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The Ukraine Is Alleged to Have 25% of the World’s Proven Natural Gas Reserves

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

COMMENT: A fac­tor that is cen­tral to the Ukrain­ian sit­u­a­tion is that coun­try’s nat­ur­al gas reserves. The Ukraine has been alleged to have a quar­ter of the world’s proven nat­ur­al gas reserves. (Oth­ers have dis­put­ed this.) It cer­tain­ly has a great deal of nat­ur­al gas and Buris­ma has had Hunter Biden and Cofer Black [George W. Bush’s Counter-Ter­ror chief for CIA] on its board.

The firm was con­trolled by Igor Kolo­moisky, Zelen­sky’s polit­i­cal patron.

Hunter Biden shoe-horned Metabio­ta into Buris­ma.

Those reserves might be seen as the answer to the EU’s ener­gy sit­u­a­tion.

We won­der if the Fis­ch­er-Trop­sch process might be used to derive motor fuel from that nat­ur­al gas, as is being done in the Mus­lim Broth­er­hood-affil­i­at­ed nation of Qatar.

“This Oil Giant Could Get Crushed by Ukraine” by Lawrence Lewitinn; Yahoo News; 3/06/2014.

 EXCERPT: Once known as the “Bread­bas­ket of Rus­sia”, Ukraine is now also Rus­si­a’s fuel tank. And, one Amer­i­can com­pa­ny has 10 bil­lion rea­sons to hope noth­ing goes wrong.

Ukraine sits on 39 tril­lion cubic feet of nat­ur­al gas reserves. That’s about one-quar­ter the world’s entire proven reserves. . . .


9 comments for “The Ukraine Is Alleged to Have 25% of the World’s Proven Natural Gas Reserves”

  1. When the Ger­mans were doing Fis­ch­er-Trop­sch the Allies already had the Ker­rich process(very clean) which is supe­ri­or, sev­er­al new­er and bet­ter coal to oil con­ver­sion tech­nolo­gies have been cre­at­ed since. Coal, of course, pos­sess­es 13 times more extractable ener­gy from it’s Tho­ri­um con­tent than burn­ing it.

    Posted by Chris | March 11, 2014, 8:17 am
  2. @Chris–

    There is no such thing as the “Ker­rich” process for fuel pro­duc­tion, as far as can be deter­mined.

    There IS the KARRICK process, which the Allies pos­sessed.

    With a cat­a­lyst, Fis­ch­er-Trop­sch becomes more viable.

    Note that Qatar has invest­ed bil­lions in just such tech­nol­o­gy.

    Note also that ThyssenK­rupp bought the Leu­na plant in the late 1990’s.

    WHY do you think Qatar and ThyssenK­rupp behaved as they have?



    Posted by Dave Emory | March 11, 2014, 6:44 pm
    03/11/2014 11:34 AM
    Help from Ger­many
    Firms Could Soon Pro­vide Gas to Ukraine

    By Frank Dohmen

    Ukraine’s depen­dence on gas from Rus­sia has often been used as a polit­i­cal weapon by Moscow in con­flicts with its neigh­bor. Ger­man com­pa­nies are now con­sid­er­ing how West­ern Euro­pean gas could be rerout­ed to Kiev if the Krem­lin decides to cut sup­plies.

    In geopo­lit­i­cal dis­putes between Moscow and Kiev, nat­ur­al gas is a fre­quent tool used by the Rus­sians to bring Ukraine back into polit­i­cal line. With frigid win­ter tem­per­a­tures, Ukraine is heav­i­ly reliant on Russ­ian gas to pro­vide heat­ing, and in recent years, the Rus­sians have twice cut off gas sup­plies to the coun­try.

    That even­tu­al­i­ty could play a role in the cur­rent cri­sis. Now Ger­many’s major ener­gy util­i­ty com­pa­nies are devel­op­ing strate­gies to help Ukraine fill the short­fall if Moscow decides to cut gas sup­plies. Com­pa­nies includ­ing RWE and E.on are work­ing on plans to sup­ply Ukraine with weeks’ worth of gas.

    Cur­rent­ly, Ukraine taps around half of it gas needs from Rus­sia. But last Fri­day, Russ­ian Gas monop­o­list Gazprom threat­ened to sus­pend deliv­er­ies to Ukraine if the coun­try does­n’t pay its out­stand­ing Feb­ru­ary bill of €1.7 bil­lion ($2.35 bil­lion).

    In an emer­gency, the flow through Europe’s pipelines could sim­ply be reversed, with gas get­ting pumped from Ger­man reser­voirs through the Czech Repub­lic and Slo­va­kia direct­ly to Ukraine. Fol­low­ing this year’s espe­cial­ly mild win­ter, Ger­many’s reser­voirs are much fuller than usu­al. Even long-term deliv­er­ies would be con­ceiv­able at the moment.

    Ukraine already signed a frame­work agree­ment in 2012 with RWE to make the gas deliv­er­ies pos­si­ble. Under the con­tract, the com­pa­ny has com­mit­ted itself to deliv­er­ing up to 10 bil­lion cubic meters of gas per year to Ukraine, which the coun­try was going to use this sum­mer to fill its reser­voirs for the com­ing win­ter. But RWE exec­u­tives say they could pro­vide deliv­er­ies much soon­er.

    RWE cur­rent­ly draws its gas from Nor­way or the Nether­lands, both major sup­pli­ers in West­ern Europe. It would also be pos­si­ble to redi­rect Russ­ian gas from the Nord Stream Baltic Sea pipeline — which con­nects Rus­sia and Ger­many — through pipelines in the Czech Repub­lic and Slo­va­kia to Ukraine. The Rus­sians have includ­ed pro­vi­sions in their sup­ply con­tracts with Ger­many pro­hibit­ing such redi­rec­tion, but a high-rank­ing ener­gy util­i­ty exec­u­tive told SPIEGEL these claus­es are eas­i­ly cir­cum­vent­ed. “Once gas has been deliv­ered to a stor­age facil­i­ty, it is impos­si­ble to deter­mine where it came from,” the source said.

