Gas Dispute Runs Deeper Than Pipes, Experts Say - January, 2009

Western Europe and south-eastern Asia, two of the three centers of global economy, are virtually devoid of natural resources. Energy resources found within the American hemisphere will be enough to meet regional demand, with very limited surplus for export. Oil fields of Gulf States and the North Atlantic which for decades provided western Europe with energy are nearing their expiration. For the foreseeable future, perhaps for the next several generations, Europe's social infrastructure and industry will continue to be heavily dependent upon fossil fuels. The same applies for Asia's, specifically China's, gargantuan economy. At a time when the demand for energy is rapidly increasing and as traditional producers of energy are fast approaching the exhaustion their reserves, the nation that holds the most reserves in oil and natural gas, as well as precious metals I should add, will be a nation strategically placed to domineer Europe's economy, and by extension its politics.

Needless to say, Russia today is the largest producer of natural gas and the second largest producer of oil. If they play their political cards correctly and exploit their vast wealthy wilderness efficiently Russia will become by-far 'the' largest producer of energy in the world within a generation or two, surpassing oil producing Persian Gulf states. Moreover, Moscow cannot lose control over distribution routes of the Caspian Sea region and Central Asian energy, which also contain large amounts energy reserves. Therefore, Moscow has to be able to efficiently extract, process and distribute its energy reserves as well as manage the energy distribution of certain others.

Needless to say, being able to provide the Europe and Asia with readily available energy will place Moscow in the political/economic driver's seat. As a result of this dependence on Russian energy, regardless of how they view Russia, certain Eurasian powers like Germany, France and China as well as a major NATO member like Turkey will have to more-or-less go along with Moscow's wishes; while other regional interests like Britain, Israel and the US, will continue to actively seek the undermining of the Russian Federation instead. In some respects, we are clearly seeing this occurring today. Merkel is a fine diplomat, but she is stuck in the middle of two major opposing forces. Her nation is closely linked to its longtime protectorate, the US, as well as the Russian Federation. In final analysis, she will go with whatever program that is in the best interests of her great nation. I don't want to talk about a low-class clown like Sarkozy, the political establishment in France as well as Germany, the two core nations that represent European culture, politics and economy today, will have to establish good relations with their virtual neighbor, Moscow. Not doing so would be very risky for the longterm health of their respective nations.


However, the key to all this for Moscow is how it manages its God given assets and how it thwarts off its major antagonists. Russia's natural wealth has been its blessing as well as its curse. Due to its natural wealth Russia has managed to create a vast empire. Also due to this wealth other empires have set their envious eyes on Russia for centuries. The same situation applies today and it's very safe to assume that it will continue to be so in the future. Russians, however, are notorious for being inefficient, disorganized and careless. Consider how the Czars ruled, consider how Bolsheviks rose to power, consider how their political system finally fell apart in 1991, consider at the Yeltsin years... In final analysis, God has given Russians a natural wealth, its now up to them how to utilize this wealth effectively. If Russians play their cards correctly, if they play their cards efficiently, they can be in the very enviable position of ruling over all aspects of Eurasian politics and economy.

And speaking of better utilization of Russia's vast natural wealth, as well as its claims to the energy rich Arctic region, here is a very interesting Russia Today interview with world famous Russian-Armenian explorer/politician Artur Chilingarov:

Arevordi

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Exploring the ocean bottom: http://www.youtube.com/watch?v=-LhEJsCSAn4


Gas Dispute Runs Deeper Than Pipes, Experts Say



Ukraine on the brink of bankruptcy?: http://www.youtube.com/watch?v=WGzNSRs2BqE

Ukraine refuses to transport Russian gas to EU: http://www.youtube.com/watch?v=I5ec96K9Jxk

Taking sides with pipelines:
http://www.youtube.com/watch?v=nTOpHqqA_S8

January, 2009

The feud between Russia and Ukraine over natural gas prices and transit fees has left large swaths of Europe without heat. Yet, what is baffling is that the dispute has always seemed overly technical and easily resolved, if there was the slightest desire on either side. After all, both countries stand to profit from selling fuel to Europe. The latest agreement collapsed Tuesday, in a familiar cacophony of complaints and countercomplaints, and again over a seemingly trivial issue. With European Union monitors along the pipeline to make sure that Ukraine did not divert any gas for its own use, Russia agreed to resume shipments to Europe.

