More thoughts about Gazprom
Posted by Heading Out on October 21, 2006 - 12:02pm
"You know what happens when they get in the same room as Putin. They all drop their trousers and say 'I love you Vladimir'." This is the gloomy and cynical view from a senior EU insider, of the leaders of the European Union's 25 countries. Perhaps it's intended to chivvy rather than insult. But there is no doubt that the EU summit in Finland is a rather odd event.
There has been much debate over the reliability of the Russian oil and gas supplies to the rest of the world, with many commentators noting the historic reliability of the source. But as Gazprom takes over an increasing percentage of the world's delivery system, there are some concerns that perhaps need to be highlighted. This is particularly true for the United States with our "Just in time" philosophy, which (as I noted) James Woolsey worried about in St Louis.
The BBC article notes three concerns with the situation a) the threat of a supply disruption, b) the increasingly monopolistic position of Gazprom as a supplier, and c) the lack of a common resolve among nations as to how to deal with this.
At a time when the EU is trying to persuade reluctant countries to open up their energy markets to the fierce winds of competition and abandon the French idea of "national champions", Gazprom is a very vivid example that such allegedly old-fashioned out-of-date thinking can work dramatically well for the country concerned. Take a little bit of communist-era central control, a little bit of hyper-capitalist ruthlessness, a big dollop of political muscle and... hey presto you have unbeatable competition. The European Union aim is to get an agreement that Gazprom will give up control of its pipelines and let other companies share the routes. The technical term for this is, I believe, a "pipedream".
One might equally well, I guess, now describe the assumption that the US would eventually get 10% of its natural gas, as an LNG supply, from the Shtokman field. However the date of that production is likely to move back, even from 2015 if the negotiations on who is going to do what become as protracted, as the negotiations over who would be partners. The reason for the decision to direct the flow primarily to Europe was
"This decision is a further guarantee of the dependability of Russian gas deliveries to Europe for the long term, and it is proof that the European market has the highest importance to the company," Miller said.
Interestingly the decision that Gazprom would, "go it alone" is now being reported as being because the field is both larger than originally anticipated, (up from 3.7 to 4 trillion cubic meters) and that it would be easier to access than had been estimated earlier. By 2015 the Russian Energy and Industry Minister projects that Russia will be exporting 257 billion meters of gas a year, up by 52% from current levels. For those who have been projecting that oil production would decline, he reports:
The minister also said Russia's annual oil production could increase from 472 million tons (3.47 billion barrels) in 2005 to 542 million tons (3.98 billion barrels) in 2015.??"Oil output growth will be ensured by the development of deposits in East Siberia and the Far East," he said.??That would give an export level of around 10.9 mbd, which is above what others have been projecting, and a growth at a time when they are currently anticipated to peak by the end of this decade.Khristenko also forecasted that Russia will increase exports of Urals crude from 253 million tons (1.86 billion barrels) in 2005 to about 300 million tons (2.2 billion barrels) in 2015.
Gazprom is currently talking to Korea about piping gas down there in the 2012 to 2013 time frame, though the supply might start earlier as an LNG feed. Earlier this week Gazprom started one pipeline to China from Western Siberia that will carry 30 billion cubic meters a year. It anticipates a second of similar or larger size may be installed later. The article suggests that supplies for the second are to come from Sakhalin Island and perhaps Kovykta, with a start date in 2011. Gazprom is considering building the pipeline for Korea (which goes back to point b above).
Going back to the gas supply to Europe, and relating to concerns about gas storage, Gazprom has just purchased an abandoned mine in Germany, to fit into the new Baltic pipeline.
ZMB (a Gazprom subsidiary) said the company would spend €100 million to €300 million, or $125 million to $375 million, over the next five years. Once constructed, ZMB said it would provide storage capacity for the joint German and Russian gas pipeline which is scheduled to be completed in 2010. That pipeline, called the Nord Stream, would for the first time allow Gazprom to send gas directly from Russia to German via a pipe constructed under the Baltic Sea. It will move up to 55 billion cubic meters, or 1.94 trillion cubic feet, of gas a year. The point of entry for Russian gas will be in northeastern Germany, near the planned storage facilities.The article also notes
Last June, Gazprom and Mol, Hungary's oil and gas company, agreed to build natural gas pipelines and underground gas storage facilities in Hungary aimed at reducing Russia's dependence on Ukraine as its main transit country and also having enough reserves of gas to handle any sharp rise in demand.
And in regard to point c above, it is worth noting the various government positions going into the Energy Summit in Finland
EU countries differ on whether the bloc should treat Moscow more as a strategic partner and supplier of a quarter of its gas, or as a bully in its ex-Soviet backyard and using energy as a political weapon.Former Soviet satellites in the Baltic states and central Europe want a tougher EU line. Diplomats said Polish Prime Minister Lech Kaczynski urged other EU leaders at the talks to maintain a united front at the dinner with Putin later on.
However they said French President Jacques Chirac took another tone, stressing the need for the EU and Russia to understand that their interests were broadly complementary.
European Parliament President Josep Borrell said the EU would lose face unless it raised its concerns with Putin, and insisted the huge European market for Russian energy was a bargaining chip in its favour.
