Ilargi: Big Oil and Gas Wars

By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at

Forests and trees. We live in a world built on such an overkill of 24/7 propaganda and misinformation that some of it easily slips by. At that point you need to rely on the little man inside to raise a warning sign. That’s about how I felt when I read yesterday about EU plans to deliver gas to Ukraine by reversing the flow through existing pipelines. That made me wonder things like: ‘How would that work in practice?’ and: ‘Which gas?’ While the little man simply said: ‘I don’t believe a word of this’.

And before you know it, you spend many hours trying to get a clearer picture. Here’s an idea of how that went for me. First, the Guardian on the initial report:

EU leaders are rapidly drawing up plans to send some of their stocks of Russian gas back to Ukraine and other eastern European countries that need it, if Vladimir Putin reacts to western sanctions over the Crimea crisis by starving the continent of energy.

Gazprom provides Ukraine with around half its gas, and other countries in eastern and southern Europe, including Poland and Greece, reportedly have low stocks of gas. Although Gazprom said the threat to Kiev would not affect the supply to the rest of Europe, western leaders are steeling themselves for a possible battle with Moscow over energy supplies. [..]

“Either Ukraine makes good on its debt and pays for current supplies, or there is risk of returning to the situation of early 2009,” Gazprom CEO Alexei Miller said on Friday, adding that Ukraine now owed $1.89 billion in unpaid bills. [..] Although it is the largest producer of natural gas, the US does not currently export its supplies, and the construction of a handful of export terminals will not be completed until at least 2015. [..]

In Brussels on Thursday, European leaders engaged in detailed discussions about the feasibility of switching the flow of gas in eastern Europe’s pipelines. Storage reserves in Europe, particularly Germany and Hungary, which have ample supplies, could be used to pump gas back towards Ukraine. José Manuel Barroso, the president of European Commission, said energy security was an early priority for Ukraine, adding: “We are looking in the short term at the gas transmission network to ensure that reverse flows with the European Union are fully operational.”

A project to modernise Ukraine’s gas transmission infrastructure forms part of the EU’s $15 billion promised aid package to Kiev, with an initial loan possible in the near future.

A European Commission memorandum specifically states it will seek to enable “reverse flows” of gas to Ukraine, ensuring they can be “operationalised as soon as possible”. [..]

What I get from that: Europe is drawing up all sorts of plans before there is any real threat to its supplies. That gives me the idea that it’s overplaying the Ukraine threat card on purpose, but that’s just my little man inside. There’s also a lot more to that than either Ukraine or EU are saying, and that makes me suspicious. As does the line about “part” of the promised aid being set aside for “modernizing” Ukraine’s gas transmission infrastructure. What does that mean? That Shell and BP are going to come in to make sure that get control, and push aside Gazprom? What else could it be? Who else has the know how?

What is clear is that Ukraine has a horrible history of paying Gazprom for gas deliveries through the past 20 years. And Barroso et al are not urging Kiev to finally pay the bills, they intend to help them get gas without paying Russia for past delivery. But still, you could argue that these things are open to interpretation, though I think western coverage of delivery and payment has been very one-sided for a long time.

So let’s try another angle. My first question about reverse gas flows was: ‘How would that work in practice?’. Here’s what the article says about this:

… European officials and energy experts concede there are doubts over whether it would be technically possible to transfer sufficient gas through the continent, west to east, if Russia decided to restrict its supplies for a significant period of time. While short-term assistance through the summer months could help, western Europe would not have the capacity to supply neighbours in the east for an extended period of time.

Speaking on the condition of anonymity, one senior executive said reversing gas flows would be an extremely complex move. “This is not easy to do. Certainly the Gazprom export pipeline is built to move gas only in one direction, and it would involve a lot of time and money to reconfigure for imports ,” the executive said. “You would also have to get the agreement of dozens of commercial and other organisations. It is not going to happen.”

That’s pretty clear, though they have only the lone anonymous industry voice (you can’t exactly speak freely on this if you work for Big Oil of course, far too many conflicting interests). It seems obvious even to the layman that there are lots of pumps along the hundreds of miles of pipeline, and they’re all configured for one way flow. Logistically, this is a potential nightmare, and administratively too. There are plans these days to reverse flow in a Canadian pipeline from Montréal to Sarnia ON, and that’s hard enough. Doing that across multiple borders with dozens of interested parties and legal entities is quite another thing again.

Europe imported 155 billion cubic metres (bcm) of gas from Russia in 2013, about 30% of its overall gas demand, according to Wood Mackenzie, an Edinburgh-based energy consultancy. Ukraine is the key transit route for Russian gas to Europe, with around 50% piped through the country in 2013. [..]

In Washington, there is a growing appetite to retaliate against Russia with a long-term, strategic acceleration in energy exports. [..] Republicans, backed by gas producers such as ExxonMobil, have for years been pushing to dramatically increase gas production to enable export trade, and are using the crisis in Crimea to argue for swift action by the Obama administration.

I’ll get to the “retaliate against Russia with a long-term, strategic acceleration in energy exports” bit in a bit. First, the money quote from the article, one that puts on a very bleak light what madness al these ideas are based on:

US gas production is projected to rise 44% by 2040, according to the US Energy Information Administration, and producers have been pressing the Obama administration to expand exports of natural gas. [..]

