Russian Oil and Gas Industry: News #3

Karl Haushofer wrote:
What long game?

When Russia will make another 20 year transit deal with Ukraine while Nord Stream II pipeline rots unused in the bottom of the sea what is the "long game" involved in this capitulation?

It was EU companies that funded much of the pipeline so its not just Russia that wants payback.

Russia can cope with Ukraine's pipelines going offline at the end of 2024, its Europe that will have the problems. It cannot get gas in volume from anywhere else in anywhere near these timescales.

All these deals are timed for maximum Russian leverage, with start/stop dates in the middle of winter. The EU are just a bunch of incompetents.

Very good summary on ZH this morning

https://www.zerohedge.com/commodities/germany-regulators-suspend-nord-stream-2-approval-gas-prices-jump-12

Can you post that opinion poll please?

Karl Haushofer wrote:

miketheterrible wrote:Can you post that opinion poll please?

Yes, I know its Moscow Times but there it is: https://www.themoscowtimes.com/2021/09/09/most-russians-say-their-country-is-isolated-poll-a75001

Younger Russians aged 18-24 were most likely to favor treating the West as an ally (50%) or as a friend (21%) compared to Russians aged 55 and older, who were most likely to back treating the West as a rival (33%).

Well, it's a garbage poll.

Levada center is garbage western funded rag.
Moscow Times is trash.
And it's opinion poll of what, 1000 people? You can never rely on that. It can be screwed in any way you like depending on question.

It was only few years ago it was over 55% that were favorable towards the west.

And it's mostly retarded youth who don't know shit beyond their gayphones and fucking each other so they like being rebellious.

But I do agree, it should be way less than that. Numbers still don't add up on favorability. And when they say west, did they define the countries listed? The Georgia one caught me off guard.

As for Ukraine, did they specify Ukraine exactly or? It's all in the questions. Moscow Times is known for taking these and skewing it as hard as possible.

According to Ostashko, Germany is trolling all the Washington puppets in eastern Europe. In particular, Germany has
informed Ukria and friends that they will have no veto power.

Anyway, it is all circus until January when EU-tards start freezing their filthy asses. The more they freeze, the less
posturing sanctimony they will engage in.

Karl Haushofer wrote:

kvs wrote:The more they freeze, the less
posturing sanctimony they will engage in.

But will they freeze if Russia keeps pumping them all the gas that they need - through Ukraine and Poland.

Even if they wanted they can´t pump all the gas Europe needs through the old pipelines. They´re connected to old gas fields with no extra capacity, that´s why the NS pipelines were neccessary, they are connected to new fields.

Karl Haushofer wrote:

Hole wrote:

Karl Haushofer wrote:

kvs wrote:The more they freeze, the less
posturing sanctimony they will engage in.

But will they freeze if Russia keeps pumping them all the gas that they need - through Ukraine and Poland.

Even if they wanted they can´t pump all the gas Europe needs through the old pipelines. They´re connected to old gas fields with no extra capacity, that´s why the NS pipelines were neccessary, they are connected to new fields.

Well this is good news if it is true.

Putin has already told the EU that the old Ukrainian pipelines cannot handle anymore then they are doing now. Never heard any negative feedback to that.

Kiko wrote:

Large gas field discovered in Taimyr, 16/11/2021.

https://sdelanounas.ru/blogs/144390/

Taimyr is looking like it will be Yamal 2.0 by 2030.

What long game?

Europe needs energy... even if they decide to go all nuclear it would take 50 years for them to design and build enough nuclear power capacity to meet their needs for today... another 50 years on top of that for what they need in 50 years time.

They talk about alternative sources but lets be honest... if there were viable alternatives for a similar or even slightly higher price they would already be using them in spite.

The alternative sources are not fixed price so generally when Russian gas gets more expensive then it gets more expensive too, and the core of the problem is that alternative sources like US gas does not come in volumes big enough to meet current demand let alone future expanded demand and it is also more expensive and as we are seeing now it is not there because it is going to Asian markets where they are paying even more for gas supplies.

Russia has gas and the EU needs it.

Russia does not want the EU to have to pay too much for gas otherwise they will stop using it and look for and invest in alternatives.

When Russia will make another 20 year transit deal with Ukraine while Nord Stream II pipeline rots unused in the bottom of the sea what is the "long game" involved in this capitulation?

EU demand for gas is increasing... the pipes through the Ukraine wont be able to supply all they need so south stream and north stream will be used.