"There is gas flow and there is cashflow," the Spanish Socialist said. "Russia needs cashflow, you can't eat gas."
Hmmm! Well the Energy Dinner is now over, and somehow I can't help but get the feeling that, in certain parts of Europe, folks are starting to look for their belt buckles
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What is so gut-churning about this? Times change. Russia has the goods. Putin is a Machiavellian genius, Russia's modern-day Bismark, perhaps. And Russia has never been a weak country.
Let the giants of Europe unite. This Russophobic stuff is not only hypocritical, but downright stupid. As a famous Frenchman apparently said, 'It is not just a crime - it is a mistake!'
Variously ascribed to Fouche, Tallyrand and to one Antoine Boulay de la Meurthe - whoever that was. It descibed tke killing of the Duc d'Egene by Napoleon.
What is so gut-churning about this? Times change. Russia has the goods. Putin is a Machiavellian genius, Russia's modern-day Bismark, perhaps. And Russia has never been a weak country.
Let the giants of Europe unite. This Russophobic stuff is not only hypocritical, but downright stupid. As a famous Frenchman apparently said, 'It is not just a crime - it is a mistake!'
Putin is the current faceman for a group of ex-KGB trying to refight the cold war via their energy supplies. Times, it turns out, don't change terribly much.
I don't know where you live, but would you like your version of the KGB running your country? Where opponents are put in jail or shot?
Modern-day Bismark? You've got to be joking. Smacks more of Stalin to me.
Try thinking critically for a change instead of just believing any old rubbish you read in Newsweek, Time or the WSJ.
As for the local version of the KGB running my country ... why don't you look closer to home (the US, right?) if you want to complain about stuff like that?
Russia did not start the Cold War, and Russia is not seeking to expand some latter-day Warsaw Pact throughout North America. If the KGB wants to 're-fight' the Cold War, why might that be? Huh? 'Communism' is gone, but NATO lives on and seeks to expand East as far as possible.
Be reasonable.
If however, you meant to say that Stalin did not really mean engage in an insane arms race (he just wanted to grab as much as he could without one), then you might have an interesting point.
And further, if you wanted to argue that the Russians, with their experience of what a cities became in terms which resembled nuclear war, were not really able to convince themselves that better dead than anything else was a grand strategic option, it would also be interesting.
It isn't 'idiocy' at all to point out that the policy of the USSR was always essentially reactive. The West really did start the Cold War. Why would the USSR have given up anything when faced with a hostile Western bloc and a re-armed West Germany?
If you prefer the fairy tales you have grown up with, it's not my problem. It's a pity to see such an intelligent person sticking to the bog-standard (and false) version of events, but then that's life.
The USSR used murder of a Head of State to overturn neutral Czechoslovkia (and their Yalta commitments)
The USSR made sgreements at Yalta regarding Poland (and more) and then ignored them.
Your "poor reactive USSR" is some of the worst BS I have seen on this forum.
In the Cold War, the US was on the Good Guys side. The USSR had no good redeeming features at all. Evil Empire was an apt and accurate description.
Alan
I don't think there were good guys on either side of the Cold War. The United States gave us Hiroshima & Nagasaki, the war in Indochina (over 3 million civilians killed - for what?), and supported some of the most brutal dictatorships (Chile, Indonesia, Iraq, etc.). The USSR gave us the suppression of uprisings in Eastern Europe (Hungary in 1956 and Czechoslovakia in 1968, among others), invasion of Afghanistan, and supported a bunch of communist dictatorships.
But, to say that the country that almost single-handedly defeated the Nazis in Europe, put the first man in space, pioneered women and minority rights well before the US, and created some of the best literature and art of the last century has no redeeming features? Sounds a bit ignorant.
Almost single handily defeated the Nazis in Europe overstates the case. Even Krushchev in is autobiography admits the value of American aid and the value of a two front war. Great Britain stood alone in 1940 and refused to negotiate. The Western front captured 350,000 in 1943. The value of the Allied aerial bombardment can be debated (it certain reduced German war production, kept 1 million soldiers at home, and much of the Luftwaffe and artillery occupied. How decisive was this to the German war effort ?). And the Soviet Union would never have entered Germany were it not for the Western Fronts.
One should also remember the war of aggression against Finland, which convinced Hitler that the Red Army was not a viable army since the Finns fought them to a standstill. And against China as well in the 1930s.
Meanwhile the US supplied the Chinese with enough aid to keep them in the war, and fought an ocean and island war over incrediable distances against the Japanese with their best troops.
Given the tens of millions that died in the Gulag, any talk of "equal rights" is meaningless, as in all had no rights what so ever, so all were equal.
And yes, the Soviets were first into space.
As for 'standard' fairy tales - it was interesting to read at about 13 or so how the U.S. was responsible for every single weapons advance of the Cold War, with the exception of MIRVs (I think - it could have been ICBMs, though I'm pretty sure it was MIRVs). Sure, the Soviets were playing catch up in an insane arms race which ended up impoverishing vast numbers of people.
