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From Energy Core to Currency War

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A multi-spectrum war is being waged against Moscow by Washington. If there are any doubts about this, they should be put to rest. Geopolitics, science and technology, speculation, financial markets, information streams, large business conglomerates, intelligentsia, mass communication, social media, the internet, popular culture, news networks, international institutions, sanctions, audiences, public opinion, nationalism, different governmental bodies and agencies, identity politics, proxy wars, diplomacy, countervailing international alliances, major business agreements, non-governmental organizations (NGOs), human rights, prestige, military personnel, capital, and psychological tactics are all involved in this multi-spectrum war.

On a daily basis this struggle can be seen playing out on the airwaves, in the war theaters in Ukraine and the Middle East, through the statements and accusations of diplomats, and in the economic sphere.
Additionally, the debates and questions on whether a new cold war—a post-Cold War cold war—has emerged or if the Cold War never ended should be put to rest too. The mentality of the Cold War never died in the Washington Beltway.

From the perspective of Russian officials, it is clear that the US never put down its war mace and continued the offensive. The dissolution of the Warsaw Pact, defeating the Soviets and Eastern Bloc, and seeing the Soviet Union dismantled into fifteen republics was not enough for the Cold War warriors in the US. The newly emergent Russian Federation had to be placated in their views.
Petro-politics have been a major feature of this multi-spectrum war too. [1] Not only have energy prices been a factor in this struggle, but so are financial markets and national currencies. The manipulated decline in the price of energy, which has been driven by the flooding of the global market with oil, is now being augmented by a siege on the value of the Russian ruble.
This is part of what appears to be a deliberate two-pronged attack on the Russian Federation that seeks to cut Russia’s revenues through market manipulation via economic sanctions and price drops. It is what you would call a «double whammy». While sanctions have been imposed on the Russian economy by the US and its allies, including Australia, Canada, the European Union, and Japan, offensives on Russia’s main source of revenue — energy — and its national currency have taken place.

Currency Warfare and Inflation
The price of the Russian ruble begun to drop in December 2014 as a consequence of the economic siege on the Russian Federation, the drop in global energy prices, and speculation. «Judging by the situation in the country, we are in the midst of a deep currency crisis, one that even Central Bank employees say they could not have foreseen in their worst nightmares». Interfax’s Vyacheslav Terekhov commented on the currency crisis while talking to Russian Preisdent Vladimir Putin during a Kremlin press conference on December 18, 2014. [2] Putin himself admitted this too at the press conference. While answering Terekhov, Putin explained that «the situation has changed under the influence of certain foreign economic factors, primarily the price of energy resources, of oil and consequently of gas as well». [3]
Some may think that the drop in the Russian ruble’s value is a result of the market acting on its own while others who recognize that there is market manipulation involved may turn around and blame it on the Russian government and Vladimir Putin.

This process, however, has been guided by US machinations. It is simply not a result of the market acting on its own or the result of Kremlin policies. It is the result of US objectives and policy that deliberately targets Russia for destabilization and devastation. This is why Putin answered Terekhov’s question by saying that the drop in the value of the Russian ruble «was obviously provoked primarily by external factors». [4]
Both US Assistant-Secretary of State Victoria Nuland — the wife of the Project for the New American Century (PNAC) co-founder and neo-conservative advocate for empire Robert Kagan—and US Assistant-Secretary of the Treasury Daniel Glaser told the Foreign Affairs Committee of the US House of Representatives in May 2014 that the objectives of the US economic sanctions strategy against the Russian Federation was not only to damage the trade ties and business between Russia and the EU, but to also bring about economic instability in Russia and to create currency instability and inflation. [5]
In other words, the US government was targeting the Russian ruble for devaluation and the Russian economy for inflation since at least May 2014.

It appears that the US is trying to manipulate the Kremlin into spending Russia’s resources and fiscal reserves to fight the inflation of the Russian ruble that Washington has engineered.
The Kremlin, however, will not take the bait and be goaded into depleting the approximately $419 billion (US) foreign currency reserves and gold holdings of the Russian Federation or any of Russia’s approximately 8.4 trillion ruble reserves in an effort to prop the declining value of the Russian ruble.

In this regard, while holding a press conference, President Putin has stated the following on December 18, 2014: «The Central Bank does not intend to ‘burn’ them all senselessly, which is right». [6] Putin emphasized this again when answering Vyacheslav Terekhov’s question by saying that the Russian government and Russian Central Bank «should not hand out our gold and foreign currency reserves or burn them on the market, but provide lending resources». [7]
The Kremlin understands what Washington is trying to do. The US is replaying old game plans against Russia. The energy price manipulation, the currency devaluation, and even US attempts to entrap Russia in a conflict with its sister-republic Ukraine are all replays of US tactics that have been used before during the Cold War and after 1991.
For example, dragging Russia into Ukraine would be a replay of how the US dragged the Soviet Union into Afghanistan whereas the manipulation of energy prices and currency markets would parallel the US strategy used to weaken and destabilize Baathist Iraq, Iran, and the Soviet Union during the Afghan-Soviet War and Iran-Iran War.
Instead of trying to stop the value of the ruble from dropping, the Kremlin appears to have decided to strategically invest in Russia’s human capital. Russia’s national reserve funds will be used to diversify the national economy and strengthen the social and public sectors.
Despite the economic warfare against Russia, this is exactly why the wages of teachers in schools, professors in post-secondary institutions of learning and training, employees of cultural institutions, doctors in hospitals and clinics, paramedics, and nurses—the most important sectors for developing Russia’s human capital and capacity—have all been raised.

