A key hearing on gas exports is currently in front of the Israeli High Court of Justice. The cabinet’s decision to export around 40% of the newly found gas and preserve 60% of the gas at home was taken earlier on 23 June this year. The decision dictates that sales to Israel’s immediate neighbours, Jordan and the Palestinian authority would come out of the allocation for exports. The decision attempted to find a compromise between on one hand the recommendation of the Tzemach committee to export half of the gas and on the other hand the concerns of the public and some of the political organizations to ensure Israel had enough gas to become and remain energy self-sufficient for years and years to come. The conservative approach reflected Israel’s long history of energy dependence, relying mainly on Egypt for natural gas supplies and suffering from numerous disruptions due to attacks on the pipeline connecting to the countries. Between keeping all the gas at home and exporting a large proportion, a balance had to be found. Oil and gas companies involved in the development of Israel’s hydrocarbon wealth need an incentive to continue their search for gas and transform the country into an energy producer. Sales revenues would ensure such a motivation is maintained and would constitute a serious motivation for oil and gas explorations to go on. New revenues in billions would also substantially boost the country’s economy by improving the employment market, allowing the realisation of national projects of all kinds and constituting a hedge against balance of payment fluctuations. Members of the Parliament and various political groups were still not satisfied with the decision and contested its legitimacy before the Supreme court of Justice. They argued that the importance and weight of the stakes involved should require the involvement of the knesset. The hearing on the petition, originally scheduled for 17 September, was postponed to 20 October. A seven-member panel will be hearing the case including Supreme Court President Asher Grunis. The uncertainty around the outcome of the hearing frustrates investors and in particular the Australian giant Woodside that signed last December a memorandum of understanding with Noble, Delek, Avner Oil and Gas and Ratio Oil Exploration to acquire a 30% stake in the Leviathan licenses for USD 1.25 billion. The deal had been due to close in February but was delayed on several occasions, initially pending a government decision on gas exports, and then by the Supreme Court's consideration of appeals against it. Despite such delays, Israel is still a step ahead compared to its neighbours. Cyprus is in the process of confirming the quantities of gas believed to be found in the Aphrodite field in the Island’s Block 12. Results of the appraisal drilling are expected in a couple of weeks. The island is also building the pillars of its LNG facility in Vassilikos that would allow it to export natural gas from Aphrodite and other potential fields within its EEZ. Cyprus also hopes to realise its ambition of becoming an energy hub by attracting gas from neighboring Israel and Lebanon for processing and transiting. Lebanon, still without a fully functional cabinet, is struggling to launch its exploration phase. Despite significant interest in its resources expressed by international oil and gas companies through their high level of participation in the pre-qualification round, the country is going through episodes of instability as a result of the civil uproar next-door in Syria. Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Follow Karen on Twitter: @karenayat
This summer Russian energy giants Gazprom Neft, Lukoil, and Rosneft signed new contracts in Iraq’s southern fields, which are controlled by Baghdad’s federal government, as well as in the northern fields controlled by Erbil’s Kurdistan Regional Government (KRG). Gazprom even announced in July that the oil investments would soon be followed by similar activity in the natural gas field. If so, Iraqi gas could join the Trans-Anatolian gas pipeline and create a price concurrence with Azeri gas, which would be a major change for European consumers looking to multiply their gas suppliers with the southern energy corridor. This year in February, Gazprom Neft signed its third contract with the KRG, adding to Russia’s already sizeable portfolio in both the KRG and the Baghdad-controlled Iraqi south. Since 2012, Gazprom Neft has penetrated the KRG’s Shakal and Garmian blocks. Moreover, in February 2012, after a visit to Moscow by Massoud Barzani, the KRG’s president, Gazprom Neft signed a contract to develop the Halabja block. Russian investment in Iraq gained new momentum this summer after the visit of central and regional government authorities to Moscow and St Petersburg. The first visit occurred in June by a high-level representatives group from the KRG. It consisted of President Barzani, Falah Mustafa (head of the KRG's foreign relations), and Hersh Muharam (head of the Investment Board of the KRG), all of whom met Gazprom’s chairman Alexei Miller in St. Petersburg. The second visit came in July from Iraq's federal authorities, a group led by Iraqi Prime Minister Nuri al-Maliki and Iraqi Oil Minister Abdul Karim Luaibi. Those talks were held in Moscow with Russia's second-largest oil producer, Lukoil OAO Holdings. Both visits had oil in their agenda and ended with resolutions strengthening Russia's presence in Iraq. Even though Maliki’s visit followed the visit of the KRG’s president, international media did not report any announce from Iraqi authorities about Russian investments being in jeopardy due to continued work in the KRG. Presumably, Baghdad authorities considering the Kurdish deals illegal because of the lack of legislation regulating oil and gas revenue sharing nevertheless do not oppose Gazprom Neft and Lukoil revenues in the KRG. Despite Iraq’s juridical gap creates tensions between the regional and federal governments and increases the vulnerability of energy investments, international oil companies have begun to question their presence in the country. This summer, a Gazprom spokesman made a new announcement after meeting with Barzani: “in particular, the parties discussed the progress with interaction in oil and gas field exploration, development and operation“. Rosneft has also joined this gas interest group and Rosneft's CEO Igor Sechin told reporters in August that the company is considering teaming up with its long-standing partner, ExxonMobil, to tap oil and gas in Iraq. In addition to 143.10 billion barrels in oil reserves (the sixth-largest in the world), Iraq has also large natural gas reserves, mainly located in the northern territories controlled by the KRG. Kurdish authorities estimate their reserves at 2.8 trillion cubic meters–making them the eleventh largest supply in the world and larger then Azerbaijan's Shah Deniz gas fields’ reserves. If Rosneft achieved its objective of exploiting Kurdish gas in partnership with ExxonMobil the presumable export road would be Europe via Turkey by using the southern energy corridor, which consists of the Trans-Anatolian gas pipeline and the Trans-Adriatic gas pipeline infrastructure. Economically, the exploration and production costs for oil and gas in the Caspian Sea Basin still remain high compared to costs in the Middle East. Consequently, the joint American-Russian move would create for European consumers a chance to multiply suppliers in the southern energy corridor. Additionally, this project might rebuild Russia's internal market dynamics, improving Rosneft's position in its battle with its rival Russian state-owned corporation, Gazprom. Rosneft has already announced its objective to increase its share of the domestic gas market from 9 percent to 19-22 percent by 2020 and to produce more than 40 billion cubic meters of gas in 2013, to reach over 60 by 2016 and to hit 100 billion cubic meters by 2020. But Rosneft is not alone in the Kurdish gas market. This week the Istanbul-based Siyahkalem Engineering Construction Industry and Trade was issued a license, valid for 26 years, to import natural gas from northern Iraqi territories to Turkey. This will no doubt raise competition in the European market and improve market condition for European consumers. Olgu Okumuş Olgu Okumuş is an affiliated lecturer in energy diplomacy at Sciences Po, Paris and director of strategy development at LEO Advisors. She is also a PhD candidate at Sciences Po, Paris, where her research focuses on Turkey’s energy transit policy. She can be reached at [email protected]
ONGC Videsh Ltd., подразделение индийской госкомпании Oil and Natural Gas Corp. (ONGC), сообщила своему бразильскому партнеру - нефтегазовому гиганту Petrobras - о намерении приобрести у него 12-процентную долю в нефтяном месторождении Parque das Conchas, которым уже заинтересовалась китайская Sinochem Group, сообщает агентство Bloomberg со ссылкой на источники, знакомые с ситуацией.
ONGC Videsh Ltd., подразделение индийской госкомпании Oil and Natural Gas Corp. (ONGC), сообщила своему бразильскому партнеру - нефтегазовому гиганту Petrobras - о намерении приобрести у него 12-процентную долю в нефтяном месторождении Parque das Conchas, которым уже заинтересовалась китайская Sinochem Group, сообщает агентство Bloomberg со ссылкой на источники, знакомые с ситуацией.