So what? It wasn't like the Stalin was motivated in his actions by the West in the 1920s or 1930s - and he quite honestly thought Hitler made him a better partner than the 'West.' Again, maybe the Poles can fill you in on the details - they tend to be fairly well informed about what happened to them over the last couple of generations.
Simply because one side in a struggle is bad doesn't mean the other side is good or less bad. I don't think the Poles thought the choice between Hitler and Stalin somehow represented a true choice at all.
I can speak only about the Czech case as part of my family is from Prague. The Commies won the democratic elections after WWII in part because there was a large segment of population leaning towards left politics prior WWII, also Russians did the large chunk of liberation of the country from nazis which wiped out the cream of the population. There was also this experience with Munich of 1938 where both UK and France "allies" betrayed their defense agreement with Czechoslovakia.
It's true when Commies were fully in power after 1948 the regime changed to authoritarian rule and especially the years before Stalin's death were pretty nasty.
Now we have a brand new brainwashed generation of US supporters not unlike the young crazy Stalinists of early 50s. Not a pretty picture given the forthcomming peakoil and increasing Russian influence in EU politics via the energy line..
Basically, current Czech politicians are seen internationally as even more devoted US interest lackeys than Poles or some of the Baltic guys.
Czechs blocked several anti US/Israel policies within the EU foreign policy structure not mentioning various anti Cuban provocations done at the UN and on other venues.
You have to dig deep into the czech psyche and history to understand they have perfected the strategy of giving up on their own program and piggybacking to the currently "winning side" on the int. scene. That's not a critique per se just an observation of the state of affairs.
In fact this might be a good survival strategy in the middle of Europe where always is someone interested in controlling or using that small country for his ends on the larger campaign..
Living in Germany, most of what I read and see is oriented to the fact that the Czechs seem very devoted to retaining their industrial base, and they do not seem to have any foreign policy ambitions on a large scale (unlike Poland, for example).
And this may also be historical - I used to work with someone who was 'German,' but was also 'Czech' (that blood line thinking is not easy for me). According to him, after 1968, the Czechs drew completely into a shell - for example, ca. 1994, he explained why there really weren't any good Czech/English dictionaries available - it was because only a few hundred people a year were allowed to study English at all after 1968.
In part, the brainwashing may have been based on not really knowing anything about the West except what was advertised.
One of his main gigs is that Czech tanks were very good. VERY Good.
For my part, though in many ways not a superb work, 'Ploesti: The Great Ground-Air Battle of 1 August 1943' by James Dugan, Carroll Stewart is good background for showing just how critical oil was to the basic understanding of warfare in the 1930s and 1940s in the sense of how casually the authors mention things like how every war college/war planner of note looked at the problem of conquering/destroying Ploesti, or how critical oil was to running a modern war - two generations ago.
Of course it was worth the time and effort to send some of America's first heavy bombers to the North African desert to strike at the only facility producing high octane fuel for German fighter planes.
And equally obvious, it was clear that making Ploesti as impossible to take out (both land and air) as possible was a top priority of the defenders.
Look at the level of planning and deception employed by both sides - war is much more than blowing things up, even when all you are trying to do is blow things up.
The first Ploesti low level raid was a massive effort - and the reason for it was oil, the most critical element in industrial warfare. I remain amazed at how many people here talk about having their eyes opened - look at what people were thinking in the decade before WWII to have a good idea of how closed many peoples' eyes are today.
But truly, reading a paragraph or two written around 1930 seems more visionary in terms of the central importance of oil than most of what is written by any 'peak oiler' today - especially in light of how WWII was fought.
Quite honestly, the idea that WWII was mainly about oil does seem a stretch, though it is not easily refuted either. But then, what was WWI all about, apart from Europe being so bored it decided to slaughter itself because its leaders were completely out of touch with how the world had changed since their childhood? Sometimes, wars just seem to happen, and the reasons come later.
Another reason for an older edition is that some of the pictures are incredible - bombing a refinery at chimney height is something hard to imagine, and that someone was taking pictures is even more unimaginable.
But the book does have its moments - such as when the German in charge of defending Ploesti (who was enjoying lunch in the countryside) watches what he imagines is perfectly coordinated waves of bombers coming in from different directions which in truth was actually a colossal mistake of navigation and bad timing - you do not want to be flying over a refinery someone else has just bombed at a level below the black burning columns of smoke.
Good point pointing to a simple solution: get the gas elsewhere! Where? Oops.
It's an incredibly explosive situation involving all the big players: the US, Russia, China, and the EU. Of these only Russia is energy rich. Russia also is the world's second nuclear power, but otherwise weak in many respects. Her energy is needed by all players but she cannot be dealt with in the same way as Iraq because of the nukes. Russia is underpopulated while China is overpopulated. But in the meantime Russia can use Chinese demand against any thought by the EU of haggling too much over price.
Of course outside this circle are all the other oil and gas suppliers. The heats on them to lessen the bargaining power of the Russians. But they can't, not this time.
I don't play chess, geopolitical or otherwise, so this all gives me a headache. But that better than the anxiety I would have if I were smarter could see where it's all heading.
I dunno, sounds pretty close to a banana republic to me.
