Pipeline Wars: Realpolitik Meets Geography

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Written by Tom Luongo; Originally appeared at his blog

The headlines are ablaze this month with news from all over about new pipeline projects coming into Europe.  Never one to miss an opportunity to do the U.S. State Department’s bidding in how it presents pipeline politics, Oilprice.com published a howler of a piece about the Southern Gas Corridor.

Titled, “Is This the World’s Most Critical Pipeline?” the piece is pure marketing fluff designed to make you think that Azerbaijani gas will change the face of European gas politics.

The beginning is the most telling, “Europe wants to become less dependent on Russian gas and use more clean energy…” This is a lie.

Europe doesn’t want this as a continent, the leaders of the European Union who are aligned with the United States who view Russia as the enemy want to become less dependent on Russian gas.

Most of Europe wants Russia to supply them with natural gas because it is 1) cheap and 2) plentiful.  For geopolitical reasons the U.S. doesn’t want an ascendant Russia.  The EU technocracy agrees because a strong Russia owning more than 40% of European gas sales is a Russia that can’t be destabilized through currency and proxy wars.

Southern Gas Boondoggle

The Southern Gas Corridor is a nearly 4000km (2500 mile) gas pipeline project to bring Caspian Sea natural gas into southern Europe.  It is slated, when completed with all the side projects tying into it, between 60 and 120 billion cubic meters of gas annually (bcma) starting with an unknown amount from Azerbaijan in 2019.

Pipeline Wars: Realpolitik Meets Geography

That number comes from an announcement in the Financial Times circa 2008.  A better number for it is closer to just 16 bcma.

It’s estimated cost at the time of negotiation was over $41 billion.  Today, it’s $45 billion with corruption and graft likely to take that number higher.  This is the very definition of a solution in search of a problem.  It is nothing more than a $45 billion bribe to both the U.S.-favorable regime in Azerbaijan and BP who is sitting on the major Shah Deniz gas deposit with out a market to sell it to.

The U.S has been using EU countries hostile to Russia, namely the Baltics and Poland, to delay or scuttle new Russian gas projects into Europe; projects that countries like Italy, Greece and Bulgaria are screaming for.

The Real Southern Gas Route

In 2014 political pressure on Bulgaria from the EU and the U.S. scuttled the South Stream pipeline from Russia.  South Stream was to bring gas from Russia’s southern fields across the Black Sea into Bulgaria, who would have profited nicely from the billions in transit fees annually.

Since the South Stream debacle, Bulgaria has had a change in government. The people got rid of the U.S. satrap government and installed one much more hostile to geopolitical games which keep them poor.

Putin and Gazprom, the state gas company behind South Stream, quickly shifted gears and announced a re-route of it through Turkey.  The new project is called Turkish Stream and will terminate in Greece.  Hungary negotiated a spur off of Turkish Stream with Gazprom last summer.   The intervening countries all want the transit fees.

Pipeline Wars: Realpolitik Meets Geography

The European Union has not signed off on Turkish Stream legs inside the EU, but the first leg which will bring 15.75 bcma to Turkey will be completed this year and that gas will be used by Turkey to strengthen its relationship with Russia.

The cost for this project? Just $12 billion.  And it goes under the Black Sea.

The Nord Stream 2 Gorillia in the Room

Then let’s turn our attention to the very controversial NordStream 2 pipeline.  This is the one that would double the capacity of the existing Nordstream pipeline bringing cheap Russian gas from basically St. Petersburg to Germany.

Pipeline Wars: Realpolitik Meets Geography

It brings 55 bmca a year to the EU as I write this.  Nordstream 2 would double that.  It’s only 780 miles long. It will be finished by next year.

The price tag? Just under $10 billion.

And Gazprom bent over backwards to make this a European-owned project, partnering with no less than five European oil and gas majors to own half of the project.  Poland stepped in and declared the joint venture illegal and Gazprom had to go it alone.  Eventually it worked out a deal where its former partners became its financiers by getting loans directly from them to build the pipeline.  The loans were for the same amount of money they were initially going to put into the joint-venture.

