The Power of the Pipes

BERLIN/MOSCOW/BEIJING (Own report) – The privileged German-European access to Russian natural gas could be lost, is the warning, as the battle over the “Nord Stream 2” pipeline persists. According to a recent analysis published by Oxford University, western sanctions, imposed on Russia in 2014, have encouraged Moscow to seek alternative markets for its resources. China, in particular, plans to purchase large amounts of Russian natural gas. The first pipeline is scheduled to go into operation this year. A second pipeline – tapping the fields currently supplying gas exclusively to Europe – is in planning. The same applies to new Russian liquefied gas projects. In the future, “European customers” will most likely have to compete in Russia with “Asian customers,” the Oxford University analysis predicts. Instead of forcing Moscow to its knees, the sanctions could put an end to Berlin’s privileged access to Russian natural gas and if the “Nord Stream 2” fails, it could further worsen the EU’s position.

Export World Champion under Pressure

BERLIN (Own report) – With intense shuttle diplomacy, members of the German government are seeking to avert the impending US punitive tariffs on European goods and the loss of access to the important US market. Following Germany’s Finance Minster Olaf Scholz’s visit to the US capital yesterday, Chancellor Angela Merkel is expected in Washington on Friday. Already in the run up to these visits, Berlin seems ready to envisage a revival of the Transatlantic Trade and Investment Partnership (TTIP). This strategic decision is accompanied by a clear frontline position against China, as was resolutely demanded by the Trump administration. In addition, German-Russian business relations are increasingly under attack in Washington. At the same time, EU criticism of Germany’s unilateral trade policies is growing. Germany’s export oriented economy is particularly vulnerable to the protectionism that is gaining strength on a global scale. Berlin’s Beggar-thy-Neighbor-Policy could prove a strategic disadvantage under these new global economic conditions.

Wintershall warns U.S. against playing ‘geopolitical football.’

 

German energy company Wintershall, a European partner with Russia’s Gazprom, said the European energy sector can’t be used for “geopolitical football.”

President Donald Trump on Wednesday signed a bill into law that sanctions Iran, North Korea and Russia. The Russian measure in particular is significant given the election issue clouding the Trump administration.

Germany, Austria vs. US Senate: America and Europe on Collision Course

 

Germany and Austria have lashed out against US Senate for approving a legislation tightening sanctions on Russia. The bill has a provision that enables the United States to impose sanctions on European firms involved in financing Russian energy export pipelines to Europe. European companies could be fined for breaching US law. In a joint statement, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern accused the US of threatening European economic interests, describing it as an illegal attempt to boost US gas exports. The United States recently started shipping liquefied natural gas to Poland and has ambitions to cultivate other European customers.

The bill says the US government «should prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen United States foreign policy». But the European foreign chiefs believe that «Europe’s energy supply is Europe’s business, not that of the United States of America». Gabriel and Kern said they «can’t accept» proposed US sanctions targeting European energy companies as part of measures against Russia.

U.S. To Undermine Russia’s Gas Monopoly In Europe

The first U.S. LNG shipment will soon arrive in Europe, marking a new era for energy on the continent. Cheniere Energy’s newly completed Sabine Pass facility on the U.S. Gulf Coast recently sent a shipment of American liquefied natural gas, which should arrive in Portugal within a few days.

“LNG coming out of the U.S. is probably the single most important thing that will transform the future LNG market,” Melissa Stark, energy managing director at Accenture, told Bloomberg. “It heralds the arrival of a global market.”

Business with Obstacles

BERLIN/MOSCOW/KIEV (Own report) – Berlin is taking steps to possibly end sanctions against Russia. Today, almost one year after the signing of the Minsk II Agreement – whose full implementation is still considered as a prerequisite for ending the sanctions – the Bavarian Prime Minster, Horst Seehofer is expected to arrive in Moscow for talks on promoting the renewal of German-Russian business relations. Seehofer can build on decades of Bavarian-Russian cooperation. His visit to Moscow is closely coordinated with Germany’s federal government. The EU and NATO are also involved in Berlin’s cooperation efforts. Monday, Chancellor Angela Merkel also increased pressure on Ukraine’s President, Petro Poroshenko to finally obtain approval from Kiev’s parliament for the constitutional amendment providing Eastern Ukraine’s special status, as agreed upon in the Minsk II Agreement. Until now, nationalists and fascists have prevented this measure.

