As the Russian invasion of Ukraine continues, it is becoming clear that a lot more is at stake than just the future of Ukraine. Big shifts in global order are set to follow because Russian bad behavior is triggering a reorganization of global energy supplies. 

Russia is the second most important exporter of oil to the global market, after Saudi Arabia.  It is the largest single supplier of gas to Europe.  Before the war, this dependence put Russia in a special position—able to earn massive export earnings while protecting the nation from much retaliation.  All that is now changing.  

The key to the new order will be Europe.  With breathtaking speed and unity, the Western nations have sanctioned Russia and branded the country a pariah.  Lots of countries have played a role, of course.  But Europe has been central because it is the most dependent on Russian energy supplies and also holds most of the keys for cutting that dependence.  

So far, the sanctions regime has covered practically everything but energy.  It has largely closed Russian access to western banking and airspace; the sanctions isolate members of Putin’s regime and family and seize Russian assets and financial reserves.  But oil  and gas have kept flowing, for now, because there’s no practical alternative.  Shutting those supplies quickly would cause massive economic harm and probably splinter the western alliance as individual nations seek their own special deals.  The politics of dependence are ugly—something the West has known since the first energy crises of the 1970s.

What’s special about Europe is the massive effort, unfolding right now, to make permanent cuts in dependence on Russian supplies.  The result will be an energy system in Europe that is much less dependent on fossil fuels—and thus a lot cleaner.  And for Russia the outcome will be permanent economic harm that will take a generation or longer to recover, if ever.  

Over the short term the European plan is to find any energy supply that will burn and doesn’t come from Russia.  That means a bit more coal along with more oil from the rest of the global market.  Saudi Arabia and the rest of OPEC have been visibly unhelpful—refusing to deviate from production plans set before the war.  Winners in this effort to find new supplies include Libya and Iran—two countries on the fringe of global oil markets but invited back, quickly, because they are less abhorrent than Russia.  None of this is politically elegant and none of it will do much to cut emissions, for now, but all of it will isolate Russia.  

Replacing Russian gas will be harder.  For now, Europe, which buys about 40% of its gas from Russia, will source as much as it can from other suppliers—such as by tanker from the United States.  That tanker gas is expensive because it must be cooled and compressed to make the gas a liquid—a process that, itself, uses a lot of energy.  Worse, Europe must pay prices high enough to attract that liquefied gas that, otherwise, would go to markets in Japan, Korea, China and the rest of Asia.  For these reasons, the price of natural gas in Europe today is about five times the level it should be this time of year.  With costlier gas has come costlier electricity and a drag on the European economy.  

Over the short term, the next year or two, Europe will do what it must do.  But over the longer term the European response is what’s most important.  Big investments in efficiency along with alternatives to oil and gas—such as electric vehicles and hydrogen—will put Europe on a trajectory of much lower consumption of fossil fuels and emissions.  

The European investment to cut dependence on Russian oil and gas matters not just for Europe but the rest of the world.  That’s because big European investments in new technology will drive down costs, and those lower cost devices will be available to the rest of the world.  This logic is exactly how solar energy, today often the cheapest form of generating electricity, got competitive.  It started in niche markets — first the U.S. and Japan, then in Germany — and from there global manufacturing (centered in China) drove down costs further.  As the new technologies got cheaper their backers also got more powerful politically, which cemented the revolution.  One of the leading approaches to cutting dependence on natural gas—shifting to hydrogen—is poised to have its solar moment.  

A lot can go wrong of course.  Elections in France and the US could put demagogues in power that will make it harder for the west to stay unified.  China and India will inevitably erode, a bit, the impacts of western sanctions by purchasing Russian energy supplies, especially oil, on the global market.  

But what’s most surprising, so far, is how much has gone right.  After decades of a foreign policy marked by disagreement and incoherence, The crisis in Ukraine has unified Europe.  And the place where that unity is perhaps most apparent is energy policy.

L'articolo Europe’s energy agenda after the Ukraine War proviene da InsideOver.

At the recent climate change conference in Glasgow, Americans were everywhere. Diplomats made bold promises to phase out fossil fuel subsidies while ramping up the countries cuts in the pollution that causes global warming.  CEOs filled the Glasgow stages with new announcements, especially on how they would help redirect trillions of private investment dollars to green causes.  The U.S. was central to a big announcement to cut pollution of methane, a particularly strong greenhouse gas, by 30%.  The U.S. even rejoined a coalition of countries that were make lofty promises to stop global warming at just 1.5 degrees above pre-industrial levels. America is back, or so it seems.

But behind the swagger, not much has actually changed in the U.S.  Across most of the country there are few signs of a massive “energy transition,” as the shift to zero emissions is often called. Change is afoot at a blistering pace in California and New York but not in Wyoming and Kansas or most of the rest of the country’s middle. Wind and solar technologies are advancing, but so is natural gas, which is the cleanest burning of all the fossil fuels but still emits warming pollution of carbon dioxide and methane.  Those advances are why coal, a less effective competitor, has dropped by half over the last two decades.  Market forces are now bringing coal back, a bit, because gas has doubled in price this year.

In transportation, the Biden administration talks about electric vehicles but that’s not what Americans are buying.  All of the top selling cars in America use internal combustion engines; the top three are giant trucks. (Only one electric vehicle makes the top 25–Tesla’s model 3, ranked 19^th).  This is not a bold transition but the more normal, gentler process of market-driven change.  These changes, most unrelated to climate policy, have helped the U.S. cut emissions a bit—thanks mainly to the pummeling of coal – but far from the deep cuts needed for the country to play its role in stopping global warming.