    Around 35 per­cent of nat­ur­al gas sup­plies in Ger­many orig­i­nate from Rus­sia, but that ener­gy depen­dence could soon wane as a result of con­tro­ver­sial frack­ing tech­nolo­gies in the Unit­ed States. The coun­try is cur­rent­ly extract­ing so much nat­ur­al gas that it may soon begin export­ing it in large vol­umes.


    Posted by Vanfield | March 12, 2014, 1:32 pm
  4. http://www.naturalgaseurope.com/ukraine-russia-natural-gas-andrs-jenei


    Russ­ian con­trol over the Crimean Penin­su­la — beside the fact that it would solve the eth­nic prob­lem and the ques­tion of the fleet — would cre­ate a brand new sit­u­a­tion regard­ing the oil and gas mar­ket, because the stakes are high: if Crimea falls under Russ­ian author­i­ty, Rus­sia will be able to great­ly expand its bor­ders in the Black Sea, among oth­ers, to the three enor­mous oil and gas field that can be found next to Crimea.

    Fur­ther­more, there is a tremen­dous amount of gas under the shal­low waters of the Sea of Azov, as there are fields with great poten­tial to the south­east and to the west of Crimea as well. Each one of the hydro­car­bon loca­tions can be found on the shal­low con­ti­nen­tal shelf, which has the advan­tage of the sig­nif­i­cant­ly cheap­er extrac­tion of the oil and gas there, com­pared to the deep­er parts of the Black Sea.

    Amer­i­can and Ital­ian com­pa­nies have con­ces­sions in these ter­ri­to­ries, but their terms were made with the Ukrain­ian state, and the cre­ation of a Russ­ian enclave sim­i­lar to Kalin­ingrad would cre­ate a rather sen­si­tive legal sit­u­a­tion. Addi­tion­al­ly, the Ukrain­ian lead­er­ship knows well the impor­tance of these ter­ri­to­ries, as beside the uncon­ven­tion­al ter­res­tri­al uti­liza­tion of nat­ur­al gas, the Black Sea loca­tions form one of the key­stones of their ener­gy strat­e­gy. So Kiev will fight for the Crimean Penin­su­la tooth and nail, not only because of its sov­er­eign­ty, but because of its hydro­car­bon trea­sures as well.

    Posted by Vanfield | March 12, 2014, 3:04 pm
  5. Even a stopped clock is right twice a day. Unless the clock was a gift from the ener­gy lob­by. Those are wrong all the time:

    The Nation
    How the Gas Lob­by Is Using the Crimea Cri­sis to Push Bad Pol­i­cy and Make More Mon­ey
    Lee Fang on March 20, 2014 — 11:14 AM ET

    A small group of pun­dits and politi­cians with close ties to the fos­sil fuel indus­try are using the cri­sis in Crimea to demand that the Unit­ed States pro­mote nat­ur­al gas exports as a quick fix for the volatile sit­u­a­tion. But such a solu­tion, experts say, would cost bil­lions of dol­lars, require years of devel­op­ment, and would not sig­nif­i­cant­ly impact the inter­na­tion­al price of gas or Russia’s role as a major sup­pli­er for the region. Rather, the move would sim­ply increase gas prices for Amer­i­can con­sumers while enrich­ing com­pa­nies involved in the liqui­fied nat­ur­al gas (LNG) trade.


    Paul Bled­soe, in an opin­ion col­umn for Reuters, wrote that the US should expe­dite nat­ur­al gas exports to “bol­ster transat­lantic sol­i­dar­i­ty and help to form a unit­ed US-EU response to Russ­ian inter­ven­tion in Crimea.” He was iden­ti­fied in the piece as a mem­ber of the “White House Cli­mate Change Task Force under Pres­i­dent Clin­ton.” What wasn’t dis­closed, how­ev­er, is that Bled­soe is an offi­cial with a pro-fos­sil fuels think tank called the Bipar­ti­san Pol­i­cy Cen­ter, which is fund­ed by the Amer­i­can Gas Asso­ci­a­tion and ener­gy com­pa­nies with a finan­cial stake in pro­mot­ing the nat­ur­al gas indus­try. (Although he’s not list­ed on the web­site, a rep­re­sen­ta­tive with BPC told Repub­lic Report that Bled­soe con­tin­ues to work there.)

    Groups cre­at­ed and fund­ed by Charles Koch, chief exec­u­tive of Koch Indus­tries, have also demand­ed that Amer­i­ca should respond to the cri­sis in Crimea with LNG exports. “A seri­ous Pres­i­dent would also fast-for­ward per­mits on new liq­ue­fied nat­ur­al gas ter­mi­nals that could ship to Europe,” claims a col­umn post­ed by Amer­i­cans for Pros­per­i­ty, a Koch-run advo­ca­cy group. A sim­i­lar argu­ment is advanced by the Koch-found­ed Cato Insti­tute.

    What’s left undis­closed, how­ev­er, is the huge finan­cial stake in the debate for Koch Indus­tries. A brochure for the com­pa­ny shows that Koch has deeply expand­ed its foot­print into the nat­ur­al gas mar­ket, and is now active­ly engaged in ship­ping, sourc­ing and mar­ket­ing LNG, in addi­tion to becom­ing a leader in devel­op­ing finan­cial instru­ments relat­ed to nat­ur­al gas. “To com­ple­ment exist­ing North Amer­i­can activ­i­ties from Hous­ton and to opti­mize their glob­al port­fo­lio, KS&T com­pa­nies are expand­ing a Europe-wide nat­ur­al gas busi­ness from Gene­va and an LNG trad­ing busi­ness from offices in Hous­ton and Lon­don,” reads the doc­u­ment. Fur­ther, Koch fed­er­al lob­by­ing dis­clo­sures show that the firm has pushed a bill to expe­dite LNG exports from Amer­i­ca to NATO coun­tries.