The Russian Bear Courts the Turkish Grey Wolf
The Kremlin, however, has an entire list of options at its disposal for countering the US offensive against Russia. One of them involves the courting of Turkey. The Russian courtship of Turkey has involved the Russian move away from the construction of the South Stream natural gas pipeline from Russia across the Black Sea to Bulgaria.
Putin announced that Russia has cancelled the South Stream project on December 1, 2014. Instead the South Stream pipeline project has been replaced by a natural gas pipeline that goes across the Black Sea to Turkey from the Russian Federation’s South Federal District.
This alterative pipeline has been popularly billed the «Turk Stream» and partners Russian energy giant Gazprom with Turkey’s Botas. Moreover, Gazprom will start giving Turkey discounts in the purchase of Russian natural gas that will increase with the intensification of Russo-Turkish cooperation.

The natural gas deal between Ankara and Moscow creates a win-win situation for both the Turkish and Russian sides. Not only will Ankara get a discount on energy supplies, but Turk Stream gives the Turkish government what it has wanted and desired for years.
The Turk Stream pipeline will make Turkey an important energy corridor and transit point, complete with transit revenues. In this case Turkey becomes the corridor between energy supplier Russia and European Union and non-EU energy customers in southeastern Europe.
Ankara will gain some leverage over the European Union and have an extra negotiating card with the EU too, because the EU will have to deal with it as an energy broker.
For its part, Russia has reduced the risks that it faced in building the South Stream by cancelling the project. Moscow could have wasted resources and time building the South Stream to see the project sanctioned or obstructed in the Balkans by Washington and Brussels.
If the European Union really wants Russian natural gas then the Turk Stream pipeline can be expanded from Turkey to Greece, the former Yugoslav Republic (FYR) of Macedonia, Serbia, Hungary, Slovenia, Italy, Austria, and other European countries that want to be integrated into the energy project.

The cancelation of South Stream also means that there will be one less alternative energy corridor from Russia to the European Union for some time. This has positive implications for a settlement in Ukraine, which is an important transit route for Russian natural gas to the European Union.
As a means of securing the flow of natural gas across Ukrainian territory from Russia, the European Union will be more prone to push the authorities in Kiev to end the conflict in East Ukraine.

In more ways than one the Turk Stream pipeline can be viewed as a reconfigured of the failed Nabucco natural gas pipeline. Not only will Turk Stream court Turkey and give Moscow leverage against the European Union, instead of reducing Russian influence as Nabucco was originally intended to do, the new pipeline to Turkey also coaxes Ankara to align its economic and strategic interests with those of Russian interests.
This is why, when addressing Nabucco and the rivalries for establishing alternate energy corridors, this author pointed out in 2007 that «the creation of these energy corridors and networks is like a two-edged sword. These geo-strategic fulcrums or energy pivots can also switch their directions of leverage. The integration of infrastructure also leads towards economic integration». [8]
The creation of Turk Stream and the strengthening of Russo-Turkish ties may even help placate the gory conflict in Syria. If Iranian natural gas is integrated into the mainframe of Turk Stream through another energy corridor entering Anatolia from Iranian territory, then Turkish interests would be even more tightly aligned with both Moscow and Tehran.

Turkey will save itself from the defeats of its neo-Ottoman policies and be able to withdraw from the Syrian crisis. This will allow Ankara to politically realign itself with two its most important trading partners, Iran and Russia.
It is because of the importance of Irano-Turkish and Russo-Turkish trade and energy ties that Ankara has had an understanding with both Russia and Iran not to let politics and their differences over the Syrian crisis get in the way of their economic ties and business relationships while Washington has tried to disrupt Irano-Turkish and Russo-Turkish trade and energy ties like it has disrupted trade ties between Russia and the EU. [9]

Ankara, however, realizes that if it lets politics disrupt its economic ties with Iran and Russia that Turkey itself will become weakened and lose whatever independence it enjoys
Masterfully announcing the Russian move while in Ankara, Putin also took the opportunity to ensure that there would be heated conversation inside the EU. Some would call this rubbing salt on the wounds. Knowing that profit and opportunity costs would create internal debate within Bulgaria and the EU, Putin rhetorically asked if Bulgaria was going to be economically compensated by the European Commission for the loss.

The Russian Bear and the Chinese Dragon
It is clear that Russian business and trade ties have been redirected to the People’s Republic of China and East Asia. On the occasion of the Sino-Russian mega natural gas deal, this author pointed out that this was not as much a Russian countermove to US economic pressure as it was really a long-term Russian strategy that seeks an increase in trade and ties with East Asia. [10]
Vladimir Putin himself also corroborated this standpoint during the December 18 press conference mentioned earlier when he dismissed—like this author—the notion that the so-called «Russian turn to the East» was mainly the result of the crisis in Ukraine.
In President Putin’s own words, the process of increasing business ties with the Chinese and East Asia «stems from the global economic processes, because the East – that is, the Asia-Pacific Region – shows faster growth than the rest of the world». [11]
If this is not convincing enough that the turn towards East Asia was already in the works for Russia, then Putin makes it categorically clear as he proceeds talking at the December 18 press conference.

