minor episode to add to your list Jerome:

Condi Rice in her recent visit to Athens, seemed to be particularly interested in protecting Greece from falling prey to a Russian gas monopoly:

Secretary of State Condoleezza Rice on Tuesday warned Greece and Turkey against allowing Russia to obtain a monopoly over Europe's supply of natural gas, implicitly bolstering a planned pipeline from Azerbaijian that would weaken Russia's tight grip on European energy supply.

"It's quite clear that one of the concerns is that there could be a monopoly of supply from one source only, from Russia," Rice told reporters in Athens after meeting with Greek Foreign Minister Dora Bakoyannis.

Rice waded into the battle over the increasing dominance of Russia's state-owned energy giant Gazprom -- which recently sought a stake in a Greek-Turkish pipeline -- even as she sought to build support in Greece and Turkey for sanctions against Iran concerning its nuclear program

The issue, some said, was a major reason for Rice's visit, along with trying to secure Greece's vote for sanctions in the UN Security Council. Reporter, a Greek economic web newspaper was describing the situation that Rice objected to, a week before Rice's arrival:

Very recently Alexey Miller, Chairman of Gazprom's Management Committee, in a visit to Greece met with Greek PM Kostas Karamanlis, Dimitris Sioufas, Greek Development Minister top executives of the Greek Public Gas Corporation DEPA and the Russian-Greek joint venture Prometheus Gas.

They discussed issues of long-term cooperation in the gas sector, addressing the possibility of increasing Russian gas supply to Greece, in particular, extending the existing Contract after 2016 and developing new transmission routes (with the Blue Stream pipeline to be potentially used along with the Balkan corridor), which might lead to Greece's converting into a transit country when gas is delivered to southwestern Europe.

The Russians, have also reactivated the nearly dead project of Bourgas - Alexandroupolis oil pipeline but offering oil via Sibneft. One should remember that Russia's Lukoil, though one of the initial partners, at the end turned to be reluctant in providing the oil at low prices that would have make the project viable. Now Sibneft will take Lukoil's place.

In addition, they promised to make serious investments in Greece relating to the aquitition of the in deep trouble state owned Phosphate Fertilisers Industry.  

Keep in mind that the Turkey-Greece pipeline is designed to be part of the Turkey-Greece-Italy pipeline (described here, see page 13 on - PDF file).

Basically, as I understand it, the Russians are trying to "hijack" the Turkey-Greece pipeline that was meant to carry gas from Azerbaijan and the Caspian and was seriously supported by the US, to carry the gas the send under the Black Sea to Turkey, all the way to Italy and the rest of Europe.

Having said that, the pipeline situation is seriously under-reported in Greece and the whole thing seems, well, byzantine in its intricacy...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sun Apr 30th, 2006 at 08:37:17 PM EST
I presume that you would be railing against Chirac if he indicated concern about a US government owned company with close ties to the CIA buying a key part of France's infrastructure?  Imagine further that the EU as a whole was fully dependent on that company for its gas supplies.

Think what we have with Gazprom - a state owned company staffed by Putin's cronies who tend to be from the intelligence establishment and which is also used as an instrument of state control domestically.  Putin's Russia for its part is at least as bad as Bush's America on human rights, much worse on domestic freedoms and crony capitalism. As it is the EU is far too dependent on Russia for its energy, it is simply common sense to try to reduce that dependency and to limit the power of Gazprom.  I really don't understand your thinking on this issue.

by MarekNYC on Mon May 1st, 2006 at 01:49:18 PM EST

Putin's Russia for its part is at least as bad as Bush's America on human rights, much worse on domestic freedoms and crony capitalism. As it is the EU is far too dependent on Russia for its energy, it is simply common sense to try to reduce that dependency and to limit the power of Gazprom. I really don't understand your thinking on this issue.

Perhaps because you're irrationally and irrevocably biased.  When did Russia (not the USSR) invade and occupy another sovereign nation?  Crony capitalism was foisted on Russia by western economists.  Putin is putting an end to it, but gets constantly criticized for ending something that the west started.  You complain about its existence AND you complain about Putin doing something about it.

It kind of sounds like you wrote this article in the May 8 edition of Newsweek called Partner or Bully?

by slaboymni on Mon May 1st, 2006 at 03:23:21 PM EST
[ Parent ]
When did Russia (not the USSR) invade and occupy another sovereign nation?

Where did I say that it did? Torturing and murdering isn't any less of a crime when the victims are your own citizens.

Crony capitalism was foisted on Russia by western economists.

