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Russia’s Gazprom Tightens Its Stranglehold On Europe, France Falls: The Natural Gas War Gets Dirty
Wolf Richter www.testosteronepit.com
Why would France suddenly prohibit shale gas exploration? Sure, there are environmental issues with horizontal drilling and hydraulic fracturing, the methods used to extract gas from porous shale deep underground: flammable drinking water, earth quakes, cows that die, radioactive sludge in sewage treatment plants.... But French governments have had, let’s say, an uneasy relationship with environmentalists. Its spy service DGSE, for example, sank Greenpeace’s flagship, the Rainbow Warrior, in the port of Auckland, New Zealand, killing one person.
No, there must have been another reason why the government of Nicholas Sarkozy prohibited shale gas exploration in 2011, after having already issued permits in 2010. A mini hullabaloo had broken out, stirred up by the European Ecologists and The Greens (EELV), the fringe on the French left. And Sarkozy caved! Without a fight! Enthusiastically. The government of François Hollande just confirmed the prohibition when Environment Minister Delphine Batho declared: “Hydraulic fracturing remains and will remain prohibited.”
The clue: Sarkozy suddenly visited Japan on March 31, 2011, a couple of weeks after the horrific earthquake and tsunami, and the subsequent nuclear accident at Fukushima, to declare in front of shell-shocked Japanese that there was “no alternative” to nuclear power.
He’d been dispatched by the almighty state-owned nuclear industry to tamp down on the growing anti-nuclear sentiment at home. Owned by the government, nuclear power plants produce 75% of France’s electricity and export some of it. No one who wants to be politically viable is allowed to hamper the industry. If someone strays off the reservation, he or she is dragged back soon. While Hollande campaigned on a vague promise to reduce dependency on nuclear power to 50%, it was understood as one of the bones he had to toss to environmentalists. Nothing would come of it.
So when Batho, who wants to add more renewables to the portfolio, toed the party line by saying, “Nuclear power is an industry with future,” then qualified it with a “but,” it caused an outcry even among the Socialists. That’s the power the nuclear industry has over the political machines.
But now another powerful entity turned up: Russia’s Gazprom. It’s the world’s largest gas producer, gas exporter, and gas distribution company with nearly 100,000 miles of gas trunk lines and branches. The Russian government owns 50.01% of it. At home, it has to sell gas under cost, one of the Soviet leftovers. It relies on high-profit sales from Europe to make up for it. But Europe is diversifying away from its single most important supplier.
Competitors include Russia’s number two, Novatek, and Norway—the second largest natural gas exporter in the world. So, in April, Gazprom had to lower its European sales guidance for 2012. Its market share in Europe was 27% last year, and it’s shooting for 30% by 2020, but if the US shale-gas boom ever infects Europe, those plans would become a pipedream—and if the high-profit sales from Europe tapered off further, it would have to raise prices at home, a political nightmare. Hence its fight by hook or crook against shale gas in France.
Gazprom’s “underhanded tactics” and “scaremongering about a new technology” have Moscow’s nod of approval and are designed to dissuade governments from developing their own shale-gas reserves, according to a report by Platts, a global provider of information on energy, petrochemicals, and metals. Efforts include all manner of operations, online and through encouraging demonstrations, but also paying public relation firms to spread “myths and misconceptions,” said Aviezer Tucker, assistant director of the Energy Institute at the University of Texas. A “European Union-wide ban” on shale-gas production, he said, would be the “holy grail.”
With France already knocked off, Sergei Komlev of Gazprom Export has been bouncing around the world in his fight against European shale gas. At a meeting in Qatar, according to Platts’ report, he gave a presentation. “Multiple Handicaps Will Retard Shale Gas Development Outside US” was the title of one of his slides. “Fortunately, it claimed, “European shale gas development faces numerous economic, regulatory, and political barriers before there are significant amounts of shale gas production, not sooner than in ten or more years.”
Breathing room for Gazprom in the natural gas wars.
