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Being angry at Russia is pointless

by Jerome a Paris Wed Sep 20th, 2006 at 11:18:46 AM EST

Moscow faced with global oil backlash

Russia was yesterday facing a global backlash over its threat to halt work on a $20bn (£10.6bn) energy project led by Royal Dutch Shell.

Japan led the chorus of anger. Shinzo Abe, chief cabinet secretary and front-runner to be next prime minister, warned the move would damage international relations and jeopardise foreign investment. The European Union voiced concern and Britain protested to the Russian authorities.

But even as the international community was protesting against the suspension of an environmental permit for the Royal Dutch Shell-led Sakhalin-2 project, it emerged that another large foreign energy project faced a similar threat.

Russian prosecutors have threatened to suspend an exploration licence for TNK-BP, the Anglo-Russian joint venture, to develop Kovykta, the massive gas field in Eastern Siberia.

Many speculate (and I tend to share that view) that these are just politically motivated moves backed by the Kremlin to impose Gazprom as a significant shareholder of each of these projects.

The West is furious at Russia for trying to improve the terms of the complex agreements that regulate the development of these assets, and ominous threats to reduce investment in the country are aired, at the same time as a recurring theme in the press is that Gazprom is unwilling or unable to invest enough to produce all the gas that we should be getting in the future and "needs" Western help.

This is all totally, utterly stupid and pointless.


Let's state it quite clearly: on current trends, we are becoming increasingly dependant on Russia for our oil and gas supplies (we meaning first and foremost Europe), and they will be in a position to dictate terms.

And, it would seem, they have started to do so. That only reflects a shifting balance of power in the energy markets between suppliers and consumers. We are free, as consumers, to accept thse terms or do without their oil and gas.

What we cannot do is expect to keep on wanting to get all the gas we want on our terms, at perpetually low prices.

What we can do is to work on what is under our own control, i.e. our energy demand. Maybe we should stop building gas-fired power plants if we find Russia's behavior so outrageous. Maybe we should stop spending so much power to heat and cool unproperly isolated buildings. Maybe we should stop driving such heavy cars.

If we want Russia's gas, then we have to do so under whatever terms the Russians deem sufficient for it to be worthwhile to be extracting their gas and sending it over to us. Obviously these degraded terms are still less painful than the expected cost of changing our energy patterns.

All I can say to Russia is: keep it up, we're apparently too stupid to even think about alternatives, and your greed will be handsomely rewarded before we get to our senses.

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This will also extend to coal, as Russia has considerable resources in that area also.
by asdf on Wed Sep 20th, 2006 at 11:45:54 AM EST
Top energy resources



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

by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 11:53:56 AM EST
[ Parent ]
Well, yeah.

Energize Europe is urgent, and it needs to start by exposing Europe's pathetic indigenous energy generation potential.

Those whom the Gods wish to destroy They first make mad. — Euripides

by Migeru (migeru at eurotrib dot com) on Wed Sep 20th, 2006 at 11:56:02 AM EST
[ Parent ]
"energy generation potential"? not energy resources?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Wed Sep 20th, 2006 at 12:02:30 PM EST
[ Parent ]
There's heat, electricity and fuel.
For heat, there's geothermal and solar heating.
For electricity there's solar photovoltaic, wind, tidal.
For fuels there's agriculture/forestry products, fossil hydrocarbons and nuclear.

Heat can be converted into electricity and conversely.
Electricity can be used to produce synthetic fuels.
Fuels can be used to produce heat and electricity, as well as operating moving machines [the latter doesn't really include nuclear].

Solar heating, solar photovoltaic and agriculture/forestry compete for land use [among themselves and with food production] and depend on latitude and weather [the number of hours of sunlight].

In the case of nuclear, with breeding/reprocessing one might not need to import any new fuel for decades.

And so on.

You can call it "resources" or "generation capacity" or something else.

If it can be argued persuasively that we're going to have to import massive quantities of oil from Saudi, gas from Russia/Algeria, coal from Russia/US/China, uranium from Australia/Canada or ethanol from Brazil, then the "energy security" argument becomes a very serious argument for demand reduction as the EU energy policy.

Those whom the Gods wish to destroy They first make mad. — Euripides

by Migeru (migeru at eurotrib dot com) on Wed Sep 20th, 2006 at 01:56:48 PM EST
[ Parent ]
Huh. I went looking to find out what an EJ was (obviously I'm the last to know ;-)), and I found it, along with this interesting (and not entirely irrelevant) titbit:

Energy experts predict that total global consumption of primary energy--energy used for space heating, transportation, and generating electricity--will double or triple over the next 50 years, from about 400 exajoules (EJ) per year in 1998 to 800--1,200 EJ per year in 2050.