A senior US official said the State Department was supportive of introducing substantial gas exports abroad as a move to counteract Russia’s influence. Carlos Pascual, a former American ambassador to Ukraine, who leads the State Department’s Bureau of Energy Resources, told the New York Times that opening global markets to US exports “sends a clear signal that the global gas market is changing, that there is the prospect of much greater supply coming from other parts of the world”.

The EIA is an organization of overpaid cheerleaders that haven’t had one prediction right in forever and a day. It’s perhaps because they have no track record to defend that they issue such double or nothing claims; it’s hardly interesting anymore. That claim that US gas production will be 44% more in 26 years than it is today is simply bonkers, and not supported by anything other than industry interests, loud as they may be.

The train of “thinking” behind it is what’s good to keep in mind: We’ve seen how Shell and BP and Exxon all see their production and reserves and investments fall. These are arguably the world’s most powerful corporations outside of Wall Street, and they’re on the brink of becoming irrelevant. That they, in their present predicament, would seek to go to “war without soldiers” with Gazprom and Putin, is no surprise, it’s desperation.

As we see also in an article by Nafeez Ahmed for the Guardian:

Just one month before Nuland’s speech at the National Press Club [in Dec 2013], Ukraine signed a $10 billion shale gas deal with US energy giant Chevron “that the ex-Soviet nation hopes could end its energy dependence on Russia by 2020.” The agreement would allow “Chevron to explore the Olesky deposit in western Ukraine that Kiev estimates can hold 2.98 trillion cubic meters of gas.” Similar deals had been struck already with Shell and ExxonMobil.

The move coincided with Ukraine’s efforts to “cement closer relations with the European Union at Russia’s expense”, through a prospective trade deal that would be a step closer to Ukraine’s ambitions to achieve EU integration. But Yanukovych’s decision to abandon the EU agreement in favour of Putin’s sudden offer of a 30% cheaper gas bill and a $15 billion aid package provoked the protests.

To be sure, the violent rioting was triggered by frustration with Yanukovych’s rejection of the EU deal, along with rocketing energy, food and other consumer bills, linked to Ukraine’s domestic gas woes and abject dependence on Russia. Police brutality to suppress what began as peaceful demonstrations was the last straw.

But while Russia’s imperial aggression is clearly a central factor, the US effort to rollback Russia’s sphere of influence in Ukraine by other means in pursuit of its own geopolitical and strategic interests raises awkward questions. As the pipeline map demonstrates, US oil and gas majors like Chevron and Exxon are increasingly encroaching on Gazprom’s regional monopoly, undermining Russia’s energy hegemony over Europe.

We’ve already seen that US agents have been heavily involved in regime change in Kiev. Now the picture emerges of the (for now let’s say potential) involvement of Big Oil behind the scenes. They want to break Gazprom’s power monopoly and replace it with their own.

For additional juicy tidbits, let’s take a look at this March 5 piece from Bloomberg.

Ukraine, the subject of a struggle for influence between Russia and the West, plans to cut natural-gas imports from its eastern neighbor and fill the gap with supplies from Europe to reduce dependence on Gazprom. Ukraine will need to import about 30 billion cubic meters of gas this year, of which a third may come through Slovakian pipelines, Energy Minister Yuri Prodan said today in Kiev.

Prodan’s remarks follow a decision by Moscow-based Gazprom, which accounts for most of Ukraine’s gas imports, not to extend a price discount beyond April, citing unpaid debts for supply. Tensions between Russia and Europe and the U.S. have escalated since President Vladimir Putin sent troops into Crimea in a bid to regain influence over Ukraine following the overthrow of Kremlin-backed President Viktor Yanukovych last month.

Ukraine has reached a preliminary agreement with Slovakia to import 10 billion cubic meters of gas a year from various European Union countries through Slovakian pipelines, Prodan told reporters. It also has signed a deal with German utility RWE AG for 5 billion cubic meters a year, he said, without giving a start date for supply. RWE Chief Financial Officer Bernhard Guenther said this week that the Essen-based utility may be able to supply Ukraine in the event of a shortage.

The EU will help Ukraine diversify its imports and provide funding to upgrade its pipelines, the bloc’s regulatory arm said today in a statement. The European Commission also backs the use of “reverse-flow corridors” via Bulgaria, Romania and Croatia, whereby pipes that send gas west switch direction, or some fuel earmarked for those countries is sent directly to Ukraine.

Note the timeline: On March 5, Ukraine says it plans to cut gas imports form Russia. A bold enough statement to begin with if you still owe $2 billion worth of the stuff (I think I’ll go buy somewhere else now …), but that aside. I’m thinking it’s perhaps not the whole truth and nothing but the truth, because 8 days before, on February 25, Reuters reported this:

Naftogaz, has slashed gas imports from Russia’s Gazprom to 28 million cubic meters per day as of February 24 from 147 million , two Russian industry sources told Reuters on Tuesday. They said Naftogaz had gradually reduced its imports from 147 million cubic meters as of February 1 , but did not offer a reason for the cuts. [..]