But rather than repressuring the Ukrainian pipeline system for exports, Russia’s gas monopoly, Gazprom, ordered a single test shipment to see if it would pass through Ukraine to Europe, through a pipeline that was being used to supply the Ukrainian city of Odessa. Ukrainian authorities refused, saying they did not want to cut supplies to their own people, and Russia again halted shipments — not, some experts believed, reluctantly. Political experts say that neither side is motivated to settle the dispute, because it has never been about the stated issues. Instead, it has been a proxy for far more fundamental and insoluble matters, particularly Ukraine’s 2004 turn to the West in the “Orange Revolution,” which deeply shook Russia’s nationalists.

“The Russian side is appealing to a lot of technical details to explain why it still wants the conflict to go on,” Vladimir S. Milov, president of the Institute of Energy Policy in Moscow and a former deputy energy minister of Russia, said in a telephone interview. “It’s very clear to see the desire to pressure the Ukrainian politicians, and pressure them that if they continue to pursue a pro-Western course and not adhere to the rules imposed by Moscow on the post-Soviet space, they will face difficulties,” he said. Nationalists in Moscow could swallow the loss of the Baltic states and Russia’s former colonies in Central Asia, but they will never accept the notion of Ukrainians, nearly half of whom are ethnic Russians, as members of an independent, Western-oriented state, and potentially in NATO, no less.

Some other analysts point to the aftermath of last summer’s Georgian conflict as another sticking point, noting that after the war Russia’s president, Dmitri A. Medvedev, had claimed a “privileged sphere of influence” over former Soviet states. “This is a continuation of the Russian-Georgian war, only by other means,” Grigory N. Perepelitsa, director of the Foreign Policy Research Institute, an arm of the Ukrainian Foreign Ministry, said in a telephone interview. “There it was tanks, here it is gas.” This time, though, Europe is suffering as well, with hundreds of thousands of people in southeastern Europe living without heat for six days and factories shutting down in several countries.

Pia Ahrenkilde Hansen, a spokeswoman for the European Commission, said: “Little or no gas is currently flowing. We are not at this stage jumping to conclusions. But this situation is obviously very serious and needs to improve rapidly. We do need to get to the bottom of this.” But getting to the bottom of Russia’s goals, said Mr. Perepelitsa of the Ukrainian Foreign Ministry, goes well beyond the industrial details of gas transit. Authorities in Moscow are seeking to discredit the Ukrainian leadership and portray Ukraine as a failed state, he said, while demonstrating to Central European nations that have supported Ukraine’s membership in NATO that they can freeze if they continue to do so. Also in play is a deep personal animosity between Russia’s prime minister, Vladimir V. Putin, and Ukraine’s president, Viktor A. Yushchenko.

Mr. Yushchenko’s face was disfigured in a 2004 poisoning that has never been solved, but for which many in Ukraine reflexively blame Russia. As it did in the disputed enclaves of South Ossetia and Abkhazia before the Georgian war, Moscow has striven to divide Ukraine politically, broadcasting Russian-language television into the country, handing out citizenship to ethnic Russians in Crimea and, critics say, backing pro-Russian figures in Ukraine’s political establishment. Russian officials, meanwhile, say Mr. Yushchenko has stirred up conflict with Russia to detract attention from his dismal performance on the economy during the financial crisis. On Tuesday, Aleksandr I. Medvedev, Gazprom’s deputy chief executive, raised a new allegation, saying that Ukraine had been taking orders from Washington after the United States and Ukraine signed a partnership agreement in December that included a clause on energy cooperation.

