Here is my talk [English & Ukrainian videos] for the Ukraine Energy Security Dialogue of 01.12.21, via Zoom, organized by Kyiv’s Dixie Group. Program & Speakers are below.
I outlined failures of the legal and political models Russia’s Gazprom has embraced to eventually bring the Nord Stream 2 pipeline into operation under the anti-monopoly provisions of the EU’s Third Energy Package law..
Critical observers have understandably interpreted the public optimism and “gas-Godfather”-like posturing of Kremlin and Gazprom officials as evidence of self-confidence, even arrogance. In contrast, here I outlined what actually amounts to a history of repeated failures of Nord Stream 2 AG strategies.
I termed its first two failed strategies as “Plan A” and “Plan B,” and the current one as “Plan C.”
Here’s my extended interview in Kyiv with two great Kosatka.Media journalists [Read in UA, RU]
18 NOVEMBER 2021 — AUTHOR YAROSLAV MARKIN, TETIANA HUZENKO In 2021, the energy sector of Ukraine faced myriad threats related to the completion of Nord Stream 2, increasing gas prices and coal shortage just before the heating season. At the same time, green trends require decarbonizing the industry and developing the hydrogen direction.
Kosatka.Media discussed what direction is better for Ukraine, whether it should wait for the protection against Nord Stream 2, and where global green trends could take us, with Dr. Thomas W. O’Donnell, international expert and senior energy and geopolitics analyst at GlobalBarrel.com, who participated in the Ukraine Gas Investment Congress held in late October in Kyiv.
One of the key messages at the congress is that whatever the ‘green’ trends are, gas is a transition fuel and we will use it for a long time. Are there any other case scenarios? How should Ukraine act in this situation?
In the long run, we want to have a world that’s not dependent on hydrocarbons. The worst hydrocarbon is lignite and brown coal. And that’s what people s\should concentrate on eliminating. Natural gas in fact is a great way to eliminate coal.
It’s actually an improvement for Ukraine, not only because of global warming, because of CO2, but also for the health of the people since natural gas does not produce environmental pollution. So, increasing the use of natural gas (or also nuclear energy) in a country like Ukraine is to the benefit of the environment and to the people’s health.
However, Ukraine is not a typical European country, it is a country that unfortunately is at war. In such a situation, it has found an intelligent way to access natural gas, which is virtual reverse flow.
Putin’s recent gas-Godfather-like statements that Nord Stream 2 could alleviate the current European natural gas price and supply crisis is an obvious attempt to pressure the EU to rush Nord Stream 2 approval in ways violating the EU’s own rule of law.
As a Polish expert wrote in 2019,: “The amendment to the [European Union’s] gas directive explicitly confirms that EU law applies in the case of Nord Stream 2 (that is, to the section running through German territorial sea), including the rules on unbundling, third-party access, independent operators et al.: (Agata Łoskot-Strachota, “The gas directive revision: EU law poses problems for Nord Stream 2,” OSW, Warsaw, 21.02.2-19.).
However, Putin’s hubris should be taken with a grain of salt. In reality, his options in this regard are subject to current technical-economic constraints of the Russia gas sector, as my research had indicated in recent weeks.
Russian domestic storage was announced to be at 97% full mid-last-week due to its continuing all-out Gazprom filling campaign, reportedly at the high rate of about 300 million cubic meters/day (mcm/d). The plan had been to finish by 1 November.. Thereafter, this maxed-out production has to immediately be choked off or be sent somewhere else – and indeed there is only one option; but it is not Nord Stream 2…
One caveat: a recently announced 7 November Gazprom export start date did not made sense. Where would the maxed out production flows go from 1 to 7 November? However, an article yesterday by Bloomburg [possible paywall] clarifies “Gazprom said Wednesday that the Russian re-injection campaign would be a week longer than the original Nov. 1 conclusion.” This is quite plausible – it is simply taking an extra six days to top off Russian domestic storage.
So to reiterate points I have stressed over the past few weeks (e.g., at Naftogaz’ Ukraine Gas investment Congress closing panel in Kyiv last Thursday-I’ll put a video of this here soon- and in various interviews):
First, while Putin has relished playing the gas-mafia Godfather (e.g., at the St Petersburg gas conference two weeks ago), asserting that, if Nord Stream 2 is rapidly approved, Gazprom exports could save Europe this winter, he has been merely posturing as the strongman decider. He wanted to appear to be craftily withholding extra, non-contracted gas supplies needed to fill the company’s storage facilities in Germany and throughout the EU, all still now at worryingly low levels long after the traditional filling season ended at the start of October.
