Has Russia sold out Iran for Israeli gas?

I HAVE BEEN SUGGESTING THAT A DEAL WITH RUSSIA FOR THE DIVISION OF SYRIA SHOULD BE NEGOTIATED AND THAT IRAN SHOULD BE EXCLUDED. I SUGGESTED THAT RUSSIA HAD MADE A DEAL WITH BOTH iSRAEL AND CYPRUS AND THEREFORE HAS A PERSONAL INTEREST IN MAINTAINING A FOOTHOLD IN SYRIA ON THE MEDITERRANEAN. TED BELMAN

Chief amongst the Kremlin’s economic and political priorities is ensuring that Russia’s vast energy resources help it to remain a global superpower

Has Putin's desire to retain Russia's energy position moved him away from Tehran?

Has Putin’s desire to retain Russia’s energy position moved him away from Tehran?

By Peter C. Glover and Michael J. Economides, The COMMENTATOR

As the tension between Israel and Iran ratchets up, an interesting sub-text has developed over the role of Iran’s traditional backer, Russia. While many Western observers continue to raise the spectre of a ‘wider Middle East conflagration’ (an argument we have consistently refuted), and one that could drag in Russia, a whole new, higher value, game chip is now in play: Moscow’s interest in Israeli energy.

Israel and its neighbouring potential partner, Cyprus, of course must be quite aware that Gazprom, Russia’s battering ram, can easily prove to be a Trojan Horse in any major future natural gas development. Certainly, they will try to affect a project that could lessen their energy stranglehold over Europe. 20 million metric tons of liquid natural gas (LNG) exported each year from the eastern Mediterranean into Europe would amount to about one third of current Russian exports.

Whatever we may think of Vladimir Putin’s politics, one thing is clear, he is a shrewd, often ruthless, operator on the global stage. But Putin’s Kremlin is clearly rattled by the threat of decline for that which underpins Russia’s entire economy: its energy hegemony.

Putin is only too aware of the triple whammy of falling domestic energy productivity, surging global shale development in the wake of the transforming US shale revolution, and a new threat posed to a European market still dependent on Russian gas imports – the significant potential of Israeli and Cypriot gas exports.

According to reports, while publicly playing down the impact that shale gas and oil is likely to have, Putin is privately urging Russia’s energy majors to learn all they can about hydraulic fracturing techniques. Meanwhile, in a bid to retain a key stake in its European export market – Russia supplies a quarter of all Europe’s (rising) natural gas demand – Moscow is set on doing all in its power to protect its ‘captive’ market.

To date, Europe’s anti-shale gas policies have played into Russian hands. But with energy prices spiralling in Europe while America’s shale revolution has seen natural gas prices cut in half with the country on the road to possible energy independence, Europe’s own shale gas resources, almost on a par with those in the US, are proving an increasingly attractive economic proposition.

Indeed, Europe’s antipathy toward shale development may already be crumbling in the former Soviet satellites. Poland’s PGNIG expects to start commercial shale gas production within two to three years. The Ukraine, a transit country for Russian gas exports to Europe, holds around 7 percent of Europe’s total shale gas reserves. Production of less than 5 percent of Ukraine’s shale gas reserves could save the country’s economy 500-750m USD each year. Given the Ukraine’s history with Russia’s when Gazprom turned off the tap over price wrangles, development there is a no brainer.

The shale gas revolution has caused the price of US natural gas to fall by 55 percent over last year’s, while the World Bank reports European natural gas prices are almost 10 percent higher than last year.  Certainly Chevron believes that Europe’s own shale gas is about to trump the environmental concerns that have to date dominated in the shale gas debate.

Earlier this year, Exxon Mobil pulled out of a prospective shale development in Poland, citing its failure to find shale in commercial quantities, but Chevron has committed to a longer-term view buying up large swathes of land in Eastern Europe along a fault-line from the Baltic to the Black Sea, from Ukraine, through Poland, Bulgaria and Romania.