Mr. Medvedev did not explain why the United States would seek to disrupt relations, not to speak of the gas supply. In a statement, the United States Embassy in Moscow said that the allegation was “baseless.” But the ties between Russia and Ukraine, the two most populous successor states of the Soviet Union, are a tangle of alliances and vendettas, mercurial and often inscrutable. Mr. Putin, for example, openly backed Viktor F. Yanukovich, whom Mr. Yushchenko defeated in the 2004 elections after the Orange Revolution protests. Yet, one of the leaders of those protests, Yulia V. Tymoshenko, has recently seemed to be leaning toward Moscow, refraining for a time from criticizing Russia’s war in Georgia.

Indeed, so frustrated were some European Union officials by the latest bad turn in the gas dispute, some began to speculate privately that the two nations might be colluding to seed chaos on energy markets and drive up the price of the fuel that is their mutual business venture. Bloomberg News reported Tuesday that the cutoff had caused spot prices in Europe to rise to a three-year high of $8.60 per million B.T.U.’s, compared with $5.52 in the United States. With prices expected to fall steeply this year, that could produce at least some welcome pocket change for Gazprom.

Source: http://www.nytimes.com/2009/01/14/wo...azprom.html?hp

Gas Crisis in Europe Continues

The natural gas crisis in Europe continued Wednesday as the standoff between Russia and Ukraine left millions of homes without heating fuel for another day. The Russian gas monopoly Gazprom said in a news release that Naftogaz, its Ukrainian counterpart, had refused Wednesday for a second day to accept natural gas from Russia for transit to Europe, despite the presence of European monitors whose work was meant to have ensured exports were flowing. “The systematic lame excuses of Naftogaz Ukrainy confirm that Ukraine is incapable of compensating for the Russian gas it unlawfully siphoned off and to resume the transit,” the Gazprom statement said. “On the Russian side, taps have been opened at GIS Sudzha towards Ukrainian gas transportation system, the pressure is operational and Gazprom is ready to supply gas to European consumers any minute.”

As was the case Tuesday, Gazprom was apparently providing gas through only the Sudzha station, supplying a pipeline that the Ukrainians are using to serve their Black Sea city of Odessa. In Brussels, Pia Ahrenkilde Hansen, a spokeswoman for the European Commission, the executive arm of the European Union, confirmed that no gas was flowing through the pipelines to Europe and said the European Union had once again demanded the full restoration of service. In Kiev, the Ukrainian prime minister, Yulia V. Tymoshenko, was quoted by the Ukrainian national news agency as saying Russian gas to Europe had not been restored because of Russian actions. “Ukraine has already informed Eurogas and other institutions of the European Union that actions taken by Russia prevent gas deliveries,” the report said.

The collapse Tuesday of a monitoring agreement between the European Union, Ukraine and Russia dashed hopes that supplies via the Ukraine transit network could be restored without a resolution of the pricing dispute that lies behind the mess. The monitoring agreement, which put inspectors on site at key points along the Russian export network, fell apart when Russia delivered a small fraction of the expected supply, and both Russian and Ukrainian officials claimed the other side had shown bad faith.

In Strasbourg, France, José Manuel Barroso, the president of the European Commission, told members of the European Parliament on Wednesday that officials were considering legal action against the Russian and Ukrainian companies involved in the cutoff. “If the agreement sponsored by the E.U. is not honored, the commission will advise E.U. companies to take this matter to the courts,” Mr. Barroso told the Parliament. On Wednesday, Gazprom’s deputy chief executive, Aleksandr I. Medvedev, said the company had informed European customers that it had declared force majeure on its European gas exports through Ukraine. Force majeure is a contractual clause covering extraordinary circumstances under which a company seeks to avoid penalty for failing to meet its obligations. The Ukrainian energy company Naftogaz could not immediately be reached for comment.

Source: http://www.nytimes.com/2009/01/15/wo...=worldbusiness

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