Tag Archives: China

My CGTN live: Merkel put Biden in a “damned if you do, damned if you don’t” bind on Nord Stream 2 deal

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.

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My DW live: The US-German “Bad Deal” on Nord Stream 2 Pipeline

Here is my 21 July 2021 live interview on Germany’s Deutsche Welle about the new US-German deal, a “bad deal” on the Nord Stream 2 pipeline.

I told DW that the key reason the US has always opposed Nord Stream 2 (NS2) was that it undermines Ukraine’s security – as well as Poland’s and other eastern European and Baltic states’ security.

I told DW that one can argue with the Biden-Blinken assessment (as I have) that they “had to” waive sanctions on the Russian-owned NS2 company, insisting that the pipeline was going to be completed anyway. Indeed, German and Dutch regulators had already allowed work to proceed even when the insurance firm and commissioning firm had left due to sanction threats, and Berlin had promised it would be completed no matter the sanctions.

However, the additional factor, which US spokesmen cite only obliquely, is that Merkel’s government was evidently willing to deny Biden a show of transatlantic unity from which to confront Putin. This shows the extreme lengths Merkel’s government had gone to to insure success in her partnership with Putin to finish NS2..

For Moscow, the essential aim of this partnership has been to avoid the “risk” (as Russian officials have put it) of having to export its gas across Ukraine, a country Putin wants to annex and is now at war with.

For Berlin, the most essential aim of this partnership is to avoid the “risk” (as I have been told repeatedly) of having to import Russian gas via what has long been seen by German political and economic elites as an “insecure” Ukraine (although it is obviously Moscow responsible for this “insecurity”), and as an “unreliable” Ukraine (i.e., German elites had lost confidence in Ukraine to reform itself, or at least the willingness to risk the process).

This German pipeline partnership with Putin,, in other words, is a decision to pursue narrow-national interests. It elevates protection of Germany’s Russian gas supplies for its troubled domestic energy system, and protection of Russian gas supplies for its principal EU trading partners, above the interests of Ukraine’s security and independence as Putin pushes to reincorporate Ukraine into the Russian Federation.

Rather than showing solidarity by forcing Putin to continue shipping his gas to Germany and to other EU sates via Ukraine, the gas will now come directly to Germany. Germany will become the principal hub for distribution of Russian gas to Europe, and Berlin will “handle” any difficulties with Moscow and Putin. Of course, Berlin never consulted with the other EU Member states, much less Kyiv, on what amounts to its narrow-nationalist energy-security plan for Europe.

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China & Russia stick with Venezuela’s Maduro for the same reason the USA stuck with S. Viet Nam [My Energy Analytics Institute Q&A]

Venezuelan protest, 31 January 2019. Photo credit Deutsche Welle, German public broadcaster.

I was very happy to be interviewed for the Latin American “Energy Analytics Institute” (EAI), a Houston-based consultancy and news service. I’ve followed its work for years.

With Biden in and Trump out, everyone is debating how to deal with Maduro and his chavista regime that’s brought such misery and ruin in Venezuela. It’s not only the USA’s new LatAm team of Biden, Blinken and Nichols, but the EU, Norway, the OAS, the Lima Group, who are all looking for a new strategy. And so has the Venezuelan opposition, plus an increasingly important actor: the growing and doggedly persistent civil society organizations. Increasingly suffering forced-isolation from abroad, this array of social, cultural, media, medical, educational, nutrition, economic and political resistance groups do largely self-sufficient work to replace basic necessities and social-services, which the chavista government and ruined private sector can no longer provide.

However, in this brief Q&A what was addressed was not strategy per se; but a key underlying issue to understand in framing a strategy: the interests of both Moscow and Beijing as key obstacles to removal of the chavista regime. Read at EAI site (free) or Read below – Tom O’D.

China, Russia, Venezuela: Q&A With Thomas O’Donnell

(Energy Analytics Institute, 13.Feb.2021) — China and Russia continue to push around their might in Venezuela. Thomas O’Donnell with the Hertie School of Governance & Freie Universität-Berlin weighs in briefly here.

Energy Analytics Institute: What might China and Russia be willing to do this year to assist Venezuela’s President Nicolas Maduro?

