How America will Profit from War in Europe
By Salman Rafi Sheikh – NEO – 16.03.2022
When the US President Joe Biden announced, on March 8, his decision to ban imports of Russian oil and gas to the US, he opened up a potential business opportunity for the US LNG gas business to expand further into Europe and beyond. While Biden’s decision does not automatically apply to Europe, given how Europe is mindlessly following the US in its footsteps at the expense of its own strategic autonomy, there was/is no denying that most European nations will follow suit the US decision. Indeed, this was Biden’s intention when he said that this decision was made in “close consultation with our Allies and our partners around the world, particularly in Europe … to keep all NATO and all of the EU and our allies totally united.” But this is not just about unity; it is about business, making money and keeping Europe under exclusive US control.
For quite a long time, the US has been making efforts to prevent Europe from asserting too much autonomy in the international arena as a player in itself. Europe decided to refuse to follow the US decision to scrap the Joint Comprehensive Plan of Action (JCPOA) with Iran. Until recently, it had differences with the US over NATO, with the French President Macron even calling the organisation “brain dead.”
But things are fast changing to the US advantage. By deliberately pushing for NATO’s expansion into Eastern Europe and by denying Russia any reasonable security guarantees, the US set the stage for the present crisis, which has now not only ‘united’ the EU under the US leadership, but many NATO members – in particular, Germany – have decided to increase their defense budget by at least 100 billion Euros.
What the US President Trump was unable to do through table-talks, the Biden administration has achieved through generating an actual war/ crisis in Eastern Europe. Other than NATO members, non-NATO members like Sweden, too, have decided to increase their budget, with public opinion in Sweden swinging for the fits time in favour of NATO membership in the wake of the on-going crisis. Where will this defense spending go?
There is no denying that no European county will be buying weapon systems from Russia or China, but mainly from the US military industrial complex. (NATO does not have its own force; “NATO forces” refer to multinational forces from NATO member countries, who in turn contribute both personnel and equipment to the organisation for “collective defense.”) A highly expected sale will involve F-35 fighter jets. It is, therefore, not surprising to see two major US military industrial groups, Lockheed and Raytheon, have seen their market shares rising up by 16 per cent and 3 per cent since the start of the war in Ukraine, respectively.
Apart from this massive increase in defense production, a clear indication of war in Europe being a business opportunity for the US is the field of energy export to Europe. The US decision to impose a ban on energy exports from Russia is symbolic insofar as the US is not a large buyer of Russian oil and gas. The imposition of the ban is, however, aimed at luring European markets to the US. The US, in short, is eyeing capturing the European market on a long-term basis.
As it stands, US LNG exporters are already appearing to be the big winners as gas prices in Europe hit all-time high. Major US exporters like Cheniere Energy Inc are among the top beneficiaries, as they have been able to sign long-term delas to sell LNG to Europe in very recent months. The present crisis has only made their task a lot easier and much more profitable at the same time.
This is happening at a time when the US LNG exports are expected to reach 11.4 billion cubic feet per day in 2022, accounting roughly for 22 per cent of the expected global LNG demands next year. The number of cargos of LNG shipped from the US to Europe, only in the first two months of 2022, has reached a record high of 164, as compared to the previous record of 125 in 2020. This trend is likely to continue – and even intensify – amidst European nations’ claims to reduce their dependence on Russian natural gas.
Supplying the US LNG to Europe is also part of a US plan-in-the-making to globalise its exports. As a recent report in the Washington-based think-tank, Centre for Strategic and International Studies – which receives funding from the US government – the US export of LNG to Europe for the next 20 years could provide the foundation for the export of US LNG to Asia, which is the largest market for LNG. Expansion of US LNG gas supply lines to Asia would also mean a direct territorial expansion of the US global influence.
The New York Times’ advocacy of a yet another “trans-Atlantic Pact” between the US and Europe reflects essentially how the path for increasing Europe’s dependency on the US is being laid. The EU/NATO already largely depends on the US for its security, which is one reason why there was, until recently, a growing demand from within Europe to enhance its own strategic autonomy by developing weapons systems “independently of the US.”
These initiatives are unlikely to develop any time soon, and even if they do develop, they will have no impact on Europe’s quest for strategic autonomy. It will only add to the US-led trans-Atlantic alliance.