The slowness to change is, to some degree, just inertia.  When a big industrial system transitions to new technology it rarely does that quickly.  When the world shifted from energy systems dominated by coal – such as the railroads – to oil-dominated cars and airplanes it took more than half a century.  That inertia, which is evident nearly everywhere in the global energy system, is why I have long thought that stopping warming even at two degrees would be next to impossible.  New studies released before Glasgow confirmed that even with big new policy efforts the world will blow through the 1.5 degree goal and also sail past two degrees.  The planet’s climate system and industrial inertia are much more powerful forces than bold agreements reached by consensus in Glasgow.

But the bigger challenge in America is political.  The nation is severely divided on almost everything, from vaccines to policing and infrastructure. Divided politics has a huge impact on energy policy because it is so hard to get the public – and their elected members of Congress – to agree on much.

When they do agree, it is on how to spend more public money – not how to penalize big polluters.  That’s why new legislation from the U.S. is filled with subsidies for clean energy supplies and electric vehicles and other worthy investments.  But it is silent on how to regulate the older, more polluting technology.  Absent regulation or other strong penalties like a carbon tax – all off the table, politically – the U.S. won’t do much cut pollution.

The current energy crisis is creating even stronger political challenges for change.  Electricity prices have doubled, mainly because price of natural gas has doubled.  The cost of gasoline is up as well.  One of the best studies ever done on U.S. public opinion about energy policy showed that American’s want cleaner futures – only if that future doesn’t visibly cost much.  Adopting policies for a green future when energy prices are soaring is a political loser.

In a politically divided country the federal government, for the most part, won’t do much.  That means that the states are the real places to look for leadership.  And the good news is that a state-driven policy—with potentially every state with its own plan—isn’t that much more expensive than an ideal nationwide policy because some energy services like electricity are traded between the states.

Of course America isn’t divided on everything.  One area where much of the American public agrees:  be tough on China.  That’s terrible news for climate policy because the world’s two biggest emitters need to find ways to cooperate if the planet has any chance.  There are some good ideas for how to make that work, and the two countries issued a hopeful statement in Glasgow, but political headwinds in both nations are strong.

To the outside world the U.S. thus looks very hypocritical.  It joins coalitions that claim they will stop warming at 1.5 degrees.  It says it will developing countries adapt to the harsh impacts of warming, even when the political consensus isn’t there to spend the money.

Hypocrisy is a dark word for what is the real art of politics, which is to do what is possible.  And, in doing that, hopefully change the feasible future.  That’s now happening in the U.S. just as it is in Europe.  As solar and wind gain market share they also get more powerful politically, for example.  As more of the public realizes the value of nuclear power in cutting emissions the same happens.

These shifts are reshaping the political landscape, but in a divided U.S. that process is slow and with many twists and turns as power shifts in Washington.  This is frustrating for the rest of the world that depends so much on U.S. leadership, but it means that if you want to know what the U.S. will do don’t watch political statements in Washington too closely.  Watch, instead, the industries that are shifting investments to clean futures and watch the states for a better sense of what’s durable.

L'articolo American Energy Politics in the Era of Biden proviene da InsideOver.

Europe is increasingly dependent on Moscow for its gas imports. Nevertheless, Turkish President Erdogan is now operating a gas pipeline with Russia instead of the EU. It will not be the last client on the continent that Putin can cater to.

President Putin and President Erdogan have intensified their contact and relationship, particularly in the previous year, during which they met a total of ten times. Accordingly, Turkey’s relations with Russia are closer than ever before. It is one of the reasons why Putin chose Turkey as the new transit country for gas deliveries to Europe.

On Wednesday, the two opened Russia’s newest TurkStream export gas pipeline in Istanbul. It is a commercial and geopolitical coup for Moscow, as it counteracts the EU’s quest for energy supply diversification on the continent, and in fact, pushes Europeans further into the energy dependency on Russia.

TurkStream is a new edition of the South Stream pipeline project. The latter failed to meet EU competition requirements five years ago in the Crimea annexation. However, Putin did not want to succumb to his goal of creating an additional corridor for gas exports to Europe, bypassing Ukraine next to the North Stream pipeline.

Approximately 35 percent of the natural gas consumed in Europe today comes from Russia. Putin seeks to maintain this market dominance in the coming decades. Turkey is thus a logical partner. After all, Turkey is Moscow’s second most essential export destination behind Germany.

Above all, however, it forms the south-eastern flank of the EU. Half of the total capacity of the pipeline, 15.75 million cubic meters per year, is destined for transit to Europe. In the medium term, the pipeline is to bring Russian gas to Austria via Bulgaria, Serbia, and Hungary. Contrary to the EU’s goal of diversifying gas imports and increasing energy security, the countries of Southeast Europe are thus even further expanding their dependence on Russia with TurkStream.

At the same time, TurkStream is a competition project for the EU-partially financed Southern Gas Corridor, which is to bring ten billion cubic meters of gas annually to the EU via the Trans-Anatolian Pipeline (TANAP) from Azerbaijani offshore fields in the Caspian Sea. Erdogan’s plan that Turkey could become an energy hub where buyers and sellers meet and where prices are set has now become a reality.

However, the Moscow – Ankara energy axis also harbors risks for Europe. In the course of the EU accession negotiations, Turkey was supposed to become a reliable partner for Europe in energy security. The alliance with the Kremlin now has the potential to put pressure on the EU.