In the US, natural gas may be the most mispriced commodity these days. Its price has been below the cost of production for so long that the industry is suffering billions in losses. But demand for natural gas by power producers has been booming—and it’s killing coal, one powerplant at a time. Read.... Natural Gas Is Pushing Coal Over The Cliff.
And here is a highly insightful interview of James Hamilton, energy economist, former visiting scholar at the Federal Reserve Board in Washington, DC and other Federal Reserve Banks. Read.... The Real Reason Behind Oil Price Rises, by James Stafford.
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Ask the Italians what they think of NATO footing the bill so that Total could muscle their way into ENI's deals with Libya.
Thanks for detailing the woeful corruption in Frances energy sector Wolfy ...well French politics to be precise
I'd feign surprise but with Govt corruption is just standard protocol on everything they touch (and turn to shit)
(double post)
What do Haiti, Cambodia, Ivory Coast, Vietnam, Gabon, Syria, Yemen, Madagascar and the world's other shit holes have in common?
France's track record blows.
Ahem... Afghan/Pak, Nigeria and Irak, Vietnam and maybe Iran coming to your local theatre soon.
One eyed jack's play a funny tune here. Its a first world disease. But France alike the USa, scions of self proclaimed leadership in " universal human rights", is right up there amongst the line up of hubristic 'usual suspects', sociopathical Kayser Sozes of this convoluted new world order; selling guns and being part of the third world extractive empire scam big time.
France is a statist ship run by an elitist caste, descendants of Jacobins, who thought the Enlightenment and Revolution game gave them the right to proclaim THEY were the messianic torch bearers of that age's NWO : Enlightenment. We know how that went : Napoleon and Moscow moment, Algeria and colonisation race with Rule Britannica...until final Armageddon Europe. The French model is backward looking and static to the point of getting to be a burden on European evolution. Its claims to universality now a stale pipe dream.
Now the USa is in the same state of levitated hubris, in the name of universal values of capitalistic innovation and open markets. Big scam of current times now evolving fast into oligarchy despotism. The world is standing on its head.
But having said that, the energy feed line is the vital thread of our times as is the money thread of capitalism now gone sour in fake fiat pumping and debt mountain accumulation.
I don't know if the frack gas argument holds water, but France's obsession with nuclear is written into its current statist genetic code, just like Gazprom is Putin's flagship of oligarchical Russia. Empires were born to implode, under the searing torch of human innovation.
Our world is moving fast to the big data cloud computing age; a new division of world wide labour : those who understand the digitalised age and those who are servants of the receding "brick and mortar" age; and a whole new energy paradigm which has not yet found itself as new universal expression. Innovation times and regression chimes. Renaissance age with a vengeance!
Agree on the informational technology doctrine, but finally everything connected to wealth or control boils down to the physical reality.
An obscure point though: What would happen if for some not understood/known physical phenomena, all of the computing infrastructure, on a continent or even over the entire Earth, at ones, becomes hit by a high voltage discharge ... Only the people who understand can visualize :)
And by the way this is not just a theoretical speculation, all of the computing infrastructure uses a very basis physical assumption: the Earth is a sink whole of whatever (group of) phenomena(s) we have defined as electricity.
This is generally true, except in certain conditions, that could, in addition to its natural appearance, also be engineered by men (well only one for now in the history, of course) ... Those, familiar with Tesla's work and UNDERSTANDING his Colorado Spring's experiments, are smiling :)
For the ruling class though, or even to all those relaying on the 0s and 1s for their single source of wealth, only the mere existence of this possibility, may bring shiver to the bones.
Thoughtful, as usual. One detail: From a point of view of corporative/lobbying Return on Effort, in europe we often have concentrations in one nation at the expense of the others. A lot of this has to do with the language and political system barriers.
So Big Oil is concentrated in the UK, the Netherlands and Norway at the expense of others, for example Italy or France.
Big Nuclear is concentrating in France at the expense of Germany, etc. (btw, I'm not that negative about that, IMHO nuclear thorium micro-plants will be in the future a way out of many things).
Big Solar is still a budding nexus, but it's concentrating more and more in Germany. Mutti Merkel just went to China to "agree" on how the German/Chinese "Solar Fight" has to be framed - a potential risk of trade war there in both side's eyes.