In December, Russia agreed to reduce the gas price for Kiev to $268.50 per 1,000 cubic meters, a cut of about one third from around $400 which Ukraine had paid since 2009. Under the deal, gas prices are revised quarterly.

Yanukovych was ousted on February 22. Two days later, Ukraine’s state oil and gas company announces it’s cut imports from Gazprom by over 80% (to be replaced with?!). What’s more, it started cutting on February 1, weeks before the Yanukovych ouster. We can probably only guess as to the reasons behind that, but it’s certainly a noteworthy event. Not least of all because the December deal with Russia that cut prices by a third was still valid and not up for revision by at least another month.

So where is the gas coming from for Ukraine today, and where will it come from in the future? Perhaps this from The Voice of Russia lifts part of the veil:

To be on the safe side, last week, the European Union made a decision to increase the volume of the gas purchased from Russia by 15%. In response, Josh Earnest, who is the US White House Special Assistant to the President and Principal Deputy Press Secretary, hurried to calm Europeans. He says that the American government has no information that would make it possible to conclude that Europe may face any lacks of natural gas in the foreseeable future. However, if such lacks do take place, the US would help Europe with its own liquefied gas, although it would be able to start deliveries of this gas to Europe not earlier than from the very end of 2015.

That is so funny you’d think April Fool’s Day is near. Not that the entire reverse flow story is not, but hey … The EU plans to buy 15% more gas from Russia, which they intend to use to – pretty openly – undermine Russian interests. Through some far-fetched reverse flow scheme it wants to take gas that has been pumped through Ukrainian pipelines, back to Ukraine, which can then continue to refuse to pay its past bills to Gazprom. And if Russia in turn would refuse to go along with such a scheme – and cut supplies – , they can all simply blame Putin.

And even then … :

EU Gas Flows To Ukraine Too Small To Cope With Russian Disruption (Reuters)

Directing natural gas from the European Union to Ukraine if Russia stops supplying its western neighbour would fail to keep up with demand for long as capacity between the EU and Ukraine is too small, analysts said on Thursday. Ukraine last year imported around 28 billion cubic metres (bcm) of natural gas from Russia [..]

One of the EU’s key plans to support Kiev in case of a supply cut by Russia is to use reverse flows to send gas to Ukraine, but at the moment the capacity to do so is limited. Ukraine began importing gas through reverse flows from Poland and Hungary in 2012 but analysts said the amounts so far have been equivalent to a mere 2 bcm a year. According to consulting group Wood Mackenzie, Poland has a reverse capacity of 1.5 bcm to Ukraine while Hungary is able to send 3.5 bcm. Romania has the potential for 1.8 bcm but there has been no firm agreement on its use, the consultancy said.

The real issue, however, might not be Ukraine but Europe itself. Wood Mackenzie estimated Europe would need more than 160 bcm of Russian gas in 2014. While Russia has enough gas and can reroute some flows from Ukraine to the Yamal Europe and Nord Stream pipelines, which supply Germany, the consultancy said these alternatives would still leave Europe needing more than 30 bcm of gas via Ukraine.

And we’re not done yet. There are more – and more grotesque – plans in the offing. US House Leader John Boehner apparently buys into the “US gas production is projected to rise 44% by 2040″ number from the EIA (what does he know), and wrote in the WSJ this week that America should build LNG terminals: “The ability to turn the tables and put the Russian leader in check lies right beneath our feet, in the form of vast supplies of natural energy… ”

The Department of Energy has approved for terminals to export liquefied gas, 5 in Texas and Louisiana, and one in Maryland. A further 24 applications are pending and Boehner et al want Obama to speed up the process. It’s of little concern to them in their ignorance that building these terminals (and the LNG tankers required for transport) is very costly and takes years, on both the supply and the delivery side, and that LNG tankers are floating bombs and thus easy targets.

Much of the entire Ukraine story seems to be made up of a different sort of easy targets, those in the western media. We are good and they are bad. It’s almost cartoon like. And so are the “solutions” that sprout from the brains of politicians who are mostly singularly clueless when it comes to the intricacies of the energy industry, and shout out whatever some industry paid spin doctor will them.

The reverse flow of gas to the Ukraine is not going to happen (but we won’t know that till much later), because os technical issues, administrative and legal issues, and because Putin and Alexei Miller won’t volunteer for western leaders to make fools of them. Russia may not go to war of Crimea, but it will over control of the pipelines it has longstanding legal rights over. It’s perhaps the most pressing issue today, but that’s not how it’s presented.

Since the American and European political systems have been bought and paid for, we need to ask ourselves every step of the way where in words uttered and events ongoing we can see the footprints and fingerprints of the major shareholders of western financial and energy corporations, who would all kill their grandmas and sell their granddaughters just to pry away control over Russian and Asian oil and gas reserves and revenues from Putin’s cold dead fingers. It may all be presented as bringing freedom and democracy to Ukraine, but come on, who believes that anymore?

The only way the west can gain control over what it’s after, over Ukraine and the pipelines, and Russia and its oil and gas reserves, is to oust Putin. Are you willing to sacrifice your children over that? If not, keep paying attention. Follow the money. Of the most endangered of corporate species, Big Oil. At this point in time, they still have the clout to move governments into war. At that point, it may all be over.