The length of the deal with the Ukraine is not important as long as they honour it it is money being made by Russia.

Russia does not need to damage Ukraine by stopping all gas flow though the Ukraine... if Russia really wanted to punish the Ukraine they are still one of the highest investors and traders with Ukraine despite all of the Ukraines bullshit towards Russia.

Putting enormous pressure on coal can create diamonds... but it also creates coal dust.

If cutting off Ukraine and "making them poor" would break them they would already be broken... look at the state they are in for goodness sake.

Russia financed more than half of the pipeline, right? So Russia is the one that takes the biggest financial loss if the pipeline is never taken into use.

Russia learned nothing from South Stream that was another big mistake that cost Russia a lot of money.

North stream and south stream are brilliant... when EU bullshit just gets too much Russia can seal off the pipes through the Ukraine if the Ukraine does not do that first to blackmail more money out of the EU, and then Russia can just say... OK... we will sell gas to Turkey and to Germany... that is where our pipes go... the rest of the EU can buy your gas from these two countries and they can dictate prices as they please because they will be buying it all from us at super cheap rates... maybe... or just market rates... depending how Russia is feeling at the time.

The only situation where Russia should agree to build a pipeline to Europe is the one where European banks loan Gazprom money to build the pipeline (with zero interest) and the loan is paid back only after the pipeline is certified and in use.

They are already built and they have said they are not building any more.

But knowing what kind of people lead Russia it is a pipe dream to expect this to happen. They didn't learn anything from South Stream and they won't learn anything from Nord Stream II either. Expect them to trust their Western partners in the future too, keep making deals with them and then getting betrayed and back-stabbed as they always do.

When you are dealing with you expect them to do things. Russia is actually making good money out of selling gas to the EU.

And quite frankly Russia deserves this hapless leadership. I just read about a study that most of the Russians still hold a positive image of the West even if the West would like nothing more than to release the same destructive forces upon Russia that destroyed the country in 1917 or attempt another Operation Barbarossa (if they had the means to do that). Incredibly naive, stupid, gullible people. Government of Russia just reflects the overall nature of Russian people.

I think you are quite right, but I also think Putin is changing and Russia is changing and realising that despite looking like white europeans that Russians really don't have much in common with the leadership of European countries who all seem to be to lowest of the low scum who backstab and steal and bully.

People talk about what sort of president trump was, but I think he was the most honest one they ever had... the bullying and name calling out in the open and the flip flopping plain for everyone to see...

The Europeans are no better.

Won't happen. The transit contract with Ukraine will be extended after 2024.

They might get a 100 year contract... that is fine... Russia makes money selling gas, whether it goes through the Ukraine or not.

How many decades of selling gas do you think they have left... most countries are promising no fossil fuels by 2050, which is less than 30 years away... and of course I know those countries are full of shit and it might not be till 2100 that they achieve anything like that, but the days of gas are numbered so sell while the selling is good.

The advantage with gas would probably be that all the infrastructure and end user systems could probably be very easily converted to burn hydrogen which is likely their plan... nuclear power plants in Russia creating hydrogen from water and pumping it to Europe via their pipelines...

I agree that Russia has the leverage but Russia never uses its leverage to its benefit.

When Germany decides to include an Orc company for certification or to halt certification it effects the price of gas... the gas didn't suddenly get more expensive to extract or deliver so Russia is making more money the next batch of top up gas the west buys... that is to its benefit already.

No need to swing the gas around like a weapon... otherwise the EU will just spend trillions on alternative solutions which would actually cost Russia, though a shift to supply Asia and providing them with much cheaper gas will make Asian production more competitive and energy for their economies cheaper will help them to grow faster instead of the EU...

Yes, Russia could cause Europe serious problems if it declines to pump gas through Ukraine and Poland. Yes, Russia could force Europe to accept Nord Stream II by doing that. But Russia - for some bizarre reason - refuses to act this way.

Everything the EU has done has made the price of gas go up... everything the Russians are doing and are trying to do is make the gas cheaper for the Europeans... the only problem here is your perception of what is happening.

The US and her most sincere bitches are trying to make energy for Europe more expensive with their interfering and influence in Europe, while Russia is fighting to keep the gas it sells to that market affordable to retain and perhaps even expand its market share.

Russia could stop and do nothing and gain in the short term as the gas price goes beyond $2,000 per Kcubic metre, but EU gas customers wont be able to afford to buy it so they will start burning wood or looking for alternatives for energy so Russia will make more money per volume of gas but sell very little gas and so in the long run lose money.

