Jun 17, 2022 Today, Gazprom announced a further cut in exports of gas via Nord Stream 1 to Germany and on into Europe. Earlier this week, they had cut 40%, now it is 60% of the 55 billion cubic meters per year (bcm) that normally flows in this pipe.
I explained that the Gazprom excuse – -that it could not re-import some compressor parts it had sent to Siemens to repair in Canada due to sanctions — appears as a convenient, manufactured excuse.
I pointed out that a one-off sanctions waiver from the USA, EU and/or Canada for the reimportation of these very specific parts could likely be easily arranged – and if the gas did not again flow fully, Gazprom’s ruse would be clearly exposed.
However, as I said, this is more accurately understood as simply another step in the weaponization of the over-dependence of the European Union (and esp. of Germany, Austria and Italy) on Russian gas imports, a game which Mr. Putin began in earnest in August of 2021.
My live discussion with DW (Deutsche Welle, the German national broadcaster; in English) on 14 Jun 2022 on Gazprom Germania’s Euro 10 b loan from the German state. I stressed that German Energy policy has made the EU hostage to Russian energy, and enabled Moscow’s Ukraine war. Why did Germany do this?
From 1980-to-2022 German elites depended on their Russian oil-and-gas partnership as a means to carve out a space for German capital despite general USA predominance, while still remaining inside the USA-protected Western alliance and global trade system. Their geostrategic gamble — a “strategic balancing” of Russia for perogatives vis-a-vis USA predominance — has led to disaster..
We discussed the reasons the German government is offering up to Euro10 billion to bail out Gazprom Germania, which was a daughter of Russian state gas export monopoly, Gazprom, in St. Petersburg.
I told Al Jazeera that Finland is well prepared, having worked since 2017 with Estonia, Latvia and Lithuania – the Baltic states – and with Poland to connect them all together with new pipelines, also to access LNG, storage and soon, new supplies from Norway.
Finland has also rented a regasification ship, from a US firm, to receive 5 billion cubic meters per year of LNG, whch will be plenty to supply both itself and Estonia in the wake of Putin cutting off Gazprom supplies of natural gas. Finland refuses, as did Poland too, to pay Moscow in rubles and so are being punished by Putin.
Kostaka.Media (Kyiv) independent journalists continue informing the Ukranian people on energy affairs. I was interviewed from afar by YAROSLAV MARKIN, TETIANA HUZENKO. We focused on gas issues – would Putin cut Europe’s gas? What have the Americans been organizing, now with the Europeans? How would this affect Europe, Ukraine and Putin’s income?
Below are links to the article in Kostaka’s three languages (EN, RU, UA). I pasted in the English one below, in case you have access problems. This interview had to be written, not audio/video, due to wartime difficulties. [Also, here’s my previous (in-person Kyiv) interview with Kostaka.Media.]
Biden’s Gas Air Lift and the impact on Kremlin revenue: Thomas W. O’Donnell on the russian gas embargo 28 April 2022 — Author YAROSLAV MARKIN, TETIANA HUZENKO Europe is going to cut the consumption of gas by a ⅔ in 2022, that is obviously will affect the Kremlin’s revenue. However, an embargo is highly possible as well. Both the Kremlin and the EU, in response to Russia’s new war crimes in Ukraine, could stop the gas flows. In such a case, LNG supplies are to help weather the crisis of 2022-2023 via Biden Air Lift. The last mentioned is being set up by the US and EU diplomats and is patterned on the Berlin Air Lift of 1949. Berlin Air Lift was a system of food and coal supply during the times when the USSR had been blocking land routes. This would be the end of Russian gas supplies to Europe forever, an international expert and senior energy and geopolitics analyst at GlobalBarrel.com, Dr Thomas W. O’Donnell believes. He told Kosatka.Media how quickly Europe would be able to abandon Russian gas, what alternative supply routes could be used, and whether Hungary and Austria, obsessed with Russian gas, could prevent this.
The analogue of Putin’s army in the energy sector • How much gas does Europe import from Russia per year? Who are the major consumers?
There are two different market processes whereby Russian gas is purchased by Europe. If we speak about only gas delivered by pipeline, these are: І. Via long-term contracts, agreements which are for natural gas to be delivered for several years, perhaps from five to as much as 20 years.
ІІ. Via the “spot” market. These are short-term contracts for gas to be delivered the following month. It is also possible to buy gas day-by-day, where traders agree to a price for gas delivered the next day. Here, gas traders consult the future’s market, which has set the price for gas delivered the next day, or the next month, or some number of months in the future.
Re: Urgente Pedido de Entrevista Periodística – Corresponsales Clarín y La Nación – Argentina
De Maria E… … Fri, Apr 29, 11:50 PM
Dr. O ´Donnell, … Estas son las preguntas para la entrevista del domingo:
1¿Alemania tiene otra posibilidad que no sea seguir comprando el gas ruso? ¿Cuáles serían sus otras opciones?
Repuesta: Antes que nada, muchas gracias por esta oportunidad de hablar con su audiencia argentina.
Pues, debo señalar que hay dos problemas diferentes: el suministro de petróleo ruso a Alemania y Europa y el suministro de gas ruso a Alemania y Europa. Me preguntas por el gas. El gas es mucho más difícil para Europa y para Alemania que el petróleo Hay dos casos: una reducción gradual o parcial de gas o un corte inmediato.
Un corte gradual se puede manejar bastante bien. Ahora Putin está tratando de dividir y conquistar Europa cortando el suministro de gas a Polonia y Bulgaria.
Un recorte inmediato, ya sea por parte de Putin o debido a las sanciones de la UE, crearía una gran crisis energética en Europa. Sin embargo, es importante entender que, al final, Putin está en una posición mucho más débil.