In reference to the Sino-Russian gas deal and other Russian projects in East Asia, Putin explained the following: «The projects we are working on were planned long ago, even before the most recent problems occurred in the global or Russian economy. We are simply implementing our long-time plans». [12]
From the perspective of Russian Presidential Advisor Sergey Glazyev, the US is waging its multi-spectrum war against Russia to ultimately challenge Moscow’s Chinese partners.

In an insightful interview, Glazyev explained the following points to the Ukrainian journalist Alyona Berezovskaya—working for a Rossiya Segodnya subsidiary focusing on information involving Ukraine—about the basis for US hostility towards Russia: the bankruptcy of the US, its decline in competitiveness on global markets, and Washington’s inability to ultimately save its financial system by serving its foreign debt or get enough investments to establish some sort of innovative economic breakthrough are the reasons why Washington has been going after the Russian Federation. [13]
In Glazyev’s own words, the US wants «a new world war». [14] The US needs conflict and confrontation, in other words. This is what the crisis in Ukraine is nurturing in Europe.

Sergey Glazyev reiterates the same points months down the road on September 23, 2014 in an article he authors for the magazine Russia in Global Affairs, which is sponsored by the Russian International Affairs Council—an think-tank founded by the Russian Foreign Ministry and Russian Ministry of Education 2010—and the US journal Foreign Affairs—which is the magazine published by the Council on Foreign Relation in the US.
In his article, Glazyev adds that the war Washington is inciting against Russia in Europe may ultimately benefit the Chinese, because the struggle being waged will weaken the US, Russia, and the European Union to the advantage of China. [15]

The point of explaining all this is to explain that Russia wants a balanced strategic partnership with China. Glazyev himself even told Berezovskaya in their interview that Russia wants a mutually beneficial relationship with China that does reduce to becoming a subordinate to Beijing. [16]
Without question, the US wants to disrupt the strategic partnership between Beijing and Moscow. Moscow’s strategic long-term planning and Sino-Russian cooperation has provided the Russia Federation with an important degree of economic and strategic insulation from the economic warfare being waged against the Russian national economy.

Washington, however, may also be trying to entice the Chinese to overplay their hand as Russia is economically attacked. In this context, the price drops in the energy market may also be geared at creating friction between Beijing and Moscow.
In part, the manipulation of the energy market and the price drops could seek to weaken and erode Sino-Russian relations by coaxing the Chinese into taking steps that would tarnish their excellent ties with their Russian partners.
The currency war against the Russian ruble may also be geared towards this too. In other words, Washington may be hoping that China becomes greedy and shortsighted enough to make an attempt to take advantage of the price drop in energy prices in the devaluation of the Russian ruble.

Whatever Washington’s intentions are, every step that the US takes to target Russia economically will eventually hurt the US economy too. It is also highly unlikely that the policy mandarins in Beijing are unaware of what the US may try to be doing. The Chinese are aware that ultimately it is China and not Russia that is the target of the United States.

Economic Terrorism: An Argentina versus the Vulture Funds Scenario?
The United States is waging a fully fledged economic war against the Russian Federations and its national economy. Ultimately, all Russians are collectively the target. The economic sanctions are nothing more than economic warfare. If the crisis in Ukraine did not happen, another pretext would have been fund for assaulting Russia.

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Both US Assistant-Secretary of State Victoria Nuland and US Assistant-Secretary of the Treasury Daniel Glaser even told the Foreign Affairs Committee of the US House of Representatives in May 2014 that the ultimate objectives of the US economic sanctions against Russia were to make the Russian population so miserable and desperate that they would eventually demand that the Kremlin surrender to the US and bring about «political change».
«Political change» can mean many things, but what it most probably implies here is regime change in Moscow. In fact, the aims of the US do not even appear to be geared at coercing the Russian government to change its foreign policy, but to incite regime change in Moscow and to cripple the Russian Federation entirely through the instigation of internal divisions.

This is why maps of a divided Russia are being circulated by Radio Free Europe. [17]

According to Presidential Advisor Sergey Glazyev, Washington is «trying to destroy and weaken Russia, causing it to fragment, as they need this territory and want to establish control over this entire space». [18]

«We have offered cooperation from Lisbon to Vladivostok, whereas they need control to maintain their geopolitical leadership in a competition with China,» he has explained, pointing out that the US wants lordship and is not interested in cooperation. [19]
Alluding to former US top diplomat Madeline Albright’s sentiments that Russia was unfairly endowed with vast territory and resources, Putin also spoke along similar lines at his December 18 press conference, explaining how the US wanted to divide Russia and control the abundant natural resources in Russian territory.

