Al Jazeera asked for an online commentary within an hour of Putin’s announcement. These were my initial thoughts.
I also spoke to AJ Arabic, and a couple hours later, on Germany’s Deutsche Welle’s English language service elaborated on these points (see video, next blog post).
The question is where will the EU-USA-g7 western alliance go from here. If they stepwise lower the cap, and also work hard to get new oil online (from OPEC and the USA), they can gradually keep lowering Russia’s market share. However, as I indicated, the coming recession – esp. in Europe – and the uncertainties of Chinese demand as it exits COVID shutdowns in early 2023, complicate calculations of whether the globala oil market will be short or long on supplies and if the price will spike or not. I said this will be “a chess game.”
This interview with Artur Ciechanowich (Polish Associated Press-PAP, Brussels) appeared on Sunday, 25 November 2022 in several Polish press, TV and radio outlets (links below this post). Polish & English (via Google Translate) versions follow:
ENGLISH – via Google Translate
Europe without gas and oil from Russia? An expert gives a possible date
If the European Union does not bow to the Russian energy attack, it may completely replace gas and oil imports from this country with raw materials from other sources within four to six years, said Thomas O’Donnell, an energy market analyst and lecturer at a university in Berlin …..
Russia is waging an energy war against Europe, which is part of a larger war between Russia and Ukraine. We see that the war on the battlefield is not going Russia’s way, so the Kremlin is counting on its energy policy to cause enough economic problems for Europeans to divide the EU and withdraw from solidarity with Ukraine, says O’Donnell.
The question of replacing gas and oil imports from Russia
Vladimir Putin has a much greater influence on Europe through the supply of gas than oil. This is because gas is mainly supplied by pipelines. Around 2027, Europe, the United States, Qatar and others will increase the export capacity of liquefied natural gas enough to replace the EU’s dependence on Russian gas and allow gas prices in the EU to fall to levels close to the low prices in the US, the analyst predicts.
However, he does not hide that before this happens, citizens of EU countries will have to go through a more difficult period. “This is an energy war, and in a war both sides suffer – consumers and businesses in the EU will suffer. It will take at least four years to implement huge new LNG export projects from the US and Qatar, he cautions, adding that the EU will also need to receive as much gas as possible from Algeria, Egypt and Norway.
This year Europe filled up its gas storages. It will be harder next year. It should be understood that the storage facilities – under normal conditions – have never been used to provide normal gas supplies to consumers. They’re just too small for that. They were created with the idea of storing the raw material saved in the summer and using it in the winter, when the Russian and Norwegian pipelines could not keep up with the demand, explains Thomas O’Donnell.
He points out that, therefore, Germany has repealed the regulations requiring the maintenance of a minimum temperature in homes, and in some EU countries there are debates about power cuts for citizens. – Europe has become dependent not only on Russian gas, but also on completely unpredictable wind energy. If the wind is weak – as in the 2020-21 season – combined with the lack of appropriate transmission networks and the lack of technical capacity to store electricity on a large scale, it can mean a disaster. These are the facts. In times of war, citizens must know the whole truth, the expert argues.
PAP He emphasizes that Russia is waging an energy war against Europe in order to break its solidarity towards Ukraine. – In the US and Qatar, but also in Norway, Algeria, Azerbaijan, Israel, Egypt and so on, there are plenty of new gas reserves, financing opportunities, technologies and functioning markets. In four to six years, Europe’s dependence on Russia will be completely replaced by imports from other directions. This also applies to crude oil. Russia, meanwhile, will be reduced from an energy superpower to an OPEC second or third tier country, concludes O’Donnell.
TVN24 live – watch on TVN24 GO The material is part of the TVN24 GO website Author:kris/ToL
Main photo source: Marcin Bielecki/PAP
POLISH – as from PAP
Europa bez gazu i ropy z Rosji? Ekspert podaje możliwy termin
Jeżeli Unia Europejska nie ugnie się przed rosyjskim atakiem energetycznym, to w czasie od 4 do 6 lat może całkowicie zastąpić import gazu i ropy naftowej z tego kraju surowcami z innych kierunków – stwierdził Thomas O’Donnell, analityk rynku energetycznego i wykładowca na prywatnej berlińskiej uczelni ….
Rosja prowadzi przeciwko Europie wojnę energetyczną, która jest częścią większej wojny Rosji z Ukrainą. Widzimy, że wojna na polu bitwy nie idzie po myśli Rosji, więc Kreml liczy na to, że jej polityka energetyczna wywoła u Europejczyków wystarczające problemy ekonomiczne, by podzielić UE i odstąpić od solidarności z Ukrainą – mówi O’Donnell.