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44 comments

  1. PaulArt

    In my life time I hope to see the fascist forces in the USA who now comprise of the elitist porkers in Washington, the elected ones and the paid lackeys in K-Street being rogered in some way shape or form. It is amazing, absolutely amazing to what extent the foreign policy of a nation state can be subverted to serve corporate interests and the greed of the 0.1%. For example, what the hell are we doing yammering on and on about Ukraine? Are we doing or have we ever done a song and dance about China interfering in Tibet? What about china japan clash over diaoyu senkaku islands? All this comes about because of the neoconservative parasitic class. Jobless morons with degrees and specialization in modern imperialism. It would be good and blessed to see justice raining down on these cretins. Tell me, won’t it be a wonderful day when we see Richard Perle and Paul Wolfowitz not to mention Daniel Pipes and Madeline Albright reduced to outright penury or serving long jail terms? A consummation devoutly to be wished.

    1. John Jones

      I agree PaulArt
      But how will Americans ever rid themselves of the neoconservative parasitic class? I just don’t see how it will be done.

      Like Yves said in another thread. “Reagan knew they were tenacious nutcases and made sure to keep them out of any positions of influence.”

      But here they still are.

    2. Cynthia

      The oligarchs are investing in a pipeline from the EU direct to their pockets. It simplifies everything, no need to pretend that none will be used for anything except to buy palatial quarters in London, and fill Swiss bank accounts. Apparently, only the French and the Russian know what to do with the elite when they have a revolution.

      1. Yves Smith Post author

        Someone used bold and didn’t close it off correctly, which means everything that follows gets bolded. I’ll fix.

  2. allcoppedout

    The reverse flow gas has been talked about long before the current Ukraine crisis (November last year in the link above, but I’m sure it’s been a longer issue than that). Sounds as though JP Morgan should jump in as an intermediary stock holder. I mean JPM could at least explain in convincing terms that Russian gas via a circuitous route and backwardation was the best possible deal. The Ukrainians might do better to negotiate deals for fuel with Russian tank crews looking to take a few bob home after Putin gets bored strutting with Kerry.

    1. Brooklin Bridge

      I wish someone with godlike powers would stick a ‘left-angle-bracket backslash b right-angle-bracket’, or even more powerful html ju-ju to break this ‘bold’ curse, somewhere, anywhere in this comment stream.

      Anyway, this post touches upon your observation in yesterdays comments that,

      It’s so difficult for anyone to say anything on these matters we can believe. […] My guess is that real history is so disgusting it has to be pushed away from mannered consideration (Norbert Elias), but always remains in interpretive context. We end up with competing fantasies. The West’ (itself a fiction) wants to bring freedom, the Russians only Putin’s jackboot or freedom and protection to ethnic Russians abroad. “Money” (sur capital – whatever) wants to get in to make its returns.

      .

      As TimR pointed out in that thread, that was a fascinating comment, and I would add poetic, but it got me to thinking back to the brief and extraordinarily duplicitous lead up to the Iraq war with the claims of weapons of mass destruction, and so on, which many saw through by use of simple common sense and the few facts we did know with some certainty (for instance, the extraordinary blitz of the main stream media for the weapons of mass destruction meme was a tip off – and to more than simply the probability that this war was unjustified). In this instance with Ukraine as with Iraq, there are things we know or can be pretty sure of. One of them is that the United States as it stands now, would never lift so much as a finger to promote democracy. Our leaders are inimical to it in every sense of the word except branding. Money and power’s the game, fascism’s the name – or something quite similar. Another is that the US would do anything or almost anything to further the wishes of the corporate elite. That’s built in. Yet another is that besides Wall Street, the most powerful component of the corporate elite are the oil and gas giants.

      Of course I may well be missing what you were getting at, but I think Ilargi makes it clear we have enough to be fairly sure of at least the broad outlines of what’s happening in Ukraine, and enough to make educated guesses about what’s going on in the EU and the US.

      1. Brooklin Bridge

        For the sake of accuracy, amend “saw through [claims of weapons of mass destruction]” above, to, “were highly suspicious of”. That was my case, and the ‘tip off’ from MSM obsequiousness to WH talking points was the first time that I seriously questioned the motives of the MSM and (I’m ashamed to confess) it still took me a long time and people like Glen Greenwald to start to see the depth of it.

        1. allcoppedout

          The last elections in Ukraine were run by US spin-doctors. The crook elected was only polling 4% before help and money from Goppers. I think Obama’s lot represented the other side.

          I’m waiting to see if tonight’s Panorama makes any sense of what is going on. I think later posts below on a market for US gas and a Halliburton pipeline is perceptive.

  3. Andrey Subbotin

    Quite likely a lot of those “reverse flows” are virtual – a EU company purchases gas pumped through Ukraine, pays for it, ant leaves it inside Ukraine. However saying so does not serve the “Hey, Gasprom, we have other options” narrative.

  4. mmckinl

    Peak oil is here … The US having failed to secure Iraq and Afghanistan to “drill baby drill” has now embarked on what is the only alternative … reduce demand through destabilization.

    What does nat gas have to do with oil? Simple, even anticipated disruptions in nat gas supply will severely reduce business and therefore oil consumption … for Russia as well.