The Putin/KGB government would love to seize/takeover all of the foreign ventures (TNK-BP, Lukoil-COP, Total's operation and Shell's) but they don't have the capital to develop them all themselves, and if they do another seizure (ala Yukos), they may well trigger massive capital flight from Russia.
Even Gazprom, which has huge resources in the ground, is a conglomerate of all kinds of unassorted businesses that are being subsidized by energy production.
"Jailing of opponents". Let's see a list. Oh, I know its Khodorkovsky. This is your notion of "opponents". One criminal oligarch for the whole country.
"murder of journalists". When you start crying as much about Paul Klebnikov and Lystiev (prime supspect: Berezovsky, another criminal oligarch who is beloved in the west since he is a "Putin oponent") as you are crying over Politkovskaya, then maybe you will have some credibility. So far all you have is a lot of credulity.
peace
In what way is Russia the world's second nuclear power?
Quote: "It must be remembered that there are no detectable efforts being made to seek confirmed reductions of almost 30,000 nuclear weapons worldwide, of which the United States possesses about 12,000, Russia 16,000, China 400, France 350, Israel 200, Britain 185, India and Pakistan 40 each"
And just who do you think Putin has in mind to run this company, to exploit the gargantuan asset base it is in the process of assembling? Who will get the stock options in this publicly traded company that is now, by design, hard to trade but which eventually will be listed on the N.Y.S.E. and, as probably the largest publicly owned company in the world, will be a household name to be owned by every widow, orphan and mutual fund? Who will get this great basket of stock options that will make the holder into a zillionaire? How about the wiliest politician in the world?
No, Gazprom - if Putin takes over after his term expires in 2008 - will require continuing political savvy and toughness to navigate the churning waters of its conflicting imperatives:
1. To provide it's clients with a measure of energy security spiced with enough uncertainty that they will continue to agree to ever-higher gas prices,
2. To continue to provide gas at subsidized rates to the good people of Mother Russia without totally pissing off shareholders,
3. To operate a politically-controlled public company while convincing the investor class to hold it in high enough regard as a private operation that they will pay a reasonable multiple of its ever-growing earnings so as to make his basket of options worth untold $billions.
That's a job worthy of the man.
Written from an Asian perspective.The authors byline follows:
Victor N Corpus is a retired brigadier general of the Armed Forces of the Philippines (AFP); former chief of the Intelligence Service, AFP; and holds a master's degree in public administration from the Kennedy School of Government, Harvard University.
http://www.atimes.com/atimes/China/HJ19Ad01.html
http://www.atimes.com/atimes/China/HJ20Ad01.html
Defeat in Iraq is just beginning to be acknowledged by the Bush administraton (via James Baker III), and it will be much more bitter than Vietnam.
When Vietnam fell, there were very few consequences. But when US forces depart the anarchic mess in Iraq, US prestige in the area will most likely evaporate. And with the descent into regional war, the extreme dependency on the US by the Saudi, Kuwaiti and UAE royal families will be greatly challenged -- not least by their own people.
They may well change their alignment and strike deals with the Shanghai Cooperation Organization (SCO, China, Russia and four central Asian countries) (which does not allow US access, even as non voting observers.)
The SCO could give the Arabs and Iranians security, buy their energy, and not be a nuisance. The SCO doesn't back Israel and doesn't meddle in Middle Eastern Affairs. And the SCO wants to drive the US out of South Asia -- which will probably be just fine with most Americans by the time we manage to extricate our troops from Iraq.
Russia is rapidly maneuvering itself into a position where it might be able to outmaneuver a weakened US, and drive it out of most of Asia and the Middle East.
There are so many potential angles to this, and none of them bode well for US global hegemony.
The end result was so predictable, but yet I can't seem to look away. The whole mess reminds me of a slasher flick, and we are not one of the characters that survive.
LOL!
I find it impossible to "look away," but I don't find it at all predictable. There are so many ways this could shake out.
One of the most important political developments in recent months is the seismic shift of evangelical Christians into a pro environmental, politically more neutral stance.
THis might prove to be as big as shift (domestically) as the Reagan coalition that gave power to the Republicans 26 years ago. It certainly changes the calculus of domestic policy vis a vis energy and environmental issues. Especially since power is rapidly shifting to the Democratic party.
A few weeks ago a top Republican operative (refusing to be identified, of course) said that whoever won as president in 2008, one of the top priorities would be Greenhouse Warming.
That, linked to peak oil and the impending defeat in Iraq, narrows American options considerably. Such as, finding domestic ways of proceeding without increasing coal use (and probably banning mountaintop removal), and while pulling back from trying to control the world.
I could see a huge push into conservation, by painting it as a patriotic thing to do, for individual, community and national survival. That would presumably be paired with a massive push into wind, solar and bio fuels (no matter what the eroei.)
To be honest, I don't see too many alternative realistic alternatives (though there will undoubtedly be all sorts of fantastic plans for increasing energy production, though many of them will be window dressing.)
http://www.globalresearch.ca/index.php?context=viewArticle&code=WIL20061007&articleId=3408
Seconded. Lots of good info and analysis here on USA versus FSU (and versus Europe and Asia!).