Erdogan even appears to be ready to increase its own energy dependency on Russia. Turkey has virtually no gas reserves of its own and is dependent on imports. Therefore, just like Europe, the country had tried in the past to diversify its energy supply and to make itself less dependent on Russia.

However, the conflict between the EU and Turkey on the energy issue had worsened. After valuable gas deposits were discovered off the coast of Cyprus, Turkey sent drillships. However, Cyprus also claims the sea area and thus the gas. The island is divided into a northern and southern part, the latter belonging to the EU. Northern Cyprus is a de facto regime that is only recognized by Turkey.

Worse yet for Ankara, at the beginning of the year, Cyprus, Greece, and Israel signed a basic agreement for the planned construction of the EastMed Mediterranean pipeline. It is said to transport gas from Israel to Greece via Cyprus. Turkey sharply criticized the construction project, as it feels cheated and sees the agreement as an attempt to isolate Turkey and Northern Cyprus.

In Turkey’s search for alternative partners outside the EU, Erdogan ran into Putin’s open arms and is inclined to accept that, with TurkStream, Russia will play a disproportionate role in its supply mix, in what is the Kremlin’s latest move in imposing its agenda on Europe.

L'articolo TurkStream And Putin’s Next Chess Move proviene da InsideOver.

Renewable energy projects and businesses surged in the 2010s. Yet, fossil fuel energy sources remain a big player in the energy market. What will be the consequences of the EU – through the European Investment Bank (EIB) – essentially ending funding for fossil fuel energy?

Renewable Energy In The EU

The current state of renewable energy in the EU is a highly segmented one. Neither renewable nor fossil fuel energy production makes up the majority share of the total energy market, according to data released by the European Commission. Although there is policy shift aimed at decreasing energy production using solid fuels, the three largest production sources in the EU continue to be nuclear energy, solid fuels and gas (over 60 per cent of the current total energy production).

The share of renewable energy out of total energy production in the EU is currently composed of around 13 per cent wind, 10 per cent hydro, four per cent solar and three per cent biomass energy production. Although all feature the same concept of energy production, they contribute to the growth of renewable energy production unequally.

Wind Power Surging

Wind energy has been the main growth source. By comparing the same months from 2016 and 2019, a stable 2 per cent increase can be seen. Additions of new wind energy facilities look to be the primary cause of growth. Decreasing costs associated with wind energy production are also contributing to further growth. Renewable energy market share growth also looks to be partially caused by the decline of the share of fossil fuel-based energy. Together, increasing production costs for coal energy and the end of governmental support for fossil fuel projects are working according to the EU’s 2050 Long-Term strategy.

Public Opinion On EU Support For Clean Energy

Public opinion about the direction the energy industry in the EU is developing towards could be an important factor. On one side, in Eurobarometer survey released in September 2019, 90 per cent of respondents agreed that “the EU must ensure access to clean energy”. However, the support for investments into clean energy in the next decade ranges from 29 per cent in Slovakia to 65 per cent in Sweden – clearly a substantial difference. Hence, because of intra-EU differences, public opinion could direct the development of the energy sector to a different path. Disagreements between regions with already well-developed renewable energy sectors, and those without, could emerge.

The Renewable Energy Picture Outside The EU

Outside the EU, the share of renewable energy out of the total gross electricity consumption is higher in all EU candidates (except Turkey), compared to the EU’s share. The main drivers of renewable energy are also quite different. The four candidate countries with a higher share of renewable energy sources than Turkey’s all boast ample hydroelectric and solar resources, thus taking advantage of a readily available renewable energy source.

The Asian renewable energy market presents a mixed landscape. Most Asian countries are either rich with fossil fuels or are importing fossil fuels for energy production from their neighbours. In Asian countries rich with fossil fuels – particularly West Asian countries – renewable energy projects are taking off. Increasing the share of energy generated from a readily available resource, such as solar radiation, will take time. Nevertheless, it is one of the best regions to develop this source of energy. Creating a stable source of electricity generation from a readily available resource should provide insurance against any future volatility.

In Asian countries with lower reserves, renewable energy development isn’t a top priority. Even with lower fossil fuel reserves, the countries can either import fossil fuels from their neighbours, or use their domestic resources in cases where populations are small enough.

The Economics Of Renewable Energy

The competitiveness of industries and the businesses making them up depend on several factors. According to Porter’s Analysis, factors like new entrants into the industry and bargaining powers of suppliers and buyers make an industry more or less competitive. On the business-level, businesses become more competitive through increasing market shares and most times, decreasing good or service prices.

This is why the decreasing financial supporting for fossil fuel energy projects is going to make a negative contribution to competitiveness in the short term, and a positive one in the long term.

The threat of new entrants into the energy industry is going to decrease because of decreased funding for fossil fuel energy projects. Since fossil fuel-based energy producers could see a decline in their share of the total energy output and will have to cope with higher production costs, their competitiveness will decrease. Although competitiveness will decrease in the short term, funding being redirected to renewable energy projects should eventually increase its level.

For businesses where energy is an important component of production, the decision to end funding support from the side of the EU will have a negative contribution to the production process. Renewable energy production has only been falling to the lower price range of fossil fuel energy. This means that businesses will see energy costs for production remaining the same, or even increasing with lower funding for fossil fuel energy projects.