Big Gas works in cooperation between Russia and Germany in the north and some Club Med projects in the South, including the existing pipelines from North Africa and the planned pipelines to Central Asia. Fracking is less interesting on a continent that is more densely populated. Russia has enough gas, the pipelines are operative, etc. etc. Don't see fracking coming, here. The author of the article is overdramatizing an issue where he might have the US situation in mind, IMHO, I agree we'll probably see a ban.
Big Automotive is concentrating in Germany, since long. Though this might change, the whole industry is globalizing while decentralizing the production sites. Just note how GM is still holding Opel castrated and down.
So in europe we have a very good showcase - better than monolythic China or the US - of which industries "need" heavy government support (and yes, often leeching). And PR, lots of PR.
Big Arms is leaving europe since long, for them a dedicated superspender is the low hanging fruit of heaven. NATO was meant to be a "great arms bazaar" like a "Weapons free trade zone", but face it, it takes much less Effort vs. Return to convince the US Congress that it needs a whole new fleet of destroyers than going to peddle frigates to each EU country.
Big Pharma - well, I presume here in ZH there are few expert on this.
For a moment it looked like a nexus was building up I dubbed Big Copyright. Now it's murkier, again. Mickey Mouse is still copyrighted after his 50th birthday and Apple and Samsung are battling over "rounded corner icons".
So yes, in a way we see a kind of political/industrial specialization.
Just so for the weekend - I thought you were a bit harsh on the "French System"... France is still the linchpin of european integration (the same way as the UK is the chief supporter of the opposite force). It just does not always be functioning in hyperbolic grandiose manner. In fact, I wish the French would stop putting so much power into the hands of a barbaric Pseudo-King-President. Get smart, have a Sixth Republic. ;-)
Some addition:
Big Arms: France, UK, Germany, Italy, Netherlands, Belgium still big developers and exporters. Yes, you're right the appetite for buying weapons in europe is less than the USA, China, India. Still exporting industries have influenced national politics and will do so in the future.
Big Gas: Have a look at the dealings around the superpipeline through the Baltic Sea: http://afp.google.com/article/ALeqM5gSWS8OcEMxTyYN1TWTwSR7xBBiBw The dutch signed a deal that would make them the distribution center for the UK. Obviously it's smart to diversify energy production. Thorium, always a hot discussion topic. I'd put this in the column "possible future" alongside hot fusion.
Completely agree with the "Pseudo-King-President" comment. Typical french elite arrogance resulting in crony politics.
+1 I will never forget how once Bush II came back from Taiwan with a list of goodies they wanted. on the top: diesel-electric subs.
He was livid when the US weaponsmiths told him this business is beneath them, only nuclear driven ones.
He could have had a business lunch with the ambassadors of the Netherlands, Germany of Italy, where those babies are still built - but for him it would have been a waste of political time and effort - and the arms lobbyists would have been quite upset.
Plutonium producers have been succesfull in killing of Thorium reactor plants.
Forced regulations through the Westinghouse/Siemens/GE/Greenpeace killed high teperature reactor in Hamm, NRW . Waiting for Chinese to deploy 30 yrs. old german technology to replace 70 yrs. old shit nuke-producing facilities .
+1 it's incredible how slow development in nuclear is hampered by those giants refusing to make small plants. it just shows how the state's influence is always towards "too big".
+1 Ghordius, you would like to see France roll back its original sin : Emperor and Son of Enlightenment of Napy days becomes Elected monarch and Republican figurehead under de Gaulle's Vth republic!
This absolutist trend of Richelieu's making, sticks to France's elitist mindset as a specific character trait; it insults history as Tarquin and Brutus can never co-exist in same nation.
Just like Rueff talked about the west's original sin when he wrote his treatise on Nixon's revocation of BW gold exchange...
Unpenetrable power womb and impenetrable logic, double whammy of entrenched oligarchs in their Bertechgarden type political fortresses; whose wrong turns cost big time to the people/sheeple.
eh? I'm not sure if you are pulling my leg. No, I'd like to see the Italian or, better, the German model applied in France. The Mother learning from the Daughters, if you want.