Wow, just wow and wow again. Who said that the Russians were not up to it? Best of all its in the Caspian, well away from hostile navies.

Definitely worth cut and pasting the whole thing here, I've left it in normal type for easier reading. Oilprice.com are not known for being particularly Russia positive.


This Is Russia's Biggest Move Yet To Take Control Of The European Gas Market

Wednesday, Nov 17, 2021 - 02:00 AM

Submitted by OilPrice.com

Russia has managed to secure the largest share in Iran’s huge Chalous gas discovery, a move that could have huge economic and geopolitical consequences

A senior Russian official believes this was the final act in securing control over the European energy market

While Iran appears to have lost out economically on this deal, it will provide the Islamic Republic geopolitical support and the IRGC a nice slush fund

A deal finalized last week to develop Iran’s multi-trillion dollar new gas discovery, the Chalous field, will see Russian companies hold the major share in it, followed by Chinese companies, and only then Iranian ones, sources close to the deal exclusively told OilPrice.com. This is despite Chalous’s position unequivocally within the Iranian sector of the Caspian Sea, over which the Islamic Republic has complete sovereignty. Billions of dollars in additional capital investment are scheduled to come from financial institutions in Germany, Austria, and Italy, as the indications are that the size of Chalous’s gas reserves are even greater now than initially thought. According to one of the senior Russian officials involved in negotiating the deal: “This is the final act of securing control over the European energy market.”

In context, the wider Caspian basins area, including both onshore and offshore fields, is conservatively estimated to have around 48 billion barrels of oil and 292 trillion cubic feet of natural gas in proven and probable reserves. As exclusively covered and analyzed by OilPrice.com in 2019, Russia was instrumental in manipulating a change in the legal status of the Caspian basins area that meant that Iran’s share of the total revenues from the entire Caspian site was slashed from 50-50 split with the USSR that it had enjoyed as from the original agreement made in 1921 (on ‘fishing rights’) and amended in 1924 to include ‘any and all resources recovered’ to just 11.875 percent. Before the Chalous discovery, this meant that Iran would lose at least US$3.2 trillion in revenues from the lost value of energy products across the shared assets of the Caspian Sea resource going forward. Given the latest internal-use only estimates from Iran and Russia, this figure will now be a lot higher.

Previously, the estimates of Iran and Russia were that Chalous contained around 3.5 trillion cubic meters (Tcm) of gas in place. This equated to around one-quarter of the 14.2 Tcm of gas reserves contained in Iran’s super giant South Pars natural gas field that already accounts for around 40 percent of Iran’s total estimated 33.8 Tcm of gas reserves and about 80 percent of its gas production.

As it now stands, though, revealed exclusively to OilPrice.com, following further studies by Russia, the Chalous discovery is now seen as essentially a twin-field site, nine kilometers apart, with ‘Greater’ Chalous having 5.9 trillion cubic meters (Tcm) of gas in place, and ‘Lesser’ Chalous having 1.2 Tcm of gas, giving a combined figure of 7.1 Tcm of gas. Therefore, the new Chalous figures would give Iran a total natural gas reserves figure of 40.9 Tcm, whilst Russia – for a long time, the holder of the largest gas reserves in the world – officially has just under 48 Tcm. That Russian figure, though, has not been revised to account for usage, wastage, and gas field degradation for many years, and, according to Russian gas sources, is around 38.99 Tcm as of the end of 2020. Consequently, the Chalous find makes Iran the biggest gas reserves holder in the world.

These new estimates, on top of recent developments in the European gas market, have led to a change in the plan that had been agreed on between Iran and Russia and had remained in play up until around a month ago. The plan had been for Iran’s side of the development to be led by the Khazar Exploration and Production Company (KEPCO), with the additional principal participation of then-to-be finalized Russian companies. Following both the upgrading of the gas reserves estimates in Chalous and spiraling gas prices across Europe in the previous weeks, the new stake split in the combined Chalous twin-sites is as follows: Russia’s Gazprom and Transneft will together hold a 40 percent share, China’s CNPC and CNOOC together a 28 percent share, and KEPCO a 25 percent share only. “Gazprom will have overall responsibility for managing the Chalous development, Transneft will do the transportation and related operations, CNPC is doing a lot of the financing and providing the necessary banking facilities, and CNOOC will be doing the infrastructure parts and engineering,” said one of the sources.

Bad as this may seem for Iran, it is actually much worse than that for two key reasons, according to the sources close to the deal.