The individual differences between energy production in the regions of EU are quite large. Household electricity prices can differ as much as two times between Western and Eastern EU members. Different energy production sources also dominate in different EU regions. Southern EU states produce energy mostly from oil, gas and coal, while other energy sources dominate in Northern EU states.

There is also strong intra-region variation. Oil, gas, and coal electricity production shares range by 15.1 percentage points in-between Northern EU neighbours Finland and Sweden, for example. Certain regions are going to be better off because of the decrease in funding from the European Investment Bank for fossil fuel energy projects. Northern and Eastern states could see even more funding for renewable energy projects. At the forefront of renewable energy production as the total share of electricity production in the EU, Northern and Eastern states could hit even higher market shares.

Western and Southern regions will be hit the hardest by this measure. These are the regions where renewable energy production is in the under 10 per cent range. Dealing with lower funding from the EIB could prove to be difficult.

The Future Of Energy In The EU

The future of the energy industry depends whose needs are ultimately put first. For businesses, choosing the still cheaper fossil fuel-based energy could be the right choice. For the public, clean energy is important, but unequally so in different member states of the EU. If the same trends will continue, a larger discussion on the demands and perspectives of the public and businesses should emerge.

Fuel costs for energy production are also going to play a role in the direction the industry will be going towards. The majority of the energy produced in the EU is made from nuclear and fossil fuel sources. The prices of the two materials could increase in the future. This could be the case because of the rising costs of new nuclear reactors and ever-volatile fossil fuel prices. However, it is possible that more efficient building of new nuclear facilities could solve the rising cost problem. If this happens, nuclear energy is likely to maintain its share out of the EU’s total, while fossil fuel’s share will decline even further.

Components for renewable energy facilities could become cheaper or more expensive in the future. On one side, technology related to renewable energy is developing. Along with it, the efficiency of renewable energy production facilities could become more affordable. On the other, storage costs pose a challenge to further decreases in costs. Even if the costs of building the facilities will rise in the future, they could be offset through predicted increases inefficiency.

The inevitable fact of energy consumption in the EU is that it will grow significantly in the coming decades. Demand for electricity will grow, and possibly at even faster rate if industries reliant on electricity use will continue to develop. Legislative initiatives by the EU have aimed to increase energy savings. These measures to decrease energy consumption have only been partially successful (for example resulting in a seven-year decrease, then increases). Increasing demand and funding being redirected to still developing energy technologies could produce new challenges in the future.

Negative consequences for businesses and certain regions of the EU could be the price paid for the ended funding for fossil fuel projects. It remains to be seen whether this step to achieve long-term energy goals will be the better choice when weighed against its negative consequences.

L'articolo As Support Ends For Fossil Fuels What’s The EU’s Next Energy Source? proviene da InsideOver.

Lebanese civilians fear there could be another war between Israel and Hezbollah after the discovery of rich offshore oil and gas reserves on disputed territory.

International oil and gas exploration company, Energean, announced in November, 2019 that the waters near Lebanon’s southern border contains recoverable resources of 0.9 trillion cubic feet of gas, and 34mm barrels of light oil and condensate. The oil and gas reserves – worth tens of millions of dollars – is present in a triangular area of water known as Block 9.

Israel And Palestine Both Claim The Reserves

The offshore borderline is disputed between both countries, because of its incredible oil and gas wealth. Although Lebanon is a signatory of the United Nations Convention on the Law of the Sea (UNCLOS), Israel is not. Article 3 of the UNCLOS concludes that, “every State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from base lines determined in accordance with this Convention.” Israel, however, operates under international maritime law.

“We will not hesitate to use our force and strength to protect not only the rule of law but the international maritime law,” Israel’s Minister of National Infrastructures, Uzi Landau, said years before.

“I Think That There Would Be A War”

Speaking about the conflict last year, former Lebanese army general, Eliad Farhat, said emphatically: “I think that there would be a war.” The Foreign Policy Research Institute argued last month that Israel’s border dispute is an issue of financial security. It wants to solidify its economic and political power on the national stage.

For Lebanon, however, the stakes are even higher. The nation was driven to mass protests at the end of 2019, as protesters, fed up with decades-long economic, social and environmental crises, demanded revolution. At an estimated 155 percent of gross domestic product, Lebanon is one of the world’s most indebted countries. Its government has been accused of decades of corruption, sectarianism and mismanagement of public funds.

“I am taking part because over the last 30 years warlords have been ruling us. I am about to be 30 and my parents still tell me tomorrow will be better. I am not seeing better days ahead,” said Sylvia Yaqoub, 29, a laboratory manager taking part in the protests. “We want back the money they stole because 30 families are ruling five million people. We won’t accept this any longer,” she added.

Lebanon’s Utilities Company: A Financial Black Hole

The country’s infrastructure is also severely lacking, under a government that refuses to diversify its rentier economy, with an equal dependence on remittances from its emigrant population. Its estimated 1.5 million Syrian refugees are an additional financial and infrastructural strain on Beirut’s already failing government. Arabian Industry has called the government’s utilities company a huge financial drain and “major source of the nation’s ballooning debt”.

“The electricity sector in Lebanon is undergoing a transition from heavy fuel oil to natural gas,” the Lebanese Petroleum Administration wrote in a statement.

“Most of the existing power plants and all the planned plants are equipped to run on natural gas. A prospective natural gas discovery is expected to first fulfill the needs of the local market, in particular the electricity sector, which is the main off-taker of natural gas.”

Additionally, access to this natural gas reserve would increase Lebanon’s export and revenue, reducing the country’s debt and unemployment problem.