    In per­haps the most iron­ic twist of this pub­lic debate around how to respond to Russia’s incur­sion into Crimea, Amer­i­can lob­by­ists with ties to Rus­sia are call­ing for a solu­tion that would not only shield Russ­ian gas oli­garchs, but enrich them. The Nation­al Asso­ci­a­tion of Man­u­fac­tur­ers has opposed tough sanc­tions on Rus­sia. Instead, NAM has used the cri­sis in Ukraine to “urge speed­i­er approval of liqui­fied nat­ur­al gas exports, argu­ing that the move would weak­en Vladimir Putin’s con­trol over Europe’s ener­gy sup­ply.” NAM’s chief lob­by­ist Jay Tim­mons told Politi­co that an LNG-export response would “send a strong sig­nal to the Russ­ian Fed­er­a­tion, our NATO allies, our trad­ing part­ners and the rest of the world that ener­gy exports mat­ter and are a crit­i­cal tool of Amer­i­can for­eign pol­i­cy.”

    What Tim­mons did not men­tion is that Exxon­Mo­bil is a lead­ing mem­ber of his trade asso­ci­a­tion, and that Exxon­Mo­bil has exten­sive ties to Russ­ian gas giants, includ­ing part­ner­ships to devel­op nat­ur­al gas in the Unit­ed States and around the world. (For more on the busi­ness ties, see Kert Davies and Steve Horn’s recent report­ing on the Putin-sanc­tioned alliance between Exxon­Mo­bil and Russ­ian state-owned oil and gas giant Ros­neft.) In short, Tim­mons’ strong sig­nal to Rus­sia would help Russ­ian gas busi­ness­es.

    One of the con­tem­po­rary glob­al tragedies is the way in which the pow­er­ful always seem poised to become even more pow­er­ful no mat­ter what hap­pens. More aus­ter­i­ty for the rab­ble, more bil­lions for the bil­lion­aires. Always.

    Although, to be fair, the elites expe­ri­ence tragedies too...

    Posted by Pterrafractyl | March 20, 2014, 12:05 pm
  6. You’d think some­one with Condi’s tal­ent at beat­ing the war drums would have a bet­ter sense of tim­ing:

    Wash­ing­ton Post
    Con­doleez­za Rice: U.S. can’t afford to be war-weary

    By Aaron Blake
    March 27 at 11:09 pm

    For­mer sec­re­tary of state Con­doleez­za Rice says that Amer­i­can lead­ers need to resist the temp­ta­tion to become weary of war, accord­ing to a report of her remarks at a fundrais­er.

    “I ful­ly under­stand the sense of weari­ness,” she told a GOP fundrais­er Wednes­day, accord­ing to reports. “I ful­ly under­stand that we must think: ‘Us, again?’ I know that we’ve been through two wars. I know that we’ve been vig­i­lant against ter­ror­ism. I know that it’s hard. But lead­ers can’t afford to get tired. Lead­ers can’t afford to be weary.

    Pres­i­dent Oba­ma has made clear in recent weeks that the Russ­ian incur­sion into Ukraine’s Crimean penin­su­la does­n’t yet call for mil­i­tary inter­ven­tion, and unlike the con­flict in Syr­ia, Oba­ma has­n’t broached the con­cept of using force in Ukraine.

    As with the con­flict in Syr­ia, polls show the Amer­i­can peo­ple are high­ly resis­tant to mil­i­tary action in Ukraine — espe­cial­ly after lengthy wars in Iraq and Afghanistan.

    Rice said the Unit­ed States has tak­en a step back in con­flicts includ­ing Syr­ia, Ukraine and oth­ers.

    “When Amer­i­ca steps back and there is a vac­u­um, trou­ble will fill that vac­u­um,” Rice said.

    Yes, “‘Us, again?’...leaders can’t afford to get tired. Lead­ers can’t afford to be weary”. That’s sure some inspir­ing lead­er­ship.

    Posted by Pterrafractyl | March 28, 2014, 9:48 am
  7. Look what idea just got float­ed by Poland’s Prime Min­is­ter and pos­i­tive­ly received by Angela Merkel and Jean-Claude Junck­er: an EU Ener­gy Union:

    UPDATE 1‑Merkel tells Putin Rus­sia has not done enough to ease Ukraine cri­sis

    Fri Apr 25, 2014 11:05am EDT

    * Merkel says EU, G7 to con­sid­er more ‘sec­ond stage’ sanc­tions

    * Crit­i­cis­es lack of Russ­ian imple­men­ta­tion of peace deal (Adds quotes from Pol­ish PM Don­ald Tusk)

    By Alexan­dra Hud­son and Erik Kirschbaum

    BERLIN, April 25 (Reuters) — Ger­many’s Angela Merkel said on Fri­day that she had told Russ­ian Pres­i­dent Vladimir Putin by tele­phone that Moscow had not done enough to urge sep­a­ratists in Ukraine to dis­arm, and that fur­ther sanc­tions against Rus­sia must be con­tem­plat­ed.

    The Euro­pean Union and Group of Sev­en (G7) nations would con­sid­er sanc­tions “with­in the frame­work of the sec­ond stage of sanc­tions” she said at a news con­fer­ence in Berlin with Poland’s Prime Min­is­ter Don­ald Tusk, refer­ring to a three-stage scheme.

    The sec­ond stage of sanc­tions com­pris­es over­seas asset freezes and visa bans on those Rus­sians and Ukraini­ans con­sid­ered respon­si­ble for the esca­la­tion. Dozens of indi­vid­u­als are already on the list. Stage three, under prepa­ra­tion, would involve trade and eco­nom­ic sanc­tions against Moscow.


    Under the terms of the deal Rus­sia, the Unit­ed States, Ukraine and the EU agreed to work to dis­arm ille­gal groups.

    “Rus­sia has the pow­er, or could have the pow­er, to bring the sep­a­ratists on to a peace­ful path of dis­cus­sions about the con­sti­tu­tion and prepa­ra­tions for elec­tions, but such sig­nals are unfor­tu­nate­ly lack­ing,” Merkel said.