(An exajoule is a billion billion joules. One exajoule is about equal to the energy content of 30 million tons of coal, or the gasoline consumed by a million automobiles during their lifetimes, or the annual energy consumption of West Virginia or Portugal.)

Fossil fuel consumption would have to be limited to about 300 EJ per year in 2050 to permit stabilization of anthropogenic greenhouse gases at an equivalent doubling. Carbon-free energy sources would then have to supply the difference: 500--900 EJ per year.

That's daunting. In 1998, carbon-free sources supplied less than 60 EJ. Carbon-free energy would need to grow tenfold over the next 50 years--from 15 percent of the total commercial supply to 60--75 percent in 2050.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Wed Sep 20th, 2006 at 12:11:29 PM EST
[ Parent ]
Oops. link

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Wed Sep 20th, 2006 at 12:46:25 PM EST
[ Parent ]
Oof, you and your big graphs.

Am I the only one who has this problem?  Nothing against the content of the graphs themselves, but so right now I have a huge white empty column on the left (due to our new micro-center column for comments) and the graph above overlaying all the blogads etc on the right hand margin as well as screwing up the formatting above it.  Some kind of awful design nightmare.

Those who can make you believe absurdities can make you commit atrocities. -Voltaire

by p------- on Wed Sep 20th, 2006 at 01:42:35 PM EST
[ Parent ]
Another call for energy saving measures from Jerome.
Recently 40 around journalists from Valdai club hobnobbed with Mr Putin and some of them expressed idea of undergoing shift of power from West to East in questions of energy flows.

I don't know whether these views are justified, Mr Bush apparently has not yet subscribed to it waging senseless wars in Middle East and preparing to jump on Iran's oil and gas.

Curious thing about Sakhalin II - ecological NGO's for long time campaigned against this project and revoke of environmental permit was welcomed. They even campaigned against EBRD loan to Shell:Sakhalin II woes.

by FarEasterner on Wed Sep 20th, 2006 at 11:54:41 AM EST
Being reliant on Russia for natural gas is a choice. There are alternatives.
Conservation. Windmills. Nuclear power.
A few others.

Sweden has made a political decision it will not be a part of the Russian natural gas system.
Others are free to follow our example if they'd like. Or they can keep bickering with Russia.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Sep 20th, 2006 at 11:58:41 AM EST
Well, Sweden has Norwegian gas, hydropower and Swedish nuclear plants within easy reach, so I don't see why you would need Russian gas to begin with. (Unless to play thew two suppliers up against each other I guess...)
by Trond Ove on Wed Sep 20th, 2006 at 03:36:04 PM EST
[ Parent ]
Sure we have lots of hydro and a tiny bit of gas. Danish mainly.

But gas is a choice, Russian gas is even more of a choice. Gas is not needed to run any economy, except maybe as peaker plants if your hydro resources are weak. But even then pumped storage is possible.

Gas is not needed for power. Gas is not needed for heating. Gas is not needed for industry. Gas is not needed for anything.

There are competitive alternatives. Gas is a choice. And as Jerome says, choose differently or stop whining.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Sep 20th, 2006 at 05:51:11 PM EST
[ Parent ]
You are correct. Norway doesnt export gas to Sweden it seems. But there is some exports to Denmark. Strange...
by Trond Ove on Thu Sep 21st, 2006 at 07:59:47 AM EST
[ Parent ]
And what if there are genuine ecological concerns, vs. an oil industry outaged of not getting a free pass as elsewhere? FarEasterner seems to give evidence to that possibility.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Sep 20th, 2006 at 12:56:17 PM EST
I have had access to quite a bit of confidential information on that topic, so I can't really comment.

Let's just say that this project is one of the most supervised environment-wise in the history of the country, if not of the industry.

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

by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 02:43:29 PM EST
[ Parent ]
I've seen comments from the people who presumably are also very knowledgeable on the topic, and they are of a different opinion regarding compliance with environmental regulations... could it be that the environment itself is just too daunting?
by Sargon on Wed Sep 20th, 2006 at 03:52:57 PM EST
[ Parent ]
Lots of public date here (EBRD):
http://www.ebrd.com/projects/eias/russia/5897.htm

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 03:59:08 PM EST
[ Parent ]
Thanks for the link!
by Sargon on Thu Sep 21st, 2006 at 03:17:52 AM EST
[ Parent ]
Jerome, go have a look at this:

http://russtech.blogspot.com/

You got someone's attention.

Those who can make you believe absurdities can make you commit atrocities. -Voltaire

by p------- on Thu Sep 21st, 2006 at 02:00:43 PM EST


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