It is important to understand that until very recently, Europe was seeking autonomy from the US, not from Russia. By manufacturing a crisis in Europe and by forcing the European nations to confront a war in their own continent, the US has been able to bring a sea-change in the European political discourse from seeking autonomy from Washington to reducing ‘dependence’ on Russia. From the US perspective, therefore, the war is already a major strategic victory – a victory that the European elite is either completely unaware of, or has been forced to shut its eyes to.
Japanese firms have no plans to abandon Russian energy project
RT | March 14, 2022
Japanese trading houses, Mitsui and Mitsubishi, are reportedly not considering quitting Russia’s Sakhalin-2 project, that is focused on producing and shipping liquified natural gas (LNG), 60% of which is destined for the Japanese market.
The Japanese trading giants, which hold a total stake of 22,5% in Sakhalin-2, will remain partners to the project, as “prompt exit is risky” and “will be in favor of China,” Nikkei newspaper reports, citing documents submitted by the companies to the Ministry of Economy, Trade and Industry of Japan earlier this month.
The project has been one of the main sources of natural gas supply to Japan with nearly 100% of Japanese LNG imports coming from Sakhalin-2, according to media reports.
Located on the Russian island of Sakhalin in the Pacific Ocean, north of Japan, the project reportedly produces nearly 11.5 million tons of LNG annually which is mainly exported to major markets in Asia.
The project, launched in 2009, includes the offshore Piltun-Astokhskoye oil field and Lunskoye natural gas field in the Okhotsk Sea, and associated infrastructure on Sakhalin Island itself.
Sakhalin-2 is managed and operated by the Sakhalin Energy Investment Company. The majority stake in the enterprise belongs to Russia’s energy giant Gazprom. Shell, the world’s largest LNG trader, holds 27,5% minus one share, Mitsui’s share totals 12,5%, while Mitsubishi Corporation owns 10%.
On February 28, UK-based Shell announced plans to pull out its stake in the Sakhalin-2 liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture following sanctions placed on Moscow over the ongoing military operation in Ukraine.
US forcing Europe to abandon Russian gas & buy more expensive American LNG – Lavrov
RT | January 15, 2018
The United States is afraid of fair competition in the energy sector, and is hampering the implementation of the Russian Nord Stream 2 gas pipeline project, according to Russian Foreign Minister Sergey Lavrov.
“There is reprisal in the energy sector against North Stream 2. It is the US which is calling it politicized, leading to a split in Europe, and the strangling of Ukraine,” he said at a press conference on Monday.
“Washington clearly forces Europeans to abandon Nord Stream 2, despite the fact that gas deliveries to Germany via the pipeline could be 2,000km shorter than through Ukraine, and the cost of transit could be halved,” said the Russian diplomat.
Europeans “are being forced to buy much more expensive liquefied gas from the United States instead of Russian gas,” Lavrov added.
He also said that the US could not withstand fair competition from Russia in the gas-export sector.
Russia plans to build the Nord Stream 2 natural gas pipeline under the Baltic Sea to Germany, and to double the existing pipeline’s capacity of 55 billion cubic meters per year.
The project has faced fierce resistance from some EU members, especially from the Baltic states and Poland. They say the pipeline will cut gas transit through Ukraine and will result in a Russian monopoly in the EU gas market.
Other countries like Austria, Hungary and Germany are in favor of buying Russian gas.
First tanker crosses northern sea route without ice breaker (Because it is one anyway!)
By Paul Homewood | Not A Lot Of People Know That | August 25, 2017
A commercial LNG tanker has sailed across the colder, northern route from Europe to Asia without the protection of an ice-breaker for the first time.
The specially-built ship completed the crossing in just six-and-a-half days setting a new record, according to the tanker’s Russian owners.
The 300-metre-long Sovcomflot ship, the Christophe de Margerie, was carrying gas from Norway to South Korea.
Rising Arctic temperatures are boosting commercial shipping across this route.
There is only one slight problem – the newly built tanker is actually an icebreaker itself, as Matt McGrath goes on to elaborate:
The Christophe de Margerie is the world’s first and, at present, only ice-breaking LNG carrier.
The ship, which features a lightweight steel reinforced hull, is the largest commercial ship to receive Arc7 certification, which means it is capable of travelling through ice up to 2.1m thick.
On this trip it was able to keep up an average speed of 14 knots despite sailing through ice that was over one metre thick in places.