If the Fed was looking for any confirmation as it entered its two day meeting that its monetary machinations are boosting inflation, at least according to the BLS' hedonically, seasonally-adjusted CPI indicator, it did not get it. August CPI just printed at a measly 0.1% increase from July, below the 0.2% expected, and down from 0.2% last month. This was the lowest monthly increase in overall inflation since May, and the biggest miss to expectations in 4 months. On a Y/Y basis overall prices roses 1.5%, below the expected 1.6% and well below the 2.0% inflation in July. Core inflation excluding food and energy rose 1.8% in line with the expected number, and higher than the 1.7% a month ago. Perhaps the best news is that according to the BLS, "the index for nonalcoholic beverages declined in August, falling 0.1 percent." It is unclear what if any hedonic adjustments were used in this particular calculation. As a reminder, the Fed has been "targeting" 2.0% inflation, and failing. So since in the Fed's eyes inflation continues to not be an issue, how long until the Fed proceeds to target NGDP, unanchors inflation expectations, and finally launches Bernanke's helicopter as we speculated recently? Broken down by components, the biggest drop in August prices took place in Utility gas services, the third consecutive month of declines, so once again it was the weather's fault even though on a Y/Y basis the increase was the largest at 4.8%. Other components seeing deflation were Gasoline prices, Used Cars and Trucks, which dipped -0.1% and have now declined for 4 months in a row, also posting a -1.0% drop in prices Y/Y. On the other end, rising the most were Medical Care Services, which rose 0.7% in August, and 3.1% Y/Y. At least Obamacare is having a favorable impact on inflation, if nothing else. Digging into the actual core and non-core components: Food The food index increased 0.1 percent in August, the same increase as in July. The food at home index also rose 0.1 percent for the second straight month. The index for fruits and vegetables continued to rise, increasing 1.2 percent after a 1.5 percent advance in July. The index for meats, poultry, fish, and eggs rose for the third month in a row, increasing 0.6 percent. The index for dairy and related products turned up in August, increasing 0.4 percent after declining in each of the three previous months, and the index for cereals and bakery products rose 0.3 percent in August after declining 0.3 percent in July. In contrast to these increases, the index for other food at home fell 1.0 percent in August, its largest decline since 2002. The index for nonalcoholic beverages also declined in August, falling 0.1 percent. The food at home index has risen 1.0 percent over the last 12 months. Four of the six major grocery store food group indexes rose over the span, with the fruits and vegetables index posting the largest increase at 3.6 percent. The index for food away from home rose 0.2 percent in August and has increased 2.0 percent over the past year. Energy The energy index declined 0.3 percent in August after rising 0.2 percent in July. The gasoline index, which increased in June and July, declined 0.1 percent in August. (Before seasonal adjustment, gasoline prices fell 0.5 percent in August.) The electricity index also decreased 0.1 percent in August, its second decline in a row. The index for natural gas fell as well, declining 2.3 percent after a 2.8 percent decrease in July. Fuel oil was the only major energy component index to increase in August; it rose 1.2 percent after a 1.1 percent increase in July. Major energy components are mixed over the last 12 months. Despite the recent declines, the index for natural gas has increased 4.8 percent over the past year, while the electricity index has increased 2.8 percent. However, the gasoline index has declined 2.4 percent over the span, while the index for fuel oil is unchanged. All items less food and energy The index for all items less food and energy increased 0.1 percent in August after increasing 0.2 percent in each of the three previous months. The shelter index increased 0.2 percent, the same increase as in June and July, with the rent index increasing 0.4 percent and the index for owners’ equivalent rent rising 0.2 percent, but the index for lodging away from home falling 0.7 percent. The index for medical care increased 0.6 percent in August. The medical care services index rose 0.7 percent with the index for hospital services increasing 1.9 percent. The medical care commodities index rose 0.4 percent. Also rising in August were the indexes for personal care, which rose 0.3 percent, tobacco, which advanced 0.4 percent, and apparel, which increased 0.1 percent. The new vehicles index, which rose in June and July, was unchanged in August, while the recreation index was unchanged for the second straight month. The index for airline fares declined sharply in August, falling 3.1 percent. This was the third consecutive decline for the index, but it has still risen 1.5 percent over the past 12 months. The indexes for used cars and trucks and household furnishings and operations both declined slightly in August, falling 0.1 percent. The index for all items less food and energy increased 1.8 percent for the 12 months ending August. The medical care index rose 2.3 percent over that span, with the index for medical care services up 3.1 percent and the medical care commodities index unchanged. The shelter index increased 2.4 percent, and the index for new vehicles rose 1.1 percent. Source: BLS
A new study released today by researchers at the University of Texas, Austin, generally tracks with U.S. EPA's most recent estimates for the amount of methane released into the atmosphere each year by natural gas production. The study, which will be published this week in the Proceedings of the National Academy of Sciences, was conducted by UT Austin with participation from the Environmental Defense Fund and nine major petroleum producers. It was intended to help end the debate over methane emissions from natural gas production -- and to solidify the role gas use can play in helping to limit man-made climate change. Emissions data for gas have been incomplete. EPA released its annual "Inventory of U.S. Greenhouse Gas Emissions and Sinks" in April, which showed that hydraulic fracturing released about 1.5 percent of total output into the atmosphere in 2011. Natural gas systems overall were responsible for 144.7 teragrams of carbon dioxide equivalent in that year, more methane than any other sector, the agency estimated. But EPA's calculations were based on reported estimates, not empirical data. They were panned by industry groups as an overestimation of the sector's emissions, while some reports showed much higher levels of methane leakage. Researchers at the National Oceanic and Atmospheric Administration and the University of Colorado, Boulder, for example, released a study finding that leaks in two U.S. drilling sites were between 4 and 9 percent. But the UT Austin study used direct measurements from wellheads being operated by participating companies, including Anadarko Petroleum Corp. and Chevron Corp. and arrived at estimates that tracked closely with the ones in EPA's analysis. The new study also showed that so-called green completions, which capture methane at the wellhead, are effective at limiting the amount of methane leaked during production. EPA promulgated a rule last year that will require operators to phase in the use of green completions by 2015, and the UT study showed that the use of that technology had proved even more effective in limiting methane leakage than the agency assumed in its inventory. "EPA has largely gotten it right, both in terms of the amount of methane the production side is producing as well as the need to have regulations for green completions," said Drew Nelson, who worked on the study for EDF. But the study also found that the agency had underestimated the amount of methane leaked by pneumatics -- or valves that keep natural gas moving and maintain pressure in pipelines. Interest in the climate-forcing properties of gas has grown as it continues to displace coal in electric generation. EPA is set to release a new carbon dioxide rule by Friday that industry expects will give further advantages to gas at coal's expense (Greenwire, Sept. 13). Environmentalists, meanwhile, have argued that EPA should consider promulgating a New Source Performance Standard to rein in methane emissions from natural gas production. Nelson said today's study and subsequent ones EDF is collaborating on may help inform future regulatory actions by the agency. "I think the study clearly shows that the regulations that are in place are effective, but it also clearly shows that there are many other opportunities for regulations and to bring these emissions down even further," he said. "The good news from an environmental perspective is that these emissions are much lower than some of the previous estimates that have been put out there, but I don't think this study shows that the problem is solved and we can all go home now and worry about other issues," Nelson added. Understanding the life-cycle greenhouse gas footprint of gas is key to understanding the fuel's overall climate benefits or liabilities, he noted. The gas industry hailed the study as further evidence that more use of its product is a boon to the environment. "The study provides further support for the findings of other credible researchers -- that greater use of natural gas can substantially reduce greenhouse gas emissions," said Erica Bowman, vice president of research and policy analysis for America's Natural Gas Alliance. "We are continually putting into operation equipment and practices that demonstrate our commitment to lower emissions in the production process. We look forward to working with stakeholders to ensure the best science is applied in future study of this issue and that as an industry we continue the substantial progress we have made through ongoing innovation." Jean Chemnick, E&E reporter Republished from E&ENEWS PM with permission. GreenWire covers the energy and environmental policy news. Click here for a free trial Copyright E&E Publishing
The rise of the US as a global gas exporter is gathering speed. Until May, the government had granted just one permit for worldwide exports of liquefied natural gas. It has approved three more in the past five months. This is setting the stage for an epic battle, pitting would-be exporters against companies planning to use the gas in the US, and rival export projects against each other. The Cove Point plant in Maryland, owned by Dominion, the US energy group, last week became the fourth project to be awarded a licence to sell to countries that do not have a trade agreement with the US. There are 20 more projects with applications for such licences waiting in the queue. MORE
This overview describes the latest adopted and pending changes to the Ukrainian legislation applicable to production sharing agreements (“PSA”). For the ease of reference each section includes a brief Summary sub-section, a more detailed Background sub-section and the Impacts sub-section with our comments on the effect we envision these changes to have on the PSA projects. 1. Amendments to the PSA Law restoring the PSA Interagency Commission Summary The Law on "Amendments to the Law of Ukraine “On Production Sharing Agreements” concerning the State Regulation of the Conclusion and Performance of the Agreements” (the “PSA Commission Amendments Law”) took effect on 21 July 2013. The main purpose of the PSA Commission Amendments Law is to reinstate the recently abolished PSA Interagency Commission (the “PSA Commission”). There are some other significant amendments to the PSA Law based on the PSA Commission Amendments Law: a new provision is added in Article 5 (part two) explicitly allowing the PSA parties to delegate the management and coordination of their PSA to the Management Committee or another body created by the parties. amendments to Article 13 (part three) prevent the parties from making the English version of their PSA the prevailing one if there is a conflict between the Ukrainian and English versions. It is a mandatory rule of the PSA Law that the Ukrainian version of the PSA prevails in case of a conflict with the English version. amendments to Article 28 stipulate regular inspections of PSA implementation by the Cabinet of Ministers, which inspections must be carried out at least once in five years. Background The PSA Commission was stipulated from the start in the original version of the 1999 Law “On Production Sharing Agreements” (the “PSA Law”) and was the only institution, which coordinated the PSA issues among various Government bodies. PSA Commission was abolished as of December 2012 and replaced at various degrees with “the central body of executive power in the sphere of geological study and rational use of subsoil”, which at present is the State Service for Geology and Subsoil of Ukraine (“Derzhgeonadra”) and with the Ministry of Ecology and Natural Resources (“Ministry of Ecology”). Abolishment of the PSA Commission created a vacuum because there was no other institution within the Cabinet of Ministers, apart from the Cabinet of Ministers itself, which would co-ordinate the PSA issues among various key Ministries, State Agencies, and bodies of Local Self-Government. It was highly unlikely that the Cabinet of Ministers itself would take over the coordination role, so in practice this role fell upon Derzhgeonadra, Ministry of Ecology and Ministry of Energy and Coal Industry (“Ministry of Energy”). The PSA Commission Amendments Law gives the Cabinet of Ministers broad discretion to create the PSA Commission, establish procedures and rules for its operation and appoint its Working Body (in practice, the latter will do all the administrative and some substantive work). Also, the PSA Commission Amendments Law allows the Cabinet of Ministers to delegate some of its responsibilities to an unnamed “central body of executive power”. The Resolution of the Cabinet of Ministers of Ukraine No.644 on "Founding of the Interagency Commission in Charge of the Organization and Conclusion of Production-Sharing Agreements" took effect on 10 September 2013. The restored PSA Commission includes representatives of the Ministry of Energy, the Ministry of Ecology, the Ministry of Economic Development and Trade, the Ministry of Finance, the Ministry of Incomes and Charges, the Ministry of Justice, Derzhgeonadra, the State Service of Mining Supervision and Industrial Safety. The Working Body of the restored PSA Commission is the Ministry of Ecology. The Head of the Commission is the Minister of Energy and Coal Industry. Impact Reinstatement of the PSA Commission is a welcome development, which assures investors that there is indeed one institution within the Government formally responsible for all key PSA issues. In practice, however, it is expected that most of the PSA issues will remain in the domain of the newly emerged triumvirate, formed within past few months under homogenous leadership: the Ministry of Energy, Ministry of Ecology and Derzhgeonadra (in the past, under the previous leadership, the Ministry of Ecology/Derzhgeonadra on the one hand, and the Ministry of Energy on the other hand, had not been known to co-ordinate their positions). 