The EU has done everything to stop Nordstream 2 short of simply writing a law outlawing it, which it cannot do.  And it finally threw in the towel earlier in the month.

The European Commission antitrust enquiry is effectively retracted from the DG Comp’s agenda after Gazprom agreed not to object to cross-border sales of resold Russian gas and make destination clauses flexible.

The EU legal service’s legal opinion on the applicability of the Third Gas Package to an offshore pipeline Nord Stream 2 (it found it was not) all but buried any future European Commission aspirations to block the project. The European Council chief, Donald Tusk, keeps on urging member states to adopt new EU gas rules which would specifically target maritime gas pipelines feeding the EU, however, Germany and France seem highly reluctant to go along with it.

Tusk is a Polish EU-Firster and Russophobe par excellence.  He’s also one of the most odious men in the EU hierarchy, and that’s saying something considering the company he keeps there.

The EU changed the rules during the lead up to South Stream as well, implementing new rules for pipeline ownership ex post facto of the contracts being signed and the permits issued. This is what made it easy for Bulgaria to scuttle the project.

Again, all to satisfy a United States hell-bent on keeping Russia bottled up and maintaining political control over the EU.

Politics Over People

What’s important in all of this is the massive effects that power politics plays on the economic welfare of people.  Politicians, generals, CEOs of corporatist nightmares don’t make decisions in the best interest of the people they are supposed to serve.  They make them in the interest of policy goals that more often than not do little more than waste precious capital on boondoggles like the Southern Gas Corridor project.

That project has been the goal of EU and U.S. politicians for more than a decade.  It has required an unbelievable amount of political maneuvering to get off the ground. And the final product will be less than twenty percent of its original capacity.

On the other hand, with Putin cancelling South Stream in 2014, he moved quickly on the two projects highlighted here which will be operational despite the roadblocks before the Southern Gas Corridor will be.

The goal of diversifying Europe’s gas purchases is one born of politics not energy safety.  The immense trade benefits that Russia gains from these pipelines are not things they will jeopardize over a single missed payment.

Energy security is simply a fear-mongering tool to mask banal corruption and articles like the Oilprice.com one that inspired this response are simply cheap forms of propaganda.

Europe’s future is more secure with Turkish Stream and Nordstream 2 providing the people of Europe gas at half the price of Caspian gas.  Don’t believe me?  Ask Ukraine, who for three plus years have been buying re-sold Russian gas at twice the price from Germany and Poland to avoid buying it directly from Gazprom.  Schools and businesses have had to shut down simply because they don’t have the money to heat the buildings.

With this year’s frigid winter, they’ve finally relented and will begin buying gas directly Gazprom again, now that their legal challenge was settled by the Stockholm Arbitration Court.

This is what is driving European politics populist.  It, along with insane immigration, is eroding the political power of the globalists who run the EU.  Gazprom, despite all of the rhetoric, supplied a record amount of gas to Europe in 2017 and will likely increase those deliveries by another 6% in 2018.

Eventually economic reality overwhelms realpolitik.

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  • leon mc pilibin

    EVIL ,EVIL;ZIONISM,the curse on Humanity.

    • Jonathan Murray

      Ok you racists make ridiculous claims about Zionist Jews being behind everything – but what on earth has this to do with Israel? What insanity makes you link Zionism to Nord Steam 2??

      • Alexis

        Keep in mind the wealthiest most powerful Zionist are not in Israel, but in the U.S. I do agree with you that the anti-pipeline politics is not about Zionism but the classic human struggle for power, wealth, control.