That, of course, leaves the question of where Europe will get its energy...For that, I suggest looking at Sweden and expanding and modifying their model as needed to fit the whole of the EU. Not easy at all, but much better than having to kow-tow to the Czar. In simple terms, energy in the EU will cost ALOT more, since it will have to come mostly from renewables, nuclear, etc. That leaves the question of EU economic competitiveness vs. the Asian (and other) economies which will have cheap labor AND cheap energy.
The solution will be the abandonement of the silly notion that free trade and unhindered capital movement are uniformly beneficial, i.e. the EU should withdraw from the WTO and re-enact cross-border capital flow regulations. The idea will be to invest locally, produce locally and consume locally, trading only with those counterparties that ADD value to the local society as opposed to subtracting from it, as is currently often the case.
This may seem like a retreat from the "free market economy", but as it stands today it is nothing more than virulent laissez-faire writ on a global scale. Under conditions of permanent resource depletion such an economic model is simply non-sensical.
-an erosion of the euro as reserve currency
-a huge inflation in transition period
-a rapid decline in exchange rates so as to compensate higher internal price of energy
-a decline in incomes of EU residents compared to other parts of the world
-a fall of attraction of EU as a rich club and subsequent decampment of members
Isolation leads to a deadlock. The USSR had tried to build a self-sufficient economy and even with huge natural riches it never worked.
The rest:
I find it quite astonishing that our politicians, having presided over the blowing away of all our own nat gas and oil reserves, are now calling on other countries to produce more.
We have this from UK Chancellor Gordon Brown:
Gordon Brown, facing a $68 billion uncertainty in oil revenues, now wants OPEC to boost supplies to keep the Party going.
It is true that Russia has vast untapped oil and gas reserves to the East of the Urals, in a vast area of melting permafrost - that is bordering on inaccessible.
And from HO's article, it seems the Russians are now forecasting increased oil production from the Urals - this just seems a total fantasy.
One day our politicians will wake up to the realisation that Russian and Saudi oil and gas production faces the same fate as the North Sea. The real issue here is not how trustworthy Gazprom or the Russians are but the extent to which they have the capacity to deliver up to promises and expectations. They are probably being over-optimistic in their forecasts - just like the UK and Norwegian governments. It seems that Tony Blair may be well briefed on this point - from HO's belt buckles link:
And so to summarise some strands of UK government "energy policy":
- Expansions of Heathrow, Manchester, Edinburgh, Glasgow and Aberdeen airports either completed, under way or approved.
- Renewables electricity generation target of 10% by 2010 (3 years to go)
- Energy consumption to be slashed by 20% by 2020
- 20% additional windfall tax on UK oil and gas producers
- Gas fired power stations are still being planned and built.
I think a look at UK followed by EU gas supplies is now top of my list - but maybe I'll buy a wood-burning stove first!CW
The question has got to be - will there be enough gas around in Europe to keep us all warm in 2015 ?
(2010 is probably covered already)
In my view the EU could have a real problem by 2015-20 due to falling indigenous production and rising demand, if we now consider the new EU countries rather than western EU alone then it looks worse as their economies expand faster.
Looking at supply - UK gas is and will continue to decline steeply, Dutch gas ditto - becoming more of a swing producer, Norwegian gas will be flat. Additional gas volumes required are therefore required are huge even without much demand growth, and will be very challenging to secure.
So where could the balance come from ?
Three sources spring to mind -
Russia, North Africa, and mid-east LNG. Taking these individually,
Increased Russian gas supply
The key large Russian gas fields are declining, and new sources must be developed to keep up with internal and export demand. Two primary areas of interest for Europe are the Yamal penisula and Shtokman.
Yamal gas will be expensive and difficult compared to existing supplies, the arctic environment is not easy to operate in, look at Sakhalin Island for a taste of things to come. Gazprom has also not actually started developing these fields but the clock is ticking, these project will not be quick. Do they have the technology - I don't know - probably not without western contractors. Do they have the cash to pay western contractors - maybe not given the current balance sheet of Gzprom. Especially if oil growth is prioritised over gas.
Shtokman is a much more demanding development - the dimensions of this project are enormous, much more difficult than anything else Gazprom (or Russia has done). 500km from shore in an iceberg prone area, some years fully covered by ice. Can they do it - not within the next 10 years. Gazprom has never done a significant offshore development - and the only one in this area Prirazlomnøye oil field is not a success, it is planned to come on stream in 2008 (perhaps) many years delayed and this is only in 50m of water.
I should also mention the growing demand for domestic gas in Russia itself - these sales are at a lower price than the western / EU, so takes volumes export and gives Gazprom less room for maneuvre by hiting cashflow - less money for new developments.
North Africa
Existing supplies from Libya, Algeria and Egypt.
Egypt will develop some more LNG but seems to be declining. We are waiting for more success in Libya and Algeria, but essentially these new volumes may simply replace depletion. I don't have much info here - other views ?
LNG / very long distance pipeline
Mid-east LNG (Quatar, Iran, Iraq etc) will become increasingly important for Northern Europe, though less so for southern. Long dstance pipelines via Turkey have been discussed, but this is not happening at the moment - LNG is more cost effective so far. The other thing with LNG is that it will become more of a comodity, it can equally go to the US, so we will begin to see a narrowing price differential for energy landed in Europe and US. If one area comes into a squeeze, both US and EU will.