“Cooperation in energy transformation and trade to increase the economic strength of the Three Seas Region …”
Kongres590 – Warsaw – 14 October 2021
Moderator: prof. dr. hab. Zbigniew Krysiak, Chairman of the Program Council of the Institute of Schuman Thought Panellists:
Dr. Thomas W. O’Donnell, (PhD Nuclear Physics; Lecturer in Berlin & Energy & Geopolitical Analyst),
Julius Zellah, (President of the Light for Africa Online Foundation)
Paweł Kotowski, (Deputy Director of the Department of Economic Cooperation, Ministry of Foreign Affairs)
Jarosław Malczewski, (President of the Polish Dairy Group),
Dr. Krzysztof Malczewski, (President of the B-2M Company)
Key points of my talk:
1. Poland has no previous experience in nuclear energy; and this is a difficult problem that needs to be tackled starting now. Also, any institute needs a sufficient scale to guarantee both high standards and employment security to those trained for industry, academia, safety, and planning. It is for this reason that nuclear training in Poland’ should be done jointly, together with all 12 of the Three Seas Initiative members (i.e., the eastern EU member states, and this may soon include also Ukraine – many of which countries already have established nuclear programs). And, as part of the Three Seas Initiative, this means also in conjunction with the USA, in particular its Department of Energy with a vast network of nationl laboratories and obviously decades of nuclear experience to draw on. Continue reading →
On Friday, 8 October, I was interviewed, with Aura Sabadus (@ASabadus) of ICIS-London, about Nord Stream 2’s impact on European energy politics on”Strait Talk” with TRT host Ayse Suberker. We discussed the geopolitical aims of Russian and German leaders for partnering on this pipeline.
I stressed, the issue is not whether Europe is dependent on Russian gas – it is and it will remain so for the foreseeable future for up to 40% of its imports. The issue is what route this gas takes to arrive from Russia into Europe.
Consider: Russia historically exported 80% of the gas it sends to Europe using massive Soviet-era pipelines transiting Ukraine, the remainder via a Belarus-Poland-Germany pipeline. However, for 20 years Continue reading →
EU leaders will discuss the idea of creating a strategic EU gas reserve and decoupling electricity prices from gas prices, said the head of the European Commission, Ursula von der Leyen.
– When it comes to gas, we are dependent on imports – 90 percent. gas is imported. The economies in the world are growing, so is the demand. But the supply is not correspondingly greater. We are very grateful that Norway is increasing production, but it seems that this is not the case in Russia, noted the head of the European Commission, visiting Estonia. In her opinion, the solution to the problem are investments in renewable energy sources, which should make the Community independent of imports and stabilize prices.
– In the short term, we will talk at the European Council, not only this evening (Tuesday), but in two weeks’ time at the formal Council of Europe, how to deal with storage, the strategic reserve and we will look at the overall price structure on the electricity market. Electricity prices are high due to high gas prices and we have to consider the possibility of (them) decoupling because we have much cheaper energy from renewable sources, said von der Leyen
On Tuesday evening, an informal meeting of European leaders will take place in Slovenia ahead of the EU-Western Balkans summit scheduled for Wednesday.
According to unofficial diplomatic sources in Brussels, Poland wants the European Commission to conduct investigations into the manipulation of the natural gas market by the Russian company Gazprom, which are causing the increase in gas prices in the EU. This issue is expected to appear at the EU summit on October 21-22.
Back in April, American energy market analyst Thomas O’Donnell predicted that Russia would use gas supplies to build strategic domination. The EU’s response should be to create a kind of gas ‘central bank’ in Ukrainian warehouses and use this country as a buffer, he proposed.
Ukraine is a key element of the strategic gas reserve
– Shortly after the beginning of the Maidan revolution and the Russian aggression, Ukraine, with the support of the EU, quickly made technical modifications to the export pipelines to Slovakia, Poland, Hungary and Romania in such a way as to enable a reverse. This quickly freed Kiev from having no alternative to buying Russian gas, said the expert.
– Moreover, the Kremlin cannot so easily promote favorable oligarchs – he envisaged adding that the implementation of this idea was only a matter of legislation.
– The EU could designate warehouses in Ukraine, Germany and France as the so-called strategic reserves that must always hold a certain minimum amount of gas. In the event of any aggression by Russia against Ukraine or other countries, these warehouses would be launched by a special EU-US committee or within the OECD, and Russian pipelines would be cut, the analyst suggested.