Chevron is not alone in its assessment. A recent report by KPMG International has described shale gas development across central and Eastern Europe as “inevitable”.

With the looming threat to the economy all too real, Putin and Russia’s energy giants are not idly awaiting the vicissitudes of the marketplace.

Last year saw Russia outmanoeuvre the EU once again when its Nord Stream pipeline came online way ahead of the EU’s ‘great pipe hope’ to help it diversify away from Russian gas dependency, the Nabucco project. Designed to pipe Caspian region gas to Europe, avoiding crossing Russian soil along the way, Nabucco is developing at a glacial pace and still lacks a substantive gas supplier.

More recently, Putin and Gazprom have pursued a flurry of new developments aimed at making Russia a “more open”proposition to foreign investors. In March, France’s Total acquired a 20 percent stake in another Russian gas venture in the Arctic. In April, Putin flagged new tax breaks for offshore oil and gas to make far-flung projects more viable.

Meanwhile, Russia has ramped up its militarization of the Arctic in support of its energy claims there. And in recent weeks, Russia’s gas giant, Rosneft, has cut Arctic exploration deals with Norway’s Statoil and with Italy’s ENI.  Potential partnerships between Gazprom and Shell are also in the offing.

But there is now a new kid on the block that could pose a very clear and present threat to Russia’s vital European market: Israel, along with Cyprus, and their upcoming potential status as gas exporting energy superpowers. And it is there that we can see a fascinating new play in the Israel-Iran nuclear saga.

Development of the eastern Mediterranean’s newfound natural gas wealth could well end up reaching the European market. In recent days, an Israeli news report quotes a senior Israeli gas executive as telling them: “The Russians have been poking around here for a while. Everyone knows about the Russian interest in controlling the European energy market. Do they want to buy from us, or delay our efforts? I don’t know. But they are here.”

The same report also cites the Israeli energy website, Tashtiot, as claiming that during Vladimir Putin’s recent visit to Israel, he and Prime Minister Netanyahu agreed a deal to form a junior company to Gazprom that would help develop Israel’s Leviathan gas field in the eastern Mediterranean.

CONTINUE

Peter C Glover is a British writer & author and International Associate Editor for Energy Tribune. For more go to www.petercglover.com. Michael J. Economides is professor of chemical engineering, University of Houston, Editor-in-Chief, Energy Tribune and author of 15 books, including the bestselling “The Color of Oil”. 

August 24, 2012 | 11 Comments »

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  1. @ Andrew:

    Putin is Gog. Iran will be along for the ride. Both will get their just deserts.

    Nonsense!

    Revelation 19:20 ”And the beast was seized, and with him the false prophet who performed the signs in his presence, by which he deceived those who had received the mark of the beast and those who worshiped his image; these two were thrown alive into the lake of fire which burns with brimstone.”

    Isaiah 66:16-17 “For by fire will the LORD contend, and by His sword with all flesh; and the slain of the LORD shall be many. They that sanctify themselves and purify themselves to go unto the gardens, behind one in the midst, eating swine’s flesh, and the detestable thing, and the mouse, shall be consumed together, saith the LORD.” See also Isaiah 1:27-31 and 65:1-5 . ‘Together’, i.e. the Notzrim (Christians) and the Ishmaelites, will perish in the war of Gog and Magog, because these two empires hold sway in this world, and this is the fourth kingdom in the visions of Daniel Chs. 2 and 7.