In summary
The key issues are
a) pace of development will determine production, not reserves in the ground. It is very uncertain if sufficient capacity will be built to supply the markets (EU + world). This I suppose is effectively a peak oil argument. The difference with gas is that it is not easy to transport so if your major supplier (Russia) runs into problems in delivering you will not be able to secure the energy on the open market (at a price) from elsewhere.
b) the political situation in Russia, middle east will be critical to making gas supply work. So far it doesn't look good does it? Though we haven't seen a gas version of OPEC yet, its probably going to come. This is why western politicians are getting nervous, the balance of power is/has shifted in favour of supplier nations.
On the other hand the UK is probably one of the best placed nations for this problem, close to Norway, has built a lot of LNG import capacity recently, and is also a target market for Gazprom (via Nordstream). This is a better position than central europe / Germany which is already dependant on Russia...
The best defense currently though is diversification, so wind, nuclear and coal need to increase. Europe desperately needs to create competition in energy sources to tame monopolistic behaviour of gas suppliers. We should stop looking at making the gas market in europe more perfect as this is immaterial - we need to start improving the playing field so that other energy sources can compete.
I don't know what changes are needed for this though - perhaps government sponsored CO2 sequestration for coal, and for nuclear - I have no idea????
I wonder if this will be in time though. And that wood burning stove doesn't sound like a bad idea to me :)
Wouldn't that require the existence of an extremely robust LNG capability?
(P.S., I've already converted to wood and passive solar.)
We can see it inthe rearview mirror, so to speak.
We do have wood furniture....
Hey, Angry Chimp! Some of us love you. You gonna come out of hiding or what, buddy? I realize hanging in the jungle with Stuart and Westexas is fun, but you gotta come back to the real world, buddy. Your mission is too important.
Like the first capital of the Republic of Texas, Washington-on-the-Brazos, once the capital moved the town lost all importance. WOTB has a population today of a hundred or so. Austin area is over 1 million.
Alan
The PBS piece spends a good deal of time on the drought theory. But they go into others. Check it out. I'll try to find a link soon.
What I found real interesting was the documentation of Jamestown's role in American History. According to these fellas, it was ignored. It happened before Plymouth Rock and yet all we ever hear about is the Pilgrims. Jamestown was sytematically wiped from the books during a certain period. Only to re-emerge now.
I also like the "threat of Spanish invasion" angle. I have no idea. I just like the alleyways you guys push me towards.
The glorification of the Pilgrims & Plymouth Rock et al is an aftermath of the War Between the States. They won and all history devolves from them (Washington, Jefferson, Patrick Henry, Madison, Monroe hard to ignore) but the clear message in grammer school is that we all (Americans) are linked to the original founding colony near Boston. I remmeber an explantion why Jamestown was not as important as Plymouth when I asked (sounded like BS to my tender ears).
The Virginia House of Burgesses (the first representative government) is not the foundation of American democracy, but the Mayflower Compact (a theocracy) is.
Best Hopes,
Alan
Personally I don't think Russia will have the capacity alone to meet demand for the whole of Europe - when they start to talk about developing Shtockman that says to me they are at the bottom of the barrel.
More than anything the UK needs a well informed energy policy - that establishes a regulatory framework of taxes/penalties and incentives to bring about the chosen outcome. Policy to include a framework for generating capacity and serious measures for reducing energy consumption.
One important plus will be low-cost catalyst-aided production of gas from coal. A US prototype is in operation, producing gas at about $3/mcf now. It's clean coal with a vengence. That will help insilate the US and UK and China - from the claws of Gazprom, but may not help some EU countries, India or other Asian countries much.
Another important plus will be enormous progress in developing highly efficient PV conversion technologies. Even today, with only 20% - 30% efficiency, PV is taking off like a greyhound, limited primarily by production capacity. That will take a lot of pressure off gas prices in terms of electrical generation. And home heating will migrate to electric as well as solar (and wind) generating technology begins to provide people with the only sense of confidence in continuing supply available to them.
The other hope to keep Gazprom "honest" (i.e. not totally monopolistic) is Iranian and Qutarian gas, but I wouldn't put a lot of hope in that holding back prices much.
Most politicians do only what the polls tell them to.
Therefore, we - consumers and voters - are responsible, not politicians.
We wanted cheap energy, and we got it.
This will certainly expose those who have most to lose.
How could Vladimir pass up an opportunity to
His sleep is undisturbed, he dreams of Methane flowing in pipelines. The junkie always feels ambivalent about his supplier.
As Jerome a Paris has noted, all of Russia's pipelines flow west but as HO points out, future developments will also flow east to South Korea and China. Russia has 25% of the world's natural gas reserves. No other country is even close.
Meanwhile, the United States becomes more dependent on future LNG imports from Qatar but the Persian Gulf region is about to become a destabilized nightmare as the Iraq situation winds down to its inevitable and tragic end, with Iran taking advantage of the situation.