        • Mario Ceva

          Zionist struggle for money and power

          • You can call me Al

            and that seems to be all…

          • Nicole

            Google offers to new employee 99 dollars per-hour to do some small tasks online .. Do job for only few peroid of time in a day and live happy greater time together with your friends … Any person can apply this easy job…last Saturday I bought a brand new Chevrolet just after earning $17814 this six weeks .it seems the most rewarding however you won’t forgive yourself if you don’t learn this.!xe232w:➨➨➨ http://GoogleDailyNewsMagFinanceReportsOnline/online/easytasks ♥♥d♥♥n♥♥q♥♥♥v♥♥y♥o♥m♥♥z♥♥e♥l♥♥d♥♥k♥p♥f♥♥j♥♥g♥♥w♥m♥♥♥a♥♥s♥♥♥e♥♥♥x♥j♥♥♥j♥♥d:::::!cw43h:lh

        • Ariel Cohen

          But that’s exactly the point. Zionists have their ugly fingers in all these “pies”. Take a closer look at who owns these oil competitors and you will find that they are almost all Zionist oligarchs.

          • You can call me Al

            There is a little more to it than that, even though you are right. The reason why the Golan heights is so important to Israel, is not security as they spout out, but due to the huge O&G field underneath it…. the article above was interesting, but I believe incorrect; my argument couple with the water argument is the crux.

            https://www.rt.com/business/317906-oil-golan-heights-israel/

            + maybe stopping a pipeline from Iran as well.

            My view only.

        • Jonathan Murray

          Point I’m making is an anglo-American empire has dominated the globe for 200 years and for some reason people on here are constantly saying that really this empire is secretly controlled by Zionist Jews.
          It seems obvious that if you are a bunch of white English speaking people who run an evil empire wouldn’t want to be blamed for exploiting and destroying the world.
          Sooo… if you want to run an empire in plain view and want to get away with it you try not to advertise it. And instead put out (on social media) a constant stream of rambling about someone else secretly controlling the world..
          And in fact all the evidence is that western intelligence agencies constantly put out propaganda to persuade gullible people that the most glaring obvious truth is not true – and that in fact there is a secret conspiracy secretly behind the anglo-American empire.
          I’m sorry but you really would have to be totally stupid to be fooled by this…

      • You can call me Al

        No, he said Zionists, he never mentioned Jews.

        PS Nord Stream 2 is going ahead end of. Turk Stream is finished next year.

        PPS Fuck Zionism.

  • AM Hants

    Amazing when you compare the costs of Russian pipelines, with others.

  • Brad Isherwood

    https://www.bostonglobe.com/business/2018/01/29/tanker-unloads-lng-everett-terminal-that-contains-russian-gas/rewj1wKjajaKtLp79irzTI/story.html

    LOL. …US cannot transport Natural Gas ….from say….Canada! ……for less?

    I’m retired 2+ decades oil/nat gas process construction…CNC underwater cut Cryogenic Nitrogen plasma gantry, metallurgy, layout,machine operator. ….
    My Schlumberger Insurance coverage reminds me that We didn’t blow up Deep Water Horizon,
    BP did : )

    I’ve done contracts where crap steel plate and pipe came from Ukraine, Spain. …sailed half way around the world .

    Someone on the front end is money,money, money….deep into crime ….to pull stunts like this off when steel plate,pipe are local,….yet it’s buy the foreign crap and ship it around the world.

    Lloyd’s of London also pockets from the game…
    $$$ : )

    • Terra Cotta Woolpuller

      Oil and gas companies always buy foreign steel until the people working with it tells them it will cost 3 times as much to use it. Typical bad shortsighted purchases and ethics in business today has been like that for long time everybody greasing everybody’s palm.

      • Brad Isherwood

        Built for BP and other Consortium on Badami/North Slope Alaska in the 90s.
        Project went FUBAR….only later with gas injection could they get the pipelines flowing/vs freezing.
        During the project…Our Shop went over 400 workers ….21 days straight with overtime for nearly 2 years.
        Running the Plasma cut gantry. ….wore a winter coat with Exxon Valdez* stencil on the back for laughs.
        Lots of Mexican agriculture during afternoon /evening shift.
        Back in 1979…worked Seismic for Bendix United Geophysical under the Northern lights,
        Blasted on Purple Dragon Acid : )

      • David Pryce

        Russia wins again

    • Graeme Rymill

      “US cannot transport Natural Gas ….from say….Canada! ……for less?”