Si Putin corta todos los suministros de gas a Europa, ahora no hay suficiente gas en el mercado mundial para compensar. Pero Occidente, y especialmente EE. UU., la administración Biden, se ha estado preparando para esto al menos dos meses antes de que Putin invadiera Ucrania, incluso antes de que Europa creyera las advertencias de EE. UU. de que Putin atacaría Ucrania.
24 April 2022: My Asharq/live evening TV news interview is a bit over seven minutes.
Would an oil embargo be “effective”?
I respond, What is “effective”? Clearly it would not end the war. However, a Ukranian soldier who decides to give his life to resist the Russian invaders has no illusion that his or her sacrifice, on its own, will end the war. But, he will makes what contribution he can.
So, the German leadership refuses to send Ukraine heavy weapons, and certainly won’t send German troops. However, Germany and the EU can at least step up and make this contribution – sanctionRussian oil now. This will greatly hinder Putin’s ability, within two to three months, to finance his war.
We discuss the question raised by the German leadership – by Chancellor Scholz (SPD party), Energy and Environment Minister Habeck (Greens) and Finance Minister Lindner (FDP liberals) – that supposedly an embargo in Russian oil (or gas) would do more harm to German citizens than to the Russian leadership.
The argument heard repeatedly from Berlin is that this is “not worth it” and also, that such an embargo it “would not end the war.”
Also, I answer the question of how much oil could Putin’s Russia divert from Europe to India if the EU and Germany embargoed oil.
I think I posed useful answers to these questions given the time we had. Your thoughts and critiques are welcomed, and solicited.
Can the EU embargo Russian oil now? I explain yes, it can, and how. Also what OPEC will do. My Live Al Jazeera interview on 12.03.22 (ca. 00:20 CET, 18:20 EST). Here are the main points coved, quickly, from memory.
Afer an initial price spike from an EU embargo, the IEA’s SPR – strategic pertroleum reserves – can make up any shortall of oil for some weeks or so or months while OPEC and the USA increase production.
Especially the UAE and most especially Saudi Arabia have significant excess capacity, at least 2 million barrel/day (mbd) they can add to the market. Oil is fungable, there is one global market, so in principle the shock of an embargo could be ended rather quickly.
Regarding Germany: it is the main EU Member state now opposed to an immediate Russian oil embargo. However, I am confident it is being overly cautious and that Germany can do this now without significant disruptions.
In particular, Germany worries about the fact that several refineries in Germany and Central Europe are located inland, and supplied by the Druzhba Pipeline bringing about 700,000 barrels per day of Urals grade oil (i.e., hevier, sulferous oil) as their feedstock. So, the German government is claiming it would be very difficult to supply these refineries. However, this is not such a problem.
Consider that two German refineries, in the South of Germany, Bavaria for example; these two refineries are on a second pipeline, the Transalpine pipeline. This comes from the port of Trieste Italy. So these two refineries are fine. In an embargo of Russian Druzhba Pipeline oil they can be supplied from Trieste.
However, the refinery the German leaders most worry about is called Svedt, and it is located in Germany near the Polish border, also on the Druzhba pipeline [i.e., PCK Oil Refinery, at Schwedt, Oder River, Brandenburg State, Germany]. However, I can make some immediate points about this refinery.
TRT’s Nexus with Matthew Moore, was recorded 30 April 2021, from London.
My fellow guests were:
Patrick Boyle, Professor of Finance at Kings College — London, UK
Andrii Dligach, Co-Founder of the Centre for Economic Recovery — Kyiv, Ukraine
Maxum Bouev, Vice Rector at the New Economic School — Moscow, Russia
Myself, Thomas O’Donnell, Energy and Geopolitical Analyst, also teaching in — Berlin, Germany
My further comment: Russian oil can perfectly well be sanctioned now by Europe, and they should do it. It would deprive Putin’s regime of his main remaining source of income. Natural gas will be more difficult, but it is also possible to be sanctoned. It shoudl be done.
Here’s: i)English audio ii) Arabic videoiii) my English blog points
Al Jazeera asked me, about the Russian Foreign minister’s declaration that oil prices could go to $300/barrel if the West sanctions its oil. [Note: this interview was a week ago; but still relevant.]
I said: Finally the Russian minister has said something true. However, I explained that USA sanctions – as the EU also wanted – initially (Note: at the time of this interview, President Biden had not yet banned USA imports of Russian oil) had included exemptions from the larger SWIFT sanctions on Russian bank transactions specifically allowing continued payments for Russian oil and gas exports. And, last week, Putin, for his part, specifically also said he would not cut off Russian oil and gas deliveries to the West. So, why do we suddenly have the beginnings of a crisis of undersupply of Russian oil to the “”‘Global Barrel’ (dot com)”” oil market? It turned out that global-oil market actors themselves – the western banks that finance purchases, the spot market traders who make daily deals and oil-tanker owners who have to send their tankers to Russian ports to pick up oil – have broadly and voluntarily backed off from buying Russian oil. There are various reasons – there is over-compliance to sanctions, being super careful not to inadvertently violate the complex sanctions, reduce risk of sudden supply disruption from the Russian side, and also the fact that no tanker will pick up oil in a war zone or nearby without appropriate insurance, etc. There are also reputational issues of being seen by civil society as engaging in war profiteering if an entity purchases what is now deeply discounted Russian crude. I also explained that the Strategic Petroleum Reserve (SPR) system of the OECD states, which should hold at minimum 90-days of the total imports of any OECD state’s oil imports, will soften the shortage of oil should the purchase of Russian oil be sanctioned by the USA and/or EU, or if Putin and Lavrov decide to cut off Russia’s oil supply to Europe.
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.”