It is of little wonder that in 2014 a record number of Russian citizens have negative attitudes about relations between their country and the United States. A survey conducted by the Russian Public Opinion Research Center has shown that of 39% of Russian respondents viewed relations with the US as «mostly bad» and 27% as «very bad». [20]
This means 66% of Russian respondents have negative views about relations with Washington. This is an inference of the entire Russian population’s views.
Moreover, this is the highest rise in negative perceptions about the US since 2008 when the US supported Georgian President Mikheil Saakashvili in Tbilisi’s war against Russia and the breakaway republic of South Ossetia; 40% viewed them as «mostly bad» and 25% of Russians viewed relations as «very bad» and at the time. [21]

Russia can address the economic warfare being directed against its national economy and society as a form of «economic terrorism». If Russia’s banks and financial institutions are weakened with the aim of creating financial collapse in the Russian Federation, Moscow can introduce fiscal measures to help its banks and financial sector that could create economic shockwaves in the European Union and North America.
Speaking in hypothetical terms, Russia has lots of options for a financial defensive or counter-offensive that can be compared to its scorched earth policies against Western European invaders during the Napoleonic Wars, the First World War, and the Second World War.
If Russian banks and institutions default and do not pay or delay payment of their derivative debts and justify it on the basis of the economic warfare and economic terrorism, there would be a financial shock and tsunami that would vertebrate from the European Union to North America. This scenario has some parallels to the steps that Argentina is taken to sidestep the vulture funds.
The currency war eventually will rebound on the Washington and Wall Street. The energy war will also reverse directions. Already, the Kremlin has made it clear that it and a coalition of other countries will de-claw the US in the currency market through a response that will neutralize US financial manipulation and the petro-dollar.

In the words of Sergey Glazyev, Moscow is thinking of a «systemic and comprehensive» response «aimed at exposing and ending US political domination, and, most importantly, at undermining US military-political power based on the printing of dollars as a global currency». [22]
His solution includes the creation of «a coalition of sound forces advocating stability—in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty». [23]

The coming century will not be the «American Century» as the neo-conservatives in Washington think. It will be a «Eurasian Century». Washington has taken on more than it can handle, this may be why the US government has announced an end to its sanctions regime against Cuba and why the US is trying to rekindle trade ties with Iran.
Despite this, the architecture of the post-Second World War or post-1945 global order is now in its death bed and finished. This is what the Kremlin and Putin’s presidential spokesman and press secretary Dmitry Peskov mean when they impart—as Peskov stated to Rossiya-24 in a December 17, 2014 interview — that the year 2014 has finally led to «a paradigm shift in the international system».
 

Repost from the MD’s partner the 4th Media.
 
NOTES
[1] Mahdi Darius Nazemroaya, «Oil Prices and Energy Wars: The Empire of Frack versus Russia,» Strategic Culture Foundation, December 5, 2014.
[2] Official Kremlin version of the transcribed press conference — titled «News conference of Vladimir Putin» (December 18, 2014)—has been used in quoting Vladimir Putin.
[3] Ibid.
[4] Ibid.
[5] Mahdi Darius Nazemroaya, «Psychological War In The Financial Markets And The Sino-Russian Gas Deal,» Mint Press News, May 29, 2014.
[6] Supra. n.2.
[7] Ibid.
[8] Mahdi Darius Nazemroaya, «The ‘Great Game’ Enters the Mediterranean: Gas, Oil, War, and Geo-Politics,» Global Research, October 14, 2007.
[9] Mahdi Darius Nazemroaya, «Oil Prices and Energy Wars,» op. cit.; Mahdi Darius Nazemroaya, «Turkey & Iran: More than meets the eye»RT, January 20, 2014.
[10] Mahdi Darius Nazemroaya, «Psychological War In The Financial Markets,» op. cit.
[11] Supra. n.2.
[12] Ibid.
[13] Sergey Glazyev, «Alyona Berezovskaya interviews Sergei Glazyev,» Interview with Alyona Berezovskaya, Ukraine.ru, July 17, 2014: .
[14] Ibid.
[15] Sergey Glazyev, «The Threat of War and the Russian Response,» Russia in Global Affairs, September 24, 2014.
[16] Sergey Glazyev, «Alyona Berezovskaya interviews,» op. cit.
[17] Mahdi Darius Nazemroaya, «WWIII aimed to redraw map of Russia?» Strategic Culture Foundation, September 10, 2014.
[18] Sergey Glazyev, «Alyona Berezovskaya interviews,» op. cit.
[19] Ibid.
[20] Всероссийский центр изучения общественного мнения [Russian Public Opinion Research Center], «Россия-США отношенияв точке замерзания» [«Russia-US Relations at Freezing Point»], Press release 2729, December 4, 2014: .
[21] Ibid.
[22] Sergey Glazyev, «The Threat of War,» op. cit.
[23] Ibid.

Energy

The African oil markets of China and the continuous daily needs for crude oil

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In an attempt to position themselves as international players in the global oil and gas market, China’s national oil companies are investing heavily in the exploration and production of oil and gas supplies in Africa. Africa is the second largest region in supplying oil and gas to China, after the Middle East, with over 25% of its total imported oil and gas.

There are three key players committing an almost equal share of the planned 15 billion US dollar spending to the development and production of the African oil sector: China National Petroleum Corporation (CNPC), China Petroleum & Chemical Corporation (SINOPEC) and China National Offshore Oil (CNOOC).

The joint investment is expected to be the fourth largest one in the 2019-2023 period, after BP Plc, Royal Dutch Shell Plc and ENI SpA. This investment in African oil and gas is larger than the 10 billion dollars that the People’s Republic of China is investing in South America and is more than double the estimated investment in North America. Coa Chai, an expert at GlobalData, said: “About two thirds of spending is in Nigeria, Angola, Uganda and Mozambique. SINOPEC and CNOOC are well-established in Nigeria and Angola, while CNPC has a stake in the Rovuma LNG project in Mozambique”. He also added: “The increase in domestic energy demand has led China to diversify its imports of natural resources and China’s presence has increased significantly in almost 20 African countries”. One of China’s largest trading partners is the largest African oil producer, namely Nigeria. Nigeria currently pumps two million oil barrels a day and aims at producing three million barrels a day by the end of 2023. As China’s domestic oil production keeps on declining, experts predict that up to 80% of crude oil will be imported over the next 15 years.