    The Ukraine putsch also opened the possibility for NATO and nukes in the Ukraine and the eviction of the only warm water Russian naval base in Crimea. Putin killed those ideas.

    For those that understand the oil game here is an article:
    “Beginning of the End? Oil Companies Cut Back on Spending”

    Not only are oil companies cutting back they are selling assets like hot cakes, especially fracking operations. Read the comments below the article … well worth the time …

    1. James Levy

      Michael Klare has been trying to get this point across but in a manner that will not get him ostracized by the academic community. What is important in his formulation is “cheap”–cheap oil is gone. They’ll be able to pump or frack and process oil for decades, but the gushers or Texas and Saudi Arabia and Prudhoe Bay and the North Sea are on their last legs. Light sweet crude that is easy to get and easy to refine is going the way of the dodo, and what will replace it is expensive and an environmental nightmare. But globalized capitalism can’t function without oil, so the rush is on to corral the remaining supplies and nobody trusts the market to allocate those supplies in a pinch–they must be under political control. We have entered the era of guaranteed access, and the only guarantee is to control the source or control the people on top of the source (or across whose territory that oil must pass). Direct control failed in Iraq, and proxy control is failing in Libya. The future trajectory of this trend is, as you point out, ominous.

  5. The Dork of Cork

    If western europe wishes to free itself of Russian imports it needs to junk the EU scarcity engine and return back to deserted French / Italian villages and market towns.
    No need for dash to gas polices then.

    These euro fuc£$kers have so desperately wanted us to become Americans.
    Problem is you need to waste resources on a biblical scale to achieve this.

    Just for laughs – here is a NYT energy piece.

    What can one say !!!!
    The idea is to achieve pointless growth that even breaks very basic input output analysis.
    So much energy is wasted in the LNG trade………
    Let the Americans use this to manufacture more junk for themselves if they want it.

    Please let us go back to Bandon Skibbereen and other real places of comprehensible human scale.that can be at least partially supplied by their own local hinterland.

  6. Banger

    That’s interesting–good exposition of the problem, btw.

    The choice for Europe seems to be to continue to pursue U.S. imperial interests and further their status as vassals to Washington or pursue a more independent course. I don’t have any idea what EU public opinion on this matter is but do people really think following Washington’s policy of full spectrum dominance is the way go?

    1. David Mills

      With the level of propaganda and vitriol floating about the operating question is “… do people think?” Looks like not. The ball now sits squarely in Merkel’s court, on this question of foreign policy / geopolitics where Germany goes Europe will follow.

    2. steelhead23

      National “imperialism” is likely the wrong frame to view this from. The people of the United States have very little interest in empire. The imperialists are corporatists, people who believe in the heart of hearts that only ownership provides prosperity, and the megalomaniacs they emit are merely the icing on their cake. Putin and Obama are role players.

      1. James Levy

        Direct rule seems to be simply out of the question these days for most states. The need then is for Compradors or proxies. Alternative policies have been found wanting. The Europeans wanted Libya and they got it, or at least its ungovernable shell, which I think has shocked and chastened them. America found that occupation and exploitation in Iraq were mutually exclusive–the costs of one outweighed the benefits of the other. So in Iraq and Afghanistan the endless search has been for a proxy, but in both cases without success. This is why America is stuck with the home of al Qaeda, Saudi Arabia. That is why not a peep was heard as the people of Bahrain were gunned down, rounded up, and tortured and the Saudi army rolled in–we need our local satrap that badly.

        BTW, in this context what the ordinary people in Europe or America want is irrelevant. These policies are formulated by an elite of consultants and think-tankers who do rich people and politicians thinking for them. Most of that elite goes back to Nixon and Carter, and are still calling the shots 40 years on. It is a closed shop dominated by groupthink and dedicated to the proposition that rules and laws are what America hands down, not what it lives by, that the interests of all nations, save the United States (and maybe Israel and Britain, maybe), are suspect and illegitimate.

        1. Brooklin Bridge

          Granted, public opinion is irrelevant, but having them on one’s side helps, a lot, (and it’s not the same thing). In this particular case, I think the MSM has been directed to pull out all the stops both here and in Europe and I think it will work. Putin is really viewed as a bad guy by most. More so than the public is willing to believe of it’s own leaders. That, and the odd good-guys and bad-guys mania we have that requires one side to be the opposite of the other; so if Putin is bad, than the other side must be good or good-er.

          1. backwardsevolution

            Was reading The Guardian the other day (not posting). Couldn’t believe how many people saw right through what was going on, and how many absolutely and unequivocally hated the United States. I was shocked. One after the other spoke very harsh words. The American people may view Putin as evil, but the rest of the world doesn’t.

            1. Brooklin Bridge

              As if to corroborate your observation, I came across this somewhat amazing interview by none other than Gwen Ifill and Stephen Cohen during a PBS “News Hour” broadcast.

              You have to scroll past the initial NewsHour gathering of sycophants until you get to the point where Gwen introduces Cohen. Gwen is one of the reasons, but by no means the only one, that I no longer watch anything on PBS so this interview that I stumbled over on the net was doubly amazing to me. I seriously think she made a mistake and had no idea what Cohen’s views were. .But regardless, the commenters, or at least quite a few of them, were also right on top of what is happening. I was just writing this up when you made your comment about the Guardian (I assume the UK version).