No, it wasn't. They just didn't care under the assumption that creating a 'market' was  all important and that it didn't matter if the nomenklatura and those close to it stole property, because once they had it they would start acting like good law abiding capitalists. Obviously they were idiots, but indifference to massive corruption, while ugly, does not equal encouragement, just like I don't hold Putin's   political allies in the West, Schoroeder, Berlusconi, and Chirac, or the business people who work with the various Russian companies responsible for the corruption that is going on today.

Putin is putting an end to it, but gets constantly criticized for ending something that the west started.

Putin is replacing one bunch of politically connected crooks with another - those tied to Yeltsin are out, unless they give a cut to the new kids on the block, and Putin's cronies are in.  When a new mob boss comes in and replaces the old capos with his own bunch I don't call that a positive development, just more of the same.

Perhaps because you're irrationally and irrevocably biased.

It is true that Poles are somewhat wary of their big Eastern neighbour, much in the same way that Latin Americans are about the US, and for the same reason.   That means that Russian leaders who express great pride in their old imperial ways, and who view the demise of their empire as a tragedy, don't get the benefit of the doubt. Call that irrational if you will. Personally I don't happen to see Latin Americans who are a tad suspicious of a Bush admin filled with unrepentant veterans from the old dirty Latin American Cold War years as crazy, but feel free to disagree.

 

by MarekNYC on Mon May 1st, 2006 at 04:02:46 PM EST
[ Parent ]

Crony capitalism was foisted on Russia by western economists.

No, it wasn't. They just didn't care under the assumption that creating a 'market' was  all important and that it didn't matter if the nomenklatura and those close to it stole property, because once they had it they would start acting like good law abiding capitalists.

Please do some research before repeating this tired old cliche.  Please read this legal finding.  From this article:


It was in 1992, after Congress passed the Freedom for Russia and the Emerging Eurasian Democracies and Open Market Support Act, that USAID hired Harvard to provide consultants to the Russian government to help design institutions favorable to democratic government and a market economy.

I cannot overestimate the level of access to Russian governmental decision makers these Harvard advisors had.  They could literally have an audience with Yeltsin upon demand.  They had permanent offices next to Yegor Gaidar, the "liberal" "economist" in charge of implementing their shock therapy prescription. They continually stressed to all levels of Russian government that they would pull the plug on funding if their decisions were not implemented without question and immediately.  

Bill Clinton is guilty, in large part, for listening to his pathetic, so-called kremlinologists.  To call his attention to Russia after the end of the cold war apathetic would be a complement.


Putin is replacing one bunch of politically connected crooks with another - those tied to Yeltsin are out, unless they give a cut to the new kids on the block, and Putin's cronies are in.  When a new mob boss comes in and replaces the old capos with his own bunch I don't call that a positive development, just more of the same.

This is just plain wrong.  Yeltsin's crew was in it purely for the money.  They didn't give a rat's ass about the country.  They stole as much as they could, as fast as they could.  Putin's appointees may also be a greedy bunch, but they are genuinely interested in improving the country.  You cannot even compare the economic, political, and legal progress made under Putin to that of the Yeltsin years.

by slaboymni on Mon May 1st, 2006 at 07:14:24 PM EST
[ Parent ]

 They stole as much as they could, as fast as they could.  Putin's appointees may also be a greedy bunch, but they are genuinely interested in improving the country.  You cannot even compare the economic, political, and legal progress made under Putin to that of the Yeltsin years.

You have not provided any kind of evidence that any improvement under Putin is due to anything other than massive amounts of money from commodity exports, something that Putin deserves little credit for, and something that even Yeltsin's crowd would have managed to use to some extent to the benefit of the population.

Never has more been stolen from Russia's population by so few people than in the past few years. It's just less visible when the loot is plentiful and crumbs can be distributed grandly.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon May 1st, 2006 at 07:32:20 PM EST
[ Parent ]
Jerome,

We've had this conversation many times, mon ami.

Do you really believe that Putin has done nothing for the country?  Is your hatred of him so blinding?

To be honest, I don't like his personality or the way he crudely expresses himself, but I have to admit that he is probably one of the most intelligent heads of state in the world right now.  Many journalists (yes, even French ones) have said that they are immensely impressed with his ability to conduct 3.5 and 4 hour-long press conferences (not bad for someone who is "anti-press"), while maintaing perfect composure and command of all relevant facts and figures.  He demands the same from all of his ministers, as well.

The mere fact that they are so well-informed puts them head and shoulders above Yeltsin's crowd.  The man Yeltsin appointed governor of Chuhotka couldn't even find it on a map until it was pointed out to him.

So, think what you like, at any given time 70% of the only people who matter -- Russian citizens -- think Putin is better than Yeltsin, who had approval ratings twice as low as W's current ones.

by slaboymni on Mon May 1st, 2006 at 07:49:50 PM EST
[ Parent ]

Never has more been stolen from Russia's population by so few people than in the past few years. It's just less visible when the loot is plentiful and crumbs can be distributed grandly.