First, although KEPCO will nominally be in charge of Iran’s limited operations on the Chalous site, the real management on Iran’s side will be in the hands of hydrocarbons companies closely associated with the Islamic Revolutionary Guards Corps (IRGC).

Second, and the explanation as to why the IRGC has suddenly taken over the Iranian side of the project, is that the 7 percent left over after the stake splits above have been removed from 100 percent, is destined to be paid into two corporate accounts – one in Shanghai and the other in Macau – that are ultimately under the control of the IRGC. This is also the reason why the IRGC has played down the true level of the reserves in Chalous since OilPrice.com’s exclusive first report on the subject was published.

Although the IRGC has stated in a series of internal discussions within the Iranian government recently that the new terms of the Chalous deal that have placed Russian and Chinese interests above those of Iran are ‘the price we have to pay for Iran’s access to the technology and manufacturing capacity required for our missile program’, the ramifications of it are much greater than the size of future IRGC slush funds in Shanghai and Macau. Russia’s Transneft in just the past two weeks projected that Chalous alone can provide up to 72 percent of all of the natural gas requirements for Germany, Austria, and Italy every year for the full 20 years that the Chalous deal is set to run. Transneft has also reported to Moscow that Chalous alone could supply up to 52 percent of all of the European Union’s gas needs over the period as well. To gain effective control over these new Iranian gas flows through securing such a stake in Chalous, Russia privately assured Iran that, in addition to development and exploration expertise, and some funding, it will also ‘seek to support Iran’s interests in the matter of the JCPOA [Joint Comprehensive Plan of Action] and in other matters at the UN’.

Aside from the enormous geopolitical value for Russia in adding the Chalous gas streams to the current gas supplies over which it has control, especially into the EU, Moscow is looking at an enormous financial payoff from its involvement in this field. Russia has calculated that, using an annual mean average figure of US$800 per 1,000 cubic meters of gas (it has been much higher than this, of course, in recent weeks), the value of exports from Chalous at a comfortable rate of recovery from the site is at least US$450 billion over the 20-year duration of the deal, which coincides with the next 20-year Iran-Russia deal. After the 20-year deal is up, the agreement currently is that the IRGC corporate vehicle Khatam al-Anbiya will take over ownership of Chalous for the next 50 years. Given the likely length of gas recovery at Chalous – and the fact that Russia intends to take less than 10 percent of it out over the course of its 20-year deal - sources close to the deal estimate the total value of the Chalous gas site at US$5.4 trillion.

https://www.zerohedge.com/commodities/russias-biggest-move-yet-take-control-european-gas-market

Correct me if I'm wrong but this doesn't look too bad for IRGC, It might look like a bad deal for the Iranians, but only in the short term but not really, this brings Russia and china into the fold which provides political and economical cover for the project, they're doing all the work after all while iran gets 25% of the shares and in 20 years Iran gets ownership and their profits will skyrocket, good deal in the long term so not too bad.

Insanely good for Russia though, i love the thought of the EU freezing because of their own stupidity.

Rasisuki Nebia wrote:Correct me if I'm wrong but this doesn't look too bad for IRGC, It might look like a bad deal for the Iranians, but only in the short term but not really, this brings Russia and china into the fold which provides political and economical cover for the project, they're doing all the work after all while iran gets 25% of the shares and in 20 years Iran gets ownership and their profits will skyrocket, good deal in the long term so not too bad.

Insanely good for Russia though, i love the thought of the EU freezing because of their own stupidity.

I agree with you, this is a good deal for the IRGC, they will have lot of funds.

Short and long term this is a very good for Russia and China, they control a lot of gas, oil and resources.

Short term, this may seem like a decent deal for Iranians but I think long term, this is a very good deal for the Iranians. The major take away is that Russia, China and Iran just got a whole lot closer. I think in next 6-8 months, we will see Iran sign a deal with Russia similar to the one with China but this the deal with Russia will be based on military technology.

Also I think that Russia and China will make sure that the JCPOA [Joint Comprehensive Plan of Action] is stored to some capacity(maybe not full) and Iran will get it funds frozen(this is over $100 Billion.) Russian and Chinese business will invest a little more in Iran, little more Russian and Chinese tourists ill go to Iran.

More important thing that has been over looked is this part "is that the 7 percent left over after the stake splits above have been removed from 100 percent, is destined to be paid into two corporate accounts – one in Shanghai and the other in Macau", I think that the Chinese have taken over from London and other western cities as the "financial capitals".

Having said that is is a massively good deal for Russia.