Crisis Point: South Lebanon

South Lebanon, Hezbollah’s heartland – and bordering Israel – has been a war zone for forty years. In 2018, attacks from both sides of the border saw a one-day battle between Hezbollah and Israel, in a sign of the diminishing relationships between leaders of both countries. Hezbollah, Lebanon’s Iranian-backed Shi’ite Muslim movement, and Amal, both received support in last year’s protests.

“If we don’t work towards a solution we’re heading towards a collapse of the country, it will be bankrupt and our currency will not have any value,” Hezbollah leader, Sayeed Hassan Nasrallah, said in a speech targeting the nation “The second danger is a popular explosion as a result of wrong handling of the situation,” he added.

Lebanon’s problem is multi-generational. It is a shared problem between its government, its banks, its militia-leaders and its wealthy elite. Its disputed oil and gas reserves may improve the country’s financial standing, but there is no guarantee that an already broken government and political system would be able to economically manage such a big responsibility for the benefit of the people.

Partly a failure of international laws, where two different laws override the same jurisdiction, the problems facing both sides of the border are multi-faceted and driven by deeply nationalistic and tribalistic sentiments. Diplomatic talks have been tenuous and unsuccessful, yet threats of war, attacks and violence have been plenty. The only sure thing going forward is that civilians on both sides of the dispute will suffer the consequences of both nations’ actions.

L'articolo Fears Of Another Israel-Hezbollah War After Discovery Of Large Oil Reserves proviene da InsideOver.

After the United States prevented Congress from completing the Nord Stream 2 gas pipeline and slapped sanctions on it in mid-December, Russia stepped in. Moscow has now vowed to unilaterally complete the project by 2020, utilizing a Russian pipe-laying ship. Ukraine, like most other Eastern European countries, has criticized the project and also warned Germany of Russia’s expansion of power and further dependence on Moscow.

US Sanctions Have Temporarily Derailed North Stream 2

Nonetheless, Russia’s energy minister Alexander Novak said last Friday that he expects the project to be completed in late 2020 despite the temporary halt to construction. Originally, Nord Stream 2 was scheduled for completion in early 2020, with commissioning expected to start a few months later. Around 80 percent of Nord Stream 2 has already been completed. So far, Russian leadership had only spoken of a delay of a few months.

US sanctions had stopped the project when they caused the contracted Swiss company Allseas to pull its ships out of the project. Allseas was unwilling to be punished by the US for its involvement. Unfortunately, particular and specially-designed ships are required to lay the tubes on the bottom of the Baltic Sea, which left the project in temporary shambles.

Russia Promises To Lay Pipe Along The Last 99 Miles Of North Stream 2

However, the Russian ship Akademik Tschersky will now lay the pipes over the last 99 miles (159 km), once it has made its way back from the Far East, where it has been operating and once the needed additional equipment to work in the Baltic Sea has been brought on board. Akademik Tschersky is operated by a subsidiary of Russia’s state energy company Gazprom. A few days ago, Kremlin spokesman Dmitri Peskov said that despite US sanctions Russia had “certain capacities” to complete the natural gas pipeline “in the foreseeable future,” despite the de facto shutdown via the US Congress.

The US sanctions target companies involved in laying the pipeline and their owners. Penalties include entry bans and freezing of assets in the United States. Germany criticized the US sanctions as “serious interference” in internal affairs. Washington, on the other hand, argues that the project led by the Gazprom group increases Russia’s economic and security influence in Europe to a dangerous level.

Ukraine also warned Germany and France of dependence on Russia in the dispute over the construction of the Nord Stream 2 pipeline. Ukrainian Foreign Minister Vadym Prystaiko stated that Germany’s intention to become more independent through Nord Stream 2 had no effect, as the gas would ultimately “still come from Russia.” Besides, the Baltic Sea pipelines would be empty immediately if Russia was no longer inclined to deliver gas, Prystaiko—who also pointed out that Ukraine always has gas and would also be willing to deliver this via Ukranian pipelines—argued.

Washington And Berlin Divided Over NorthStream 2

Nord Stream 2 has been causing controversy between Washington and Berlin for quite some time. The pipeline has already cost almost ten billion euros and was initially supposed to pump gas to Europe by the end of this year. In the future, Nord Stream 2—like Nord Stream 1—will deliver gas directly from Russia to Germany. So far, Russia has used Ukraine as the leading transit country. Currently, Kyiv and Moscow are working on a new agreement for future gas transit to supply Europe, despite the ongoing war in eastern Ukraine and Russia’s role in the conflict.

However, it is also likely that less Russian gas will be transported through Ukraine in the future. Nord Stream 2 is designed for a capacity of 55 billion cubic meters of gas per year. Around 2,300 kilometers of the line with two strands have already been laid.

Meanwhile, Germany has put itself in a rather dubious position right the middle between Russia and the United States. President Trump has long claimed that Germany was uber-dependent on Russia, something the US cannot and will not accept. Congresses’ sanctions are simply the next stage of this conflict in which Germany will eventually need to decide whether Russian gas is worth jeopardizing their bilateral relationship with Washington.

L'articolo North Stream 2 Pipeline Continues To Cause Geopolitical Upheaval proviene da InsideOver.

The Qatari state-owned, Qatar Petroleum, has announced the successful operation of a gigantic refinery, in which it owns a major stake, north of Cairo, the capital of Egypt.