  2. With the new supplies of natural gas, Israel should consider using stationary fuel cells for electric power supply. They have many advantages. 1. Stationary fuel cells such as the molten carbonate fuel cell and the solid oxide fuel cell eliminate 99% of the toxic pollution from conventional coal fired boilers powering steam turbines and are also lower in emissions than gas fueled internal combustion gas turbines. 2. They are more fuel efficient than conventional generation including combined cycle generators, particularly when measured at the customer’s meter because of the electrical losses in transmission and distribution. 3. They eliminate unsightly transmission and distribution lines and wasteful use of limited land resources in small countries such as Israel.. 4. When manufactured in large volume, the hardware will be cheaper than conventional generating capacity and a fortiori will be cheaper than the total of the large scale generating capacity AND the transmission, subtransmission, distribution and substations needed to integrate small loads to obtain the benefits of time diversities and large generators to obtain the benefits of reserve sharing. 5. As they are fuel efficient even in small sizes, they can be used for co-generation for domestic hot water, space heating, process steam, and with a proper chiller, even for air conditioning raising the already high fuel efficiency to 90%+ or higher.
    With Israel’s new gas supply, they should be concentrating on high temperature stationary fuel cells such as the molten carbonate fuel cell and the solid oxide fuel cell. Unlike wind and solar, they provide power 24/7 with availability about the same as conventional generation, i.e. 95% of the time. For Israel, the advantage of greater system security is also an advantage because while it is difficult to guard long transmission lines from sabotage by terrorists, the fuel cell generators are usually on site where they can be protected.

  3. Meanwhile two important issues are being ignored.
    1. The global energy establishment is blocking any advanced energy technology that can replace oil, coal, natural gas and nuclear power with alternatives that are clean, safe, cheap, and available to all.
    2. Drilling for natural gas, and especially fracking, also liberates huge amounts of methane. Methane is also being liberated in large amounts from warming of permafrost ground in the arctic. As a greenhouse gas it is rated as 25 times more potent as CO2.

    It is very hard to get an objective evaluation of these two issues because they have become extremely politicized and even raising questions often elicits angry ridicule and name calling.

  4. Has Russia sold out Iran for Israeli gas?

    Of course not. Russia is an long-time ally of Syria and of Iran (this will not change except for the possible fall of Asad). Putin will pretend to be leaning toward Israel but only a fool would believe him. Israel’s gas and I believe future oil finds will threaten the dominance of Russia’s energy industry in Europe probably provoking future conflicts. Israel needs to develop the capacity to develop and manage its own gas/oil industry. Israel should recruit the companies, experts, and venture capitalists to establish and support the necessary schools of engineering, scientific and technological research, and new companies in Israel.

  5. Question about the picture.
    When leaders like Putin and Netenyahu lean next to each other what language are they speaking? Does Putin know Hebrew? Does Netenyahu speak Russian? I know Netenyahu speaks English, does Putin speak English?
    Anyone know?

  6. Putin should want an attack on Iran. It would drive the price of both oil and natural gas way up, generating hundreds of billions of dollars more for him.

  7. The Russians are being pushed to work with Israel not because they love the Jews but because Israel is going to be the next energy superpower.

    That is not clear now but it will soon be clear enough. President Putin didn’t visit Israel for the scenery or his good health.

  8. Quote of the Day!!

    Khamenei’s Sacred Word: Destroy Israel

    by Clifford May
    Moment Magazine

    http://www.cliffordmay.org/12117/khamenei-destroy-israel
    José Maria Aznar, former prime minister of Spain, speaking at the Jerusalem Center for Public Affairs, recalled a “private discussion” in October 2000 with Iran’s current supreme leader, Ayatollah Ali Khamenei, who told him: “Israel must be burned to the ground and made to disappear from the face of the Earth.”

    Dore Gold, the former Israeli ambassador to the United Nations who now heads the JCPA, wanted to be certain there was no misunderstanding. He asked Aznar: Was Khamenei suggesting “a gradual historical process involving the collapse of the Zionist state, or rather its physical-military termination?”

    “He meant physical termination through military force,” Aznar replied without hesitation. Khamenei called Israel “an historical cancer”—an echo of Nazi rhetoric he has used on numerous occasions, the last time in public on February 3.

    Putin and Russia’s Views of Israel’s intentions and capabilities

    “Aznar recalled another meeting, this one with Vladimir Putin, in which he advised the Russian president against selling missiles to Iran. “Don’t worry—I, you, we can sell them everything, even if we are worried by an Iranian nuclear bomb,” Aznar quoted Putin as saying. “Because at the end of the day, Israel will take care of it.”