A New Era in the Middle East (II)

TEHERAN/HANOVER/MUNICH (Own report) – Now that the sanctions are coming to a close, German enterprises are initiating major investments in Iran and multibillion-dollar gas deals with Teheran. Over the past few weeks, several business delegations have already visited Iran. The state of Bavaria will soon open a business representation in the Iranian capital. On the one hand, German business circles have their eye on the Middle East market, because Iran “is the ventricle of an economic zone comprising a cross-border population of 400 million people.” With car sales in Iran, Volkswagen would like to compensate for the slump it is suffering on other major markets, particularly China and Brazil. On the other hand, Berlin and Brussels are trying to acquire access to Iranian natural gas. The EU Commission estimates that by 2030, Iran should be annually selling 25 to 35 billion cubic meters – probably liquid – gas to the EU. BASF natural gas subsidiary Wintershall has also shown interest. During his recent visit in Teheran, Lower Saxony’s Minister of the Economy proposed the construction of a LNG terminal in Wilhelmshaven as a German-Iranian joint venture. This is all happening at a time, when the conflict over Syria – with Iran and Russia on the one side and the West on the other – is escalating.

German-Russian Flagship Projects

KASSEL/MOSCOW (Own report) – The German natural gas company, Wintershall Holding GmbH, is intensifying cooperation with Russia’s Gazprom and will receive direct access to large Siberian gas fields. Last Friday, the two companies announced they would finalize an asset swap this year, which would allow Wintershall to participate in the exploitation of two blocks in the Achimov formation of the Urengoy natural gas field. The deal had been signed back in 2013, but was canceled by Moscow in late 2014, because of the escalation of the conflict with the West. This resumption enables BASF’s subsidiary, Wintershall, to continue its rise in the global gas sector. The Austrian company, OMV, since July 1, under the management of former Wintershall CEO, Rainer Seele, is also participating. Gazprom, Wintershall, OMV and other gas companies have agreed to expand the Russia-to-Germany “Nord Stream” pipeline with two more pipelines. German business circles explicitly describe both as “flagship projects” and push for a rapid re-intensification of cooperation at the political level.

Independent of Moscow (II)

KASSEL/BERLIN (Own report) – Wintershall, the giant German gas company, has begun reorienting the focus of its expansion drive westward. This subsidiary of the mega chemical company, BASF, had set high hopes on having direct access to Russia’s enormous gas deposits – the largest in the world – which would have brought it to within reach of the summit of the world’s natural gas sector. This perspective was obliterated by the escalation of tensions between Moscow and the West. An additional impetus for the necessary search for an alternative is provided by the fact that German gas imports from the Netherlands are on the verge of being shut down. Beginning 2020, The Hague intends to drastically reduce gas production from the country’s largest gas field, because draining the deposit would heighten dangers of earthquakes. Wintershall is particularly expanding its activities in Norway and has already begun shale gas production in Argentina, where the world’s second largest shale gas deposits are estimated to be found. Wintershall’s orientation shift also reduces its interest in business with Russia, while reinforcing its transatlantic interest.

War by Other Means

MOSCOW/BERLIN (Own report) – Prominent German foreign policymakers are proposing that a “double strategy” be applied in the West’s power struggle with Russia. According to Wolfgang Ischinger, Chairman of the Munich Security Conference, the West should continue to demonstrate a “position of strength.” However, because, at this time, Moscow obviously cannot be subdued by a policy of pure confrontation, a new phase of engaging Russia should be initiated. Talks on EU cooperation with the newly established Eurasian Economic Union could be envisaged. Such a cooperation would return the rivalry “between Russia and the West to the economic field, from that of the military,” according to experts. Last week, Chancellor Angela Merkel had already floated such an option. At the same time, aggression against Russia continues. A US rating agency has just downgraded Russia to “junk level.” Additional measures are in discussion.