There is more than a grain of truth in what you say.  But, you don't seem to understand that under Yeltsin no crumbs were even allowed to fall of the table!

by slaboymni on Mon May 1st, 2006 at 07:52:46 PM EST
[ Parent ]

When did Russia (not the USSR) invade and occupy another sovereign nation?

Actually, it could be argued that at least Moldova (Transdniestria) and Georgia (Abkhazia, Northern Ossetia, and Adjuria) were invaded and occupied in the past 15 years...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon May 1st, 2006 at 05:00:39 PM EST
[ Parent ]
All the places you mention have ethnic Russians as either the majority or a very large minority.

Defending your citizens' interests cannot be compared to, say, France's imperialist escapade into Algeria.

by slaboymni on Mon May 1st, 2006 at 07:00:44 PM EST
[ Parent ]
  1. I take it that you admit that Russia did invade sovereign countries
  2. I also take it that you approve of such actions
  3. Wow.

It's the same logic that justified the Anschluss, you know.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon May 1st, 2006 at 07:18:03 PM EST
[ Parent ]
Um, did you drop your monitor today or something ;-)

Where did I say that Russia invaded sovereign countries?  Russia has spent most of its time defending itself from European invading powers.  That's one of the reasons for its mistrust of huge European alliances like the EU.

I am the biggest pacificist you are likely to meet, which, by the way, got me into big trouble in the US military.  But, hey, it was they who turned me into the pacifist.

Double wow.

by slaboymni on Mon May 1st, 2006 at 07:24:29 PM EST
[ Parent ]
Well, I specifically mentioned military occupation/interventions in Moldova and Georgia, and you responded that there were Russians there, which I (pretty naturally, I think) understood as justification of said occupation/interventions, meant not to "invade", but to "protect" Russians.

So if my interpretation was wrong, how would you describe Russian "interventions" in the territories I mentioned? Was Russia invaded or attacked by Moldova or Georgia?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon May 1st, 2006 at 07:28:49 PM EST
[ Parent ]
What "military interventions" in Moldova and Georgia are you talking about?  I don't know of any recent ones (maybe you mean in 1848-1849, in Moldova?).  Therefore, I took you to mean general citizenship rights for ethnic Russians - which all of these states, as well as the supposedly democratic baltic states (who are in the EU for some reason), refuse to grant.
by slaboymni on Mon May 1st, 2006 at 07:35:03 PM EST
[ Parent ]
It can be argued that Transdniestria, Abkhazia, Northern Ossetia, and Adjuria were invaded, raped and pillaged by Georgia and Moldova.

Techically every peacekeeping mission can be considered an occupation, however, in those cases territory of republics of Transdniestria, Abkhazia, Northern Ossetia is being controlled by local police and Russian peacekeepers only involved in points of contact between those republics and Georgia/Moldova.

Unfortunately, both Georgia and Moldova have little to offer to those republics at this point. Neither economically, with Moldova being the poorest country in Europe and Georgia being a failed state, nor politically - they just not prepared to give any meaningful state of autonomy.

by blackhawk on Mon May 1st, 2006 at 11:56:01 PM EST
[ Parent ]
No, because Chirac's (and France's) position has been consistent, treating energy as a strategic issue, and Gazprom as the insrument of State power that it is. Thus the negotations between GDF and Gazprom are not easy, but there are no surprises - two State entities negotiating - and finding peace and cooperation because they know they will need to work together for the next 40 years.

Blair is totally hypocritical because he says that energy can be treated as a normal good, that markets will ensure supply at the requisite price, and ownership of the companies is irrelevant - and now he is suddenly panicking, he wants to force other Europeans to give up - to him - the security arrangements they have painstakingly put in place; he wants to prevent Gazprom from participating in his "free" markets, and he wants Russia to break up Gazprom - not for "strategic" reasons, but just for market efficiency.

Give me a break.

As to what I think of Gazprom, I've made it clear in various texts.

Russian gas cuts - why there is no need to worry (Jan. 2)
Ukraine vs Russia: Tales of pipelines and dependence (Dec. 30)

A pipeline is like a marriage with kids (Dec. 16)

Some thoughts on Gazprom (30 March 2002)

The power of Gazprom over Europe is overestimated publicly by some in Europe, to create an overreaction - for reasons I suspect are linked to their desire to weaken Russia or to wrestle control over energy policy form those countries that do have an energy policy, like France and Germany.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon May 1st, 2006 at 04:58:12 PM EST
[ Parent ]


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