2.Clarifications of the National Bank of Ukraine regarding exempting PSA-based transactions from various burdensome currency regime and banking restrictions Summary In its Letter No. 29-216/6760/7303 dated 20 June 2013 the National Bank of Ukraine (“NBU”) implements a number of previously adopted legislative amendments exempting PSA-based business transactions of investors (including foreign investors' representative offices in Ukraine) from various burdensome currency and banking restrictions. Background Ukraine has an archaic and very restrictive currency and banking regime, and the NBU, in line with previously adopted legislative amendments, exempts PSA-based business transactions from the restrictions imposed on: settlements in export and import transactions requiring that payments to residents of Ukraine must be made within 90 calendar days (stipulated by the Law “On Procedure for Making Foreign Currency Payments”, as well as the NBU Board Resolution No. 163 of dated 14 May 2013); residents receiving and repaying loans from non-residents, in particular the requirements stipulating mandatory registration by the NBU of the loan agreements with non-residents (stipulated by the Presidential Edict No. 734/99 dated 27 June 1999), as well as the restrictions concerning the interest rates under such loan agreements (stipulated by the NBU Resolution No. 363 dated 3 August 2004). the use of foreign currency in Ukraine in payments between resident-investors, which requires obtaining from NBU the individual license authorizing such payments (stipulated by the Cabinet of Ministers Decree No. 15-93 dated 19 February 1993); selected transfers of foreign currency to non-residents to pay for works, services or intellectual property rights under contracts, which are subject to a price examination to verify compliance with the market prices and to document actual provision of works, services or assignment of intellectual property rights (stipulated by the NBU Board Resolution No. 597 dated 30 December 2003); foreign currency proceeds received by residents, 50% of which are subject to mandatory conversion into local currency (UAH) at the interbank foreign exchange market of Ukraine (stipulated by the NBU Board Resolutions No. 163 and 164 dated 14.05.2013). Impact The purpose of this NBU Letter is to notify the Ukrainian banks, which under the law have responsibility to supervise foreign currency operations and monitor compliance with the applicable legislation, of the fact that various restrictions concerning such operations are not applicable to PSAs. The NBU letter is an additional safeguard against potential obstacles for PSA-related banking and currency operations. 3. Bill on environmental safety concerning PSAs for unconventionals Summary Bill No. 2318 on "Amendments to Some of the Legislative Acts of Ukraine Concerning Environmental Safety, Prevention and Elimination of the Negative Impact of Production of Unconventional Hydrocarbons on the Natural Environment in Connection with the Conclusion and During the Implementation of Production-Sharing Agreements" was registered in the Verkhovna Rada (Parliament of Ukraine) on 18 February 2013 (“Bill 2318”). Although the title of the Bill 2318 mentions unconventional hydrocarbons only, its substance allows to conclude that if adopted, it will affect all PSAs. The Bill 2318 has been reviewed by the Verkhovna Rada Committee in Charge of Environmental Policy, Wildlife Management and Liquidation of Consequences of Chernobyl Disaster, and was recommended to be accepted as a basis for further consideration. It should also be mentioned that the Main Scientific and Expert Department of the Verkhovna Rada issued a negative opinion on the Bill 2318, stating that some of its provisions are conflicting and must be improved. Background The Bill 2318 stipulates inter alia the following changes: All PSAs become subject to approval by the Verkhovna Rada (at present the decision to enter into a PSA is made by the Cabinet of Ministers). Mandatory public hearings must be held when local self-government bodies approve PSA drafts. Mandatory environmental expert examination must be carried out by the investor during the performance of the PSA at least once a calendar year to identify environmental risks and safety of planned or performed activities and to assess the impact of the activities on the natural environment and quality of natural resources. Mandatory monitoring by public authorities of the natural environment in the PSA area must be carried out prior to the commencement of the works under the PSA, and annual monitoring of the PSA area must be carried out after the PSA takes effect. An essential change in natural environment will be a ground for canceling the PSA. Impact The Bill 2318, if adopted, will have a catastrophic effect on PSAs. First, the approval of each PSA by the Verkhovna Rada would defeat an original purpose of the PSA Law to create an efficient and attractive regime for investment into the natural resources sector of Ukraine. Such approval in practice would not only cause significant and unreasonable complications and delays, but considering Verkhovna Rada’s highly politicized environment, most likely would result in failure to approve most of the PSA projects thus destroying all efforts by investors in preparing for and participating in the PSA tenders, negotiating PSAs with the Cabinet of Ministers, etc. Second, although the Bill 2318 is aimed at a perfectly legitimate and important cause of environment protection, it contains a number of burdensome and unnecessary requirements resulting in extra financial and organizational efforts and costs for investors. 4. Bill on securing the interests of the local communities where PSA subsoil areas are located Summary Bill No. 2936 on "Amendments to the Law of Ukraine "On Production-Sharing Agreements" aimed at securing the interests of the local communities where PSA subsoil areas are located, was registered in the Verkhovna Rada (Parliament of Ukraine) on 26 April 2013 (“Bill 2936”). The Bill 2936 is currently being reviewed by the relevant Verkhovna Rada Committee. Background The Bill 2936 inter alia stipulates that: Social and economic cooperation agreements shall be concluded between the PSA investor and the local councils where PSA subsoil areas are located. Conclusion of such an agreement shall be a mandatory pre-condition for the conclusion of the PSA and shall be its integral part, stipulating the investor's obligation to insure the investor's liability for ecological harm for the benefit of local self-government. At least 10% of the State's share of production under a PSA must be used for the needs of the territories where PSA subsoil areas are located (currently PSA Law allocates no share of production for any local needs). Impact The purpose of the Bill 2936 is incorporating the interests of local communities into the PSA conclusions and implementation process. The absence of any provisions defending their interests in the current PSA legislation in practice justifiably has caused serious opposition to PSA projects from local communities and local authorities. So far the central Government has demonstrated no desire to share its future benefits from PSAs with the local communities where PSA projects will be implemented, shifting the burden of dealing with local authorities from itself to the investor. Bill 2936 would split this burden between the PSA investor and the central Government, requiring that the investor enters into an agreement with the local authorities, while the central Government allocates at least 10% of the State’s share of production for local needs. Establishing incentives for local communities and clear procedures for granting these incentives, despite requiring additional time and efforts, ultimately is an inevitable positive measure needed for the efficient and fair PSA conclusion and implementation process. 5. Bill on amendments to PSA tax laws Summary Bill No. 2288а on "Amendments to the Tax Code of Ukraine Concerning Some Tax Aspects of Production-Sharing Agreements" was registered in the Verkhovna Rada (Parliament of Ukraine) on 11 June 2013 (“Bill 2288а”). The Bill 2288а stipulates that all investors in a multilateral PSA, and not just its operator as currently stipulated, can get registered as taxpayers and maintain tax accounts for the PSA. Also, both the operator and other investors in the multilateral PSA can show a tax credit with regards to VAT. Impact In our opinion, the PSA tax accounting options, proposed in the Bill 2288а represent a positive development. At the same time, while choosing a PSА tax option, it will be necessary for an investor, which is not the operator, to consider all aspects of the Ukrainian tax legislation, including complicated administration and extra accounting costs. 6. Bill on amendments to some legislative acts regarding subsoil use Summary Bill No. 2438а on "Amendments to Selective Legislative Acts of Ukraine (Concerning Subsoil Use Approvals)" was registered in the Verkhovna Rada (Parliament of Ukraine) on 27 June 2013 (“Bill 2438а”). The Bill re-assigns PSA approval responsibilities from local self-government authorities to Oblast [regional] State Administrations (local executive authorities). Impact According to its authors, Bill 2438а will clarify uncertainties in allocation of powers between local self-government and local executive authorities, and thus will prevent unreasonable delays and complications in obtaining approvals for PSAs from local authorities. 7. Draft of the new Subsoil Code Summary The Ministry of Ecology has drafted a new version of the Subsoil Code (“Subsoil Code Draft”), which is at present under public discussion. The Subsoil Code Draft has not yet been submitted to and registered with the Verkhovna Rada, and therefore it is not expected to be adopted in the near future. This is the latest of the numerous attempts to propose a new version of the Subsoil Code, none of which so far have had serious chances for success. Background The Subsoil Code Draft stipulates inter alia: qualifying the rights to use subsoil as a matter of civil turnover (at present, the law prohibits subsoil users form carrying out a number of important civil-law operations with regards to their subsoil rights, in particular alienating, pledging or contributing such rights in joint activities or joint ventures); incorporation into Subsoil Code the provisions of selected other laws applicable to subsoil laws (while these laws will be abolished) in particular: ü Law «On State Geology Service of Ukraine» dated 4 November 1999; ü Law of Ukraine «On Oil and Gas» dated 12 July 2001; ü Law of Ukraine «Coal Deposit Gas (Methane)» dated 21 May 2009; reducing the list of grounds for obtaining subsoil licenses in a non-competitive procedure (i.e. without an auction or a tender); streamlining and clarifying inspection procedures. Impact The purpose of the Subsoil Code Draft is to modernize and harmonize all subsoil legislation, modify the right to use subsoil, reduce the number of approvals and other bureaucratic procedures, etc. It remains to be seen, however, if this particular version of the Subsoil Code Draft will be introduced by the Cabinet of Monsters to the Verkhovna Rada for consideration. 8. Draft Cabinet of MinistersResolution on investor's civil-law liability insurance Summary The Cabinet of Ministers developed a draft Resolution on "Approval of a Procedure and Rules Concerning the Investor's Mandatory Civil-Law Liability Insurance, Including Harm to Environment and Human Health, Under Production-Sharing Agreements, Unless the Agreement Stipulates Otherwise" (the “Draft Resolution”). The Draft Resolution was developed on the basis of the Law "On Insurance", the PSA Law and the Law "On Protecting Natural Environment" that stipulate the investor's civil-law liability insurance, including against harm to natural environment and human health, unless a specific PSA stipulates otherwise. It is interesting to note that although the Draft Resolution uses the word “mandatory”, the insurance requirement will not be in fact mandatory, because under Article 30.2. of the PSA Law the PSA parties may agree otherwise in their PSA. In other words, the insurance requirement will become mandatory only if the PSA parties failed to agree otherwise in their PSA. Impact The purpose of this Draft Resolution is to set the procedure and rules concerning investors' PSA liability insurance. According to the drafters, it will be favorable both for the State and for investors. The benefits for the State would include: reducing the burden on the State budget; guaranteed indemnification to individuals and legal entities; improving environment protection. The benefits for investors would include: guaranteed indemnification of possible damage to property because of third parties' acts; potential money saving if an investor is found guilty in an insured event. 9. Draft Order of the Ministry of Ecology on therules of developing oil and gas deposits Summary The Ministry of Ecology has drafted an Order on "Approval of the Rules of Developing Oil and Gas Deposits" (the “Draft Order”). The purpose of this Draft Order is to replace the archaic procedure for developing oil/oil and gas deposits set forth in a 1984 USSR regulation and to establish modern fundamental regulations concerning the organization and implementation of the development of deposits, as well as to regulate subsoil use relations for subsoil users. Impact According to the drafters, establishing modern and clear regulations for oil and gas industry will have a positive impact on natural environment and human health. We believe, however, that introduction of such strict regulations can have both the positive and the negative effect. On the one hand, it will help to prevent disputes with various governmental authorities caused by the lack of clear legal regulations, but on the other hand the regulations can create additional bureaucratic obstacles, requiring significant additional resources from the subsoil users. By Irina Paliashvili and Olga Nevmerzhytska RULG-Ukrainian Legal Group, P.A. RULG-Ukrainian Legal Group is a full-service law firm based in Kiev and Washington, D.C. that provides comprehensive legal support to international corporate clients doing business in Ukraine and other CIS countries. One of the RULG’s key practice areas is upstream oil & gas, under both the Licensing Regime and the PSA Regime. RULG co-authored the production sharing (PSA) legislation for Ukraine, and has been representing international oil companies in their investment projects in Ukraine for over 20 years. Detailed information about RULG practice is available at www.rulg.com. Dr. Paliashvili can be contacted at [email protected]  http://www.visnuk.com.ua/ua/news/id/446 http://w1.c1.rada.gov.ua/pls/zweb2/webproc2_5_1_J?ses=10008&num_s=1&num=2318&date1=&date2=&name_zp=&out_type=&id=  http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=46802  http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=47381  http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=47654  http://www.menr.gov.ua/content/article/11913  http://www.menr.gov.ua/content/article/11893  http://www.menr.gov.ua/content/article/48  Rules for Developing Oil and Gas Deposits, approved by the USSR Oil Industry Ministry dated 15 October 1984 No. 44.