The Scrapped Pipeline Project

MOSCOW/BERLIN (Own report) – Moscow’s cancellation of the South Stream pipeline project is causing Berlin and Brussels headaches. EU bodies and government leaders of EU member states have expressed their wish to continue negotiations on the pipeline, which, in a few years, would annually have pumped 63 billion cubic meters of natural gas to Western Europe. They still see some possibilities for clarification. By delaying the project, Brussels had hoped to exert pressure on the Russian government. Moscow, however, got tired of banging on closed doors and announced South Stream’s cancellation on Monday. Germany is one of the losers, because it would have been able to expand its influence on the European gas supply through its BASF subsidiary Wintershall participating in the pipeline project. Turkey is the winner, because the planned Russian South Stream gas will now probably transit through its territory. Turkey, a loyal transit country, could become an influential gas distribution hub for the EU – at a time when tensions between Berlin/Brussels and Ankara are rising.

Energy as a Weapon (II)

BERLIN (Own report) – In view of the EU’s summit meeting, later this week, the “fracking” lobby and NATO are intensifying their pressure for the EU to initiate the highly controversial “hydraulic fracturing.” There are indications that the German Bundestag could speed up legislation allowing this dangerous gas production technique. The outgoing NATO General Secretary Anders Fogh Rasmussen is implying that fracking opponents are in fact working as agents for the Russian government. This incredible slander coincides with global transatlantic strategies aimed at using the current fracking boom in the USA and other western countries, to significantly weaken or even eliminate Russia’s influence as a producer of natural gas. If Moscow can no longer sell its gas to the EU, it could hardly avoid painful budget cuts. This would have serious consequences for Putin’s position of power at home and his influence in global politics. Regardless of such campaigns, German and US energy companies are pressing ahead with fracking in Europe – while continuing to do business with Russia.

Global Policy Orientation

By now it should be clear where Europe, or Germany rather, stands in regards to its dealings with Russia and what side it will likely take should it have to decisively choose between it and the West.

BERLIN/MOSCOW (Own report) – In the debate over a possible expansion of EU sanctions against Russia, the German chancellor is suggesting a possible continuation of cooperation with Moscow. “In the intermediate and long term,” Merkel explained, “the close partnership with Russia should be continued.” She sees “no necessity” in a policy of “isolating” Russia, patterned on the cold war’s “containment” policy. Merkel was reacting to the persisting anxiety in leading German business circles, that sanctions against Russia could seriously dampen their expansion opportunities. This is not only an anxiety shared by gas companies, but also by top corporations in other branches with significant commercial and production sites in Russia. On the eve of the Russian president’s visit to China, observers are warning that if the EU and the USA impose boycott measures, Moscow could forge also stronger ties to Beijing, thereby tangibly strengthening China. Hard-core transatlantic circles are up in arms over the prospect that cooperation with Moscow could be continued – pleading for the creation of a global front of NATO countries and their allies against Russia and China.

Artic Oil

HANNOVER (Own report) – The German government’s Agency for Geological Studies and Natural Resources (BGR) is intensifying its exploration for Arctic oil and gas deposits with a new exploration trip to the Arctic Ocean. “Deliveries of natural resources from countries in the Arctic” – i.e. Russia and Norway – are “of great importance” to Germany, the BGR declared. It is very inconvenient that the prediction of the volume of Arctic resources is based only on unreliable estimates. This research institute is, therefore, consolidating its exploration of the mineral resources of the Arctic Ocean, into a new research program. The melting of the polar cap could soon allow these resources to be profitably exploited. Within the framework of the natural resources policy offensive launched by the German government around eight years ago, the BGR has been intensifying its activities for German industry. The BGR, which has long since been closely linked to the German business community, founded, in 2010, the Agency for German Resources (DERA) which now serves German industry directly. The BGR sees itself in the undaunted continuation of the institutions in German Empire and the Nazi period.

Putin launches construction of key South Stream pipeline

President Vladimir Putin yesetrday launched construction of the long-awaited South Stream pipeline that the Kremlin hopes will pump Russia’s gas to Europe while avoiding its unpredictable neighbour Ukraine

The pipeline will flow underneath the Black Sea and through the Balkans to supply energy giant Gazprom’s big European clients with Russian gas and ensure the security of its energy exports.