Popular Science has more details on the project to build another 15 of these icebreaking tankers:
There’s a lucrative shipping route between Europe and Asia that has the potential to cut thousands of miles and months of time off the trip. The only catch: it’s covered with thick, ship-sinking Arctic ice.
Heavy ice blocks the Arctic route from December to July, more than half the year. Even with icebreaking escort ships, few merchant vessels run it.
Now, Daewoo Shipbuilding and Marine Engineering is building the world’s first icebreaker tankers–16 of them–to carry liquid natural gas (LNG) through the route year-round. LNG tankers today have to be escorted by icebreaking ships that clear the way through the Northern Sea Route.
The Yamal LNG project, run by companies in Russia, France, and China, proposes drilling more than 200 wells in the Arctic to produce 16.5 million tons of LNG per year, supported by Daewoo’s first 16 Arc7 tankers. Year-round, Yamal LNG will ship LNG from the project’s Sabetta port in Russia’s Yamal Peninsula westward to Europe, South America, India, China, and South Korea. For the warmer half of the year, it’ll also ship east from Sabetta to Japan and South Korea.
As Russia leans more heavily on fuel exports and the prices for them drip lower and lower, a dormant 17th-century Russian ambition is coming back to life: to open the Arctic year-round.
http://www.popsci.com/worlds-first-ice-breaking-tanker-ships-open-arctic-route#page-2
French oil company Total, who are involved in the Yamal project also have this:
To transport Liquefied Natural Gas from Yamal LNG, which is located in the Arctic and constitutes one of the world’s biggest LNG projects, Total and its partners have designed a new type of ship: an LNG ice-breaker. This innovative solution allows large shipments of LNG to be transported efficiently and at a steady pace throughout the year and without the assistance of ice-breakers. The ship, which is 300 metres long and has a capacity of 172,600 m3, can sail in temperatures that fall as low as -52°C and in ice thickness up to 2.1 metres. Between December 2016 and 2019, 15 LNG ice-breakers will be commissioned. In this article, we delve into this technological microcosm.
The tankers are certified as Arc7, which is the Russian system of classifying ice breakers and ice strengthened ships. The classification goes up to Arc9 for the strongest ships.
So the fact that the Christophe de Margerie has just made this trip has nothing at all to do with global warming.
It is however a reminder that the French, along with Russia and China, will carry on developing oil and gas reserves, regardless of whatever was agreed at Paris.
Iran to emerge as US rival in gas markets
Press TV – July 25, 2016
Forbes in a report has hailed Iran’s success in the development of its gas industry and says the country can soon become a main rival over market access to key players like the United States.
The world’s leading business magazine says Iran owes the progress it has made in its gas industry to its high exploration success rate which it says stands at a whopping 79 percent.
The rate, it says, is specifically high given that the world’s average is only 30 to 35 percent.
The Forbes report further emphasizes that the progress in Iran’s gas industry could soon enable it to exploit the promising markets in India, Pakistan, Kuwait, and UAE.
It adds that the country’s planned reductions in subsidized pricing, which will help reduce wasteful usage, will free up more of its gas for exports.
Forbes further stresses that Iran’s plans to produce liquefied natural gas (LNG) will specifically have a prosperous future.
“Iran is currently working on several options to join the same ‘international LNG club’ that the US is also joining,” wrote Forbes in its report. “And Europe is the mid- and long-term target. Europe’s gas demand is projected to increase 15-20 percent by 2025. This means that Iran is competition for the US”.
The report emphasizes that Iran’s LNG plans are expected to become operational after 2020, adding that the country could benefit from the growing demand over the succeeding years particularly given that Europe’s gas demand, for example, is projected to increase 15-20% by 2025.
US Energy Envoy Flies to Kuwait, Qatar, Egypt and Israel for Discussions
Sputnik — 18.04.2016
WASHINGTON – The US government has sent Special Envoy Amos Hochstein to Kuwait, Qatar, Egypt and Israel to discuss falling oil prices after the failure of the Doha energy talks, the US Department of State announced in a media note on Monday.
“Special Envoy and Coordinator for International Energy Affairs Amos J. Hochstein will be travelling to the region to meet with key interlocutors in Jerusalem, Cairo, Kuwait City and Doha,” the note stated.