There have been several remarkable investments by CNOOC, including the acquisition of a majority shareholding in an oil and gas exploration project by the Australian company FAR Ltd. The latter is drilling oil off the coast of Guinea-Bissau (West Africa). A FAR Ltd. spokesman said that CNOOC would obtain a 55.6% stake in the Sinapa and Esperança licenses of Swedish Svenska Petroleum Exploration AB. The Chinese oil producer may choose to become the operator of the joint venture after the completion of an upcoming offshore drilling campaign. CNOOC’s interest will be converted into a 50% share in case of successful discoveries. In Nigeria, CNOOC’s investment and involvement dates back to 2005 and the company is now the largest Chinese investment entity in Nigeria.

In 2006, CNOOC spent 2.3 billion dollars to acquire a 45% stake in the deepwater license of the Nigerian company OML 130, which is located in one of the most prolific oil and gas fields on the planet and contains the deposits of Akpo (discovered in 2000) and Aegina (discovered in 2003).

The Nigerian National Petroleum Corporation (NNPC) has made public its support for Chinese investment in Nigeria, despite the fact that the region has had considerable problems with the populations involved. These problems include sporadic outbreaks of violence: some young people have taken actions, including theft, as a way to demand access to the country’s oil wealth. There has also been a questionable lack of transparency by NNPC, which apparently has not been able to demonstrate its billion dollar revenues in recent years.

While trying to meet the growing domestic demand for fuel, Aliko Dangote (No. 1957) – the richest African and Nigerian business tycoon – is building what will be Africa’s largest oil refinery in the former capital Lagos. The nine billion dollar megaproject is supposed to be completed by the end of 2020, thus doubling Nigeria’s refining capacity and potentially turning the country into an exporter of refined products.

As China’s largest oil and gas producer in terms of efficiency and power developed, CNPC has recently signed a contract with the government of Benin (West Africa) to build and operate a crude oil pipeline in the region. It will extend for 1,980 kilometres from the Agadem oil field in Niger to the Seme Terminal port in Benin. It is the largest investment in a transnational pipeline that CNPC has ever made in Africa and aims at further allowing the transport of crude oil from Niger to international markets, as well as promoting social and economic development in Benin. Besides these large companies that invest heavily in the oil and gas industry, China is also contributing to the growth of African infrastructure as a way to have great economic and social impact. A noteworthy entrepreneur is Wilson Wu, an electrical engineer, who now manages the free trade zone of the Ogun State, Nigeria: a public-private project in which the local government provides the land and Chinese companies the capital. Wu is said to be one of about one million Chinese citizens who have ventured into Africa over the last twenty years to seek their fortune.

The daily need for black gold

It should be noted that the People’s Republic of China has increased its oil share by 20% so as to take advantage of low oil prices. Indeed, according to an announcement by the Chinese Ministry of Commerce, in a situation of declining demand and signs of increasing supply, the world’s largest oil buyer has increased the share for the use of crude oil abroad by non-State entities for 2021 by over 20% compared to 2020.

The increase in the import quota is equal to about 823,000 barrels per day, which is slightly lower than the amount pumped by Algeria that is an OPEC member. The companies that will use oil include privately-owned refineries, known as “teapots”, which in recent years have become increasingly important in the global oil market. These companies have been operating their facilities at a higher utilization rate than in 2019 for many months now, while their counterparts in the United States and Europe are lagging behind.

The increase shows that China’s oil purchases will be even larger at a time when global demand is facing new headwinds coming from further restrictions and blockages, while Covid-19 infections are spreading again in Europe and the United States.

Deteriorating demand prospects, together with a new supply in Libya, have weighed on reference prices, thus bringing West Texas Intermediate down to 6% on October 26, 2020. At 7:29 a.m. New York local time, the crude oil price was 2.4% lower, at $34.93 per barrel.

Behind the import push there is the ambitious expansion of China’s capacity. The country’s brand new mega-refinery, Zhejiang Petrochemical, started up one of its new 200,000 barrel/day crude oil distillation units on November 1. Another independent Chinese refinery, the Shenghong Petrochemical Group, is working on the construction of the country’s largest crude oil unit, which is expected to start up by the end of 2021.

Oil traders have been buying cargoes since the beginning of October 2020 and sending them to China, hoping to capitalize on an expected increase in demand at the end of the year when the independent refineries obtain the import licenses for 2021.

According to the Ministry statement, China has set the import quotas of crude oil for non-State companies at 243 million tons. According to the data collected by Bloomberg, this is equivalent to 4.9 million barrels per day. China has kept its annual quota unchanged at 202 million tons for this year, after an extraordinary increase of over one million oil barrels per day for 2019 compared to the previous year.

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Nord Stream 2: Who Benefits From the Navalny Affair?