...In fact, I wish the French would stop putting so much power into the hands of a barbaric Pseudo-King-President. Get smart, have a Sixth Republic. ;-)...
I was agreeing with this, and reminding you of its historical time line.
My fault, I read too fast and got it wrong...
I agreed with you right up to your bright-shiny-cloud future.
For one, the cloud represents the ultimate redundancy-maker. Infinite scalability will mean massive overhangs in productive capacity. It's Marx's "labor saving device" on steroids -- leaving great swathes of "those who understand the digital age" to the gutter despite their status among the digitally enlightened.
Secondly, the cloud represents the ultimate Orwellian control of personal information, thoughts, movements, finances and affilations.
No the Renaissance will not come from the cloud. The cloud will further concentrate wealth and control.
But the Renaissance *is* coming via robotics and genetic engineering. That era however is at least two decades away, and there's almost certainly a very big, very bloody war to fight between then and now. The good thing (if one can find something good in war) is that robotics and drones will do most of the killing in the next war and the technological advancements made there will ironically, and in no small way ignite the next great wave of positive human advancement.
http://www.ted.com/talks/juan_enriquez_shares_mindboggling_new_science.html
Well at least we won't be getting slaughtered by these robots for nothing. It feels better to know this will actually be the NET leg-up for humanity ... just got to remember it's all good in the interim.
But I strongly suspect most people will not be killed by a limited supply of $300K Hellfire missiles, or multi-million dollar robots, they will just be killed by cheap and abundant bullets, shrapnel and knives, operated by humans.
We're the weapon, the enemy, the target and the sucker killing or being killed ... for something or other ... can't remember at the moment ... gimme a minute ... it'll come back to me ...
But I guess there's room for a swarm of cheap insect-size autonomous drones that infiltrate and land on your neck then detonate a micro-explosive shaped-charge into your brain stem.
That would be soooo fricken coooool!!!
I shouldn't jest ... because something like that almost certainly exists right now, just needs to be mass-produced, model-T style ... and we know robots can mass produce.
Ok, ... maybe you're right.
But at least the utopian dream will re-emerge intact after that. :)
or not
Of course one can say SS officer and boss of the KZ Dora Mittelbau Wernher von Braun did something for humanity. Under his supervision slave workers produced the first ballistic rocket and in 1942 or 43 a Nazi rocket reached the space.
Later the rocket scientists went to Sowjet Union and US. von Braun to the US where his team build the first intercontinental rocket with a nuclear war head, while the Sowjet team launched Sputnik and shot the first man into the space.
Yes and genius Racketenmann Werner the SS officer and KZ boss received from Kennedy the job to bring a man to the moon. As we all know von Braun suceeded.
By the way the drones are also a nazi product. Also by von Braun developed still in Nazi Germany. It was called the flying bomb. In German the name is Drohne and it got its name from the word droehnen, which means a roaring sound which was typical for the Nazi flying bombs.
I wonder what these nazi inventions did good for the mankind or as you wrote:
ignited the next great wave of positive human advancement
@ Element, not only shrapnel, bullets and knives, but also floride, aspartame, BPA, GMO's, radiation, and whatever else the evil f*cks want to put in our food, water, air, or 'medicine' to help us die faster or breed slower.
The Good News...
"The good thing (if one can find something good in war) is that robotics and drones will do most of the killing in the next war and the technological advancements made there will ironically, and in no small way ignite the next great wave of positive human advancement."
The Bad News...
Robots and Drones already ARE killing you. You just haven't noticed, yet.
If the drones don't kill you, Fukashima will.
F Putin! The USA and Cana can sell Europe nat gass with LNG tankers.
"the ways of the Almighty are truly unpenetrable!"
Lol, I am no soothsayer; just giving you my gut feeling. Glad it stirs an echo in the forum!
Well I'm not sure who this "Almighty" mythical creature is supposed to be, but let's hope he or she is "impenetrable" and not "unpenetrable".
;)
my bad! she must be a tuff woman!