    Poland’s Tusk warned: “The cri­sis in Ukraine may become per­ma­nent, which could require a new east­ern pol­i­cy from Europe”. He added he could not imag­ine Europe stick­ing to a “busi­ness-as-usu­al” posi­tion.

    Tusk has urged the EU to cre­ate an ener­gy union to secure its gas sup­ply and weak­en its cur­rent depen­dence on Russ­ian gas.

    Jean-Claude Junck­er, a can­di­date for Euro­pean Com­mis­sion pres­i­dent, was quot­ed by Pol­ish state agency PAP on Fri­day as say­ing that the ener­gy union pro­pos­al was “an intel­li­gent and wise pro­pos­al”.

    Merkel said she sup­port­ed the idea in prin­ci­ple but the details would need to be worked out and a joint mar­ket and joint struc­ture was nec­es­sary.

    Oh wow, what could this Ener­gy Union involve? A cen­tral EU agency for buy­ing nat­ur­al gas for all 28 EU mem­bers? How about all that plus a lot more frack­ing?

    Pol­ish PM calls for EU ener­gy union to end depen­dence on Russ­ian gas

    By Jan Strupczews­ki

    BRUSSELS, April 21 Mon Apr 21, 2014 5:52pm EDT

    (Reuters) — The Euro­pean Union must cre­ate an ener­gy union to secure its gas sup­ply because the cur­rent depen­dence on Russ­ian ener­gy makes Europe weak, Poland’s Prime Min­is­ter Don­ald Tusk wrote in an arti­cle in the Finan­cial Times.

    Rus­sia, which pro­vides around one third of the EU’s oil and gas, sent shock­waves through the inter­na­tion­al com­mu­ni­ty with its mil­i­tary inter­ven­tion and annex­a­tion of Ukraine’s Crimea penin­su­la in March.

    The action prompt­ed the Unit­ed States and its Euro­pean allies to begin impos­ing sanc­tions on Pres­i­dent Vladimir Putin’s inner cir­cle and to threat­en to penalise key sec­tors of Rus­si­a’s econ­o­my if Rus­sia esca­lates ten­sions with Ukraine.

    An inter­na­tion­al agree­ment to avert wider con­flict in Ukraine was fal­ter­ing on Mon­day, with pro-Moscow sep­a­ratist gun­men show­ing no sign of sur­ren­der­ing gov­ern­ment build­ings they have seized in the east of the coun­try.

    “Regard­less of how the stand-off over Ukraine devel­ops, one les­son is clear: exces­sive depen­dence on Russ­ian ener­gy makes Europe weak,” Tusk wrote in the arti­cle.

    He not­ed that the EU was cre­at­ing a bank­ing union, with a sin­gle super­vi­sor, and a sin­gle res­o­lu­tion mech­a­nism and fund to close down fail­ing insti­tu­tions.

    The EU was also already joint­ly buy­ing ura­ni­um for its nuclear pow­er plants. The approach to Russ­ian gas should be the same, he said.

    “I there­fore pro­pose an ener­gy union. It will return the Euro­pean Com­mu­ni­ty to its roots,” he said.

    Such a union should be based on sev­er­al ele­ments, he said, the first of which would be the cre­ation of a sin­gle Euro­pean body that would buy gas for the whole 28-nation bloc.

    Anoth­er would be that if one or more EU coun­tries were threat­ened with being cut off from gas sup­plies, the oth­ers would help them through “sol­i­dar­i­ty mech­a­nisms”.


    The EU must also help finance, even up to 75 per­cent of the val­ue of such projects, gas stor­age capac­i­ty and gas links in coun­tries which are now most depen­dent on Russ­ian gas sold by the state-owned Russ­ian gas monop­oly Gazprom.

    “Today, at least 10 EU mem­ber states depend on a sin­gle sup­pli­er — Gazprom — for more than half of their con­sump­tion. Some are whol­ly depen­dent on Rus­si­a’s state-con­trolled gas giant,” Tusk said.

    The fourth ele­ment was the full use of the EU’s exist­ing fos­sil fuels, includ­ing coal and shale gas.

    “In the EU’s east­ern states, Poland among them, coal is syn­ony­mous with ener­gy secu­ri­ty. No nation should be forced to extract min­er­als but none should be pre­vent­ed from doing so — as long as it is done in a sus­tain­able way,” Tusk said.

    The next ele­ment of the ener­gy union would be to sign agree­ments to buy gas from exporters out­side Europe — like the Unit­ed States or Aus­tralia. It could be trans­port­ed to Europe by ship in liq­ue­fied form, Tusk said.

    Final­ly the EU should strength­en the exist­ing Ener­gy Com­mu­ni­ty of the EU and eight of its east­ern neigh­bours, cre­at­ed in 2005 to extend the Euro­pean gas mar­ket east­ward.

    “True, this will require Europe’s gov­ern­ments to take a uni­fied posi­tion. But such feats of co-ordi­na­tion have been achieved before,” Tusk said.

    Euro­pean lead­ers already agreed in March to accel­er­ate their quest for more secure ener­gy sup­plies in response to Moscow’s annex­a­tion of Crimea and asked the exec­u­tive Euro­pean Com­mis­sion to draw up detailed pro­pos­als by June on how to do that.

    The EU has made progress in improv­ing its ener­gy secu­ri­ty since gas crises in 2006 and 2009, when rows over unpaid bills between Kiev and Moscow led to the dis­rup­tion of gas exports to west­ern Europe. But so far, EU reliance on import­ed oil and gas, espe­cial­ly from Rus­sia, has been ris­ing, not falling.


    Note that France is on board with the idea too, so we have lead­ers of Ger­many and France both back­ing the idea which means it’s prob­a­bly just a mat­ter of time before the EU Ener­gy Union becomes real­i­ty and all EU states have their gas flows man­aged by a cen­tral author­i­ty. And since the plan also calls for the EU to ‘strength­en’ the exist­ing Ener­gy Com­mu­ni­ty of the EU “east­ward”, this sug­gests that Ukraine is also intend­ed to be part of the new EU “Ener­gy Com­mu­ni­ty” whether or not it’s an EU mem­ber (since the “com­mu­ni­ty” already includes non-EU mem­bers).