– Gas belonging to Gazprom, which stores huge amounts of gas in Germany and other EU countries, should in this case be nationalized – the expert believes.
Responding to the objection that such ideas sounded a bit fantastic, he explained that this is almost exactly how the international oil security system has operated for 50 years: in the event of a crisis, 90-day strategic oil reserves are deployed in each member state of the International Energy Agency.
I was quite happy with the answer of IEA (International Energy Agency*) director, Dr. Fadi Birol, to two critical questions I posed, first on how the European Commission should include nuclear power in its “green financing taxonomy,” and secondly, against German over-reliance on variable renewables (I termed this “renewable fundamentalism”) which I said produces high “organizational entropy,” that is, unworkable and unaffordable, completely “reinvented” so-called “smart grids” with “grid scale stage” whose technology is not sufficiently developed all to cope with the problem of unavoidable wind and solar energy fluctuations, which become more massive as the percentage of installed renewables increases. This is a significant contribution to Germany’s (and the EU’s) present crises of energy supply and price security. (The video above is set to start at my two questions.)
Following the arrest of a British employee at its Berlin embassy as a Russian spy, it’s been suggested that Russia has tried to infiltrate Germany in particular because of its role at the centre of Europe and because of its ties to Moscow. A former MI5 agent-recruiter, Annie Machon, plus UK academic expert Dr. Jenny Mathers at Aberystwyth University, and Dr. Tom O’Donnell, at Hertie School of Governance in Berlin are here to tell us if we’re witnessing a return to the Cold War ways of spying.
Some comments on the show: First off, my fellow panelists are experts on human espionage and Russian spy craft – which I am not – and were extremely informative In this discussion on David Foster’s Roundtable.
An overview and elaboration of my points: I stressed, besides a Cold-War-like level of Russian espionage in Berlin, there is a general openness in Germany to economic and political interpenetration and integration with Russia. In plain sight one sees everyday what I called the “unique influence and penetration” of German society as compared to any other EU or NATO ally.
I stressed energy-sector examples – most especially Nord Stream 1 and, now, Nord Stream 2 pipelines, built by German partnerships with Putin’s Russia, aiming to avoid Russian gas having to transit Ukraine to arrive in Germany and beyond. The degree of this open integration with Russia is unique in the EU. Consider: the Germany’s pre-Merkel chancellor, Schröder, heads the boards of both Gazprom and Rosneft; that an x-German Stazi secret-police officer is the CEO of Gazprom-owned Nord Stream 2 AG, and that overwhelming numbers of German experts “consult’ for Gazprom, including even the 2005-06 German Federal State Secretary for Defense(!) – who is a member of Merkel’s CDU/CSU party.
My Op-Ed on German motives for Nord Stream 2 appeared in the Dziennik Gazeta Pravwna 4 Aug. 2021 (no. 149 dziennik.pl, forsal.pl), derived from an English interview (below here) with Artur Ciechanowiicz (PAP, Brussels). [Polish Op-Ed link]
Here is my full English interview, expanded for clarity:
1) [AC] What are the consequences of the Nord Stream 2 deal between Washington and Berlin?
[T O’D] Stepping back a bit: this deal marks a victory by Berlin in its long and intensifying contest with its ally, the USA, over which of these two biggest transatlantic powers will decide the alliance’s strategy with respect to Russia and China. The two allies deeply disagree on this matter.
In the USA, both Democrats and Republicans have agreed since the Obama administration that “Great Power Competition” must be the strategy for the alliance versus Russia and China. The Americans strongly feel it is necessary to “decouple” from globalism’s deep trade and tech integration with China and Russia, that these states must either change their disrespect for global trade rules and moderate their increasingly aggressive geopolitical activities, or be isolated and forcibly contained.
Germany, with almost 50% of its GDP from global trade, deeply disagrees with this US strategy [i.e., German exports provide 46.9% of GDP, the USA’s only 11.7%]. Berlin likes global rules; but its unbalanced economy cannot afford trade decoupling and it broadly opposes forceful military containment of China and Russia. Instead, it wants only negotiations and occasional sanctions.
So, Nord Stream 2 is an iconic example of this clash, this “leadership fight” between the USA and Germany over the transatlantic alliance’s strategy towards Russia. Berlin wants to maintain energy ties at all costs, while the USA has long advocated maximum European energy independence from Russia, and to constrain Russia (and defend Ukraine) by forcing Putin to continue having to send gas across Ukraine to reach his European customers.