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On October 7, the French Foreign Minister Jean-Yves Le Drian and his German counterpart Heiko Maas issued a joint statement condemning the “Russian involvement and responsibility” in the Novichok poisoning of Alexey Navalny. In retaliation for the violation of the Chemical Weapons Convention, France and Germany will share several proposals for sanctions with their European partners.

This statement occurs in the complex and unstable context of the Russian-European project, Nord Stream 2. Undermined by threats of U.S. sanctions, this infrastructure venture, surely the most ambitious in Europe, is currently at a standstill.

In Germany, various political figures are voicing their willingness to abandon the project, such as Norbert Röttgen, chairman of the Foreign Affairs Committee of the Bundestag and presidential candidate of the CDU. Another candidate, Friederich Merz, offered to immediately suspend the work for two years in reaction to Navalny’s poisoning. Despite these pressures, Angela Merkel can still rely on other supporters, such as the former chancellor, and chairman of the supervisory board of Nord Stream, Gerhard Schröder, or Nils Schmid, the vice-chairman of the SPD group in the Bundestag. As the German Chancellor begins her final year in office, the future of the project has never been so uncertain.

What is Nord Stream 2?

Nord Stream is a setup of gas pipelines that would allow Germany to be supplied with Russian natural gas via the Baltic Sea. The first two pipelines were inaugurated in 2011 and are known under the name “Nord Stream 1.”

The Nord Stream 2 project for the construction of two other pipelines was launched in 2018 to double the quantity supplied by Nord Stream 1.

While benefitting from the unmitigated support of Moscow, Nord Stream 2 is a truly European project, driven by 4 countries: Russia (through Gazprom — 51% shares), Germany, (through Wintershall and PEG Infrastruktur — 15.5% each), and France and the Netherlands (9% each, via Engie and Gasunie). In addition, more than 100 companies from 12 European countries are involved in the construction of Nord Stream 2.

The pipeline is a response to Germany’s increasing demand for natural gas. The German energetic transition policy aims to reduce coal-burning and close nuclear reactors by 2022. Natural gas is necessary to achieve this transition and could become, according to an article from Reuters, the second pillar of the power supply after renewables.

Nord Stream 2 would allow Russia to transport gas in unmatched quantities to Europe. This competitive advantage, along with the low price of Russian gas, resulted in the United States’ strict opposition to the project. Indeed, since the advent of technical innovations allowing the extraction of shale gas and its export as liquefied natural gas (LNG), the USA has become one of the leading gas suppliers in the world. However, the cost of producing American gas is much higher than that of Russian gas. It is therefore easy to understand the American hostility towards the project. On December 21 2019, while Nord Stream 2 was 94% complete, the threat of an American antitrust law to sanction companies involved in the construction of the pipeline led Allseas, a Swiss company, to halt its work. In order to resume work, the consortium has to find another contractor, but other firms fear finding themselves under U.S. sanctions.

American pressure is greatly felt in Europe. Last August, a group of U.S. Republican senators vowed to impose “crushing legal and economic sanctions” on the Port of Sassnitz in Germany. The USA also slowed down the project by putting pressure on the countries concerned by the route, such as Denmark, which was the last one to issue authorization for the pipeline to cross its territorial waters. As one of the major U.S. allies in Europe, Poland’s antitrust watchdog slapped a record $7.6 billion fine on Gazprom, which represents 10% of the Russian company’s revenue. Mateusz Morawiecki, the Polish Prime Minister, also called on Germany to halt the Nord Stream 2 project, depicting it as a threat to the stability of Europe.

It is certain that the creation of the pipeline, by stimulating competition, would allow a more reasonable price on the European gas market. Critics of the project fear a dependence of European countries on Russian gas. This argument can easily be questioned. Indeed, Nord Stream 2 in no way prevents other suppliers such as Algeria, Norway, the USA or the Netherlands from supplying gas to European countries to diversify their supply. The central issue is that of a lower price, which, as in all markets, worries suppliers.

Opposition to Nord Stream 2 is not motivated by market share concerns only, as global energy supply flows have an inherent geopolitical dimension. The position of Ukraine epitomizes this intertwining of economic, energy security, and geopolitical aspects. Indeed, Nord Stream 2 would also allow Russia to bypass Ukraine, located on the main current route for European imports of Russian gas—and to deprive it of 2 billion dollars annually, roughly 3% of the country’s GDP. Because of its key strategic position, in the long term, it is in the interest of all countries to maintain a cordial relationship with the latter. This is why the question of its loss of income must be addressed, respected and treated seriously, both by Russia and by its Western partners.

Navalny Poisoning: a Tool in Information Warfare

The objective of this article is not to lift the veil on the unfortunate poisoning of Alexey Navalny but to understand how this affair is treated by the mass media and what impact it has on the Nord Stream 2 project.

On August 20, Alexei Navalny fell ill on a flight between Siberia and Moscow and was placed in a coma for two weeks. Initially hospitalized in Omsk, he was transferred to Germany on August 22, where, following blood work, the Novichok nerve agent was found in his system.

Although the outcome of the Navalny case remains unknown, it is already fueling pro-Western and pro-Russian arguments. First of all, by the communication of Mr Navalny himself, who, via social networks like Twitter or Instagram, accuses the Kremlin of his poisoning.

In the overwhelming majority of Western media who use him as a figure to denounce the Russian system, Alexey Navalny is presented as the primary opponent of Vladimir Putin. The first analysis of the case published by Le Monde (one of the most popular French newspapers) states, “there is a simple truth: political violence is inherent to the Putin system.”