    One of the inter­est­ing quirks in this plan is that it isn’t just a plan to set up a sin­gle enti­ty to man­age the nat­ur­al gas mar­ket. It’s also a plan to set up a sin­gle buy­er for EU nat­ur­al gas. That’s what Poland’s PM explic­it­ly called for: An EU monop­sony buy­er to counter Rus­si­a’s pow­er as the major EU sup­pli­er:

    Finan­cial Times
    April 21, 2014 1:37 pm
    A unit­ed Europe can end Russia’s ener­gy stran­gle­hold
    An ener­gy union could restore com­pe­ti­tion, says Don­ald Tusk

    By Don­ald Tusk

    Regard­less of how the stand-off over Ukraine devel­ops, one les­son is clear: exces­sive depen­dence on Russ­ian ener­gy makes Europe weak. And Rus­sia does not sell its resources cheap – at least, not to every­one.

    This, of course, is basic eco­nom­ics. A dom­i­nant sup­pli­er has the pow­er to raise prices and reduce sup­ply. The way to cor­rect this mar­ket dis­tor­tion is sim­ple. Europe should con­front Russia’s monop­o­lis­tic posi­tion with a sin­gle Euro­pean body charged with buy­ing its gas.

    Once this has been achieved, Europe should under­take the length­i­er task of break­ing up the Russ­ian gas monop­oly and restor­ing free mar­ket com­pe­ti­tion. True, this will require Europe’s gov­ern­ments to take a uni­fied posi­tion. But such feats of co-ordi­na­tion have been achieved before.

    Now, there’s noth­ing inher­ent­ly wrong with a monop­sony, espe­cial­ly when it’s a monop­sony oper­at­ing on behalf of the pub­lic inter­est. But one of the loom­ing con­flicts over this gen­er­al plan appears to be the fact that the EU is going to try to dri­ve down nat­ur­al gas prices at the same times it’s clear­ly plan­ning on turn­ing Ukraine, with its mas­sive nat­ur­al gas deposits, into Europe’s new nat­ur­al gas sta­tion. And this is all hap­pen­ing when bru­tal aus­ter­i­ty is still very much the plan for Ukraine. As a result, nat­ur­al gas sales are prob­a­bly the only real­is­tic way for the coun­try to dig itself out of a giant eco­nom­ic hole (putting aside the giant envi­ron­men­tal hole that this plan exac­er­bates).

    So will there be any counter-bal­ance for Ukraine if its forced to pay off its mas­sive debts at new­ly low­ered gas-prices? After all, the Ener­gy Union will exist long after the imme­di­a­cy of cur­rent cri­sis and so will Ukraine’s peri­od of planned soci­ety-destroy­ing aus­ter­i­ty. So will Ukraine get lighter aus­ter­i­ty treat­ment in light of the new plan to dri­ve down the price of one of its main nat­ur­al resources? Let’s hope so...

    Posted by Pterrafractyl | April 25, 2014, 9:08 am
  8. Here’s an arti­cle that high­lights some impor­tant fea­tures of the EU’s rela­tion­ship with Rus­si­a’s nat­ur­al gas sup­plies: Qatar, the world’s sec­ond largest nat­ur­al gas exporter, is in a prime posi­tion to cap­i­tal­ize on the EU-Russ­ian ten­sions, but it’s can’t do this eas­i­ly. Why? In part because Rus­si­a’s pres­ence in the EU ener­gy mar­ket sim­ply makes it much much cheap­er for Rus­sia to sell it’s gas and that includes the new Nord­stream pipeline that came on line con­nect­ing Rus­sia to Ger­many and pos­si­bly the yet-to-be-start­ed Rus­sia-to-Bul­gar­ia South Stream pipeline that both bypass Ukraine. While it’s not known yet if South Stream is going to be derailed or not by the cri­sis in Ukraine, it does­n’t look like Rus­sia ras going to be replaced by out­side sup­pli­ers any time soon:

    Huff­in­g­ton Post
    As Europe Recon­sid­ers Russ­ian Gas, Qatar Waits in Wings

    Gior­gio Cafiero
    Co-founder of Gulf State Ana­lyt­ics and research ana­lyst with Coun­try Risk Solu­tions, a cross-bor­der risk advi­so­ry firm

    Daniel Wag­n­er
    CEO, Coun­try Risk Solu­tions

    Co-writ­ten with Sufyan Bin Uza­yr

    Post­ed: 04/26/2014 4:52 pm EDT Updat­ed: 04/26/2014 4:59 pm EDT

    Through­out the Ukraine cri­sis, Euro­pean Union (EU) lead­ers have become more vocal about their inter­est in reduc­ing Europe’s con­sump­tion of Russ­ian nat­ur­al gas. As a result, Qatar — the world’s num­ber-one provider of liq­ue­fied nat­ur­al gas (LNG) — is well posi­tioned to play a more influ­en­tial role in Europe’s ener­gy land­scape.

    Although unlike­ly to replace Rus­sia as Europe’s top nat­ur­al gas provider, Qatar could assist in sig­nif­i­cant­ly decreas­ing the EU’s reliance on Russ­ian ener­gy resources while at the same time obtain­ing greater diplo­mat­ic lever­age over Euro­pean gov­ern­ments.

    Ukraine’s impact on EU-Rus­sia ener­gy trade

    For­tu­nate­ly for the EU, Ukraine’s cri­sis did not erupt sev­er­al years ear­li­er. In 2006, 80 per­cent of Rus­si­a’s nat­ur­al gas sales to the EU tran­sit­ed Ukraine. This was reduced to 50 per­cent by 2013 (two years after the Nord Stream pipeline came on line — con­nect­ing Vyborg, Rus­sia to Sass­nitz, Ger­many via the Baltic Sea).