Russia, for its part, wants to re-incorporate former-Soviet Ukraine [plus Belarus, Moldova and Georgia, and minimally keep them outside of the EU and NATO], and has wanted to avoid having to send its gas to Europe via Ukraine. Moscow’s transit dependence on Ukraine not only provided income for Ukraine, this constrained Russian subversion and military aggression there, for fear that the transit pipelines could be interrupted by either Ukrainian state or non-state actors.
For Germany, the “insecurity” of having to import Russian gas through Ukraine deeply alarmed Berlin. And so it made a strategic decision over 20 years ago to partner with Russia, to build new pipelines to bring gas directly from Russia to Germany [via Nord Stream 1 and Nord Stream 2] and on to European customers long supplied with the same Russian gas but via Ukraine. The aim was to make Germany the new hub for distribution of Russian gas in Europe.
Given Berlin’s logic, the 2014 Russian war on Ukraine and its annexation of Crimea only made it more sure than ever of the dangers of relying on Russian gas imports that have to transit Ukraine, and it redoubled its efforts to complete NS2, notwithstanding this would undermine German relations with three consecutive US administrations and with many of its EU allies, esp. Poland and East-Central Europe – a region where its much-prized soft power has been sacrificed.
My live interview (22 July 2021) on the Nord Stream 2 deal between Germany and USA. with CGTN (London office of Chinese state broadcaster. This was not edited, or I would not post it here.)
I explain the bind which Berlin had put the Biden administration in for agreeing to waive sanctions on Nord Stream 2 (NS2) in return for this bad deal. The German side was playing hardball. Berlin had made clear to Washington (well before Biden arrived in office) that the pipeline would be finished regardless of sanctions.
The German (and the Danish) side had already allowed Gazprom-owned North Stream 2 AG to continue construction in their territorial waters even when reputable insurance companies and the reputable construction-commissioning firms had abandoned the project due to the threat of US sanctions; and Berlin had made it clear to the US side that it would be completed regardless of any further sanctions. Sanctions on German firms could be circumvented by Berlin continuing to allow Russian firms to do any work that German firms were prevented from performing. And, sanctioning German firms, or NS2 AG, would cause outrage in every German political party except for the Greens, the only German party clearly opposed to the project. However, the Greens had made clear they did not think US sanctions on German firms was an appropriate measure for an ally to take.
It was my pleasure to be with Thierry Bros of Sciences Po University, Paris, and Peter Zalmayev, Ukrainian security analyst and executive director of Eurasian Democracy Initative on David Foster’s Roundtable on TRT World, London, broadcast 9 June 2021.
I discussed Biden’s apparent reasoning for waiving Nord Stream 2 sanctions:
First off, the German government of Angela Merkel simply would not cooperate otherwise. Allowing her pet energy project to go forward was the price she had demanded for trans-Atlantic “unity” before Biden’s summit with Putin.
(Aside: My research in Berlin and elsewhere has convinced me that, at no point from the late-Trump administration through Biden’s six months in office, did the German side actually engage in any meaningful “negotiation” or discussions with the US side to seek to find some compromise or to initiate a moratorium on construction. Not until Biden waived sanctions on Nord Stream 2 AG, and decided not to sanction any German firms inolved in construction did Merkel show any real interest in discussions. She emphasized her change of attitude on negotiating with Biden about: “what now are also the necessary commonalities in the relationship with Russia” in comments during a German national broadcast interview immediately following Biden’s sanctions waiver. Until this waiver, she had held up any real discussion of the pressing issues of trans-Atlantic unity-in-general, whcih urgently needed attention.
“This is either a conscious Russian disinformation scheme to collect supplies from naive firms, or it’s a really irresponsible move by the foundation,” said Thomas O’Donnell, energy and geopolitics analyst at Hertie School of Governance. (“German green foundation joins efforts to complete Nord Stream 2,” Financial Times, 21 Jan 2020, see here, or PDF here.)
The FT’s Erika Solomon interviewed me about the fake “climate-protection” foundation established by the legislature of the German state of Mecklenburg-West Pomerania (German initials MV). State officials stated intent is to help Gazprom, the Russian state gas monopoly, overcome US sanctions to finish building the Nord Stream 2 pipeline. Their new foundation is financed with €20 million from Gazprom (sole owner of Nord Stream 2 AG), and €200,000 from the state government.