On September 11, 2013, the US Department of Energy (US DOE) announced that it has conditionally authorized Dominion Cove Point LNG to export US LNG to countries that do not have a Free Trade Agreement (FTA) with the United States. Subject to environmental review and final regulatory approval, Dominion’s Cove Point LNG terminal, located in Calvert County Maryland, is conditionally authorized export at a rate of up to 0.77 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years.) The US Has Approved LNG Exports of Over 40 Bcf/d Dominion’s export approval is potentially significant because DOE has now cumulatively authorized non-FTA exports totaling 6.37 Bcf/d of natural gas, or 2.325 Tcf/yr. This includes Cheniere’s Sabine Pass (2.2 Bcf/d), Freeport (1.4 Bcf/d), Lake Charles Exports (2.0 Bcf/d), and Dominion (0.77 Bcf/d). As noted by DOE, this total export volume “moderately” exceeds the 6 Bcf/d volume evaluated by the majority of the economic studies that have used 6 Bcf/d as the “low” export case, including the NERA LNG Study relied upon by the DOE. In addition to the 6.37 Bcf/d of LNG exports to non-FTA countries, the DOE has also authorized LNG export applications for 33.82 Bcf/d to FTA countries. To put this in perspective, 40 Bcf/d is approximately 312 million metric tons per annum of LNG (using the DOE’s conversion factor of 1 Bcf/d = 7.82 mtpa). Even though not all of the proposed US projects are likely to be built, and most of the FTA countries are not likely to be large LNG importers, 312 mtpa is a LOT of LNG! Currently, the world’s largest LNG exporter is Qatar with export capacity of 77 mtpa. Australia has massive LNG export projects under construction and is expected to rival or even exceed Qatar’s LNG export capacity. So even if just a fraction of the approved 312 mtpa of LNG exports comes to fruition, the US could be a major LNG exporter in the coming decades. The Approval Process As required under current US law, in order to approve Dominion’s export project, the DOE had to make a finding that the proposed exports would not be inconsistent with the “public interest.” In reviewing Dominion’s application, the DOE followed the same analysis followed in its most recent approvals of exports from Lake Charles LNG and Freeport LNG. While a range of factors are considered by the DOE in making the “public interest” determination, the primary focus of the DOE has thus far been on the economic benefits of the proposed exports. As noted in the DOE press release announcing the decision, the development of US natural gas resources is having a “transformative impact” in the US, including spurring economic development and job creation around the country. The DOE also indicated that the increased production of natural gas is expected to continue with the US Energy Information Administration (US EIA) forecasting a record production rate of 69.96 Bcf/d in 2013. Another factor that seems to influence the DOE’s decision is whether there are contracts in place with LNG buyers, or “off takers.” In Dominion’s case, the capacity of the facility is fully subscribed, with signed 20-year terminal service agreements. Pacific Summit Energy, LLC, a U.S. affiliate of Japanese trading company Sumitomo Corp., and GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Ltd., each have contracted for half of the marketed capacity. Additionally, and as with many of the proposed US export projects, since Dominion Cove Point is an existing LNG import facility, it already has in place much of the necessary infrastructure, including connections to the pipeline grid, LNG storage capacity and an updated pier. It should be noted, however, that the additional CAPEX for constructing the liquefaction/export facilities is not insignificant. Dominion estimates the cost of construction for the export facilities will be $3.4 billion to $3.8 billion, with construction scheduled to begin in 2014, with an in-service date of 2017. Terms and Conditions of the Authorization Dominion had requested a 25-year term for the export authorization starting from the date export operations begin. Consistent with the DOE’s approval of the Freeport LNG and Lake Charles LNG projects, the DOE’s authorization is only for a 20-year term. This caution on the part of the DOE is in part due to the fact that the LNG Export Study that DOE commissioned to determine the economic benefits of LNG exports contained projections over a 20-year period only. Going forward, this means that any projects that are approved in the future are likely to be limited to a 20-year approval time period. In addition to reducing the requested authorization term, the DOE also added a condition that Dominion must commence commercial LNG export operations no later than seven years from the date of the issuance of the Order. The Path Forward on LNG Export Applications As in the prior authorizations, the DOE reiterated that it would continue to process the applications currently pending on a case-by-case basis, in the order of precedence previously detailed. During this time, the Department will continue to monitor any market developments and assess their impact in subsequent public interest determinations as further information becomes available, including the EIA’s Annual Energy Outlook Report at the end of 2013. To date, the DOE has still not detailed what the precise process and procedure is for monitoring the cumulative impact of additional LNG applications. As a result, there continue to be calls from all sides, including a group of industrial users of natural gas and manufactures represented by America’s Energy Advantage, for the DOE to continue to take a “measured approach” in reviewing pending applications and to clarify how DOE will monitor the cumulative impact. These calls are growing louder now that the US has authorized more than the “low” export case of 6 Bcf/d and now that it looks likely that the US will export more LNG than previously suggested. Three More Companies File LNG Export Applications At the same time, the DOE’s recent approvals seem to have attracted even more applications to export. According to the most recent list of pending applications, the following three companies have filed export applications in the past month: Argent Marine Management, Inc. filed an application to export over a 25-year period 20,000 metric tonnes (approximately 1 Bcf) of LNG per year to FTA nations. Argent proposes to transport LNG from a facility in Trussville, Ala. via truck to ports on the U.S. East Coast and then ship the LNG in ISO containers aboard ocean-going vessels. Eos LNG LLC (EOS) filed an application to export over a 25-year period up to the equivalent of 1.6 Bcf/day (584 Bcf/year) of LNG from a proposed floating liquefaction unit on a barge and LNG storage tanker at the Port of Brownsville, Texas to nations with an FTA with the United States. EOS also filed a separate application to export the same volumes from the same facility to non-FTA nations. Barca LNG LLC (Barca) filed an application with DOE to export over a 25-year period up to the equivalent of 1.6 Bcf/day (584 Bcf/year) of LNG from a proposed floating liquefaction unit on a barge and LNG storage tanker at the Port of Brownsville, Texas to nations with an FTA with the United States. Barca also filed a separate application to export the same volumes from the same facility to non-FTA nations. Of particular note is the Argent application since there seems to be growing interest in US LNG Exports to FTA countries and because these applications require automatic approval by the DOE. Accordingly, there is a possibility that much more LNG will leave the US destined to FTA nations than contemplated by the various economic studies that have been released. The DOE has indicated it has a continuing obligation to continue to assess the cumulative impacts of each succeeding request for export authorization on the public interest with due regard to the effect on domestic natural gas supply and demand fundamentals. How DOE intends to do this remains unclear and with a total (FTA and non-FTA) of more than 40 Bcf/d of LNG exports already approved, it is becoming increasingly important for DOE to clarify how it intends to monitor the cumulative impact. Without such clarity, the fate and timing of additional US LNG export approvals remains uncertain, as does the potential role for the US as a major LNG exporter. Susan L. Sakmar is currently a visiting assistant law professor at the University of Houston Law Center and an expert on global gas markets, including LNG and global shale gas development. She is the author of the latest book on LNG,“Energy for the 21st Century: Opportunities and Challenges for LNG.”
Mikhail Krutikhin: Awkward arithmetic Jokers in Gazprom say that, when Chairman Alexey Miller retires, the company may dedicate a memorial library in his name, and the bookshelves could be impressively stuffed with copies of agreements on gas supply to China. Another such document was added to the collection during the G20 meeting in St. Petersburg in early September. In the presence of presidents Vladimir Putin and Xi Jinping Gazprom and CNPC signed ‘basic terms’ of delivering Russian natural gas across the Chinese border. The parties announced again that the new agreement opened the way to a final contract, to be signed before the year is over. Gazprom spokesman Sergei Kupriyanov told reporters the deliveries would begin in 2015 and added that the 30-year contract was to be signed for annual supply of 38 billion cubic meters. Initially, he added, gas would reach China via the Sakhalin-Khabarovsk-Vladivostok pipeline until new lines were built from Eastern Siberia. It sounds incredible whichever part of the statement you look at. Gas from Sakhalin? In 2015? 38 bcm? If upstream efforts of Gazprom on that island go on as planned, its projects can contribute annually about 15-17 bcm of gas to the pipeline by 2018, and this volume is barely enough to satisfy domestic consumption and feed two 5-million-tonnes-a-year trains at the future LNG plant in Vladivostok. Nothing will be left for China in the gas flow from Sakhalin unless the LNG project is scrapped. New lines from Eastern Siberia? According to the most optimistic scenarios drafted by Gazprom planners, it will take the company at least six years to start delivering gas from the Chayanda project in Yakutia via the planned Power of Siberia pipeline (some 4-5 bcm a year), and annual supply of 29-30 bcm would become possible only ten years after that. The impossible promises Gazprom makes to China may have a cynical rationale, apart from reporting a semblance of progress to the Russian government. The gas monopoly’s management can make any commitments being aware that the plans will never materialize because there is a mammoth stumbling block on the road to the final contract: the price of Russian gas. A thousand cubic meters of natural gas delivered to Vladivostok via the pipeline from Sakhalin cost $643 in 2012, if financial reports of Gazprom and state budget figures are to be trusted. The federal government subsidizes local consumption paying about $300 million a year to Gazprom to cover the loss from these sales. Is Moscow prepared to expand the subsidies to Chinese consumers? Mikhail Krutikhin Published with the kind permission of RusEnergy. Mikhail Krutikhin is with RusEnergy, an independent privately-run company established in 2000 by a group of Russian experts with a long experience in consulting and publishing business. Based in Moscow, it specializes in monitoring, analysis and consulting on oil and gas industry of Russia, Central Asia, Azerbaijan and Ukraine.