As global oil prices remain near record lows, and the United States emerges as a global exporter of liquefied natural gas, Hochstein will be seeking to strengthen US relationships with partners in the region as well as discuss strategies for addressing the market realities of the energy sector, the note explained.
Hochstein will discuss energy security issues in Israel, power generation issues in Egypt and plans to investment in developing new oil fields and build additional oil refineries in Kuwait, the State Department pointed out.
In Qatar, Hochstein will give a speech emphasizing US support for liquefied natural gas development and its role in reducing global carbon emissions, the note said.
Global gas demand to grow 32% by 2040 – Putin
RT | November 23, 2015
World demand for gas is growing faster than any other energy source, and will grow by a third in the next 25 years, according to Russian President Vladimir Putin.
“The growing demand opens up great opportunities for increasing production and exports of gas. At the same time, it’s a major challenge, because there’s a need to dramatically accelerate the development of new deposits, modernize the refining capacities, expand gas transportation infrastructure, bring into operation additional pipelines and make new LNG routes”, said Putin at a Gas Exporting Countries Forum in Tehran on Monday.
According to Putin, Russia seeks to increase its gas output by 40 percent by 2035, reaching 885 billion cubic meters. One of the biggest tasks ahead of Russia is to boost the supplies of gas to China, India and other Asian countries from the current 6 percent to 30 percent, said Putin. Kremlin also intends to triple the LNG supplies. He added that Russia would be able to deal with all these tasks.
During his visit, Putin is meeting with Iranian leaders. He’s talked to Supreme Leader Ali Khamenei about energy cooperation, Syria and other key issues. Putin’s also meeting Iran’s President Hassan Rouhani.
Gazprom eyes Japanese expansion
RT | April 30, 2013
Seeking to expand in its export markets, Russia’s gas major Gazprom is now looking to develop terminals to process liquefied natural gas as well as distribution networks in Japan.
Japan is largely dependent on gas exports, as the country consumes above 100 billion cubic metres of gas a year while producing domestically no more than 4 billion. Since the Fukushima disaster in 2011 Japan is seeing a greater need for gas.
After the incident, “of 50 nuclear power units, only two are working – that’s a large drop in power generation, we understand that perfectly,” said Russia’s President Vladimir Putin at a press conference following talks with Japanese Prime Minister Shinzo Abe.
Given Russia’s abundant hydrocarbon reserves, the country is quite “capable of providing for the growing consumption of hydrocarbons in Japan without harm to our traditional partners and without harm to our own consumers,” Putin added.
Russia supplies about 6.5 million tonnes of gas to Japan each year, which is about 8% of the total need of the Japanese.
Russia must need closer energy cooperation with Japan to back its Eastern Gas Program, which exports to Asian – Pacific countries, says Michael Korchyomkin, a director at East European Gas Analysis.
Among the joint gas projects between Russia and Japan are Vladivostok LNG and Sakhalin–2, an oil and gas joint venture between Gazprom, Shell and Japanese companies Mitsui and Mitsubishi.
Gazprom’s chances to successfully compete in regasification in Japan look slim, as currently the country processes about 250 bn of cubic metres of liquifed gas. So, new LNG terminals are unlikely to have a huge effect on the country’s economy, analysts say.
Further cooperation between Gazprom and Japan should deal mainly with the latest projects aimed at increasing Russian gas exports to Japan, says Grigory Birg, an analyst from Investcafe.
The Sakhalin – 2 project should be more attractive for the Japanese, as the prime costs there are acceptable, Korchyomkin added. The situation around the Vladivostok LNG plant, that’s due to start operations in 2018, so far looks vague. The price of gas produced there could rise too much – to as much as $700 per a thousand cubic metres, the expert concluded.
Pricing it in
At the moment the price issue remains a key one for the Japanese. “Cutting prices for the fuel bought abroad is an urgent task for our country,” said Toshimitsu Motegi, the Japanese Minister of Economy, Trade and Industry.
People in Japan pay about $550 per thousand cubic metres of gas, which compares to the average of $365 in Europe.
The Japanese have started to ask for lower prices, Valery Nesterov, an analyst at Sberbank Investment Research, told Kommersant daily. This isn’t surprising, as the number of similar requests has increased, adds Mariya Belova, a senior analyst at the energy sector at Moscow School of Management, Skolkovo. Rosneft and Novatek are among other Russian companies offering their LNG (liquefied natural gas) projects, and looking for possible delivery contracts to the country.
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