Qatar Petroleum owns 38.1% of the shares of the Arabian Refinery Company, which owns 66.6% of the shares of the Egyptian Refining Company which owns the refinery, located in Mostorod area.

All refinery units are now successfully operating, and are expected to ramp up to full production before the end of the first quarter of 2020, Qatar Petroleum said.

It added that the operation of the refinery would reduce Egypt’s dependence on imported petroleum products.

The new refinery has cost $4.4 billion to construct. It will process around 4.7 million tons of petroleum products annually.

It will mainly produce Euro V refined products (such as diesel and jet fuel), which are intended for consumption primarily in Cairo and surrounding areas.

The announcement has raised eyebrows in Cairo and probably in other Arab capitals, given the ongoing political row between Egypt and Qatar.

Cairo and Doha have turned into enemies ever since Egyptians rose up against Islamist president Mohamed Morsi in mid-2013, with support from the Egyptian army.

Qatar, a principal sponsor of political Islam in the region and around the world, along with Turkey, was infuriated by Morsi’s mid-2013 ousting.

Soon after this political development, Doha turned into a refuge for the leaders and the members of the Muslim Brotherhood, Morsi’s movement, who escaped from a crackdown by the post-Morsi authorities on their organization and its affiliates.

In June 2017, Egypt cut off trade and diplomatic ties with Qatar, along with Saudi Arabia, the United Arab Emirates and Bahrain, after accusing Qatar of interfering in its affairs and contributing to its instability by financially and politically backing the Muslim Brotherhood.

This was why the announcement by Qatar Petroleum was shocking to some of those closely following developments in the row between Cairo and Doha. The announcement, some observers said, throw light on the nature of politics in today’s Middle East, a region where all sorts of contradictions move hand in hand.

Egyptian Ministry of Petroleum Spokesman, Hamdi Abdel Aziz, said Qatari investments in the refinery had nothing to do with politics.

“This is particularly so with the ongoing conflict between Qatar, on one hand, and Egypt; Saudi Arabia; the United Arab Emirates, and Bahrain, on the other,” Abdel Aziz said. “Investments and politics are two different things.”

The refinery is the largest investment by Qatar Petroleum in the Arab and African region. Qatar also invests in Egypt’s banking sector and other sectors of the Egyptian economy.

Nevertheless, most of these investments, including in the refinery, were made in 2012, a year of hope for political Islam in the region and Qatari political goals.

The Muslim Brotherhood suffered repression for decades under Egypt’s successive regimes since its founding in 1928.

When Egypt’s longtime president Hosni Mubarak was ousted in January 2011, after 18 days of continual and unprecedented protests, the road to power was finally open for the Islamist organization which was the most organized then.

It won the majority of seats in the first post-Mubarak parliament and then its candidate, Mohamed Morsi, was elected by a majority of the voters who were afraid of the possible return of Mubarak-era politicians to power.

The Muslim Brotherhood’s rise to power fanned Doha’s hopes of politically controlling the most populous Arab state in the region. Qatar was also hoping that Egypt would be a springboard for regional control by political Islam.

However, Morsi’s failure to address Egypt’s economic problems caused the people to go back to the streets to demand his ouster, only a year after he was elected president. This caused Qatar’s regional aspirations to fall like a house of cards.

The operation of the new refinery is, meanwhile, a small detail in the larger picture of Egypt’s attempts to turn into an energy hub in the region.

Egypt imports a third of its needs of petroleum products. It has a plan to reach self-sufficiency by 2023. With projects like this refinery, the populous country moves closer to achieving this goal.

L'articolo New Refinery Divulges Hidden Aspect In Cairo-Doha Ties proviene da InsideOver.

The talks around potential -and significant- gas reserves within the Greek territory, especially southern of Crete, do not present a new case. The idea of an energy-rich Aegean Sea has been standing there for decades, however, it seems that only after the Greek economic crisis has started, a more focused and serious approach has been adopted. Since the early 2010s, the potential gas reserves in the region have been a quite popular topic among academic circles, in-country media and Greek society as a whole.

It as been almost two weeks since reports about signs of considerable gas reserves in the southern part of the country monopolized the headlines of local news once again. The comments triggering the massive media interest, have been made during a conference on the strategic role of Hellenic Hydrocarbons, hosted by the “Circle of Ideas for National Reconstruction” think tank. According to the aforementioned estimations, the gas reserves in field Talos south of Crete might reach up to 10 trillion cubic feet (tcf), a number that could cover the needs of Greece in natural gas for almost 70 years. Strangely enough, though, those statements have been promptly downplayed by the largest oil refiner in Greece, Hellenic Petroleum. The reaction of HP has been projected as a realistic one, however, it is indicative of the hesitant mindset characterizing the Greek side, when it comes to exploitation of energy reserves in the Aegean and South-Eastern Mediterranean Sea. A mindset being built up for decades, highlighting the incapacity -or rather unwillingness- of Greek administrations to take advantage of such a critical and promising issue.

The options for Greece today are specific and quite straightforward. The Greek side has done its bit in terms of negotiations with Turkey and efforts to find common ground. Diplomacy has hardly worked so far, leaving Greece passively watching neighboring countries, such as Cyprus, Egypt, and Israel moving ahead with research and exploitation of their gas reserves. Indeed, the considerable confirmed amounts of natural gas resources in the respective EEZ of these countries, have boosted the probability of similar findings in the Greek underwater terrain, making the need for decisive action even more imperative. At this point though, we should stress out that the discovery of “giant gas fields” has a completely different meaning for a country of 1.2 million people like Cyprus, and Greece with a tenfold population or Egypt of almost 100 million people.