Conventional gas is green, cheap, abundant and economically viable. With regards to the Middle East, are supplies still secure? Gas is an explosive material, in all respects - is the Middle East blowing up because of natural gas? If Iraq was about oil, is Syria about gas? With its divided Islamic factions fighting for power, the upheaval in Syria does not seem to be made for democracy. Lacking democratic ideals, these factions also cannot agree amongst themselves, which is a problem for the western countries willing to provide them support. It is interesting that French Ambassador Eric Chevalier told a member of the rebel coalition they “don’t deserve the effort that we made”. What were the efforts for? Why provide divided Islamic factions with arms and support, knowing if Syrian President Bashar al-Assad falls, the factions may fight amongst themselves, resulting in even more bloodshed. Why increase the risk of instability in the region and possible terrorist attacks in Europe? Could these ‘efforts’ against the Assad regime (Shia), and by extension Iranian Shiites, be about hydrocarbons once again? I reckon it is worth taking a look at the countries that have experienced troubles since 2011. Mass media focused on Libya, Egypt, and now Syria and again Egypt (keep in mind that what happens to the Muslim Brotherhood in Egypt is very much linked to what happens in Syria), but it turns out that all the Arabic countries around the Mediterranean Sea have experienced troubles. A quick look at newspapers from various countries would have easily helped a newsreader in 2011 see that ‘troubles’ were experienced almost simultaneously in the afrementioned countries. The difference was how it developed and it continues to develop. The question here is whether there could be a link with the current situation in Syria and Europe’s natural gas supplies. Reduction of Russian gas is a redundant topic. However, insofar as it is actually to be put into a wider strategy of rolling Russia back within its boundaries, it is not irrational to look at the situation from a natural gas angle. Let’s have a look at Syria’s role in the ‘Med Gas Ring’. Below is how the Ring looked on paper when the European Commission received the third issuance of a study by the firm Mott Mac Donald on Sept 29th, 2011. It is worth looking at it. Please note that infrastructures that are not in dark green and red are those that do not exist, yet… What is interesting here is this blue line running from Syria to Turkey. According to the Mott MacDonald study, Syria does not possess enough gas to be a net exporter. It actually barely possesses enough gas to satisfy its own needs: "Based on our supply/demand analysis we conclude that Syria will unlikely to have any surplus natural gas to export starting some time between 2010 and 2015 in the Minimum gas availability case and starting some time between 2015 and 2020 in the Maximum gas availability case. The clear implication is that Syria will have to import increasing volumes of gas at some point in the near future if gas supplied are not ramped up to meet the consumption expansion, presumably from Egypt via the Arab Gas Pipeline and possibly also from Iraq. If so, there will be less or even none Arab Gas Pipeline gas available for export to Turkey and the EU." It is also noted that "new discoveries have been made in Saudi Arabia in the north of the country, very close to the existing Arab Gas Pipeline and Syrian border potentially will produce 10-20bcm for export. Saudi Arabia also has associated gas which could potentially be exported." And here is where the link may start to appear (literally speaking…) between the Arab Spring, the 'rebels' in Syria and our topic: natural gas. Of course, to make the situation even more complicated we have in the backdrop an unstable region divided between Shia and Sunni Muslims. As a result, Syria finds itself in the middle of an on-going chess game between the United Stated and Russia - a complex situation involving Sunni Gulf Monarchies, Iran, and even China. So if Brussels and its ‘American brain’ are trying to get rid of Russian gas and avoid Russian-controlled routes, it poses a problem to have a Shiite ‘Russian friendly’ clan (al-Assad) heading a crucial transit country. It would give Syria a strategic position and grant it not only leverage over Turkey and the European Union, but also more power in a region where other Arabic countries are Sunni (including oil-rich Saudi Arabia). Furthermore, the Assad regime belongs to the Shia minority in Syria and has relations with majority Shia Iran. So, in admitting that Syria would not take the gas it needs from the extended pipeline, being a transit country for gas from Egypt, or even from northern Saudi Arabia, would end in substantially modifying the regional balance of power - currently detrimental to Iran. A possible side effect would be that insofar as Russia is supportive of Iran, then the former might have been able to gain some influence in a region dominated by the west. China, who is ignoring US sanctions and importing Iranian oil, could also benefit from this loss of Sunni influence in this region. This of course would not please the US or the Sunni Gulf Monarchies. Moreover, Syria, whose gas production is not enough to satisfy its own needs, would have been a competitor to the European Union for natural gas imports, hence putting at risk the diversification of gas supplies. Or, put more crudely: it would have put the ‘’all-but-Russian-gas’’ and ‘’all-but-Russian-controlled-route’’ plans at risk. When I was working in Brussels, someone working on energy issues in an EU Member State Representation and well-aware of political realities, told me that the European Commission was an open door for American interests. Well, this could be the case indeed. The United States is pursuing their strategy to limit Russia’s rise both by trying to oust it from its zone of influence, and by trying to make a hole in its budget (please see US lobby for LNG and spot-prices), hence generating a political and social crisis that would finally enable Uncle Sam to achieve what it wants with Russia. Namely, to cut the country into different independent little states that would spend their time fighting amongst each other (Russia’s numerous ethnic groups would be very helpful to the US for this) and as a consequence US companies would be able to tap into Russia’s huge natural reserves. It could look like a new Middle East, but colder. There is no genuine will to support simple and normal people in America’s foreign policy: it is pure pragmatism only looking for economic interest and business. Indeed, as the record shows, the US provided support to overthrow regimes for economic consideration, not for the well-being of population. Could it be that our American friends misread Gene Sharp who notes that "It should be remembered that against a dictatorship the objective of the grand strategy is not simply to bring down the dictators but to install a democratic system and make the rise of a new dictatorship impossible." Or maybe they just decided to skip that paragraph. For example, in 1954 in Guatemala, the United States through the CIA overthrew the president Jacobo Arbenz because his policy was against the interest of an American company. An even better example of how the US really supports democracy is Chile. In 1973, via the CIA, it overthrew the legitimate president Salvador Allende. In this particular case, the strategy was to ‘’make the [Chilean] economy shout’’ (President Reagan) and to work with opposition groups. It ended with a coup d’état of general Pinochet, who was supported by a massive propaganda campaign orchestrated by the CIA in spite knowledge of gross violations of human rights and assassination of political opponents. But let’s go back to the initial question: is it all about gas? The Syrian conflict does indeed imply gas transit. But it is also about religious rivalries and balance of power in the region. This is a fairly explosive cocktail that could turn even worse after western intervention. Instability actually prevents pipelines from being built as it makes the zone insecure. So why does the US pay little attention to the risks of regional conflagration? Do they need war that badly to keep existing as a power? Is it worth the bloodshed? The EU has thus far a rather functioning win-win partnership with Russia that is also depending on the European market for its gas sales. So why does the former keep playing the American game without wondering where its interest actually lies? Why doesn’t it build for itself a real independent foreign policy? The opening of a NATO office in Vilnius in charge of energy security shows that for the US, the ‘Russian case’ is not over and that using energy exports as a way to make the Russian economy shout is still on. Beyond the fact that it also shows NATO as trying to keep existing what the Cold War had ended (at least officially) by stretching the reading of its article five and its mandate for action, it sadly shows that the EU has no maturity and still cannot emancipate itself from Uncle Sam’s influence. Yasmina Sahraoui is based in Moscow and comments on natural gas developments. The views expressed are those of the author.  The Independent website, 29th of May 2013 ; http://blogs.independent.co.uk/2013/05/28/the-syrian-opposition-is-in-crisis-and-it%E2%80%99s-all-on-video/  Mott MacDonald, Supplying the EU Natural Gas Market, 29th of September 2010  Gene Sharp is a brilliant American scholar who wrote notably ‘’From Dictatorship To Democracy, A Conceptual Framework For Liberation’’ (published first in 1993) where he succinctly explains how to make a dictatorship fall. It has apparently been used in Egypt in 2011. The current rise a ‘’homosexuality cause’’ in Russia is also an attempt to apply Sharp’s theory; yet it is not working because Russia is not a dictatorship and hence parameters are not the same. But still, some are trying their best to make sure that Russia is being perceived as such so as to get results using this conceptual framework. Though it could be interesting to discuss it, it is not the point here and in any case, it is absolutely worth reading Sharp’s book.  Russia is still too heavily relying on its hydrocarbons exports for its revenue and its economy is not diversified enough yet. The European export market is the most profitable market. A drop in these exports could have serious economic, social, and ultimately political impact.
A $50 million gamble on a Michigan-based manufacturer of wheel-chair accessible vans running on compressed natural gas will cost tax payers $42 million after the company went bust and suspended operations. Based in Allen Park, Michigan, Vehicle Production Group (VPG) laid off hundreds of employees and halted operations back in February after having received a $50 million loan in 2011 from the Department of Energy (DOE)—only $5 million of which it managed to pay back and another three million that the DOE confiscated from the company’s…Read more...
