“And these "drop-out" volumes cannot be replaced with any LNG, we emphasize - any, whether American, Qatar, not even with our Yamal LNG.”
“These sources are insignificant considering the price of pipeline gas, and there are currently no technical solutions to this problem.”
We saw this coming when we wrote this: http://www.newsilkstrategies.com/news--analysis/trump-sells-vacuum-cleaners-to-warsaw . It was clear since Trump’s visit to Poland that he assumed that, as president he had godlike powers and could force Europe to buy extravagantly expensive US LNG as a replacement for cheap Russian piped gas. Trumponomics was just good old fashioned bullying (consistent with the Trump business MO described by USA Today). But the world had moved beyond. When the sanctions on Russian gas were under discussion, the EU did something very uncharacteristic. They rebelled against the US and brazenly and truthfully said this was economic extortion. The US was forced to back down. Then after Trump slapped tariffs on metals, a poll among economists showed that 93% disagreed with this.
You will recall that Trump and US lawmakers were imposing sanctions on any party that dared to cooperate with Russia economically. The excuse du jour was that Russia had supposedly interfered with the US election, but the charge was vague to absurd. The Russian “trolling” company was private, not tied to the state, and did not clearly promote either party in the campaign. Now consider all the news outlets, like NYT, CNN and many others that have Russian language versions which, during the last presidential election campaigns in Russia, aimed blatant anti-Putin propaganda at the Russian voters in a clear attempt to influence the election. And consider that Voice of America has the mission of converting Russia to a pro-American puppet – implying, by definition, interference is all areas of Russian politics, not just elections. Yet the content of a site hosted by a Russian private company -- content that was not clearly pro-Trump, naturally was branded by the Democrats as “foreign meddling,” and this issue took up a large proportion of the time and effort of US lawmakers for nearly 2 years and is still the main item of “business” in Washington. For this, the Russian economy and hence, the wellbeing of the Russian people, was targeted for destruction. Clearly, America’s “business” was centred not on building its own economy but on destroying the economies of its competitors. Where was “market economics”?
Meanwhile, Russia is busy selling its products, including hydrocarbons, abroad, to the benefit of Russia.
Our translation of an analysis from RIA Novosti follows.
It started: the two biggest powers of Europe will fight over Russian resources
The other day the deputy chairman of the board of the Russian corporation Gazprom, Alexander Medvedev, told Rossiya 24 that to meet the growing needs of Europe for Russian gas, his company is ready to lay another strand, Nord Stream-3, along the bottom of the Baltic Sea.
"We have always said that we will supply Europe with as much gas as necessary," he said. "We have confirmed reserves, there is transport available, and we are building new transport routes." If Europe declares its needs and is ready to sign the necessary contracts, then I do not rule out that new gas transport projects will be needed. "Nord Stream-3, for example."
The effect of this statement - very accurate, by the way - turned out to be such that the media special forces were immediately put on the case. And not only from the American, British, Polish and Ukrainian, but also the Russian democratic media. Arguments were quite diverse and often somewhat contradictory. In one and the same article, for example, there could be simultaneously a statement that Russian gas is not needed for Europe and Gazprom is engaged in "laying pipes as a sport" and there is "understanding for Ukraine's position" that is trying to maintain and even increase transit. The fact that Ukraine in this case should increase the transit of Russian gas "unnecessary for Europe" does not bother anyone.
Gazprom starts and wins. How a Russian company "conquered" Europe
The lively discussion ended with the consensus that the Russian gas giant is simply bluffing. With a view to a) "Protecting the Ukrainians," and b) "Still somehow finish building" the second "stream that no one needed.”
Meanwhile, to everyone who is more or less interested in the problems of the European energy markets, it is clear: Alexander Medvedev was not joking or trolling.
For there are two factors.
First, the depletion of Europe’s own reserves.
In January, the Netherlands announced reduced production at the once-largest Dutch Groningen field by 50% - to 12 billion cubic meters per year by 2022. To illustrate, a few years ago the annual production at Groningen was 50 billion cubic meters. And, according to Dutch Prime Minister Mark Rutte, production at this field will be completely discontinued by 2030. Production is declining in Norway and Scotland. According to the published and publicly available report of the Oxford Institute for Energy Studies, by 2020, gas production in the EU will initially decline to 212 billion cubic meters per year from the current 256 billion, and to 146 billion cubic meters by 2030.
Secondly, the demand for gas in Europe will only grow.
Old coal-fired thermal power plants are being closed down. By 2022, all nuclear power plants (NPPs) in Germany are being closed down definitively (and their share in the German energy industry once amounted to almost a quarter of national consumption). Industrial gas consumption, on the contrary, continues to grow.
And these "drop-out" volumes cannot be replaced with any LNG, we emphasize - any, whether American, Qatar, not even with our Yamal LNG.
These sources are insignificant considering the price of pipeline gas, and there are currently no technical solutions to this problem. And if it is economically justified to raise gas prices for the population (the burghers are unlikely to be happy about this, but they will squeal and pay), liquefied natural gas spells death for developed European industry: the increase in cost of energy-intensive products along the technological chain notoriously leads to their non-competitiveness in global markets.
Well, perhaps, the most interesting thing in this amusing "gas equation” is as follows.
Literally yesterday, the first of two sections of the Turkish gas pipeline, the Turkish Stream pipeline, reached the coast of Turkey.
And as the aforementioned Alexander Medvedev informs us, in the very near future, Gazprom will finally choose the Turkish Stream route of gas transport to Europe (from the second stream, which is also being actively constructed now). "Currently, two main options are being discussed," the deputy chairman of the company said, "As for the markets, they are Greece, Italy, Bulgaria, Serbia and Hungary."
Pipe under pressure. Euro bureaucrats are trying to block "Nord Stream-2"
Thus, Gazprom is not trolling anyone with its report on Nord Stream-3. It is simply announcing, so to speak, for the time being, an unspoken, but already mathematically necessary offering. On the "third" for the beginning of the line of both "streams". Russia, in fact, is quite satisfied with the transport of gas by both routes, ie, the "Turk Stream" and the "Nord Stream."
So now let Turkey and Germany (by the way, these are the largest European countries, apart from Russia itself) compete for the one who builds the new "strands" and thereby becomes the main hub for "the Russian gas no one needs."
Ukraine is asked not to worry, but we can well wait. We still have the "Power of Siberia" for the Chinese to complete and, perhaps, can think of a pipeline to South Korea through the territory of the DPRK, which is hastily reconciling the southern brothers.
RIA Novosti https://ria.ru/analytics/20180501/1519714446.html