Replies to This Discussion

Permalink Reply by Les Bamburg on December 27, 2008 at 7:38

Baron, small correction. The US exports natural gas to Mexico rather than imports.

Permalink Reply by Antsu-in-Japan on December 27, 2008 at 6:48

Hey there Titleist!

Based on news that I've seen from various countries here in Japan...I think it would be in LA's interest to look to export Heck, if the United States (in general) doesn't have the means or finances or will to focus more on marketing its natural gas resources in order to cut reliance on oil, then let LA sell it to countries that want to buy it. There is obviously a market for it...so what are we waiting for? I truly wish those who aren't interested in going to the potty would hurry up and get their butts OFF THE POT!! We've got Egypt trying to get NG to Europe via Turkey; Japan working with China on joint exploration in the China Sea; Uzbekistan teaming up with South Korea; Russia continuing its dominant stance worldwide...etc. So, is the major problem regarding this transportation?...or do we not want to supply internationally because that would deplete our resources, which would force us to rely on other countries in the long run? All I know is that we have NG under our land, and nothing substantial is being done with it. People keep TALKING about what they intend to do and that's about it. Maybe we should get Mr. Pickens to push for both domestic use, as well as exporting it.

Side note: I can't tell you how thankful I am that gas prices are down here. I read the complaints from many of you in here, but we were paying close to $7 a gallon a few months ago. Down to $4 and change now. What a relief....for the time being anyway! Well, I've included a link to the Energy Information Administration. Please check it out when you have time. http://www.eia.doe.gov/oiaf/archive/ieo04/nat_gas.html

Permalink Reply by Antsu-in-Japan on December 27, 2008 at 6:52

Thanks Snake and Les B...you answered some of the questions that were circulating in my mind. Keep us informed PLEASE!! Thanks again and happy holidays.

Permalink Reply by Bruce on December 27, 2008 at 12:13

Antsu thanks for publishing the two articles. It makes it crystal clear that natural gas has been and will continue to be an economic weapon used against neighboring countries. I found it funny that the head of Shell in Egypt would criticize the export of natural gas, this from the world's largest gas company. Could it be because other companies got the export contracts? When we hear of a pipeline going from the Turkey-Italy pipeline to Ukraine, we will know a dagger is being put into the heart of Russia's nat. gas industry and ending the leverage they have over Europe. Once again, thanks Antsu have a happy new year!

Permalink Reply by Antsu-in-Japan on December 27, 2008 at 16:30

You too, Bruce. Best wishes to you and yours this holiday season!

By the way, wondering what will happen if and when China starts to play this game. This is a long read, but the info is really interesting.

http://www.iea.org/dbtw-wpd/textbase/nppdf/free/2000/chinagas2002.pdf

Permalink Reply by Bruce on December 27, 2008 at 17:04

Wow Antsu I don't know where you find this stuff but it is fascinating! It is over 300 pages but what I gleaned was that starting roughly in 2006 the demand would outstrip the supplies that China has. It explicitly says that they are building pipelines from the west to the east(Biejing) where the major cities are located. We just have to look who lies to their west-Russia. This would suggest the Russians will sell to the Chinese and they will become best friends again based on economic neccissities. The Chinese for the gas and the Russians for the sales they will lose to Europe. Another very interesting point was at the port cities of Szenchen and Hong Kong the Chinese are building liquified natural gas import facilities. Hello! Is anyone listening? Dr. Fleming here is another excellent point to encourage the development of liquified natural gas for domestic use and for exports to China. If not we are going to make them bosom buddies with the Russians again. Thanks for all your input Antsu!

Permalink Reply by Antsu-in-Japan on January 6, 2009 at 3:20

Well...I feeeeel the pinch coming!! Check this out...

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Moscow – Thermometers are plunging across Europe, and so is the pressure in the natural-gas pipelines connecting the continent with its key supplier, Russia.

But no one is pushing the panic button yet. The five-day-old gas war between Moscow and Kiev appears worse than in past years, aggravated by Ukraine's deepening financial and political crises and Russia's urgent need to refloat its floundering state budget by raising gas prices. Europe, watching closely, has sufficient gas reserves to see it through any short-term crisis and has officially declined to take sides.

The increasingly acerbic dispute, which has seen Russia's state gas monopoly Gazprom accuse its Ukrainian counterpart of "stealing" gas and acting to damage the pipeline that transports 80 percent of Russia's gas exports to Europe, may be doing permanent harm to Moscow's relations with its most important ex-Soviet neighbor. It has also reignited a European debate about how to secure energy supplies amid deepening instability in the resource-rich former Soviet lands to the east.

"When there are problems on these transit routes, this brings insecurity to the energy markets. I think Brussels's strategy [to seek alternative energy routes for Russian gas] is right, but we also see that it can cause a lot of difficulties," says Claudia Kempfert, an energy expert at the German Institute for Economic Research in Munich. "At the end of the day, [Europe] still has a huge dependency on Russian energy, and this is a little bit dangerous."