This thesis, depicting Russian power assassinating its opponents, comes from an old narrative framework and reminds us of a collective subconscious very present in Western minds. There are many examples, for example the Skripal Affair recently, but also in Russian history, such as the elimination of Paul I by Catherine II, the sponsored assassination of Trotsky, Alexander I, etc. It is essential to take into account this common bias moulded by the Cold War when analyzing Western media criticism of Russian power.

In the context described previously, the choice of Navalny’s relatives to transport him outside of Russia, to Germany, on purpose or not, necessarily gives a geopolitical and international dimension to his poisoning.

The outcome of this assassination attempt is, at present, murky and difficult to anticipate. Nevertheless, the criticism, analysis and denunciation of the presumed role of the Russian government in the poisoning have made it possible to question the place of Russia in the system of international relations.

The American newspaper Politico clearly highlights the dynamics in Western mass media. In an article dated September 16, Polish Minister of European Affairs Konrad Szymański took a stance on Nord Stream 2. The article headlined, “Navalny poisoning shows why Putin’s pipeline must be stopped.” As the article goes on, he denounces the Russian-European project, criticizes German energy consumption and defines the poisoning of Navalny as a “rude awakening” of the danger that Europe runs when dealing with Russia.

Several major European newspapers have used similar arguments, such as The Guardian, Le Figaro, Corriere della Sera or Deutsche Welle. Alexei Navalny is, well beyond his control, a communication tool in the information warfare. His case is instrumentalized and allows different stakeholders to assert their interests.

Nord Stream 2: Revealing Interests and Influences

In this geopolitical chessboard based on communication, some countries have obvious interests. This is the case for the United States, Poland, the Baltic States and Ukraine. On the other hand, Austria’s President Alexander Van der Bellen supports the project. After talks with Ukrainian President Volodymyr Zelensky, he declared, “In this particular case, we are talking about diversifying gas supplies. This is a commercial issue.”

Most of the other stakeholders have more ambivalent positions. France, which contributes to the project through the company Engie (whose state has 23.6% of the shares) has a clear economic interest in the realization of the project. However, the country—in a declared approach of rapprochement with Russia since the election of President Macron—is also subject to American influence through its bilateral relations and structures such as NATO.

The American influence is even more visible on Denmark, despite the denial of the Danish government on the interference of foreign powers. The country first authorized the construction of the gas pipeline in its territorial waters on October 30, 2019, a few months after the election of Prime Minister Mette Frederiksen. More recently, in an interview with Danish agency Ritzau, the latter declared, “I’ve been against Nord Stream 2 from the start” and “I don’t think we should make ourselves dependent on Russian gas.”

We can also remember that in July 2020, Mike Pompeo, American Secretary of State, visited Denmark. During this visit, he publicly praised the country’s energy policy.

What About the Future?

Angela Merkel has on several occasions insisted on the absence of a link between the poisoning of Navalny and the construction of Nord Stream 2. While the project has stalled since last year, this speech shows the vital interest of Germany for privileged access to Russian gas. Germany’s energy transition depends on it. However, as we have seen, Europe is fundamentally divided on this project. As a true driving force of the European Union, Germany must condemn the poisoning of Navalny, treated in a German hospital, in order to consolidate its leadership.

France, the other great leader of the European Union, is following it in this process. This is why the joint statement of the two foreign ministers, Mr Le Drian and Mr Maas, presented in the introduction underlined the following concerning sanctions: “Proposals will target individuals deemed responsible for this crime and breach of international norms, based on their official function, as well as an entity involved in the Novichok program.” The absence of any mention of the Nord Stream project, while it is at the very centre of current geopolitical tensions, shows the strong will of the two countries to carry out the project.

Completion of the pipeline, which has already cost Russian and European partners more than 9.5 billion Euros, will greatly depend on the treatment of information in key countries, with Germany at the forefront. Time is playing for the United States while Angela Merkel, still faithful to the project, will be replaced within a few months. If the project is not completed or abandoned before the next German election, we can be sure that Nord Stream 2 will occupy a prominent place in the debates.

From our partner RIAC

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Energy

Energy Research Platform Takes Central Stage under Russia’s BRICS Chairmanship

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After the Ufa declaration in 2015, BRICS, an association of five major emerging economies that includes Brazil, Russia, India, China and South Africa, has made energy cooperation one of its priorities besides attaining an admirable significant influence on regional affairs and very active on the global stage.

That 7th summit held in July in the Russian provincial city of Ufa in Bashkortostan, under Russia’s initiative the BRICS adopted the key guideline for expanding among many other spheres, development of energy cooperation, bridging the scientific and technological gap, as well as finding solutions to the challenges in the energy sector among the members.

The Ufa Declaration (point 69) states “Recognizing the importance of monitoring global trends in the energy sector, including making forecasts regarding energy consumption, providing recommendations for the development of energy markets in order to ensure energy security and economic development, we call on our relevant agencies to consider the possibilities of energy cooperation within BRICS.”

“Taking into consideration the role of the energy sector in ensuring the sustainable economic development of the BRICS countries, we welcome balancing the interests of consumers, producers and transit countries of energy resources, creating the conditions for sustainable and predictable development of the energy markets,” it further stated.