              It would be great if I’m wrong above, and hardly the first time, but I’m still not convinced these aren’t just two exceptions. Gwen, perhaps, because miracles never cease, and the Guardian because of the Glen Greenwald residue.

              1. Fiver

                There is very good reporting from independent journalists all over the Internet on this crisis, and they portray an entirely different picture than MSM. Critical questions surrounding the legitimacy of the ‘revolutionary’ Ukrainian Government are actually discussed, eg., who actually controlled the snipers that killed so many protesters and police officers. Patent BS is challenged. Nonsense is smoked out. People are more informed and speaking out more than I’ve seen in some time. Younger people regard the notion of MSM as a news source as silly.

                There’s already enough known to say for certain the US was up to its eyeballs in pulling off this coup. The US Admin, neocons and media want to keep the discussion focused on the effect (Putin’s move) not the cause (US and Ukrainian duplicity). Ukraine gets turned into a very short-term extraction flare for big global capital, then tumbles back onto whatever is left of its pre-gutted economy. Meanwhile, give it another decade or so and nobody’s going to be thinking about new ways to emit carbon.

                1. backwardsevolution

                  Fiver – “The US Admin, neocons and media want to keep the discussion focused on the effect (Putin’s move) not the cause (US and Ukrainian duplicity).”

                  Great point. Yes, I think more and more people are waking up to the propaganda we’re being served. They’re starting to think on their own.

              2. backwardsevolution

                Brooklin Bridge – very interesting video. At least Cohen sees the situation clearly. Thanks for posting it.

        2. gordon

          “So in Iraq and Afghanistan the endless search has been for a proxy…”

          From the rest of the world’s point of view, the way an isolationist US went to school in Latin America to learn about foreign policy is one of the great 20th century tragedies. Instead of engaging with other educated, modern States, the post-Civil War US engaged with comparatively primitive, elitist, unstable States in South/Central America. There, through the late 19th and early 20th centuries, the US learned very bad habits of bullying, exploitation and the use of corrupt and violent local elites as proxies for its own vested interests. Americans came to think that is how foreign relations should naturally be conducted.

          These bad habits are very evident now in the post-WWII world, where a no-longer-isolationist US treats all small foreign European and Asian States like Guatemala, Cuba, etc. So we get the search for the proxy “strong man”, who is just the US-supported Latin American dictator of yesterday (and not a very distant yesterday) in a slightly different uniform but doing essentially the same things.

    3. Cynthia

      I’ve learned a long time ago that when the US steps up to defend another nation, especially in the name of democracy and that country isn’t Israel, the UK or France, I grab the encyclopedia. Why you may ask? Well, we do nothing unless it has a financial value.

      For example, Afghanistan’s geographical location is a very important gas transit country. In fact the pipeline that is presently under construction to transport natural gas from Turkmenistan through Afghanistan into Pakistan and India is a $8 billion project with origins as far back as 1995. Why would the US and Russia have such a interest in having a presence in a nowhere country? Do you really think it’s for 9/11, Communism or Democracy?

      Ukraine is pretty much in the same boat with the exception that it is in Russia’s backyard. Ukraine is the transit country for natural gas from Russia to Austria, Bosnia, Bulgaria, Croatia, Czech Republic, Germany, Greece, Hungary, Moldova, Poland, Romania, Slovakia and Turkey.

      In addition, there have been recent discoveries of shale gas deposits.

      Russia will do everything it can to maintain some control of this country because not only is it in its backyard (and does not want a Western presence that close), Ukraine is also a patch of land between it and a decent revenue source.

      This rattling of sabers has nothing to do with the freedoms of people – just money.

  7. I know that this is not the thrust of this post, but

    US gas production is projected to rise 44% by 2040

    reads rather scary to me in light of anthropogenic climate change.

    Even if this number isn’t realistic, it shows rather clearly that any attempt to reign in greenhouse emissions is essentially doomed.

    1. susan the other

      Always my thought as well. So I rationalize that we are strategic planners. Even when we look like idiots. I think the fact is that alternative fuels are not that “alternative” when it comes to total CO2 and so the biggest immediate solution will be conservation – and to carry this line of thinking to the limit – we want control over oil to both create the economies we want to see, and prevent the ones we do not want to see. It’s going to be a long ordeal. One of our (western) must-haves is our own supply of energy and so it is a priority to protect it. Maybe by deflecting the demand from Asia toward Russia. Even if Asia practices austere energy conservation it will use a lot of gas and oil before technology catches up enough to resolve our critical situation.

      1. Brooklin Bridge

        I suspect that as far as the oil and gas giants go, having our own supply of energy takes a back, back, back, back seat -somewhere on the order of getting Leprosy or Malaria – to the desire to maximize profits. Exporting oil and gas abroad (initially under the guise of a Marshall like plan of assistance – later as common practice) will result in supply deficits in the US that can only work to increase their profits.

  8. EconCCX

    @Mods
    The reason for all this bold is because the bottom of the piece was truncated in formatting. It wasn’t supposed to end with “even then….”