The strategy is for the foundation to purchase “rare and hard to find” equipment Nord Stream 2 AG will need to finish the pipeline, but which firms cannot sell directly to it because of US sanctions against the project. MV politicians have called their foundation a “clever mechanism” to protect firms from sanctions. According to the state’s energy minister, Mr. Christian Pegel (SPD), the foundation will be a “type of hardware-store shelf” (“Baumarktregal-Variante“) that then supplies the Gazprom operation. The strategy here is that with the “climate-protection” foundation acting as the middleman, German firms will both not deal directly with Gazprom’s sanctioned Nord Stream 2 project, and the foundation’s purchases will be completed “before the deadline” when sanctions are applied.
However, there are no such loopholes to be exploited.
Aquí abajo se puedan ver la grabación de la tortulia del 15 de agosto entre dos expertos y yo en el programa “El Fondo” de la red alemana de Deutschewelle (DE.de TV) sobre “la lucha entre aliados” de los EE. UU. y Alemania en la que Washington ha amenazado con fuertes sanciones contra su aliado de la OTAN, Berlín, por su participación en el proyecto del gasoducto ¨Nord Stream 2¨ con Rusia. Gracias a DW y su moderadora venezolana Silvia Cabrera.
Tenga en cuenta que estas no son sanciones del presidente Trump, sino sanciones impuestas por el Congreso en contra de los deseos de Trump y con el amplio apoyo de ambos partidos. Hay mucha ira en el Congreso contra Rusia por sus malas actividades en Europa en materia de suministro de gas natural al continente por parte de Moscú de forma geoestratégica, pero también por su invasión de Ucrania en 2014, y sus extensas actividades contra las democracias del Oeste.
Para Estados Unidos, este proyecto es una peligrosa colaboración de Alemania con Rusia contra los intereses y la independencia energética de la UE y especialmente de Ucrania, un país con partes de su territorio ocupadas por Rusia desde 2014.
De la propaganda del programa El Fondo de DW.de:
“¡Extorsión!” “¡Guerra comercial!” que traería gas de Rusia a Alemania. ¿Se dañará la relación entre Alemania y Estados Unidos? ¿Definirá Estados Unidos la política energética alemana?
Soldiers deployed in Poland are a kind of warning to the Kremlin. – Source: GazetaPrawna.pl
My interview on Trump’s announced US troop draw downs from Germany and partial reassignment to Poland appeared in the Polish economic press Gazeta Prawna on 25 June 2020 by the Polish journalist Artur Ciechanowicz. You can read it (a) in ENGLISH below (via Google Translate, with minor fixes) or (b) in the POLISH original at this link.
O’Donnell: Soldiers at the borders of Russia are a signal to the Kremlin [INTERVIEW]
From a military point of view, deploying too many troops too close to the border with a potential enemy is dangerous because there is a risk that they can be overrun rapidly – says Dr. Thomas O’Donnell, energy and international affairs analyst, and adjunct faculty at Hertie School of Governance in Berlin.
Question: US President Donald Trump has decided to increase the US military presence in Poland, while also reducing the contingent in Germany. Where do these decisions come from?
On the one hand, they logically result from the American National Security Strategy (NSS) of December 2017. Work on it began during Barack Obama’s term of office and was completed by the Donald Trump administration. According to the NSS, the US priority is no longer the war on terror and the situation in the Middle East, but competition with China and Russia. It is therefore quite natural that the United States moves its troops and increases its military presence in countries closer to Russia – the Baltic States, Poland and Romania. The second factor that led to these decisions was the personal involvement of Donald Trump, who is running his election campaign.
Poland’s security will increase?
As a rule, increasing the US military presence in Poland is of course good news. The Pentagon’s activities have been moving in this direction for some time, although the US military is of the opinion that this should be done a little slower and not at the expense of Germany. From a military point of view, deploying too much of the army too close to the border with a potential enemy is dangerous because there is a risk that it will be overrun too soon. There is therefore a tactical reason to keep some of the army a little further from the Russian border. Therefore, the rapid relocation of a significant number of soldiers to Poland is viewed skeptically by some American commanders. Remember, soldiers deployed in Poland are a kind of warning against the Kremlin. There are enough of them for Vladimir Putin to think twice before doing anything. However, not enough – even after increasing the quota – to stop the first strike. The rule is simple here: if Russia decided to attack Poland and American soldiers would die, it would mean a war with all the power of the US. Neither any president nor Congress would hesitate a single moment.
Some American commanders are opposed to the permanent presence of US troops in Poland. Why? Continue reading →