Securing a Greek Exclusive Economic Zone

The sovereign rights across the Aegean Sea and the South-Eastern Mediterranean have been a long-time point of friction for Greece and Turkey. Since diplomacy has been far from fruitful so far, Athens is actually left with two options. Starting with the possibility of taking the dispute to the International Court, an option that might look rational especially for Greece, but is hardly a purposeful strategic move. Even though Athens could support the case with convincing evidence in an International Court -either in the International Court of Justice in Hague or the International Tribune for the Law of the Sea in Hamburg- still there are no guarantees that the final decision would definitely fulfill Greek objectives, utilizing mainly the Median Line methodology, instead of the “proportionality criterion”; additionally such a process would be significantly time-consuming, slowing down even further the already-delayed initiative for the exploitation of energy reserves in the Aegean. And last but not least there is no assurance, that Ankara will comply with the final Court decision; an approach similar to the one adopted by Beijing in the South China Sea is probable, in case Turkish interests are put at stake.

Now let’s have a look at the alternative route that Greece could follow. As discussed in one of our previous articles, Turkey has been threatening Greece with casus belli, in case Athens proceeds with establishing its Exclusive Economic Zone. A determined and responsible Greek government would call Turkey’s bluff and proceed with the announcement of the EEZ, knowing that Turkey would not go that far and take the offensive against their neighboring country and fellow-NATO member. Considering current geopolitical balances, Turkish aggressiveness will jeopardize even further the country’s international standing, as a potential attack would be justified by no means under the International Law. Erdogan, being certainly a pragmatist, comprehends that Ankara has already too many loose ends, considering the on-going operations in Syria and the international attention the country has drawn due to the targeting of the Kurdish populations, the ups and downs of the economy over the last five years and the country’s foreign policy wavering between East and West. Declaring a casus belli is a low risk/high return strategy, as long as Greece is falling for it, and makes perfect sense for Ankara; on the other hand, a wide-scale offensive would be absolutely irrational, thus highly unlikely.

Keeping up with the same old story and beyond

Greek governments have been traditionally downgrading the vital issue of in-country energy reserves; however, what used to be an insignificant matter, in terms of public attention, in the past decades, has now turned to a major popular debate, blocking any given administration from intentionally ignoring it anymore. Especially since 2012, when the impact of the economic crisis became more intense for the Greek people, major political figures played the card of the immediate establishment of the Hellenic EEZ, making promises that were never fulfilled. The unilateral announcement of EEZ and the direct exploration and exploitation of energy reserves in the Aegean should be the most appropriate option for current Greek administration in a context of smart and agile diplomacy. However, such a decisive change in the Greek yielding stance is highly unlikely; there are two scenarios expected to happen during the 4-year term of the current conservative government. There might be an effort to further delay any action around the exploitation of energy fields in the Aegean Sea, a latency that could be legitimized in public conscience, by claiming that drilling might have a severe impact on the Greek eco-system, invoking the topical arguments of green energy and eco-friendly alternative resources. On the other hand, considering Turkey’s aggressive stance and comprehending that Ankara’s strategic goal is to secure a considerable portion of the gains that the Greek energy sector could have from exploiting the Aegean, the potential of joint exploitation cannot be ruled out. This is the exact Turkish agenda that Erdogan has been pushing for in Cyprus, and a more careful look could reveal that the Turkish intentions are similar for the Greek territory. Such a development would be an unprecedented failure for Athens and a tremendous victory for Ankara, but still, it would not be surprising this hypothetical joint exploitation to be sold to Greek people as a success; highlighting that Greece has finally started gaining from an area and a sector that has been always dormant.

L'articolo The Political Curse And Blessing Of Greek Energy Reserves  proviene da InsideOver.

China’s consistent GDP growth has been a miracle, which has remained well above the 6% mark during the last three decades. But steady declines in 2019 seem to suggest that that miracle is slowly but surely disappearing.

The fears have been aggravated after the country’s GDP growth rate touched its lowest in more than 27 years at 6% in the third quarter of 2019. This was down from 6.2% in the second quarter. The declines have come mainly on the back of contraction in the manufacturing sector and sluggish domestic consumption — which has historically served as one of the key drivers in fueling China’s perennial economic growth.

Although the rising tensions with the United States are beginning to take its toll, the non-US export growth seems to have offset any negative impact so far. But US President Trump’s aggressive stance on the crisscross between Chinese state and private sector has closed other markets as well including those in Europe, and Australia. The increasing scrutiny over Chinese investments is expected to harm China’s economic ambitions in the long run.

This is against the backdrop of industrial output falling to 17-year low in August. Furthermore, the retail sector has been undergoing a consistent decline auto sales — a key economic barometer — have fallen for more than 14 months during the quarter.

Earlier this month, the International Monetary Fund (IMF) also trimmed its 2019 forecast for China’s GDP growth down to 6.1% from 6.2% anticipating domestic demand to skid further and tensions with US over trade to get uglier.

On the other hand, the government intends to address the torpid growth with tax cuts, increased access to credit by reductions in reserve ratios for banks in an attempt to boost investment and business in the country. It has already devalued its currency to insulate exporters from the US tariffs. But as the war with the world’s largest economy drags on, it is likely to have negative impacts on the trade, overall consumer and producer sentiment, investment and limit technological transfers which will have a pronounced impact on its medium-term economic outlook.