The % splits are in the ownership and timescale of that ownership, i.e. the distribution of profits. But that is not where much of the money will be going especially in the early years.

“Gazprom will have overall responsibility for managing the Chalous development, Transneft will do the transportation and related operations"

"CNOOC will be doing the infrastructure parts and engineering,”

That work will create vast sums, including profits, for the subcontractors involved. In the past this kind of highly skilled work would have been shared out between the western oil companies and hardware builders, not now, this is now the Russians and Chinese who will benefit. Add this work to the already agreed Iran/China set up on the Gulf gas/oil fields and, even though some might be employed as sub contractors, this is a huge transfer of work out of the $ economy. Think of the boost to the New Silk road with all that equipment and workers coming out of China on a new freight railway, boosting work along the route, perhaps with a pipeline next to it.

Not so much a hammer and nail into the US Empire coffin but a pneumatic nail gun. The strategic importance cannot be overstated and the Americans can't get near it.

This will not have gone down unnoticed in Baku either, there will be big opportunities for them as well. Whilst further away the Turkish construction companies will be licking their lips. Definitely a time to be in Russia, China and Iran's good books.

We wait to see where the pipelines go.

It actually sounds like a very good deal for Iran... they get a small percentage at the start when all the investment and money needs to be spent to start extraction, so when ownership changes hands they will get a working mature gas system likely already plumbed in and generating revenue and from the sounds of things there is so much material there that there should be plenty left when they take control.

In the mean time they get an income that is US sanction proof and good new trade ties with Russia and China.

This seemed the most logical place for this

Three Seas Initiative
@ThreeSeas24
·
18 Nov
Poland has completed the construction of the sea-bed section of #BalticPipe, the strategic gas pipeline that will make it possible for natural gas to flow from Norway to Poland.

The pipeline, with a capacity on 10 bcm per year, will become operational in 2022.

Yandex translate from Polish

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10bcm?

Is that even enough for even 3 countries use?

miketheterrible wrote:10bcm?

Is that even enough for even 3 countries use?

Very interesting question. That pip[eline down the north sea serves Germany and Denmark as well as having Poland as an extra.

I suspect Norway will sell at a high marginal price to Poland whilst D and G will reduce their take, replacing it with cheaper Russian gas from NS2. The Poles seem to have difficulty with economics when bending over to please their Master.

GarryB wrote:It actually sounds like a very good deal for Iran... they get a small percentage at the start when all the investment and money needs to be spent to start extraction, so when ownership changes hands they will get a working mature gas system likely already plumbed in and generating revenue and from the sounds of things there is so much material there that there should be plenty left when they take control.

In the mean time they get an income that is US sanction proof and good new trade ties with Russia and China.

Its a standard arrangement known in the patch as a PSA or production sharing agreement.  Nations that, for one reason or another, cannot bring their resources to market permit foreign interests to develop the field and bring it to production, and then receive a share of the resulting production.  initially it can be quote low (15% on an Asian project I worked on), but increases linearly over a specified time until it reaches 100%.

This example of a PSA seems eminently more fair than the ones that Shell tried to force onto Yeltsins Russia over the development of Sakhallin 2.  That was highway robbery, and allowed the Western "partners" to recover 110% of all investment from the production sales before Russia was permitted any share, and it started from a low 10%.  It was blatant highway robbery and criticised as such, but Western responses were simply to be publicly smug that they had such leverage over the cash-strapped corrupt regime of Yeltsin and his Oligarch lease-holders. Thankfully Putins admin cancelled the unfair PSAs by using loop holes regarding environmental impacts    and the West has hated him ever since!!!

Western nations are hardly in a position to complain if Russia and China use a vehicle that is common for Western oil majors...  but of course we already know that they will...

JohninMK wrote:This seemed the most logical place for this

Three Seas Initiative
@ThreeSeas24
·
18 Nov
Poland has completed the construction of the sea-bed section of #BalticPipe, the strategic gas pipeline that will make it possible for natural gas to flow from Norway to Poland.

The pipeline, with a capacity on 10 bcm per year, will become operational in 2022.

North Sea?  Bah... Its badly depleted. Norwegian production has plateaued and is falling with limited areas for new discoveries, while UK gas production has collapsed and is in a death-spiral.

This is a case of Polish Russophobes drowning in the ocean of reality and desperately grasping at a life buoy to avoid the humiliation of having to ask Russia to help keep the lights on and make them warm in Winter.

Poolanders are idiots, but i'm loving it