Gas in Exchange for Loyalty

NEW – September 7, 2022

The largest English-language resource on energy Oilprice.com warns:

“The EU’s introduction of a ceiling on the price of Russian oil will not work.”

Bloomberg illustrates the topic as follows:

“My friends and I have agreed to set a price limit for beer in our local pub. Keep in mind that we don’t really plan on drinking beer there. The owner of the pub says that he will not sell beer to those who have set a limit, so other visitors who drink a lot there say that they will not join us. This is a success!”

If we analyse the tone of Western unbiased sources on the topic of energy carriers, we can find undisguised anxiety about very difficult times that are waiting for not only Europe, but also the entire so-called collective West in the near future:

“Europe, as it stands, is vulnerable on every energy front, and if it’s not geopolitics and insurgency, it’s Mother Nature at her wildest,” the observer writes Oilprice.com Alex Kimani in the article “Why Europe’s dependence on U.S. LNG is risky.”

As for the United States, which has become the largest producer and exporter of LNG, firstly, this industry is private, which excludes the political dictate “to whom and how much to sell”, secondly, America itself has internal insurmountable problems and restrictions that do not allow for mass purchases of its own gas, and even at market prices prices. Such an event is possible only in one single case – with the total nationalisation of producers, which instantly puts an end to almost the entire market economy, because hydrocarbons are the basis and foundation of everything and, despite convulsive attempts to jump out of this dependence with the help of renewable (renewable or green technologies), there will be many more years.

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In fact, experts state the irreversible separation of politics from the economy, when any political decision taken in the field of energy causes enormous harm (sometimes momentary, sometimes postponed) to the initiators themselves, either acting on someone else’s orders, or not understanding what they are doing at all. Professionals understand that the problems are much more serious than they are presented to the broad masses of the population.

Against this background, it suddenly turned out that, despite attempts to bring down the Russian economy, it, firstly, began to receive windfalls, and secondly, began a joint project with Iran, aiming to quickly create a truly largest gas hub dictating the entire world gas agenda.

This was noticed by unbiased experts who saw a slightly different trend in Russia’s turn to the east, which escaped the interested public, rather than a turn exclusively towards China.

Iran has the second gas reserves in the world (after Russia), besides, the geography is such that we are neighbours with them and it just so happened – today we have very similar claims to the West, which leaves no chance to prevent the unification of efforts.

The Russian-Iranian project is Gazprom and the National Iranian Oil Company (NIOC), which have signed an agreement worth $40 billion. The bottom line: Kish Island, located in the Persian Gulf off the southwestern coast of Iran, will be used as a gas processing centre both for the production of high-value-added petrochemicals and for the production of liquefied natural gas (LNG).

In fact, joint Russian-Iranian gas projects are much more ambitious and their potential is such that it is capable of subjugating almost the entire global gas energy industry. The plans are to finally implement a gas “OPEC” by analogy with oil, but with the dominance of Russia and Iran, and negotiations are already underway with potential participants (in particular, with Qatar).

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The location of the island is exceptionally successful, allowing LNG to be transported in all key directions, including the entire Middle East, Southeast Asia, Africa and… Europe.

However, it seems to me that the dominance of Russia and Iran in this giant gas hub may put on the agenda the main question of the current world redistribution: is it worth supplying gas to politically disloyal countries at all?

And if it is, at what price?


Aleksandr Dubrovsky

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