Saturday 23rd of October 2021

Democracy and Gas - Lock, Stock and Hallibarrel

I'm beginning to understand the race to tie up Australia and the Oceania regions Liquefied Natural Gas sources. From the looks of this article on Energy Review Net, Unless you own the initial resource you'll have nothing to work with.  You also have a considerable quantity of political clout, as Russia is currently demonstrating to Europe.

The question this piece leaves me with is: how much of a percentage of control is retained by the suppliers of the technologies used to access the LNG reserves?  The answer to this question will be of importance in our near future, and I believe the answer will have Halliburton written all over it.  Can anyone advise me where to begin looking?

Here's part of the ERN article

 
THE world, according to a recent study, has the capacity to
're-gassify' 27.3 billion cubic feet of gas a day – but only has the
infrastructure to produce 20.3bcf of liquefied natural gas (LNG) a day.
The resulting 7bcf daily gap is a market anomaly that will be converted
into profit by someone and has the potential to change expected market
behaviour.

The study by North American energy specialist Tristone Capital, and reported by Natural Gas
Intelligence, found that the gap between the production of LNG and the
re-gasification capacity would not narrow in the immediate future. In
fact, by 2010 there will be an 18.2bcf shortfall in the supply of LNG
to re-gas projects.

It is the widening gap which explains the boom in LNG production
projects around the world, especially in Australia where there is the
added appeal of political and economic stability.

More particularly, the gap explains why Woodside Petroleum shares are
booming, and likely to continue booming for as long as LNG demand
outstrips supply, and re-gasification plants are scouring the world for
LNG cargoes.

The Tristone study, encouraging as it is for LNG producers, also
contains a warning which could mean trouble for the global LNG industry
unless great care is taken. To understand why there could be problems
ahead you need to appreciate that market anomalies generally represent
a profit for someone and a loss for someone else.

The profit side of the anomaly is easy to spot. A shortage of LNG means
high demand, and high prices. But, those conditions will also, almost
certainly, mean that long-term contracts, of the sort which effectively
lock a producer and a consumer into a closed-loop relationship, will
remain the mainstay of the LNG industry.

For producers this represents a licence to print money because they have a guaranteed market, and a guaranteed price.

But for the development of a free market in LNG, similar to that which
exists for oil, the shortfall in supply could be the kiss of death – as
it could be for a number of re-gasification plants being built (or
planned) around the world on the assumption that LNG will become freely
traded.

Among the conclusions of Tristone's analysis is that LNG will remain a
"seller's market" for the rest of the decade, and that of the 50
proposed re-gasification projects in North America not all will be
successful.

Put another way, there is the potential for the surplus of
re-gasification projects to produce a number of expensive failures
because these projects have a very high fixed cost structure, and need
to operate at a high level of efficiency to make a profit.

Any LNG re-gasification project being built without a long-term supply
agreement in place faces a sticky future – as does the belief that LNG
is on the road to rival oil as a freely traded commodity.

Tristone, which operates in Canada, the US and Britain, also found that
several big LNG projects were carrying large amounts of "geopolitical
risk". These are projects located in countries such as Russia, Iran,
Saudi Arabia and Venezuela.

The rising risk profile means that rapid LNG export growth is not
assured, simply because the owners of the capital required to build the
projects might balk at the risk of putting money into dodgy places.

 "Geopolitical Risk" shouldn't be much of an issue to investors in Australian LNG, you'd reckon.  It's far from the same case in Europe, which gets around a quarter of its gas supplies from Russia, via pipelines through the Ukraine.  So when the neighbours get grumpy...

On Sunday Russia cut off most of its supplies to the Ukraine, after
its neighbour refused to pay for an increase to $230 per 1,000 cubic
meters of gas, from $50 per 1,000 meters. Ukraine has said it is
willing to pay more, but wants the price increase to be made gradually.

Ukraine said the Russian move is a political one to punish the
country for adopting a more Western friendly stance since the election
of Viktor Yushchenko as president.

The U.S. government said it "regretted" the decision by Russia.

"Such an abrupt step creates insecurity in the energy sector in the
region and raises serious questions about the use of energy to exert
political pressure. As we have told both Russia and Ukraine, we support
a move toward market pricing for energy but believe that such a change
should be introduced over time rather than suddenly and unilaterally,"
the State Department said in a statement on Sunday.

The Centre for Research on Globalisation's William Engdahl seems to think that control of the Ukraine s as important to US influence on Russia as it is to European Energy supply:

It’s mainly about who influences the largest neighbor of Russia, Washington or Moscow. A dangerous power play by Washington is involved, to put it mildly.

A look at the geo-strategic background makes things clearer. Ukraine is historically tied to
Russia, geographically and culturally. It is Slavic, and home of the first Russian state, Kiev Rus. Its 52 million people are the second largest
population in eastern Europe, and it is regarded as the strategic
buffer between Russia and a string of new US NATO bases from Poland to
Bulgaria to Kosovo,
all of which have carefully been built up since the collapse of the
Soviet Union. Most important, Ukraine is the transit land for most
major Russian Siberian gas pipelines to Germany and the rest of Europe.

Yushchenko favors EU membership and NATO membership for Ukraine. Not surprising, he is backed, and strongly, by Washington. Zbigniew Brzezinski has been directly involved on behalf of the Bush Administration in grooming Yushchenko for his new role.

As far back as November 2001 Yushchenko was reportedly wined and dined in Washington by the Bush Administration, paid for by the US Congress-funded National Endowment for Democracy (NED). Martin Foulner in the Glasgow Herald of November 26
reported the details of the meeting. The NED, it’s worth noting, was set up during the Reagan Administration by the US Congress, to
‘privatize’ certain CIA operations, and allow Washington to claim clean hands in various foreign meddling. Ukraine is part of a wider US pattern of
active ‘regime change’ in eastern Europe and Central Asia.

At the end of 2003, Papua New Guinea's Oil Search announced an alliance with Halliburton.  They also announced the construction of a pipeline from PNG to South Australia, to provide fuel for the massively expanding Olympic Dam Mine, (containing a major chunk of the world's future uranium supply)  for which Halliburton had conducted the Environmental Impact Statement, while it was laying stormwater pipes for Mawson Lakes, the forthcoming Heart of the Defence State,

If, at some time in the future, Australia decides to use its uranium and gas reserves as a method of flexing a political "muscle",  in a similar manner to Moscow, the message might be transmitted by "nerves" controlled by another "brain". 

It\s a small world after all....

No fun games...

200 American reservists who were supposed to play friendly war games with the Ukrainian army have been booted out by anti-NATO protests. The reservists have left Fedosia (Crimea) to go back to the US. Just letting you know... since our papers and the US press are not letting you know...