Environment movement is in 'deep denial' over the right ways to tackle climate change, says Canadian authorCanadian author Naomi Klein is so well known for her blade-sharp commentary that it's easy to forget that she is, above all, a first-rate reporter. I got a glimpse into her priorities as I was working on this interview. Klein told me she was worried that some of the things she had said would make it hard for her to land an interview with a president of the one of the Big Green groups (read below and you'll see why). She was more interested in nabbing the story than being the story; her reporting trumped any opinion-making.Such focus is a hallmark of Klein's career. She doesn't do much of the chattering class's news cycle blathering. She works steadily, carefully, quietly. It can be surprising to remember that Klein's immense global influence rests on a relatively small body of work; she has published three books, one of which is an anthology of magazine pieces. Klein's first book, No Logo, investigated how brand names manipulate public desires while exploiting the people who make their products. The book came out just weeks after the WTO protests in Seattle and became an international bestseller. Her next major book, The Shock Doctrine, argued that free-marketeers often use crises – natural or manufactured – to ram through deregulatory policies. With her newest, yet-to-be named book, Klein turns her attention to climate change. Scheduled for release in 2014, the book will also be made into a film by her husband and creative partner, Avi Lewis.Klein's books and articles have sought to articulate a counternarrative to the march of corporate globalization and government austerity. She believes climate change provides a new chance for creating such a counternarrative. "The book I am writing is arguing that our responses to climate change can rebuild the public sphere, can strengthen our communities, can have work with dignity." First, though, she has to finish the reporting. As she told me, speaking about the grassroots response to climate chaos: "Right now it's under the radar, but I'm following it quite closely."During your career you've written about the power of brand names, populist movements around the world, and free market fundamentalism. Why now a book and film on climate change? You know, The Shock Doctrine, my last book, ends with climate change. It ends with a vision of a dystopic future where you have weak infrastructure colliding with heavy weather, as we saw with Hurricane Katrina. And rather than working to prevent future disasters by having lower emissions, you have all these attempts to take advantage of that crisis. At the time, it seemed to me that climate change was potentially going to be the biggest disaster-capitalism free-for-all that we've seen yet. So it was quite a logical progression for me to go from writing about disaster-capitalism in The Shock Doctrine to writing about climate change. As I was writing The Shock Doctrine, I was covering the Iraq War and profiteering from the war, and I started to see these patterns repeat in the aftermath of natural disasters, like the Asian tsunami and then Hurricane Katrina. There are chapters in that book on both of those events. Then I came to the idea that climate change could be a kind of a "people's shock," an answer to the shock doctrine – not just another opportunity by the disaster capitalists to feed off of misery, but an opportunity for progressive forces to deepen democracy and really improve livelihoods around the world. Then I came across the idea of "climate debt" when I was doing a piece on reparations for Harper's magazine. I had a meeting with Bolivia's climate negotiator in Geneva – her name is Angélica Navarro – and she put the case to me that climate change could be an opportunity for a global Green Marshall Plan with the North paying climate debts in the form of huge green development project. In the wake of Hurricane Sandy you wrote about the potential of a "people's shock." Do you see that it's happening, a global grassroots response to some of the extreme weather we're experiencing?I see a people's shock happening broadly, where on lots of different fronts you have constituencies coming forward who have been fighting, for instance, for sustainable agriculture for many, many years, and now realize that it's also a climate solution. You have a lot of reframing of issues – and not in an opportunistic way, just another layer of understanding. Here in Canada, the people who oppose the tar sands most forcefully are Indigenous people living downstream from the tar sands. They are not opposing it because of climate change – they are opposing it because it poisons their bodies. But the fact that it's also ruining the planet adds another layer of urgency. And it's that layering of climate change on top of other issues that holds a huge amount of potential. In terms of Hurricane Sandy, I really do see some hopeful, grassroots responses, particularly in the Rockaways, where people were very organized right from the beginning, where Occupy Sandy was very strong, where new networks emerged. The first phase is just recovery, and now as you have a corporate-driven reconstruction process descending, those organized communities are in a position to respond, to go to the meetings, to take on the real estate developers, to talk about another vision of public housing that is way better than what's there right now. So yeah, it's definitely happening. Right now it's under the radar, but I'm following it quite closely.In a piece you wrote for The Nation in November 2011 you suggested that when it comes to climate change, there's a dual denialism at work – conservatives deny the science while some liberals deny the political implications of the science. Why do you think that some environmentalists are resistant to grappling with climate change's implications for the market and for economics?Well, I think there is a very a deep denialism in the environmental movement among the Big Green groups. And to be very honest with you, I think it's been more damaging than the right-wing denialism in terms of how much ground we've lost. Because it has steered us in directions that have yielded very poor results. I think if we look at the track record of Kyoto, of the UN Clean Development Mechanism, the European Union's emissions trading scheme – we now have close to a decade that we can measure these schemes against, and it's disastrous. Not only are emissions up, but you have no end of scams to point to, which gives fodder to the right. The right took on cap-and-trade by saying it's going to bankrupt us, it's handouts to corporations, and, by the way, it's not going to work. And they were right on all counts. Not in the bankrupting part, but they were right that this was a massive corporate giveaway, and they were right that it wasn't going to bring us anywhere near what scientists were saying we needed to do lower emissions. So I think it's a really important question why the green groups have been so unwilling to follow science to its logical conclusions. I think the scientists Kevin Anderson and his colleague Alice Bows at the Tyndall Centre have been the most courageous on this because they don't just take on the green groups, they take on their fellow scientists for the way in which neoliberal economic orthodoxy has infiltrated the scientific establishment. It's really scary reading. Because they have been saying, for at least for a decade, that getting to the emissions reduction levels that we need to get to in the developed world is not compatible with economic growth. What we know is that the environmental movement had a series of dazzling victories in the late 60s and in the 70s where the whole legal framework for responding to pollution and to protecting wildlife came into law. It was just victory after victory after victory. And these were what came to be called "command-and-control" pieces of legislation. It was "don't do that." That substance is banned or tightly regulated. It was a top-down regulatory approach. And then it came to screeching halt when Regan was elected. And he essentially waged war on the environmental movement very openly. We started to see some of the language that is common among those deniers – to equate environmentalism with Communism and so on. As the Cold War dwindled, environmentalism became the next target, the next Communism. Now, the movement at that stage could have responded in one of the two ways. It could have fought back and defended the values it stood for at that point, and tried to resist the steamroller that was neoliberalism in its early days. Or it could have adapted itself to this new reality, and changed itself to fit the rise of corporatist government. And it did the latter. Very consciously if you read what [Environmental Defense Fund president] Fred Krupp was saying at the time.It was go along or get along.Exactly. We now understand it's about corporate partnerships. It's not, "sue the bastards;" it's, "work through corporate partnerships with the bastards." There is no enemy anymore.More than that, it's casting corporations as the solution, as the willing participants and part of this solution. That's the model that has lasted to this day. I go back to something even like the fight over NAFTA, the North American Free Trade Agreement. The Big Green groups, with very few exceptions, lined up in favor of NAFTA, despite the fact that their memberships were revolting, and sold the deal very aggressively to the public. That's the model that has been globalized through the World Trade Organization, and that is responsible in many ways for the levels of soaring emissions. We've globalized an utterly untenable economic model of hyperconsumerism. It's now successfully spreading across the world, and it's killing us. It's not that the green groups were spectators to this – they were partners in this. They were willing participants in this. It's not every green group. It's not Greenpeace, it's not Friends of the Earth, it's not, for the most part, the Sierra Club. It's not 350.org, because it didn't even exist yet. But I think it goes back to the elite roots of the movement, and the fact that when a lot of these conservation groups began there was kind of a noblesse oblige approach to conservation. It was about elites getting together and hiking and deciding to save nature. And then the elites changed. So if the environmental movement was going to decide to fight, they would have had to give up their elite status. And weren't willing to give up their elite status. I think that's a huge part of the reason why emissions are where they are.At least in American culture, there is always this desire for the win-win scenario. But if we really want to get to, say, an 80 percent reduction in CO2 emissions, some people are going to lose. And I guess what you are saying is that it's hard for the environmental leadership to look some of their partners in the eye and say, "You're going to lose."Exactly. To pick on power. Their so-called win-win strategy has lost. That was the idea behind cap-and-trade. And it was a disastrously losing strategy. The green groups are not nearly as clever as they believe themselves to be. They got played on a spectacular scale. Many of their partners had one foot in US CAP [Climate Action Partnership] and the other in the US Chamber of Commerce. They were hedging their bets. And when it looked like they could get away with no legislation, they dumped US CAP completely. The phrase win-win is interesting, because there are a lot of losers in the win-win strategy. A lot of people are sacrificed in the name of win-win. And in the US, we just keep it to the cap-and-trade fight and I know everyone is tired of fighting that fight. I do think there is a lot of evidence that we have not learned the key lessons of that failure.And what do you think the key lessons are?Well one of them is willingness to sacrifice – in the name of getting a win-win with big polluters who are part of that coalition – the communities that were living on the fenceline. Communities, in Richmond, California for instance, who would have been like, "We fight climate change and our kids won't get as much asthma." That win-win was broken because you get a deal that says, "OK you guys can keep polluting but you're going to have to buy some offsets on the other side of the planet." And the local win is gone, is sacrificed. I'm in favor of win-win, you know. The book I am writing is arguing that our responses to climate change can rebuild the public sphere, can strengthen our communities, can have work with dignity. We can address the financial crisis and the ecological crisis at the same. I believe that. But I think it's by building coalitions with people, not with corporations, that you are going to get those wins. And what I see is really a willingness to sacrifice the basic principles of solidarity, whether it is to that fenceline community in Richmond, California or whether it's with that Indigenous community in Brazil that, you know, is forced off their territory because their forest has just become a carbon sink or an offset and they no longer have access to the forest that allowed them to live sustainably because it's policed. Because a conservation group has decided to trade it. So these sacrifices are made – there are a lot of losers in this model and there aren't any wins I can see. You were talking about the Clean Development Mechanism as a sort of disaster capitalism. Isn't geoengineering the ultimate disaster capitalism? I certainly think it's the ultimate expression of a desire to avoid doing the hard work of reducing emissions, and I think that's the appeal of it. I think we will see this trajectory the more and more climate change becomes impossible to deny. A lot of people will skip right to geoengineering. The appeal of geoengineering is that it doesn't threaten our worldview. It leaves us in a dominant position. It says that there is an escape hatch. So all the stories that got us to this point, that flatter ourselves for our power, will just be scaled up. [There is a]willingness to sacrifice large numbers of people in the way we respond to climate change – we are already showing a brutality in the face of climate change that I find really chilling. I don't think we have the language to even describe [geoengineering], because we are with full knowledge deciding to allow cultures to die, to allow peoples to disappear. We have the ability to stop and we're choosing not to. So I think the profound immorality and violence of that decision is not reflected in the language that we have. You see that we have these climate conventions where the African delegates are using words like "genocide," and the European and North American delegates get very upset and defensive about this. The truth is that the UN definition of genocide is that it is the deliberate act to disappear and displace