Kwestia zastąpienia importu gazu i ropy z Rosji
Władimir Putin ma znacznie większy wpływ na Europę poprzez dostawy gazu niż ropy naftowej. Dzieje się tak, ponieważ gaz dostarczany jest głównie rurociągami. Około 2027 roku Europa, Stany Zjednoczone, Katar i inne kraje zwiększą możliwości eksportowe skroplonego gazu ziemnego na tyle, aby zastąpić zależność UE od rosyjskiego gazu i pozwolić na obniżenie cen gazu w UE do poziomu zbliżonego do niskich cen w USA – przewiduje analityk.
Nie ukrywa jednak, że zanim to się stanie, to obywatele państw Unii będą musieli przejść przez trudniejszy okres. – To wojna energetyczna, a na wojnie obie strony ponoszą ofiary – ucierpią konsumenci i firmy w UE. Co najmniej cztery lata zajmie wdrożenie ogromnych nowych projektów eksportu LNG z USA i Kataru – zastrzega, dodając, że UE będzie musiała otrzymywać jak najwięcej gazu także z Algierii, Egiptu i Norwegii.
W tym roku Europa napełniła swoje magazyny gazu. W przyszłym roku będzie trudniej. Należy rozumieć, że magazyny – w normalnych warunkach – nigdy nie służyły do zapewniania normalnych dostaw gazu konsumentom. Są na to po prostu za małe. Powstawały z myślą przechowania surowca zaoszczędzonego latem i wykorzystania go zimą, kiedy rosyjskie i norweskie rurociągi nie nadążały z zaspokojeniem popytu – tłumaczy Thomas O’Donnell.
Zwraca uwagę, że w związku z tym, Niemcy uchylili przepisy nakazujące utrzymywanie w domach minimalnej temperatury, a w niektórych krajach Unii toczą się debaty na temat przerw w dostawach prądu dla obywateli. – Europa uzależniła się nie tylko od rosyjskiego gazu, ale postawiła też na całkowicie nieprzewidywalną energię wiatrową. Jeśli wiatr będzie słaby – jak w sezonie 2020-21 – to w połączeniu z brakiem odpowiednich sieci przesyłowych i brakiem technicznych możliwości magazynowania prądu na wielką skalę, może to oznaczać katastrofę. Takie są fakty. W czasie wojny obywatele muszą znać całą prawdę – przekonuje ekspert.
PAP Podkreśla, że Rosja prowadzi wojnę energetyczną przeciwko Europie, aby rozbić jej solidarność wobec Ukrainy. – W USA i Katarze, ale też w Norwegii, Algierii, Azerbejdżanie, Izraelu, Egipcie i tak dalej, istnieje mnóstwo nowych rezerw gazu, możliwości finansowania, technologii i funkcjonujących rynków. Za cztery do sześciu zależność Europy od Rosji zostanie całkowicie zastąpiona importem z innych kierunków. Dotyczy to również ropy naftowej. Rosja tymczasem zostanie zredukowana z supermocarstwa energetycznego do drugoligowego lub trzecioligowego kraju OPEC – konkluduje O’Donnell.
TVN24 na żywo – oglądaj w TVN24 GO Materiał jest częścią serwisu TVN24 GO Autor:kris/ToL
Źródło zdjęcia głównego: Marcin Bielecki/PAP
Here are links to some of the Polish media where the PAP interview was published:
I will be speaking at this roundtable here in Berlin on Thursday with two eminent German oil market experts. [See PDF invite, below].
What is happening in oil markets bewteen Russia and esp. Saudi Arabia, competing for the Chiese and larger Asian market? This is a key issue in the effectiveness of EU & USA sanctions against Russia’s oil exports, aimed at limiting the Putin regime’s capacity to war agaisnt Ukraine.
You are cordially invited to this live-only event in Berlin. Our roundtable includes:
Dr. Birgit WETZEL – Wirtschaftsjournalistin mit Schwerpunkten Energie und postsowjetische Staaten
Mathias BRÜGGMANN – International Correspondent im “Handelsblatt”
Dr. Thomas W. O’DONNELL – Wissenschaftler an der Freien Universität Berlin, Experte für globale Energiesysteme, erneuerbare Energien und die Transformation fossiler Brennstoffe
Moderation: Ewald KÖNIG, Journalist
Please register ASAP at : email@example.com as room is limited. Sponsored by the Berlin-Gulf Dialogue for Energy Dialogue e.V.
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.
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.
Why the discrepancy in oil and petrol prices in Europe. Is it merely a delay from pipe to pump… or are petrol companies taking profit?