    In 2013, the EU and Rus­sia began con­struc­tion on the South Steam project, a planned gas pipeline con­nect­ing Rus­sia to Bul­gar­ia via the Black Sea, which would increase EU-Rus­sia ener­gy trade while bypass­ing Ukraine.

    How­ev­er, the chill­ing of EU-Rus­sia rela­tions may jeop­ar­dise the South Stream pro­jec­t’s future. Euro­pean firms involved in the project have react­ed dif­fer­ent­ly. While the CEO of Italy’s ENI called the pro­jec­t’s future “gloomy,” some Bul­gar­i­an and Ger­man firms have remained opti­mistic, as have their Russ­ian part­ners.

    Nat­u­ral­ly, each EU mem­ber faces unique geopo­lit­i­cal chal­lenges and vary­ing degrees of geo­graph­ic prox­im­i­ty to alter­na­tive nat­ur­al gas providers and cor­ri­dors. Nation­al inter­est will there­fore dic­tate how each par­tic­i­pat­ing Euro­pean nation reacts to the project in the future.

    Qatar’s most promis­ing near-term oppor­tu­ni­ties in the EU exist in Central/Eastern Europe, where depen­den­cy on Russ­ian gas is com­par­a­tive­ly high and anti-Krem­lin sen­ti­ment is wide­spread.

    Although Poland relies on Rus­sia for 60 per­cent of its nat­ur­al gas imports, War­saw has pur­sued bold mea­sures to pur­chase gas from oth­er providers (includ­ing Qatar) since the Rus­sia-Ukraine price war of 2009, which high­light­ed the geopo­lit­i­cal risks of main­tain­ing a reliance on Russ­ian gas.

    Poland’s LNG ter­mi­nal in S´winoujs´cie is expect­ed to begin import­ing Qatari gas in 2015. As East­ern Euro­pean coun­tries, includ­ing Esto­nia and Lithua­nia, also invest heav­i­ly in LNG infra­struc­ture, Qatar will like­ly gain new oppor­tu­ni­ties giv­en Doha’s own­er­ship of Qatar­gas, the world’s largest LNG ship­ping com­pa­ny.

    Can Qatar make a dif­fer­ence?

    Although Qatar is only a frac­tion of one per­cent the size of Rus­sia, the Gulf emi­rate’s reserves amount to over half of Rus­si­a’s, mak­ing Qatar the world’s num­ber-two gas exporter behind Rus­sia itself.

    How­ev­er, Qatar under­stands that it can­not over­take Rus­sia as Europe’s top gas sell­er, nor is it clear that Doha has any inter­est in pur­su­ing such an ambi­tion.

    Due to Rus­si­a’s enor­mous mar­ket share in Europe, it can sell nat­ur­al gas to the Euro­peans at a price 40–50 per­cent below what the Qataris offer. Near­ly 70 per­cent of Qatar’s exports reach Chi­na, India, Japan, Sin­ga­pore, and South Korea, mak­ing Qatar’s econ­o­my far less depen­dent on EU-bound exports.

    There­fore, Rus­sia will like­ly sign gas deals with Europe at rates below any lev­el that the Qataris would find agree­able giv­en their oppor­tu­ni­ties in Asian mar­kets. While Pol­ish offi­cials are will­ing to pay a steep price to wean their coun­try off Russ­ian gas, oth­er Euro­pean gov­ern­ments will not have the abil­i­ty or incen­tive to do so.

    Rus­si­a’s pre­em­i­nent role in the EU gas mar­ket can­not be threat­ened in the near-term. Even Poland — the EU mem­ber arguably most deter­mined to reduce its reliance on Russ­ian gas — still has a con­tract with Gazprom booked until 2022.

    Alter­na­tive­ly, the pos­si­bil­i­ty of Ger­many re-start­ing its nuclear pow­er plants, advances in green tech­nol­o­gy, and increased con­sump­tion of coal could decrease the EU’s con­sump­tion of nat­ur­al gas alto­geth­er.

    Fur­ther­more, the cost­ly invest­ments in LNG infra­struc­ture that cash-strapped Euro­pean gov­ern­ments would have to make in order to secure high­er LNG imports from Qatar will lim­it Doha’s capac­i­ty to wedge itself between the EU and Rus­sia.


    Anoth­er ques­tion raised by this is just how eco­nom­i­cal­ly fea­si­ble the EU’s big push into frack­ing in order to wean itself off of Russ­ian gas is going to be, espe­cial­ly with the pro­posed EU “ener­gy union” now on the hori­zon. That could end up being some pret­ty cheap gas that the EU gets from Rus­sia if there’s a sin­gle EU buy­ing agency that sets up gas con­tracts for the entire EU.

    So is the EU seri­ous­ly going to be able to out-frack Rus­si­a’s gas sup­pli­ers if Qatar, the sec­ond largest exporter in the world, can’t real­is­ti­cal­ly com­pete unless the EU decides to buy at high­er prices? Or might an “ener­gy union” be used to ensure that expen­sive, domes­ti­cal­ly fracked gas gets selec­tive­ly pur­chased over the cheap­er imports? Free­dom isn’t free, after all. Could expen­sive domes­tic frack­ing for ener­gy free­dom be on the way? Angela Merkel appears to be warm­ing up to idea of frack­ing for free­dom, so...prob­a­bly?

    The Local Ger­many edi­tion
    ‘Frack­ing won’t save Ger­many from Putin’

    Pub­lished: 22 Apr 2014 13:17 GMT+02:00
    Updat­ed: 22 Apr 2014 13:17 GMT+02:00
    Ger­many’s reliance on Russ­ian gas con­tin­ues to lim­it the nation’s diplo­mat­ic lever­age in the Ukraine cri­sis. But as lead­ers once again explore frack­ing as an alter­na­tive, crit­ics told The Local the risks were too high.

    Frack­ing — the process of extract­ing hard-to-access shale gas from the ground using high­ly-pres­sur­ized chem­i­cals — has nev­er been pop­u­lar in envi­ron­men­tal­ly-con­scious Ger­many.