Thomas O’Donnell, PhD: Beijing’s original (and perhaps still) plan for Venezuela was deep vertical integration mirroring PDVSA-Citgo Petroleum: new Faja upgraders, a pipeline to Colombia’s Pacific coast, dedicated ships, dedicated domestic Chinese refineries, etc. All very rational and lucrative for both sides. China became alarmed with Hugo Chavez’ unreliability and incompetence within a few years and with Maduro’s incapacity to reform within a year or so. The entire “oil-for-loans” history was a fallback strategy for Beijing – at least secure an oil stream with minimized risk. I have no doubt the Chinese Communist Party wants a new Caracas regime it can work with.

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Decoding the Oil Price War 2: My Wikistrat webinar “Oil Price War & COVID Crisis” transcript

covid-oil_war_2bd-cropped-graphic_wikistrat_12apr20_captureMy Wikistrat webinar transcript “Oil Price War & COVID” from a couple weeks ago is now available on their website as a PDF.  Issues discussed include:

  • Why did Moscow declare the “war”? [Note: Putin & Sechin’s initial boasts Russia would hold out for “years”, kill shale & end sanctions all stopped in only a couple days!]
  • The Saudi response was sharply focused against Russian oil-pipeline markets in W Europe (Druzhba) & Asia.  [I believe this focused Mr. Putin’s attention on economic realities as opposed to Mr. Sechin’s anger-driven desire for revenge against US sanctions that had inflated his (self-)image of Rosneft and Russian oil-market prowess when up against a concerted Saudi counter-war, and the prospects of various US responses.  Reports are that Putin spend three days on the phone to undo this fiasco and, in the end, had to accept significant cuts to Russian output.  See my GlobalBarrel.com post of last week explaining the initial, flawed Russian strategy.]
  • The options Trump had to choose from undermine his long antipathy to OPEC. (Did he secretly offer Putin any Nord Stream 2, Ukraine or Venezuela sanctions relief? If so, Congress won’t approve.) Also: Big Oil (American Petroleum Institute) and W. Texas/other independent producers are pulling at Trump in two very different policy directions re. OPEC, tariffs, production controls, etc
  • And more (esp. in the Q&A): probable impact on carbon mitigation policies, the China market for LNG, US shale’s financial and production future, etc.

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China’s big NOCs slash prices to take market from private oil refiners ~ I’m quoted in “China Oil Week”

sinopec_station_china_newsbase_21jul17

A Sinopec station in China.  Sinopec and other big NOC’s are slashing prices to take business from Chna’s small private “Tea Pot” refiners.

Last week, I was quoted on my assessment of how China’s “Tea Pot” refineries (small, private outfits) will fare in the face of  China’s big National Oil Companies (NOCs) cutting  prices to grab the Tea Pots’ business.  My main point to Newsbase reporter Saw Wright was that China is far from a completely “free market” and the state can be expected to weigh in on one side or another, complicating any outcome predictions based on market and/or tech strengths and weaknesses.  I’m quoted a couple times near the article’s end, here:
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New US tech squeezing oilfields & rivals [IBD quotes me]

U.S. oil companies are developing new technologies and techniques to produce oil cheaper and faster.Gillian Rich at Investors’ Business Daily News (17 June 2016) writes a quite informative survey of the many new technological methods pushing the cost of US shale production ever downward. Here’s Gillian’s article. She asked me about the impact on OPEC producers and my central point (my quotes are below) was that it will be the high-tech, most-efficient producers (such as US shale) and NOT necessarily those with the largest and easiest-to-access proven reserves (e.g., countries such as Venezuela and much of OPEC, many corrupt Russian and Chinese state-dominated firms, etc.)  that will set the pace in the new oil order

If the latter actors can’t find ways to innovate in technology and operational methods they will be at a disadvantage because shale production looks more like manufacturing than  traditional oil extraction.  Many OPEC and other state-owned firms never had to think like a combination of Henry Ford and Silicon Valley, but could instead count on huge, low-cost reserves, inefficient exploration and production and cheap local labor.

Eventually, the new shale methods will of course spread to promising shale fields in Argentina, China, Eastern/Central Europe and elsewhere; but this will require big advances in local infrastructure, training and government regulatory capacity. Again, things those countries must think about very seriously. Here are my quotes (from near the end of her long article).

New Oil Order

…. OPEC countries like Nigeria and Venezuela that haven’t invested in newer technology will be hurt by advances in the U.S., said Thomas O’Donnell, a senior energy analyst at the consulting firm Wikistrat. Russia also can’t exploit shale and Arctic assets because of economic sanctions that limit Westerners from helping develop the new fields.

Meanwhile, Saudi Arabia has low-cost production fields, and state-run oil company Saudi Aramco can bring in foreign experts knowledgeable about fracking and new technologies, he added.