people. What the delegates representing the North are saying is that we are not doing this because we want you to disappear; we are doing this because we don't care essentially. We don't care if you disappear if we continue business-as-usual. That's a side effect of collateral damage. Well, to the people that are actually facing the disappearance it doesn't make a difference whether there is malice to it because it still could be prevented. And we're choosing not to prevent it. I feel one of the crises that we're facing is a crisis of language. We are not speaking about this with the language of urgency or mortality that the issue deserves. You've said that progressives' narratives are insufficient. What would be an alternative narrative to turn this situation around?Well, I think the narrative that got us into this – that's part of the reason why you have climate change denialism being such as powerful force in North America and in Australia – is really tied to the frontier mentality. It's really tied to the idea of there always being more. We live on lands that were supposedly innocent, "discovered" lands where nature was so abundant. You could not imagine depletion ever. These are foundational myths.And so I've taken a huge amount of hope from the emergence of the Idle No More movement, because of what I see as a tremendous generosity of spirit from Indigenous leadership right now to educate us in another narrative. I just did a panel with Idle No More and I was the only non-Native speaker at this event, and the other Native speakers were all saying we want to play this leadership role. It's actually taken a long time to get to that point. There's been so much abuse heaped upon these communities, and so much rightful anger at the people who stole their lands. This is the first time that I've seen this openness, open willingness that we have something to bring, we want to lead, we want to model another way which relates to the land. So that's where I am getting a lot of hope right now. The impacts of Idle No More are really not understood. My husband is making a documentary that goes with this book, and he's directing it right now in Montana, and we've been doing a lot of filming on the northern Cheyenne reservation because there's a huge, huge coal deposit that they've been debating for a lot of years – whether or not to dig out this coal. And it was really looking like they were going to dig it up. It goes against their prophecies, and it's just very painful. Now there's just this new generation of young people on that reserve who are determined to leave that coal in the ground, and are training themselves to do solar and wind, and they all talk about Idle No More. I think there's something very powerful going on. In Canada it's a very big deal. It's very big deal in all of North America, because of the huge amount of untapped energy, fossil fuel energy, that is on Indigenous land. That goes for Arctic oil. It certainly goes for the tar sands. It goes for where they want to lay those pipelines. It goes for where the natural gas is. It goes for where the major coal deposits are in the US. I think in Canada we take Indigenous rights more seriously than in the US. I hope that will change.It's interesting because even as some of the Big Green groups have gotten enamored of the ideas of ecosystem services and natural capital, there's this counter-narrative coming from the Global South and Indigenous communities. It's almost like a dialectic.That's the counternarrative, and those are the alternative worldviews that are emerging at this moment. The other thing that is happening … I don't know what to call it. It's maybe a reformation movement, a grassroots rebellion. There's something going on in the [environmental] movement in the US and Canada, and I think certainly in the UK. What I call the "astronaut's eye worldview" – which has governed the Big Green environmental movement for so long – and by that I mean just looking down at Earth from above. I think it's sort of time to let go of the icon of the globe, because it places us above it and I think it has allowed us to see nature in this really abstracted way and sort of move pieces, like pieces on a chessboard, and really loose touch with the Earth. You know, it's like the planet instead of the Earth. And I think where that really came to a head was over fracking. The head offices of the Sierra Club and the NRDC and the EDF all decided this was a "bridge fuel." We've done the math and we're going to come out in favor of this thing. And then they faced big pushbacks from their membership, most of all at the Sierra Club. And they all had to modify their position somewhat. It was the grassroots going, "Wait a minute, what kind of environmentalism is it that isn't concerned about water, that isn't concerned about industrialization of rural landscapes – what has environmentalism become?" And so we see this grassroots, place-based resistance in the movements against the Keystone XL pipeline and the Northern Gateway pipeline, the huge anti-fracking movement. And they are the ones winning victories, right? I think the Big Green groups are becoming deeply irrelevant. Some get a lot of money from corporations and rich donors and foundations, but their whole model is in crisis.I hate to end a downer like that.I'm not sure that is a downer.It might not be.I should say I'm representing my own views. I see some big changes as well. I think the Sierra Club has gone through its own reformation. They are on the frontline of these struggles now. I think a lot of these groups are having to listen to their members. And some of them will just refuse to change because they're just too entrenched in the partnership model, they've got too many conflicts of interest at this stage. Those are the groups that are really going to suffer. And I think it's OK. I think at this point, there's a big push in Europe where 100 civil society groups are calling on the EU not to try to fix their failed carbon-trading system, but to actually drop it and start really talking about cutting emissions at home instead of doing this shell game. I think that's the moment we're in right now. We don't have any more time to waste with these very clever, not working shell games.• Jason Mark is editor of Earth Island JournalActivismClimate change scepticism theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
The oil and natural gas giant BG Group led the fallers in the blue chip FTSE 100 index yesterday after warning that instability in Egypt and delays in Norway would hit production.
BG Group announced production next year would be 30,000 boed lower than expected due to delays at projects in Egypt and Norway. In a note released on Monday ahead of the Capital Markets Day for analysts and investors, the UK-based company said that it was on track to meet its 2013 targets. ‘With regards to 2014 milestones, due to the on-going political and social instability in Egypt, phase 9a of West Delta Deep Marine has suffered delay, resulting in first production commencing later than expected in 2014,’ reads the note, adding of a four months delay at the Knarr project in Norway. The Group does not see any change in the 2015 production guidance, ‘but this is subject to a recovery in natural gas prices in the USA and future events in Egypt.’
Minister talks of shale gas ushering a 'green future', but report warns global emissions will rise without international climate dealFracking for shale gas is not a "great evil" and can act as a bridge to a "green future" in the UK as long as it is properly regulated, according to the energy and climate secretary Ed Davey.In a major speech in defence of exploiting domestic shale gas he said that Britain can extract the gas without endangering the country's climate targets.But the energy and climate secretary's comments were accompanied by a warning in a report from his department's chief scientist that exploiting shale gas in the UK will cause global greenhouse gas emissions to rise without an international deal on climate change.Davey said the debate over shale gas has been marred by exaggeration and misunderstanding. "You would be forgiven for thinking that it represents a great evil; one of the gravest threats that has ever existed to the environment, to the health of our children and to the future of the planet."On the other side of the coin, you could have been led to believe that shale gas is the sole answer to all our energy problems ... Both of these position are just plain wrong."Gas, as the cleanest fossil fuel, is part of the answer to climate change, as a bridge in our transition to a green future, especially in our move away from coal," said Davey, at a speech at the Royal Society in London. He added the report showed that "with the right safeguards in place the net effect on national emission from UK shale gas production will be relatively small when compared to the use of other sources of gas."He added: "UK shale gas can be developed sensibly and safely, protecting the local environment, with the right regulation."But in the government report, which analyses for the first time the impact of shale gas on greenhouse gas emissions and climate change, David Mackay, chief scientific adviser at the Department of Energy and Climate Change, said that fracking in Britain would lead to emissions going up in the absence of an international agreement on a UN climate deal in Paris in two years' time. The UN talks have been stalled for several years, after failing to agree a strong deal at Copenhagen in 2009.The report compared the emissions of shale gas with those from the liquefied natural gas that the UK currently imports, largely from Qatar, and concluded the two were very similar and would have little effect on the UK's legally-binding climate targets. Both were higher, however, than conventional gas extracted from the North Sea. "It will have a very small effect on the UK's [climate] targets," said Mackay. "We think it's credible were shale gas produced in the UK it would displace LNG imports."Davey said that this conclusion should "reassure" environmentalists concerned at shale gas exacerbating global warming."This report shows that the continued use of gas is perfectly consistent with our carbon budgets over the next couple of decades. If shale gas production does reach significant levels we will need to make extra efforts in other areas. Because by on-shoring production we will be on-shoring the emissions as well. And, as this report recommends, we will still need to put in place a range of techniques to reduce emissions."It should help reassure environmentalists like myself, that we can safely pursue UK shale gas production and meet our national emissions reductions targets designed to help tackle climate change," he said.Davey also dismissed concerns over water pollution from fracking in the UK, and the very small earthquakes caused by energy company Cuadrilla in 2009. "It will not contaminate water supplies. It will not cause dangerous earthquakes," he said.Green groups said that the government's backing of shale gas was not compatible with efforts to tackle climate change.Nick Molho, head of climate and energy policy at WWF-UK, said: "An overreliance on gas will lock us into a high-carbon future. Simply put, at the moment, the maths don't stack up – and it's difficult to see how exploiting ever more fossil fuels is compatible with tackling climate change or boosting the UK's promising low-carbon economy."Leila Deen, of Greenpeace, said it was "extraordinary to see a Liberal Democrat enthusiastically embracing new fossil fuels." She added: "Today Davey is endorsing the use of a fuel that remains highly polluting, damages our countryside and scientists say must be largely left underground. The solution to our energy problems is still a roll-out of high-tech low carbon renewables which would be incentivised by supporting the clean energy target in the energy bill, but Davey is currently blocking it."Fracking, or hydraulic fracturing, involves drilling underground and pumping a high-pressure mix of water, sand and chemicals to crack shale rock and release the gas inside.Critics are concerned at the high amounts of water the process uses in areas of England that are already increasingly being affected by drought, contamination of water supplies, and investment being diverted from renewable energy, such as windfarms and solar power.However, experts on Monday said that the volume of water used by fracking would not be a problem in the UK nationally, though some local water-stressed areas could be an issue. The British Geological Survey also said that it had begun a survey of methane levels in UK groundwater so that it could establish a baseline of how much of the gas occured naturally, in order to detect whether contamination by fracking for shale gas occurs in the future.Liberal Democrat Davey, like the Tory chancellor, George Osborne, has repeatedly made the case that the UK needs to explore the potential of shale gas, because of the potential for economic growth and greater energy security.Last month, prime minister David Cameron said that the UK needed to pursue fracking because it would bring down energy prices. Cameron said: "Even if we only see a fraction of the impact shale gas has had in America, we can expect to see lower energy prices in this country."But the world's leading climate change economist, Lord Stern, later said such a claim was "baseless." "It's a bit odd to say you know that it will bring the price of gas down. That doesn't look like sound economics to me. It's baseless economics," he said. On Monday, Davey said: "It's far from clear that UK shale gas production could ever replicate the price effects seen in the US." Yet he also said he was of the same mind as Cameron on fracking.Cuadrilla, the only energy company to have so far undertaken fracking for shale gas in the UK, has temporarily halted its operations in the West Sussex village of Balcombe due to protests and a foul-up with its licensing application that left a "legal ambiguity." It has also told the Guardian that in the next two months it will be announcing plans to resume operations in Lancashire. It had to stop fracking near Blackpool after two small earthquakes in 2011.Under government plans, communities living near shale gas wells are to be paid a one-off payment of £100,000, and will share 1% of the revenues if the well is successfully exploited.Shale gas and frackingEnergyFossil fuelsGasEd DaveyOil and gas companiesEnergy industryClimate changeCarbon emissionsAdam Vaughan theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