    Here’s what was cut off, via the page source:


    And even then …

    Directing natural gas from the European Union to Ukraine if Russia
    stops supplying its western neighbour would fail to keep up with demand
    for long as capacity between the EU and Ukraine is too small, analysts
    said on Thursday. Ukraine last year imported around 28 billion cubic
    metres (bcm) of natural gas from Russia [..]

    One of the EU’s key plans to support Kiev in case of a supply cut
    by Russia is to use reverse flows to send gas to Ukraine, but at the
    moment the capacity to do so is limited. Ukraine began importing gas
    through reverse flows from Poland and Hungary in 2012 but analysts said
    the amounts so far have been equivalent to a mere 2 bcm a year.
    According to consulting group Wood Mackenzie, Poland has a reverse
    capacity of 1.5 bcm to Ukraine while Hungary is able to send 3.5 bcm.
    Romania has the potential for 1.8 bcm but there has been no firm
    agreement on its use, the consultancy said.

    The real issue, however, might not be Ukraine but Europe itself.
    Wood Mackenzie estimated Europe would need more than 160 bcm of Russian
    gas in 2014. While Russia has enough gas and can reroute some flows
    from Ukraine to the Yamal Europe and Nord Stream pipelines, which
    supply Germany, the consultancy said these alternatives would still
    leave Europe needing more than 30 bcm of gas via Ukraine.

    And we’re not done yet. There are more – and more grotesque – plans
    in the offing. US House Leader John Boehner apparently buys into the
    “US gas production is projected to rise 44% by 2040″ number from the
    EIA (what does he know), and wrote in the WSJ this week that America
    should build LNG terminals: “The ability to turn the tables and put
    the Russian leader in check lies right beneath our feet, in the form of
    vast supplies of natural energy… ”

    The Department of Energy has approved for terminals to export
    liquefied gas, 5 in Texas and Louisiana, and one in Maryland. A further
    24 applications are pending and Boehner et al want Obama to speed up
    the process. It’s of little concern to them in their ignorance that
    building these terminals (and the LNG tankers required for transport)
    is very costly and takes years, on both the supply and the delivery
    side, and that LNG tankers are floating bombs and thus easy targets.

    Much of the entire Ukraine story seems to be made up of a different
    sort of easy targets, those in the western media. We are good and they
    are bad. It’s almost cartoon like. And so are the “solutions” that
    sprout from the brains of politicians who are mostly singularly
    clueless when it comes to the intricacies of the energy industry, and
    shout out whatever some industry paid spin doctor will them.

    The reverse flow of gas to the Ukraine is not going to happen (but
    we won’t know that till much later), because os technical issues,
    administrative and legal issues, and because Putin and Alexei Miller
    won’t volunteer for western leaders to make fools of them. Russia may
    not go to war of Crimea, but it will over control of the pipelines it
    has longstanding legal rights over. It’s perhaps the most pressing
    issue today, but that’s not how it’s presented.

    Since the American and European political systems have been bought
    and paid for, we need to ask ourselves every step of the way where in
    words uttered and events ongoing we can see the footprints and
    fingerprints of the major shareholders of western financial and energy
    corporations, who would all kill their grandmas and sell their
    granddaughters just to pry away control over Russian and Asian oil and
    gas reserves and revenues from Putin’s cold dead fingers. It may all be
    presented as bringing freedom and democracy to Ukraine, but come on,
    who believes that anymore?

    The only way the west can gain control over what it’s after, over
    Ukraine and the pipelines, and Russia and its oil and gas reserves, is
    to oust Putin. Are you willing to sacrifice your children over that? If
    not, keep paying attention. Follow the money. Of the most endangered of
    corporate species, Big Oil. At this point in time, they still have the
    clout to move governments into war. In 5 years time, that may be over.

    1. Brooklin Bridge

      Thanks, EconCCX, that ending makes a lot more sense than: ‘even then….’ (The ellipsis is what made the break-off plausible). It definitely adds to Ilargi’s post.

      Now if only someone could insert the mark-up to end the bold spell.

    2. John Jones

      “Of the most endangered of corporate species, Big Oil. At this point in time, they still have the
      clout to move governments into war. In 5 years time, that may be over.”

      Doe anyone know why this is the case for big oil? And why in 5 years time?

  9. Thor's Hammer

    I don’t understand why people have such a hard time understanding the benefits of forcing gas to flow uphill into the pockets of the West’s allies in the Ukraine. What are friends for if not to provide a few hundred missile launch sites?

    First a bit of technical background… A major primary gas pipeline has a pumping station every 125k or so. This is necessary to re-pressurize the gas to overcome friction losses along the way. The motive power for the compressors are 747 sized gas turbines running full throttle 24/7. As much as 10% of the original energy content of the gas is consumed in this process, and the waste heat is discharged into the atmosphere. Just think of the potential profit to an oil services company like Haliburton inherent in the contract to re-engineer and reverse every pumping station—-.