Still, OPEC must now grapple with U.S. shale producers on the rebound, which could lead to volatility, O’Donnell said. “The oil order has changed. It’s conventional oil on one side, and new shale oil on the other.”

Latin American Oil: Beijing Still Lending, But for How Long? – I’m quoted by Energy Compass

energy_intelligence_tom_od2_13may16

Last week, Energy Intelligence (EI) quoted me on China’s continued appetite for oil and gas investments in Latin America even with its own  economic slowdown and LatAm’s many political upheavals. (Sincere thanks to EI for a PDF of their proprietary Energy Compass to share on my blog. You can access it below here.)

Some thoughts on China’s strategy: In the case of Venezuela, as the price of oil fell, Beijing quickly eased up on PDVSA’s repayment terms for its huge outstanding loans which are repayable in oil. This shows some willingness to help Venezuela cope with the falling market value of oil. Why? Because, mainly, it is the oil that China has always been laser-focused on – not making interest on these loans.

Generally, it is clear that new Chinese investments or loans are still possible in Latin America. In Venezuela however, Continue reading

My AQ piece: “Russia Is Beating China to Venezuela’s Oil Fields”

map_aq_russia-pdvsa_oil_a

Russian Production & Stakes in Venezuelan Oil Projects (40% stake is limit)

Last October & November I succeeded in interviewing several people in the Venezuelan private sector directly knowledgeable of Russian oil projects with PDVSA. Many Venezuelans wonder what all the Russians-known for their secrecy-are up to there.  Some of my key findings are in Americas Quarterly‘s Winter 2016 edition. Read on … 

Russia Is Beating China to Venezuela’s Oil Fields – By THOMAS W. O’DONNELL

The profits, politics and luck behind Russia’s growing footprint.

Russian companies produce more oil in joint projects with PDVSA than their Chinese counterparts This article is adapted from our 1st print issue of 2016. 

The late Venezuelan President Hugo Chávez, had long envisioned China becoming Venezuela’s biggest oil-sector production partner. So when Rafael Ramírez, then president of Petróleos de Venezuela, S.A. (PDVSA), announced in January 2013 that Russia would produce enough oil with PDVSA by 2021 to become “the biggest petroleum partner of our country,” very few people believed him. It sounded like empty hype.

Yet it turns out that Ramírez was serious. Three years later, Russian companies are already producing more oil in joint projects with PDVSA than their Chinese counterparts. Official figures are either unreliable or unavailable, but according to field data provided by Global Business Consultants (GBC), a Caracas-based energy consulting firm, Russia-Venezuela production as of late 2015 was 209,000 barrels per day (bpd), compared to China-Venezuela’s at a bit over 171,000 bpd.

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US Experts on German & EU Energy Vulnerabilities (My D.C. seminar)

Merkel and Obama at G7 - the main topic was Russia and Ukraine

Merkel and Obama at G7. Main topic was Russian threats to EU and Ukraine

An AICGS workshop with Dr. Thomas O’Donnell was held on May 27 in Washington, DC with a lively full-room attendance.

O’Donnell presented preliminary results of interviews he conducted in Washington during April and May to hear candid views of US energy-and-geopolitical experts on German and the EU energy policies.  The main topics were (1) European natural-gas vulnerabilities in light of the Ukraine crisis and dependence on Russian supplies and (2) implications of Germany’s commitment to a transition to renewable energy called the Energiewende.   Continue for Workshop PowerPoint & written Summary –>  Continue reading

The EU-US “Oil Weapon”: Putin’s overtures to OPEC, China & Iran reveal desperation

Foto: Presidents Rouhani of Iran and Putin of Russia holding discussions Presidents Rouhani of Iran and Putin of Russia holding discussions

(AICGS Analysis, by Tom O’Donnell)  Since Russia’s president, Vladimir Putin, decided to annex Crimea and back east Ukrainian separatists with troops, many have worried he might use his “energy weapon” to counter U.S.-EU sanctions, as Russia supplies around a third of the EU’s natural gas imports.  But what about Russian retaliation in the oil sector?

That’s hard to imagine. While gas is marketed in bi-lateral, pipeline-mediated relationships, oil is not. It’s liquid, fungible, and marketed in a unified open market—“the global barrel” [and name of this blog, T.O’D.]—which means there are no bi-lateral oil dependencies.