The UK prime minister went to Saudi Arabia to argue for them to pump more oil. How likely is that, considering oil producing nations profit greatly when prices are high?
Already the oil price has gone back below 100 dollars a barrel, despite the ongoing war on Ukraine which fuelled a price spike recently. What’s causing the price drop and how likely is it to stabilise or even head lower?
The European Commission claims the EU can cut imports of Russian gas by TWO THIRDS by the end of the year. Is this realistic?
Note: It is indeed possible for the EU – including Germany too – to immediately cut Russian oil imports to zero and not suffer prolonged high oil prices. How? I will explain in a coming post. This is a topic I have been working on intensively the past couple weeks.
I mention some of my (and others’) rationale for saying this in my answer to the second question from Al Jazeera. NOTE: A very good reference on this is: Christof Rühl speaking last week to bne inelligence. I strongly concur with him. (this note added 15 Mar.)
Here’s our TRT Roundtable on Annelene Baerbock as new German Green Foreign Minister. The questions included, will/can she:
Prioritize human rights in China and Russia over German trade?
Stand strong vs Putin’s Ukraine-invasion threats?
Insist Chancellor Scholz (SPD) kills Nord Stream2?
Can the new German Foreign Minister, Annalena Baerbock, co-chair of the Green Party, possibly make any difference in German foreign policy under the strong hand of the new SPD Chancellor, Olaf Scholz?
I appeared on David Foster’s “TRT World” show, produced in London, to discuss Germany’s first woman foreign minister, whose Green Party is now governing with the Social Democrats (SPD) and liberal Free Democrats (FDP).
Ms. Baerbock, the first woman foreign minister in German history, has a steep hurdle to overcome to put any imprint on German foreign policy. For example, the chair of Scholz’ party, said this week that he sees Putin’s 100,000 troops on Ukraine’s borders as, rather incredibly, a case of “mutual threats,” quite different from Minister Baerbock’s public views before assuming this office.
As Nato, EU and USA relations vis-a-vis Russia and China heat up, Minister Baerbock comes with no previous foreign affairs experience, and SPD Chancellor Scholz is expected to dominate foreign policy, just as Angela Merkel’s office did previously. [See footnote]
I discussed her much-asserted intent to shift to a “values-centered” foreign policy, to criticizing Russian and Chinese human rights violations, which were not emphasized by the “pragmatic” and “interest-based” foreign polity of Angela Merkel.
I also discussed her avowed “post-pacifist” political ideology – e.g., in favor of speaking more strongly than most Greens have traditionally done in favor of NATO security (and perhaps expansion?) in Eastern and Central Europe, and than either the CDU and especially the SPD generally would, and also for a “European Army” to enhance EU defense capacities. However, what she exactly means by this is not so clear, and till now this stance has tended to be a distinction without any great practical difference to the policies of either the former CEU or the new SPD chancellor.
For example, as I pointed out, last week she indeed spoke clearly in opposition to the Nord Stream 2 pipeline as a threat to Ukrainian security, and further said that it cannot be certified as it now stands, under EU law.. However, while she was in opposition, she consistently demanded the project be abandoned. Now, as foreign minister, she has only thus far stating what is known: that the pipeline is not possible to certify legally and bring into operation as its present ownership structure would violate the anti-monopoly provisions of European law (and, therefore, too German law), known as the “Third Energy Package.”
However, she has said nothing really new here. Gazprom and its Nord Stream 2 AG subsidiary are now increasingly being seen to be on legal thin ice (e.g., I gave a historical overview of this Gazprom difficulty in my 05.12.2021 Kyiv talk video: Plan C: Gazprom’s failures on Nord Stream 2 and in my written explanation accompanying it).
The question is, will she demand of Scholz that the pipeline be abandoned, especially not that Putin is openly threatening to commits new aggression against Ukraine? And, the Americans will demand it is he takes any such step, based on their reading of the “deal” they made with Mrs. Merkel’s government that the pipeline must not be used as an energy weapon and that an invasion of Ukraine would especially require the project being killed.
Should she do so, she has a very steep climb ahead in her governing coalition, especially coming up against the firm support for the project within Scholz’ SPD..
My fellow expert panelists included
Dr. Samuel Ramani, Researcher in International Relations at University of Oxford/ Associate follow at RUSI
NOTA BENE: A really very informative background deep dive on the decline of the German Foreign office under Merkel, who gradually took over all important foreign issues herself, by Politico’s Germany/Austria reporter is: “Who will be Germany’s next foreign minister? Nobody cares. During her 16 years in power, German Chancellor Angela Merkel seized full control over international affairs.” BY MATTHEW KARNITSCHNIG September 24, 2021. Here is the link.