Vladimir is laughing all the way to the bank $$$$ as the former American geopolitical hegemony goes up in flames. The rumor I am hearing is that Vladimir's favorite song is by the Rolling Stones, who sang --
Time is on my side, yes it is
Oh, time is on my side, yes it is
Now you always say
That you want to be free
But you'll come running back (said you would baby)
You'll come running back (I said so many times before)
You'll come running back to me
My long-term prediction, though, is that the US will use its overwhelming military dominance worldwide to save the Europeans' bacon by bullying the Russians into supplying the Europeans what they need.
future US leaders might favor doing something like that, but after the defeat in Iraq, I would anticipate a fairly strong isolationist movement in the US.
If Bush, or the next president, started visibly threatening Russia, it had better be over something seen as a vital American interest. I'm not sure I see Europe in that category; especially since they don't like us to threaten others.
Pray tell, what could possibly fit into that category? What could possibly justify threatening Russia, other than the export of WMDs to terrorists?
Cooler, more rational heads running the government can change a lot.
Russia always needs food, and the U.S almost always has a surplus. U.S. is always the leader in farm equipment as well. Sounds like good trading potential.
Maybe if elected officials actually used diplomacy, considered real business opportunities (instead of just energy), and looked at long term economic realities (rather than quarterly stock prices) talks with Russia, China and others wouldn't be quite so antagonistic.
If all these things happened (big IF's, I know) a person could imagine real issues being discussed by nations instead of constant sabre rattling. I serious doubt we want to invade Russia, or Russia take over our mess. Everybody just wants power, or at least parity, on the world stage to allow the best trading advantage. No one, least of all Nations, wants to be seen as weak, unimportant, or of little account by others.
(I know, all this is wishful thing, but I'm in a positive mood today. Unlike most days when I know peak energy is going to screw up my future.)
Suggest you read the recommended text above by Don in Colorado. US military dominence has reached its peak and will decline steadily relative to Russia in the aftermath of Iraq and as the Russian energy strategy plays out. No way is your prediction in the least bit feasible.
Putin's Smile, in case anyone's interested.
I just won the Lottery!
I would have recorded it if I knew it was comming on, people in the UK (and elsewhere ?) can watch it on:
http://news.bbc.co.uk/1/hi/programmes/newsnight/default.stm
Watch latest program, first story.
Here is the gist of it (not a transcript):
Gavin Esler (Presenter)
Energy Gap
EU Summit in Finland
British Governments working Assumption is that their will be a shortfall bigger than UK gas consumption in 2010.
Paul Mason (Reporter)
Learn to love us, not fear us (Putin).
Europe fears it's dependance on Gazprom.
45% of EU Gas comes from Gazprom.
But EU represents 67% of Russian Exports.
Russia can (in theory) has reserves to supply EU demand for 300 years.
But their may be a serious shortfall in four years time (2010) due to lack of investment.
Vladimir Milov (see globe and mail story) Ex-Minister of Energy, gave some figures in an academic paper. UK Govt accepts the figures as best available.
2010 Russian total output = 500bcm of Natural Gas.
EU = 200 bcm.
CIS = 112 bcm.
Russia = 238 bcm (domestic demand)
But Russia's domestic consumption is already 422 bcm and by 2010 is expected to be 469 bcm.
Extra gas from Central Asia = 105 bcm (2010)
Leaving a Gap of 126 bcm (2010).
This could lead to serious disruption in Russia and
Gazprom represents 20% of Russia state tax revenue.
Easten Europe is 90% dependant on Russian Gas - leading to severe economic disruption.
Germany Europes greatest dependant on Russian Gas could also experience severe economic disruption.
Solutions:
Russia retsrains domestic demand by putting a lid on economic growth and restricting supply.
Russia says it will bring on big new fields in the Yamal Peninsula. But this would require $70bn in investment and Gazprom is $35bn in the red.
UK Govt:
Milov figures as bets available.
Quite scary, not much time to put it right, some question over central asian gas (105 bcm not avaiable) making problem worse.
Western Partners refused stake in Shtokman.
Russian correct error Vladimir Milov Ex Deputy Minister of Energy for a few months, dismiss concerns.
I think this is correct. All errors are my own, if anyone wishes to capture video or make a proper transcript be my guest.
There seems to be a 70% supply deficiency in the US if oil and natural gas supplies were to stop suddenly. 30 to 40% efficiencies seem to be available if we put our minds to it, leaving a 30 to 40% shortfall.
The Europeans already drive much more fuel efficient cars, live in smaller, more energy efficient dwellings, and have designed their cities to be more energy efficient, rail friendly etc. 30 to 40% gains in efficiency will be more difficult than in the US. All the US has to do is act half-way reasonably about energy use (admittedly a challenge) to achieve large energy savings.
In reality, it is doubtful that oil and natural gas supplies will stop suddenly. It is more likely that these supplies will gradually become less available and much more expensive. It is possible that a concerted push to conserve and develop renewable fuel sources could be relatively smooth. It might even be a large economic opportunity.
I suspect that the Europeans will have a much more difficult time adjusting to fuel supplies becoming scarce. In view of this difficulty, it makes perfect sense for the Europeans to cuddle up to the Russians.