Worth to remind here that it was Russia’s proposal to hold the first meeting of the BRICS Ministers of Energy during the fourth quarter of 2015. While reaffirming the importance and necessity of advancing international cooperation in the field of energy saving, energy efficiency and developing energy efficient technologies, the BRICS look forward to developing intra-BRICS cooperation in this area, as well as the establishment of the relevant platform.

In 2020, Russia holds the rotating chair of BRICS. BRICS has neither a secretariat nor a charter. The country that chairs BRICS organizes the group’s summit and coordinates its current activities. Russia has been holding series of conferences focusing on different directions. In mid-October, the BRICS Energy Ministers held their meeting and approved a roadmap for cooperation in energy sphere that runs until 2025.  Due to coronavirus pandemic, it was video conference chaired by Russian Energy Minister Alexander Novak.

The influence of BRICS nations on the international arena is increasing due to the increasing economic power of the participating states, and it is imperative for them to coordinate their positions in energy cooperation, Minister Novak said during the meeting.

“Today, the BRICS nations represent nearly one fourth of global GDP and over a third of global consumption and production of energy. In this regard, it is very important to coordinate the positions of our nations where we have common interests and speak from a unified position in global platforms which concern themselves with matters of international energy cooperation,” he said.

“We have already begun to implement this idea in practice. Our nations have launched informal consultations on the sidelines of the G20 and on the sidelines of the World Energy Council. Beginning our work this year, we have collectively determined three key vectors of the energy dialogue. These are the support for the development of the national energy systems of BRICS nations, technological cooperation and facilitation of improved terms for investment in energy, contributing to the stability of energy markets and increasing the role of BRICS in the global energy dialogue,” Novak emphasized.

The roadmap adopted at the end of the meeting is the first comprehensive document that sets out agreed plans for the development of the energy dialogue between the five countries. The meeting also issued a communique confirming the intention to strengthen their strategic partnership in the energy sector and the area of energy security, and noting the important role of all types of energy, including fossil fuels and nuclear power.

The ministers affirmed that energy transition should correspond to national conditions and each country should determine the optimal policy without being compelled to adopt models that do not fit BRICS countries, according to the Russian ministry statement.

On October 15, Moscow hosted the first Annual Meeting of the BRICS Energy Research Platform, where analytical reports by the BRICS countries presented. That was followed by the largest youth energy event in BRICS. This year, delegations from all five countries comprised of representatives of Line Agencies responsible for the implementation of energy and youth policies as well as over 150 young scientists and experts from 40 leading universities and industrial organizations took part in the summit.

According to surveys conducted by the VTsIOM, Russian public opinion research centre, the number of families that have been taught to save energy has doubled over the past five years. That the BRICS countries are taking part in the #TogetherBrighter International Energy Saving Festival, as part of the BRICS Energy Week (October 16 – 20) was a landmark event of Russia’s BRICS Chairmanship.

Notably, the Energy Research Platform designed to encourage the research community’s involvement in the practical activities on drawing up energy resource plans. Two major events took place as part of the Energy Research Platform. The results submitted for consideration by the heads of state for effective industrial interaction and practical cooperation in developing and implementing new joint energy.

Based on national statistics and forecasts, leading BRICS experts have prepared the “BRICS Energy Report” – a review of the energy sectors in the five countries, and the “BRICS Energy Technology Report” – focuses on the priorities of technological development of the fuel and energy sectors in BRICS. The reports came from leading experts, representatives of major research institutes and energy companies from the BRICS countries as well as international energy organizations, such as OPEC, GECF, the World Energy Forum, the Clean Energy Ministerial and the World Energy Council.

In September, Foreign Minister Sergey Lavrov held an online meeting of the BRICS Foreign Ministers Council in Moscow. That was second of such meetings this year under Russia’s chairmanship. The first one was dedicated exclusively to mobilizing efforts to prevent the spread of the coronavirus infection.

Within an updated Strategy for BRICS Economic Partnership to 2025, Russia has drawn proposals on developing a new mechanism for the five member’s interaction in securing sustainable economic development in the post-pandemic age.

The theme of the Meeting of the Leaders of BRICS countries is “BRICS Partnership for Global Stability, Shared Security and Innovative Growth” which is planned for November 17 via videoconference, to be coordinated and moderated in Moscow. This year the five countries have continued close strategic partnership on all the three major pillars: peace and security, economy and finance, cultural and people-to-people exchanges. 

“Despite the current global situation due to the spread of the coronavirus infection, the activities under the Russian BRICS Chairmanship in 2020 are carried out in a consistent manner. Since January 2020, more than 60 events have been organized, including via videoconferencing. The BRICS Summit will provide impetus for further strengthening cooperation together with our partners and ensure well-being of BRICS countries,” – noted Anton Kobyakov, Adviser to the President of the Russian Federation, Executive Secretary of the Organizing Committee to Prepare and Support Russia’s SCO Presidency in 2019 – 2020 and BRICS Chairmanship in 2020.

Since 2009, the BRICS nations have met annually at formal summits, with Brazil having hosted the most recent 11th BRICS Summit in November 2019. Russia is pushing forward significant issues of five-sided cooperation in the bloc’s three areas of strategic partnership: policy and security, economy and finance, and cultural and educational cooperation. The five BRICS countries together represent over 3.1 billion people, or about 41 percent of the world population.

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