    Last year a draft bill to allow com­pa­nies to use the method had to be shelved when the extent of pub­lic feel­ing became appar­ent.

    But as the Ukraine cri­sis has made clear, Ger­many’s reliance on Russ­ian gas imports is becom­ing increas­ing­ly dan­ger­ous. Now frack­ing is being put for­ward again as a way of lib­er­at­ing the coun­try’s ener­gy sup­ply from the whims of Russ­ian Pres­i­dent Vladimir Putin.

    Yet as calls for Ger­mans to recon­sid­er frack­ing grow loud­er, crit­ics, includ­ing Envi­ron­ment Min­is­ter Bar­bara Hen­driks and Friends of the Earth Ger­many (BUND), are call­ing for an out­right ban. They say the coun­try is not big enough to with­stand large scale use of frack­ing chem­i­cals, which car­ry a poten­tial risk to drink­ing water.

    “Exist­ing shale gas deposits in Ger­many would only last for about ten years. Long term price sta­bil­i­ty and inde­pen­dence through rely­ing on Ger­many’s own gas resources are there­fore pure utopi­an fan­ta­sy,” BUND frack­ing expert Inga Römer told The Local.

    “Con­t­a­m­i­na­tion of drink­ing water, increased risks of earth­quakes, increased noise and air pol­lu­tion in a dense­ly pop­u­lat­ed coun­try like Ger­many? It is unthink­able,” she added. “The high-risk and uneco­nom­ic frack­ing process should be banned here.”

    Frack­ing dan­gers

    Oth­ers, such as renew­able ener­gy blog­ger Michael Brey, have accused the pro-frack­ing lob­by of manip­u­lat­ing fears over Ger­many’s gas sup­ply in the Ukraine cri­sis to force a dan­ger­ous tech­nol­o­gy on a skep­ti­cal Ger­man pub­lic.

    Writ­ing on the blog sec­tion of Econeers, a crowd­fund­ing plat­form to raise mon­ey for Ger­man renew­able ener­gy projects, he argued the EU Ener­gy Com­mis­sion­er Gün­ther Oet­tinger was bold­ly using the Crimean cri­sis as a way of bring­ing frack­ing back into play.

    “He is not alone — Chan­cel­lor Angela Merkel has also sud­den­ly tak­en a shine to the high­ly risky tech­nol­o­gy,” Brey wrote.

    “Gün­ther Oet­tinger is not exact­ly known as an ardent pro­po­nent of renew­able ener­gy. He seems bet­ter known for his absurd advances in ener­gy pol­i­cy.

    “In his lat­est polit­i­cal gaffe, Oet­tinger used the back­ground of the Crimean cri­sis to speak up in favour of frack­ing in Ger­many — a dan­ger­ous tech­nol­o­gy used to extract shale gas, which con­t­a­m­i­nates soil and ground water for cen­turies with poi­so­nous chem­i­cals.

    “If these chem­i­cals find their way into drink­ing water, they can cause infer­til­i­ty and can­cer in humans — among oth­er things.

    Merkel’s U‑turn

    “Frack­ing also caus­es mas­sive dam­age to nat­ur­al habi­tats. Drilling in sen­si­tive areas can lead to fis­sures and earth­quakes. The gas extrac­tion method is also seen as extreme­ly risky for the cli­mate because it can allow the green­house gas methane to leak into the atmos­phere.

    “Methane is 25 times more dan­ger­ous than car­bon diox­ide in terms of its warm­ing affect on the atmos­phere — a real dan­ger to our cli­mate. In this way, frack­ing could in some sit­u­a­tions prove worse for the cli­mate than burn­ing brown coal as an ener­gy source.

    “But Oet­tinger is not the only one push­ing for frack­ing. In light of the Ukraine cri­sis and fears over Ger­man depen­dence on Russ­ian gas, Chan­cel­lor Angela Merkel seems to be about to do a U‑turn on her pre­vi­ous­ly crit­i­cal stance towards frack­ing.

    “She is now con­sid­er­ing import­ing liq­uid gas from the USA, where since the begin­ning of the last decade a frack­ing boom has been tak­ing place.

    “Back in May 2013, when Ger­many tabled a draft law to allow frack­ing that was lat­er shelved, Merkel advised cau­tion. ‘This tech­nol­o­gy would also very prob­a­bly give Ger­many access to new gas deposits, but unlike large areas of the USA, we live in a very dense­ly pop­u­lat­ed coun­try,’ she told a crowd in Ham­burg. ‘That is why we have to look very care­ful­ly into whether this tech­nol­o­gy should also be used here.’

    “Yet as the Crimean cri­sis drags on and Ger­many explores how best to wean itself off gas imports from Rus­sia, along comes a solu­tion — just in the nick of time. Ger­many will begin import­ing gas from frack­ing in the USA.

    “At an EU sum­mit this March, Merkel was report­ed as say­ing US shale gas imports could be an option for Euro­pean coun­tries seek­ing to diver­si­fy their ener­gy sources. Or in oth­er words, frack­ing is fine as long as it hap­pens a long way away and not here.


    So back in March, Merkel was open to idea of import­ed fracked gas from the US, but was­n’t so keen on frack­ing tak­ing place in Europe and cer­tain­ly not in Ger­many. But now, with the new frack­ing-inten­sive “ener­gy union” idea being bandied about that sets up a sin­gle nat­ur­al gas pur­chas­er, frack­ing in Poland might become a real­i­ty. And frack­ing in Ukraine is just a mat­ter of time. But there are sub­stan­tial shale gas reserves across the EU. Which rais­es the ques­tion: is the pro­posed “ener­gy union” going to dou­ble as a “EU-wide domes­tic frack­ing union” even when the fracked gas (pure­ly in finan­cial terms and putting aside envi­ron­men­tal costs) is going to be far more expen­sive than Russ­ian imports? In oth­er words, is the cri­sis in Ukraine going to result in the EU buy­ing expen­sive domes­ti­cal­ly pro­duced fracked gas as the price to pay for EU ener­gy free­dom from Russ­ian gas? It’s start­ing to look like that’s the agen­da and, if so, that’s a pret­ty pricey plan.