So, when EU leaders were cajoled by Germany’s Angela Merkel into joining the United States in applying sanctions, Russia could do little to retaliate from within the oil sector.  In reality, it is the EU and the U.S., not Russia, that have an “oil weapon” in hand.  And, the flurry of Russian oil diplomacy with OPEC, Iran and China over the past couple of weeks has a distinct whiff of desperation to it. Continue reading

[Spanish] Mi opinión en Petroquía: China se involucra en los principales proyectos de América Latina

Here’s my piece [in Spanish] in Petroguía 2015, the oil-&-gas sector catalog for Latin America  Note: Hemispheric integration (e.g., energy infrastructure) was endlessly promoted by Hugo Chavez.  In the end, he built none. The region’s resources continue going mainly to develop other regions, such as China. Continue reading

USA Oil Seminar 5.0 | USA as Rising Energy Superpower?

us_air_force_jets_oil_buring_iraqNote: These “USA Oil Seminar” posts are extra readings for my students to better understand how US energy policy is developed and to hear the views of US experts.  The seminar is: “The Global Oil System & US Policy” at JFK Institute of FU-Berlin. 

RECOMMENDATIONS:

  1. This Friday, watch live (or the recording later on): Is the U.S. a Rising Energy Superpower? Implications for Global Markets and Asia, the Middle East, Russia, and Europe.  CSIS upcoming talk by Fereidun Fesharaki.  FRIDAY, MAY 16, 2014 | 10:00 AM – 11:30 AM .  Moderated by David Pumphrey.
  2. Read the paper: Fueling a New Order? The New Geopolitical and Security Consequences of Energy |April 15, 2014. By: Bruce Jones, David Steven and Emily O’Brien.  Brookings Institute; Washington, DC.

BACKGROUND:  This week, the class reading assignments are a couple conference papers I wrote a few years ago on the history and structure of today’s global oil system, and how it grew to replace the neo-colonial oil system. Continue reading

USA Oil 3.0 | US energy experts on Europe, Russia & Ukraine

Note: I’m teaching a post-graduate course “The Global Oil System & US Policy” at JFK Institute of Freie U. in Berlin. In order to give students a feel for how US energy policy is developed–and to see the views of important US actors–I’m sending them frequent e-mails with supplemental readings and videos  from US think tanks, US government offices and from the US media on energy topics.

These are not my own in-depth analysis like I usually post on GlobalBarrel.com.  However I think they are worthwhile sharing with especially non-USA followers of my blog.  I’ll title these posts “USA OIL” plus a number to label them).  I hope these are useful.  Here’s today’s ‘optional material’ I sent to my students:

How is US energy policy developed? You might find this video of interest.

Some background: The CSIS (Center for Study of International Security) is a non-partisan (i.e., not Democratic or Republican) think tank in Washington, DC. It performs an important role in US foreign policy. Continue reading

Venezuelan state’s economic response to protests: Rationing plus Chinese and Russian loans to float a liberal dollar market

The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police BBC
The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police. Three more died in widespread protests. BBC

As protests continue against Venezuela’s faltering “oil revolution,” the political strategy of the chavista administration is striking for its intransigence. President Maduro has refused to recognize any grievances by students or other protesters. He calls protesters “fascists” and blames them for all the ills of the economy.  Protests are attacked by the national guard and often by state-organized paramilitary gangs on motorcycles who are praised by the president.

The administration’s strategy so far appears to be that protests will burn themselves out if they can be delegitimized and contained within middle-class areas.  Accordingly, the president’s rhetoric aims at inciting poorer citizens against protesters.  All in all, this is a risky strategy.  Protests have constantly intensified, with perhaps 25 persons dead now.
After a month of protests, the administration has taken urgent economic measures it hopes will undermine the protests and prevent their spread to poor and working-class barrios.
1. Ramirez announces Chinese and Russian loans and the launch of a very liberal Sicad 2

A new syllabus: The USA & the global oil system: The formation of American energy policy

global_barrel_graphic_twodDuring Spring 2014, I’m teaching a post-graduate seminar in Berlin  on the USA and  the global market-centered oil system (a.k.a.”The Global Barrel”)–the syllabus sketch is below here.

While I’ve often taught seminars on “the Geopolitics of Global Oil,” the JFK Institute at Berlin’s Freie Universität had a special request: they would like their students to learn “how these policies are decided in the USA.”

For an American energy “expert”, the how of the USA’s policy-decision process is fairly familiar. However, not only for German students, but also for most US citizens, this process–whose outcome has such a profound impact on the entire world– indeed seems at best rather opaque, and, at worst, like an unseemly, vested-interest-driven and hopelessly partisan process. Continue reading