    Here’s how the re-configured system would work in practice.
    1- Fracked gas from the US with a cost basis of $6 Mcf is liquified and shipped by tanker to a LNG port in Europe where it is sold to the Ukraine for $12 Mcf. It is sent by Halliburton-engineered reverse flow pipeline to the Ukraine. The Ukrainian government pays the market price of $4 Mcf, and the $8 difference is made up by loans from the IMF and European central bank. Next the oligarchs who own the Government in the Ukraine trans-ship the majority of the gas to Russia where they sell it for the bargain price of $2— not a problem because their cost basis is $0. The Russians, being the primary supplier to Europe, immediately send it through the Northern pipeline to Germany and double their money. Once every hausfrau’s hearth is warmed, the Germans sell the remainder to the Ukraine for $12.

    Isn’t high finance wonderful! Every yacht floats on a rising sea. What’s not to like?

  10. Brooklin Bridge

    One thing for sure. The MSM is pimping the ‘Putin Bad, US Good’ meme with 1) just as much unanimity and consistency – as if from a WH script and 2) just as ferociously as it did the weapons of mass destruction and other lies that took us into the Iraq war.

    It’s always interesting to me to see which side HuffPo comes down on since it has a large readership and because it paints itself a “liberal” digital rag (as if Arianna ever had any motive other than a super liberal amount of dollars), and in this case it seems to be 100% consistent with such sycophants as MSNBC or CNN.

  11. susan the other

    This confrontation with Russia is a lot like England’s confrontation with Germany before WW2. They tried to push Hitler toward Russia to rid the capitalist west of the threat of communism… and they played for time because diplomacy is delicate and deceptive. Always pretending to be the allies of Russia, etc. So the great danger to the West at that time was Europe turning communist. Today’s danger is being overrun by China and India because of their massive, and uncontrollable, populations. Once again we are putting Russia between us and the things we fear the most. It’s the Karl Rove school of geopolitix – making Russia’s greatest asset (the vast expanse of Siberia with all its riches) vulnerable to invasion by the starving hoards. Making it a liability. How will they protect it? This has happened before. Genghis Khan comes to mind. So one clear maneuver is to out-compete Russia in the sale of energy to Ukraine and Europe (the West) thereby making it necessary for Russia to sell oil and gas to China. Maybe.

    1. Fiver

      The Indian and Chinese ‘hordes’ are going to be very disappointed when they discover it’s already occupied.

  12. Synopticist

    “the EU plans to buy 15% more gas from Russia, which they intend to use to – pretty openly – undermine Russian interests. Through some far-fetched reverse flow scheme it wants to take gas that has been pumped through Ukrainian pipelines, back to Ukraine, which can then continue to refuse to pay its past bills to Gazprom. And if Russia in turn would refuse to go along with such a scheme – and cut supplies – , they can all simply blame Putin.”

    That’s about it, yeah. You think we maybe should have spent a little longer thinking this through, or not?

  13. Binky Bear

    I think the point here is that fracking and production of coalbed methane is coming to the Ukraine and the current emergency is what will provide the impetus for putting these technologies to use in Ukraine. Lebensraum becomes gazprom-replacement and Ukraine becomes the Eurozone’s Bakken Shale.

  14. allcoppedout

    We don’t have much grip on the money behind conflict. Most of us don’t want to live in interesting times, yet they are constantly engineered. Very few benefit from war and very few from finance. Most of us don’t believe in rubber-masked aliens, yet it’s hard to believe, on real history, we don’t need some countervailing strategy against them. I’m struck we are educated to know nothing about them. We learn we went to war against nasty Germans and Japanese with our heroic American allies and that we won these wars. In fact, Britain was bankrupted by them and, importantly, our living conditions got better despite the costs of the conflicts.

    What we are constantly denied is rationality and peace. Apparently, such desires are foolishly idealistic. One needs more complex understanding that others will never let you live in rationality and peace, build up arms and swarm in. We should thus keep them weak. It’s all so clever we can even provide them with arms and the essential means to make them (manufacturing capacity), in order that we make the profits that will make us strong by keeping our technological supremacy. Free trade will conquer all. And the proof of this genius is you can do it all for hundreds of years without it ever working and there is still no alternative. Russian boots in Crimea look just like British boots in Northern Ireland, yet the matters are entirely different. All the leaders get rich and this is entirely necessary. Some fools, incapable of understanding the nuanced theory of this reality, tell us we are burning the planet. It’s enough to drive one to the satisfaction of sums in which we can work out the world with tautologies at the end of a pencil.

  15. jal

    The Crimean is full of Russian oligarch summer estates …
    Got to put boots on the ground to protect them from the western mobs.

  16. Fiver

    This is the most brazen, open attempt to smash-and-grab an entire large country and humiliate/weaken an opposing Power that I can remember. Like watching a movie, there’s Nuland, there’s those hardliners in with the protesters, there’s the violence, there’s the coup, there’s a media going berserk, there’s the target reacting to the appalling stunt that was pulled, knowing he loses the rest of Ukraine for a decade or ‘ever if he moves, but he has to, and is made into a Demon when he does. Everyone knows the plan is to global corporately ravage Ukraine while causing Putin/Russia maximum grief, NATO, missiles and all – the US State and Big Oil/Big Money operate as one. I don’t see how Putin can reverse his fortunes and he now has to deal with what the new situation – with or without Crimea – means for Russia itself and its allies. I’m sure they must wonder now if their opponent has no “off” button, as in Russia is itself in danger, and by extension India and China and Brazil and other economic players with any semblance of capability for independence of thinking or action at all.

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