    Posted by Pterrafractyl | April 26, 2014, 5:04 pm
  9. Here’s a tweet to con­sid­er: East­ern Ukraine is mush gassier than West­ern Ukraine

    Daniel Sand­ford@BBCDanielS

    Map of the day. From the Shell brochure about their planned shale gas project in E Ukraine...centred on Slo­vian­sk! pic.twitter.com/FXA1qagwsH
    4:29 AM — 28 Apr 2014

    There’s anoth­er map here show­ing the dis­pro­por­tion­ate num­ber of gas fields in the east­ern half of the coun­try.

    Inter­est­ing­ly, since the big west­ern oil and gas firms are main­tain­ing very chum­my ties with Moscow despite the cri­sis, it’s unclear how much a breakup of Ukraine is some­thing the big firms should even fear from a busi­ness stand­point.

    Loss of exist­ing con­tracts could be an issue. But keep in mind that all of the talk from Ukraine’s gov­ern­ment last year was that these new frack­ing deals would lead towards Ukraine’s ener­gy inde­pen­dence and maybe even allow for nat­ur­al gas exports. Maybe, assum­ing the opti­mistic fore­casts. How thrilled are firms like Chevron and Shell when they hear about non-export­ing plans like that?

    Ukraine signs $10 bil­lion shale gas deal with Chevron

    By Pavel Poli­tyuk and Richard Balm­forth

    KIEV Tue Nov 5, 2013 9:11am EST

    (Reuters) — Ukraine signed a $10 bil­lion shale gas pro­duc­tion-shar­ing agree­ment with U.S. Chevron (CVX.N) on Tues­day, anoth­er step in a dri­ve for more ener­gy inde­pen­dence from Rus­sia.

    The deal to devel­op its west­ern Oless­ka field fol­lowed a sim­i­lar shale gas agree­ment with Roy­al Dutch Shell (RDSa.L) in Jan­u­ary and boosts Ukraine’s lead­er­ship at a time of fraught rela­tions with Moscow over gas sup­plies.

    “The agree­ments with Shell and Chevron ... will enable us to have full suf­fi­cien­cy in gas by 2020 and, under an opti­mistic sce­nario, even enable us to export ener­gy, Pres­i­dent Vik­tor Yanukovich told investors short­ly before the sign­ing.

    The high­est end of expec­ta­tions for Olesska’s poten­tial reserves would match around three years of Euro­pean Union gas demand, but sim­i­lar­ly sun­ny hopes for shale reserves in neigh­bor­ing Poland have been very sharply down­sized.

    Shale devel­op­ment in Europe is far behind the boom­ing U.S. sec­tor and progress is patchy. Chevron pulled out of a shale explo­ration ten­der in Lithua­nia and has sus­pend­ed work at a Roman­ian shale well after local protests.

    Ukraine Ener­gy Min­is­ter Eduart Stavyt­sky, who signed the deal with Chevron exec­u­tive Derek Mag­ness, set it in the con­text of a high price Ukraine pays Rus­sia for its gas.

    This is one more step towards achiev­ing full ener­gy inde­pen­dence for the state. This will bring cheap­er gas prices and the sort of just prices which exist (else­where) in the world,” he said.

    Ukraine pays $400 per thou­sand cubic meters for Russ­ian gas under a 2009 10-year agree­ment. Kiev has failed to re-nego­ti­ate its terms with Moscow.

    The agree­ment with Chevron, to extend for 50 years, fore­saw an ini­tial invest­ment of $350 mil­lion by the U.S. major in explorato­ry work over two or three years, Stavyt­sky said, aimed at estab­lish­ing the com­mer­cial via­bil­i­ty of shale reserves in the 5,260 square km (2,000 square miles) Oless­ka, part of a band of shale which stretch­es from the Baltic to the Black Sea.

    Ear­li­er gov­ern­ment fig­ures set total invest­ments, includ­ing extrac­tion after explorato­ry drilling, at around $10 bil­lion.


    The 50 year dura­tion of Chevron’s (and Shel­l’s) con­tract high­lights the fact that they have a long-term stake in the cur­rent cri­sis with busi­ness oppor­tu­ni­ties on both sides. Does Ukraine, itself, have to keep exist­ing for those con­tracts to be enforced? Might the pos­si­bil­i­ty of civ­il war and the split­ting up of Ukraine make the remain­ing “West Ukraine” and “East Ukraine” an even big­ger net gas exporter than a unit­ed Ukraine? Since the gas isn’t real­ly even­ly dis­trib­uted, depend­ing on how the coun­try gets divid­ed the gas-to-pop­u­la­tion ratio might get­ting shift­ed around quite a bit, leav­ing more for exports in one of the two new states.

    And what if East­ern Ukraine broke off and joined Rus­sia? If that hap­pened, how much more of that gas from East­ern Ukraine would end up for export instead of domes­tic con­sump­tion and how would the export prices com­pare to the price a unit­ed Ukraine would pay for domes­tic con­sump­tion of their own gas? It seems like there might be some sort of spe­cial low price for domes­tic gas con­sump­tion giv­en how impor­tant nat­ur­al gas is for the Ukrain­ian pop­u­lace (and the exter­nal­i­ties the pop­u­lace has to pay). Is that some­thing Shell & Friends prefers? Or might a divid­ed Ukraine be bet­ter for busi­ness?

    If the big West­ern oil and gas firms that are cur­rent­ly close to Moscow don’t real­ly care how the Ukrain­ian cri­sis is resolved (as long as they get their con­tracts intact), from a pure­ly busi­ness stand­point, which out­come of the cri­sis in Ukraine would they pre­fer? That’s not obvi­ous. But no mat­ter how it turns out, they’re prob­a­bly pret­ty glad it hap­pened.

    Posted by Pterrafractyl | April 28, 2014, 9:40 pm

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