The Tide Has Changed Robert Bonomo Activist Post Since 9/11 the state’s power has grown exponentially and its ability to wage war and infiltrate a digitized populace has reached epic proportions, but the pendulum has reached its apogee. The Obama Administration has made a terrible miscalculation regarding the public’s reaction to its proposed military intervention in Syria and it appears the President will not be able to garner the votes needed in Congress to pass the resolution in support of his plan to attack Assad. As Private Manning sits in a prison cell and Edward Snowden lives in exile, AIPAC is working tirelessly to lobby Congress to pass the war resolution, but the public’s heart is with Snowden and Manning, not Netanyahu. If Obama and AIPAC lose this vote their grand plan to confront Iran’s nuclear aspirations will crumble. If Americans reject a military intervention in order to punish Assad for his supposed use of WMDs, how will they ever support taking on the Iranian regime for just having them? This is not the same America that re-elected George Bush in 2004. Kerry’s Case Secretary of State John Kerry made a forceful argument in favor of intervention: In an increasingly complicated world of sectarian and religious extremist violence, what we choose to do -- or not do -- matters in real ways to our own security. Some cite the risk of doing things. We need to ask what is the risk of doing nothing. It matters because if we choose to live in a world where a thug and a murderer like Bashar al-Assad can gas thousands of his own people with impunity even after the United States and our allies said no, and then the world does nothing about it, there will be no end to the test of our resolve and the dangers that will flow from those others who believe that they can do as they will. google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; Many Americans would have rallied to this call for war in the early years of this century, but not now. They know that President Obama has killed hundreds of innocent civilians with drones, some of them even Americans. They know that hundreds of thousands of Iraqis were killed under false pretenses. Not only were innocents killed and money wasted, but strategically Iraq has moved under the influence of supposed arch enemy Iran, while the Taliban are simply waiting for the NATO troops to leave before making their final assault on the puppet government installed in Afghanistan. What was also conspicuous in Mr. Kerry’s speech was what he didn't mention. Are the Saudis, the Qataris, and the CIA also ‘thugs’ for financing, training and facilitating a civil war that has killed over a hundred thousand people? And why are the Saudis and Qataris doing this and why don’t we stop them? Apparently Mr. Kerry believes there is something ‘sectarian and religious’ about bringing natural gas from Qatar to Europe through a proposed pipeline through Syria. Since almost 25% of Europe’s natural gas comes from Russia’s Gazprom, the Russian angle becomes clear. But if Americans aren't buying the WMD story, it’s even more unlikely they would support a war to reduce Gazprom’s market share in Europe. The Danger Democracy is a messy business; and if we had one, we would be reminded of it constantly. However, we live in a plutocracy where public opinion is created through corporate media. The fabricated message being sent is that Muslims are the enemy and Israel is our closest ally. Israel, however, does have a real problem with its Muslim neighbors - especially Syria, Iran, Lebanon and the Palestinian state it occupies. In a democracy there would be a stormy debate as to whether Israel’s security has any bearing on America's well being, and it would be openly argued for America to jettison the ‘special relationship’ with Israel. This debate never occurs in America because its corporate media has a strong pro-Israel bias and questioning the 'special relationship' with Israel is taboo. Both those in and outside the US Government who strongly believe that America must stand by the Jewish state are being faced with the reality that the moment for action has passed and the pendulum is beginning a long journey back toward isolationism and cynicism regarding the state security apparatus. Syria is their last chance and it is quickly slipping through their fingers. If there is no attack on Syria, the chances of attacking Iran will quickly fade to zero. If one believes that there is a grand strategy then we have reached a critical and dangerous moment. If Obama backs down and doesn't attack, he will lose enough international credibility to make him a de facto foreign policy lame duck just as the Iranians cross the nuclear threshold. This is unacceptable to those bent on protecting Israel’s monopoly on nuclear weapons in the Middle East. It seems highly unlikely that this group of people will allow President Putin to become the new voice of reason in the region. The absurdity of Assad committing this gassing, Putin’s argument, is now also being supported by intelligence as reported in a Huff Post article which quoted a report that seems to contradict the Obama Administration's claim that Assad was the perpetrator of the gas attack. It would be catastrophic to the US standing in the world if it were proved that this was a false flag attack by the rebels in Syria, and more importantly it would make it almost impossible to make a case for the ultimate target, Iran. No Exit It’s difficult to fathom that those who brought us the wars in Afghanistan, Iraq, Libya, the NSA surveillance apparatus, The Department of Homeland Security and the drone war will simply take their bows and fade away. Their only options at this point are either to force the issue in Syria and quickly escalate it through their time-honored method of rallying the home front with images of horrors committed on innocents, or throw up their hands and accept defeat. God help the innocent. Read more from Robert Bonomo at his blog, Cactus Land, which continues to explore the ideas of his novel, Cactus Land available at Amazon.
Summary Lane Energy Poland, an exploration company controlled by U.S. energy giant ConocoPhillips, announced Aug. 28 that it has been extracting some 8,000 cubic meters of shale gas per day at a test well in northern Poland since late July. While this is not significant enough to qualify for commercial production, it is the best result for shale gas extraction in Poland to date. The announcement comes after three international firms left Poland following disappointing drilling results and raises hopes that shale gas extraction in the country could regain momentum. However, significant regulatory, technological and infrastructural challenges remain. Analysis Exploration for shale gas is a sensitive issue in Poland, but Warsaw considers it essential in its efforts to achieve self-sufficiency and end its current dependence on Russian energy. Poland is one of the least energy import-dependent countries in the European Union, largely because of its heavy reliance on coal. It is one of the top 10 coal producers in the world, and more than half of the country's primary energy supply comes from this resource (the EU average is around 20 percent). According to the European Association for Coal and Lignite, Poland has around 17 billion metric tons (18 billion short tons) of hard coal reserves and 15 billion metric tons of mineable lignite. Currently, Poland produces more than 90 percent of its electricity in coal or lignite-fired power plants. Although Poland is largely self-sufficient in coal, and thus electricity, it is not independent in other areas such as heating and transportation fuel, which largely require oil and natural gas. Poland is a net energy importer; roughly 95 percent of oil and 66 percent of natural gas demand in the country is met through imports. Russia is the most important supplier of both commodities. More than 90 percent of oil imports and around 80 percent of natural gas imports come from Russia. This dependence is an important factor in Poland's energy security and diversification plans, especially since Poland is under pressure from the European Union to reduce its dependence on coal and meet tighter carbon emission targets. More important, Poland's dependence on Russian energy gives Moscow significant political and economic leverage in its relationship with Warsaw. In the past, Russia has used Central and Eastern Europe's energy dependence as a political tool and has implemented energy cutoffs and politically motivated pricing mechanisms to exert its influence in the region. This situation has led Poland to pursue several diversification plans, including the construction of a liquefied natural gas import terminal. The terminal is scheduled to be ready in late 2014 and is expected to initially receive 2.5 billion cubic meters of liquefied natural gas annually -- its capacity could be later expanded. There are also plans to build two nuclear plants, which would not come online before 2024. In recent years, the prospect of shale gas exploration brought hopes that Poland could significantly reduce its dependence on foreign natural gas. Poland's enthusiasm for shale gas exploration was triggered in 2011, when the U.S. Energy Information Administration published that Poland could have untapped reserves of some 5.3 trillion cubic meters -- sufficient to meet the country's demand for three centuries. (Poland's annual demand for natural gas is around 17 billion cubic meters.) This led Warsaw to declare shale gas exploration a strategic priority, fueling speculations that Poland could even become a net exporter. Geological and Regulatory Problems However, several problems have dampened Poland's hopes for a shale gas boom. Recent estimates by the Polish Geological Institute have cooled expectations, saying the country may have 346 billion to 768 billion cubic meters of shale gas, which is equivalent to 65 years of cumulative domestic natural gas consumption. In June 2013, the U.S. Energy Information Administration revised downward its own original estimates for shale gas in Poland. Geology is an additional obstacle. Shale rock in Poland, which runs some 4 kilometers (about 13,000 feet) underground from the Baltic Sea coast through central and eastern Poland to the borders with Belarus and Ukraine, is more difficult to mine than shale rock in the United States. The geologic features of the land are a significant problem for exploration, and the region is also much more densely populated than most areas where shale gas is available in the United States. This makes exploration more time consuming and more expensive. Even if shale gas could be extracted at commercially viable levels, there are significant infrastructure problems. First, most pipelines in Poland are located in the southwest, while the shale gas reserves are concentrated mostly in the north, east-central and southeast, so more transmission capacity will be needed. Second, because of Poland's traditional dependence on coal, only half of its households are currently connected to natural gas distribution networks. As a result, significant investment will be required in Poland's natural gas transmission infrastructure to upgrade the country's network. In June 2012, doubts over the scale of Poland's shale gas prospects grew when ExxonMobil announced plans to cease exploration in the country, citing disappointing test drilling results. Then in May 2013, two more multinationals, Canada's Talisman Energy and U.S. firm Marathon, left Poland, fueling even more doubts about the commercial viability of shale gas exploration in the country. Not all companies engaging in shale gas exploration have left, however; significant players, including U.S. giant Chevron, are still operating in Poland. Moreover, the biggest holders of shale gas concessions are state-owned companies, most notably Polish Petroleum and Gas Mining. In addition to unconvincing test drilling results, there are problems related to legislation and bureaucracy. Poland has granted more than 100 exploration permits to some 30 different investors. But companies operating in Poland often claim that complex environmental regulations and a lack of legislation on shale gas complicate their activities. There are also fears that Warsaw could try to centralize control of shale gas production further, especially after the Polish government announced plans to create a state-owned company -- the National Mining Resources Operator, commonly known as NOKE -- that would take up to 5 percent of the projects' expenses and profits to ensure that the government oversees all projects. Companies also argue that the current regulations do not legally guarantee them the right to turn their existing exploration licenses into production licenses. Finally, prices could become an additional problem. If Russia moves forward with its current strategy of lowering natural gas prices, expensive shale exploration could become less cost-effective and therefore a less attractive enterprise. The Polish government is trying to reduce uncertainty about its shale gas sector, and in June it presented two bills to address existing gaps in legislation. First, Warsaw proposed that a controversial law on hydrocarbon taxes (which caps the government take at 40 percent of an operator's profits) would come into force in 2015, but taxes would not be collected until 2020. This is meant to encourage investors to explore for shale. Second, it proposed that National Mining Resources Operator would not have veto power over license-holders' decisions but only the option of issuing "reservations" to the Environment Ministry. The Polish parliament has yet to approve either proposal. Polish lawmakers are also analyzing ways to make shale exploration more attractive for U.S. companies, which could have valuable expertise in the matter because of the success of shale exploration in the United States. A Political Message Other EU member states will watch the evolution of the regulatory and technological environment for shale exploration in Poland closely. In the United Kingdom, the government of Prime Minister David Cameron has been pushing to expand shale gas exploration, which is currently limited due to strong resistance from environmental groups. In Romania, the government of Prime Minister Victor Ponta changed its opinion on the issue and in May allowed shale gas exploration on the Black Sea coast. However, other EU countries with potentially significant shale gas reserves, such as France, still oppose exploration on environmental concerns. Lane Energy's announcement is very modest from a technical perspective, but it is politically meaningful to Poland. Warsaw needs to send positive messages regarding its shale gas sector to international investors and Moscow in order to create the perception that shale exploration is finally making some progress. However, regulatory, technological and infrastructure constraints will have to be addressed before Poland can make substantial progress in its aspirations for a shale gas revolution. Natural Gas Europe is pleased to provide this article in cooperation with Stratfor, a Natural Gas Europe Knowledge Partner. For more visit http://www.stratfor.com/ Follow Stratfor: @stratfor on Twitter | Stratfor on Facebook