Those are exactly the right words. Russia wants Europe to "cuddle up" but they, (the Europeans), still want to act aloof. Putin is like, hey, I'm not so bad, but if you find me so repulsive why don't you go running to over to your American lovers, surely they can keep you warm this winter? Of course this is partly an effort on Putin's part to further isolate the US, but can you blame him? The only reason the rest of the world is trying to form alliances is in response US hegemony. Would you want a Russian military base in Alaska? Or a Chinese military base in Florida? If Russia invaded Iran on some pretext, like WMDs, don't you think there would be a few people in the US a little bent out of shape about it?
Residents of Hamburg & Birmingham can take an electric train to holiday (vacation) in Spain or Italy if flying is an issue. Residents of Boston and Detroit ?
A majority of EU residents have the option (yeh, another 12 minutes travel time) of taking public transit (often electric rail) rather than driving. In 1973 many did. They can again this Monday morning if they chose.
Germany is in active talks with industry about what needs to be done to reduce coal, oil and natural gas use by 20% by 2020. And who is Bush talking with ?#
And the EU exports much more, which allows them to import oil much more easily.
# See one year (minimum) delay in building the DC Metro expansion to Tyson's Corner & Dulles Airport. Local funding being collected as I write, all FTA approvals OK, etc. BUT the check is NOT in the mail !
What I was referring to was societal adaptation to energy shortage. In this respect, Europe has already made many of the easier adaptations (like the electric trains mentioned in your post). The harder adaptations that remain are likely to be more difficult to achieve and more painful to implement.
Europe already has more fuel efficient vehicles, electric trains, and dense development patterns. They can't make these improvements again. The US has none of these improvements. With consensus and will it would be possible to reduce the effects of a reduction in energy supply by implementing these reforms. What is lacking is will and leadership.
I repeat that as a society Europe has far fewer options to deal with reduced energy supplies which makes them far more vulnerable than the US.
http://www.mediastatements.wa.gov.au/media/media.nsf/9dbd10dc05971ee348256a76000cc002/b86ad9b69b9005 af482572050012afb5?OpenDocument
Recall my earlier posts on Putin & Gazprom:
Putin needs to ASAP charge fellow Russians the going world price for natgas, not subsidizing it--making every building metered and as energy-efficient as possible; relocalizing as much as possible every city/town. In short, the faster this is done, the greater the quantity he can export for big $$$ to raise the avg. Russian living standard. It will create enough excess revenue that Gazprom can afford to develop the remaining internal FFs.
The faster an exporter can create an optimized internal biosolar lifestyle for most of it's citizens--the longer they can husband resources into the future or leverage pricing power and/or volumes on exports. The longer Russia can supply adequate exports to EU and elsewhere: the less likelihood of war breaking out.
Russian govt. appears to have political ability to get this done more quickly than the US; more dictatorial structure vs the happy, deluded idiots in our Congress responding to the happy, deluded idiots comprising most of our populace. Where Russia could fail is if corruption gets out-of-hand.
I feel Putin & his buddies really need to consider the avg Russian more--to greatly expand the home team by not hoarding all the cookies. The pollution, safety, and environmental problems scattered across the vastness of Russia could eventually prove the undoing of the present ruling junta. The sinking of the nuke sub, Kurst, and other horrors, like the drying up of inland lakes through ill-advised policies could come back to haunt them.
The worst example I can think of going forward is: if the Russian deep-sea platforms, FSPOs, LNG tankers, and proposed floating nuclear powerplant barges for the Shtockman field are consistently unsafe deathtraps. Billions lost, time lost, lives lost, and resources lost: putting both Russians and EU citizens in jeopardy. Imagine how that could ratchet up tensions in a postPeak world.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
From the EU green paper on energy efficiency last summer the potential for reducing dependence on foreign energy is shown clearly.
Per $ produced japan uses half the energy of the EU average
See national differences page 40 top and comparison with ROW page 44 top graphs
COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 22.6.2005 COM(2005) 265 final
GREEN PAPER on energy efficiency
or doing more with less http://ec.europa.eu/energy/efficiency/doc/2005_06_green_paper_text_en.pdf
Analyses show clearly that the EU can reduce energy use much more than the 20% mentioned. Recent reports show the fx. Denmark- at the moment the most energy efficient country in the EU can reduce energy consumption some further 0-70 % if necessary. The tools for this are identified, the hurdles known, and the only missing is political will to implement.
The will to implement will arise as a result of the Russian actions. When it is realized this will not change, the drive to energy efficiency will grow rapidly.
The scenrios also make room for economical growth. The major tools are reduction of transport energy use- and energy use in the home plus energy efficient industry production.
I have never understood that wealth is associted with waste of energy. Is it "poor" to travel from A to B with 1/3 the energy use but with a 1500 pound car?? If your home is heated to 22 oC with 5 kwh/m2/year instead of the usual 15 kWh/m2/year are you then poor or rich?
For EU, the message is clear: Energy efficiency or leave the political independence to others.
regards /And1
Gazprom building
EU's proposal for Russia to give free-for-all access to its gas pipelines is almost laughable. Noone except Russia and USSR invested a single penny into building and maintaining these pipes. Demanding equal access to them without giving Gazprom access to European infractructure seems downright silly