      “A recent cold snap in New England and the shortage of pipeline capacity from gas-rich Pennsylvania have created an appetite for natural gas imports even as the United States has begun exporting LNG from other terminals on the Gulf Coast.” https://www.washingtonpost.com/business/economy/tanker-carrying-liquefied-natural-gas-from-russias-arctic-arrives-in-boston/2018/01/28/08d3894c-0497-11e8-8777-2a059f168dd2_story.html?utm_term=.989ec59bf383

      • Brad Isherwood

        Worked for a Nat/gas company….an insider friend in transmission and purchasing told me about the game the Nat/Gas companies play with Federal and State regulatory.
        Nat/gas gets moved in volume to different underground or storage caches.
        And moved again. …and again. …and again.
        Each time…Fed and State get taxes and other skim off profits before the Nat/gas actually makes it to a city or major rural facility.
        They have more Nat/gas than they know what to do with.
        They howl with laughter when the consumer gets the monthly gas bill : )

  • Hide Behind

    This is an interesting article for Southfront to bring forth; It seems to me as being an expansion of opening to views of real politic of war makers true actions, and not just the blood and gore by those idiots who allow themselves to be manipulated and exploited by Eurocentric power brokers.
    More is same on geopolitical situation is appreciated.
    Goes to real core of ME chaos.

  • Manuel Flores Escobar

    USA and EU puppets know that once Nordstream 2 and Turkstream are built…Ukraine is Kaput!!…as Russia cut all gas transit there included supply to Ukraine country….then Ukraine beggar/ cheap labour people will say ” We are etnic Russian and part of Russia empire Not Anglo saxon empire”!

  • TiredOfBsToo

    And to think Bulgaria could’ve been the transit company had they not listened to the Empire and it’s vassal states, now they’re left crying in their beer. Turkey on the other hand is engaging the brain to see where it’s future lies, with an Empire thousands of miles away that doesn’t care one iota whether Turkey lives or dies (as evident by the support for Kurdish terrorists in Syria), or it’s local neighborhood which includes an important trading partner, Russia, a no brainer! France and Germany aren’t willing to sacrifice their economies any further for the sake of rabid extremists and servants of the Empire. It appears they’ve had enough. Now as the Empire thinks of more sanctions to impose on Russia, we’re starting to hear the rumblings of revolt among the vassals. It looks like the Russophobe belt in the Baltics along with Poland will be the ultimate losers. Karma’s a bi*ch!

  • matt

    real bullshit story, fossil fuels are energy sources that will soon have a place in history.

    • You can call me Al

      It is a real bushtit story, but not for the reasons you mention. More propaganda crap by the author.

      • matt

        even the UAE are building solar energy plants, fossil fuels will be history, and hopefully very soon, before its too late.

        • Ronald

          Actually natural gas burns 98 % clean , refined gasoline at best 80 % , diesel the real problem , 40 % , although with bio-diesel , they claim 100 % , which I doubt . Solar , and wind turbines will help reduce consumption , but the real deal is Tesla and free energy .

  • Ronald

    This same manipulation is also ongoing in the east . The so called “Rohingya Crisis” in Burma or Myanmar . Iran worked out a deal with China to ship oil and gas to the west coast of Burma , and from there pipeline into China . Iran also brought in Qatar into the deal as the gas is from the same Pars field . That is what the Saudi – Qatar “dispute” is all about , the US wants no one to cooperate with Iran , like Russia they are trying to impede them economically . But Qatar because of their enormous economic asset base , broke free and went with Iran . Saudi Arabia spent 2 billion in the last year and opened 650 madrasas or schools in Bangladesh , needless to say these are Wahhabi Sunni schools
    They are preparing jihadists for this future war against Burma which will not only choke Iran but prevent China from developing an ocean port on the Indian Ocean , they would like to keep them bottled up in the South China Sea .
    Happy to see Russia winning , I think Iran and China will as well .