But maintaining growth will be a challenge for Xi Jinping as assets which propelled GDP to decade highs have become liabilities for the Asian giant. Demographic crunch, losing access to foreign markets and technology as more and more nations begin to suspect Chinese investments, and the declining food, water and energy resources increase its dependence on other countries. Moreover, the ticking time-bomb of the ageing population is waiting to happen as China prepares to serve 300 million seniors in the course of the next three decades.

China is hedging its future by betting on Asia. With its trillion-dollar signature Belt and Road Initiative, it has brought its neighbours in its sphere of influence. By funding infrastructure projects with loans, China has brought many of its neighbours under its power. But that too has lost its glean over the last five years as critics allege that China is shoving debt down the poorer countries for projects they do not need and cannot afford.

But as west grows aggressive and domestic demand flattens, Beijing will have a hard time rekindling that fire that fueled its decades-long economic growth.

L'articolo Weakening Domestic Demand Pull China’s GDP Growth proviene da InsideOver.

Iran has discovered a new natural gas reserve, according to a report from its oil ministry on Oct. 13. The underground field located in the southern province of Fars near the Persian Gulf, holds 19 trillion cubic feet (tcf) of the resource which Tehran estimates could produce 400 million barrels for a total of $40 billion. The new field, named Eram, adds to an already-large natural gas supply, which is second only to Russia. 

“We have the potential to identify more undiscovered oil and gas reserves (in the country) by using geophysical exploration techniques and discovery drilling and will definitely add to Iran’s national wealth,” said Reza Dehghan, deputy managing director for National Iranian Oil Company (NIOC).

As United States oil sanctions continue to strangle the Iranian economy, the discovery of more natural gas reserves could help revitalize the struggling nation. Amid a sharp decline in energy exports, Tehran is hoping to increase trade by leveraging its wealth of natural gas. The US Energy Information Administration reports that Iran uses 6.9 tcf of the 9.5 tcf it produces annually, but if production can be boosted, several international customers could benefit, namely China and India. In 2017, three-quarters of its exports were destined for Turkey; other buyers include Armenia, Iraq, and Azerbaijan. 

In 1995, Iran and Pakistan signed a deal to create an oil pipeline that would run to India. The project has experienced many setbacks, however, mainly from Pakistan refusing to complete its portion of the pipeline. Although the Iranian section is complete, the Pakistani portion appears to be indefinitely held up despite some deals negotiated in the past 10 years. Consequently, India decided it would pursue an under-sea route directly between the two nations. 

The Iran-Pakistan pipeline, if revived, would also facilitate easier exportation to China, a market which, like India, is expected to grow two to three per cent per year. 

“Gas is the most important energy of the world in the future and Iran possesses the world’s largest gas fields,” Iranian First Vice-President Eshagh Jahangiri told a Chinese delegation. “And we are ready to export gas to China through the Iran-Pakistan gas pipeline.”

For its part, China has publicly supported continued trade with Iran even as sanctions and a US-China trade war cause instability. Importing natural gas would be one way to get around sanctions and help the Iranian economy. The Asian market is collectively in dire need of a natural gas boost, a stimulus that could only come from Iran or Russia. The Asian Development Bank reported that the supply-demand gap during peak hours has increased annually since 2014. 

Some countries, like Pakistan, have passed legislative measures to conserve energy and at one time, were eager to import from Iran. This may be one reason it continues to renege on its deal to complete a pipeline to India, so that it can keep Iranian natural gas for itself instead. Under a 2013 plan, it would have imported 22.5 million cubic meters per day.

Like Pakistan, India too has faced shortages, which it has attempted to stymie by purchasing reserves from Qatar via an undersea pipeline. At one point, the US convinced New Delhi to abandon its plans in 2013 to import from Iran by swaying it with a civil nuclear deal. 

In China, the situation is different, however. Demand is predicted to triple over the next 20 years, according to the Middle East Policy Center. Importing from Iran would require the completion of the Indian section of the pipeline, however, but would be an innovative way to thumb its nose at US sanctions. Beijing’s willingness to do so is questionable though as it recently left the South Pars natural gas field which is shared by Iran and Qatar. The abandonment of the world’s largest field was as a result of increasing US sanctions.

Alternatively, Iran could horde the reserves for itself. According to NIOC, it is substantial enough to power Iran for 16 years. There is the lingering question of exactly how Iran could wield its discoveries in the face of sanctions, which apply to natural gas just as much as crude oil. Absent buyers who are willing to defy the sanctions, Tehran could instead focus on growth at home as it reinforces its energy independence. 

Currently, buyers of Iranian natural gas included Iraq and Turkey, the former of which has received a renewed sanctions waiver to continue its imports. In September, Turkish President Recep Tayyip Erdogan said trade between the two countries would continue, although overall imports were down. 

Aside from sanctions, another issue facing Iran is the development of refining facilities. As illustrated with the South Pars project and China’s exit, US sanctions have an effect not only on trade, but also development. For Tehran, this means that development of new fields must be undertaken without the assumption of help from international partners. 

Iran has the natural resources to boost its economy, but to do so must find willing partners and complete pipelines to transport them. Both are severely lacking at the moment, which casts a shadow on the recent discovery of the Eram reserve field. While it is welcome news for Tehran, questions abound on how it can capitalize on the discovery. 

L'articolo Iran Discovers Natural Gas Reserve, but Sanctions Make its Utility Uncertain  proviene da InsideOver.