Russia's relations with Ukraine have been deteriorating since the pro-democracy "Orange Revolution" brought Ukrainian President Viktor Yushchenko to power four years ago, pledging to bring the nation of 50 million into the NATO security alliance and draw it closer to the European Union. Soon after, Russia began demanding that Ukraine begin paying world market prices for its formerly subsidized Russian oil and gas and, to drive the point home, first shut down the pipeline on New Year's Day 2006. Last year, Ukraine paid on average $180 per thousand cubic meters of Russian gas, far below European rates, and Gazprom is demanding that it pay $418 for the same amount in the yet-to-be-concluded 2009 contract.

"The problem is that Ukraine is bankrupt, politically and economically," says Konstantin Zatullin, deputy chair of the Russian State Duma's commission on the Commonwealth of Independent States. "They are violating all their obligations and dragging out the situation to no constructive end. Russia had no choice but to cut off their gas. Is there any place in the world where people receive energy supplies free of charge?"

Gazprom ceased pumping Ukraine's share of gas into the pipeline late last week, and by Monday at least six European countries had reported reduced pressure. Sergei Kupriyanov, a Gazprom spokesman, told journalists Ukraine has "stolen" some 25 million cubic meters of gas, passing on the shortfall to European customers.

A spokesman for Ukraine's state company Naftogaz responded that the Russian cutoff caused a pressure drop in the line. On Monday, Ukraine suggested it may seek a huge increase in the fees it charges to transport Russian gas, to offset expected price hikes.

Russia says it has not received a Ukrainian arrears payment of $1.5 billion that Kiev says it made through an intermediary last week, and insists there was no alternative but to shut off supplies after Ukraine rejected Gazprom's offer of $250 per thousand cubic meters of gas for delivery in 2009. On Monday, Gazprom announced it will take its case against Ukraine to the Stockholm Arbitration Court, and appealed to the European Union to independently monitor Ukraine's stewardship over the gas pipeline.

"Ukraine is not only stealing our gas from the export pipes, it's also using gas from our joint storage facilities in Ukraine for its own needs," Gazprom deputy CEO Alexander Medvedev told the ITAR-Tass news agency. "We can't compensate these shortages in full."

The dispute is overshadowed by the growing geopolitical schism between Moscow and Kiev, especially since Ukraine extended military assistance to Georgia during last summer's Russia-Georgia war, and some suggest Ukraine might ease its position in the gas negotiations with a few political concessions. "Gas means big money, but it's also a pretext," says Dmitri Furman, an expert with the Institute of European Studies in Moscow. "Gas is just one manifestation of our colossal irritation with Ukraine ... for having chosen to build a different political system and join the West."

Experts say the conflict's real dynamics are hidden. The gas arrangement between Russia and Ukraine was never based on straightforward contracts between Gazprom and Naftogaz, but on dealings that could conceal massive corruption.

"There is no transparency [from either side]" says Alexei Kolomiyets, president of the independent Institute of Euro-Atlantic Integration in Kiev. "This may be to the benefit of highly placed figures in both countries, but we know that it alienates the Europeans."

Some Russian commentators suggest that the political and commercial rhetoric flying back and forth is secondary to the conflict's main movers. "Gazprom is a great machine of embezzlement and misappropriation of funds," says Mikhail Krutikhin, a partner with RusEnergy, a Moscow-based consultancy. "It makes very good money for some of its managers and a few associated politicians, but not for the country."

Mr. Krutikhin points says Ukraine pays Russia for its gas through as many as 12 intermediaries, making payments almost untraceable. It's no surprise that last week's check, supposedly sent by Ukraine, got lost in the mail, he says. "Virtually everything Gazprom does is some strange combination of politics, commerce, and graft."

The opaque business dealings also baffle the Europeans, who seem to be wishing the dispute would just go away.

"It isn't exactly that Russia is the evil energy-provider bear and Ukraine the innocent victim," says Henning Riecke, an expert at the German Council on Foreign Relations in Berlin. "Ukraine must be protected from collapse, and Europe needs to support Kiev – but without trying to take sides."

• Correspondent Jeffrey White in Berlin and staff writer Robert Marquand in Paris contributed.

Permalink Reply by Bruce on January 6, 2009 at 10:20

Neither side is as pure as the driven snow in this dispute but what Europe is waking up to is the fact they can't be completely dependent on Russia for nat. gas supplies, diversification is the best protection and a tie-in to the Turkey_Italy pieline with the gas from Egypt is another viable option as well as the option I like best, the export of LNG from our haynesville shale to Europe, it would give the Europeans a well-balanced supply, put Russia in its place and give our gas an international demand that we so desperately need in these times. I hope the powers-to-be are reading this and planning ways to take advantage of this unique situation that we have.

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