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Gazprom To Europe: We Own You (At Least Until 2016)

Tyler Durden's picture


It is no secret that in scrambling to find an alternative to Russia's energy-export dominance, Europe is actively seeking to recreate the US shale miracle (at least superficially, recall that a month ago Germany shelved shale-gas drilling plans until at least 2021, when it would again reassess the shale ban). Curiously, one of the few places that features as a most probable candidate for shale drilling, is none other than Ukraine itself whose Dnieper-Donets basin is a place targeted by local energy company Burisma, where as we have reported extensively in the past, none other than Joe Biden's son, Hunter, has been strategically placed as a director to give the US a front line of sight into drilling developments.

There is one problem, however, and a rather major one at that: it will take Europe years, in a best case scenario at that, before it can bring its shale output online. In fact, according to Gazprom's quarterly report released on Wednesday, shale gas production in Europe could be possible in Europe not earlier than in 2016-2018. Which, of course, is Gazprom's polite way of saying that for at least the next two years, and likely far longer, European marginal gas needs will be met by the dreaded Russian semi-nationalized monopoly, which in turn means that for all the posturing, the Kremlin will have an exclusive "right of first refusal" to determine European economic growth with the literal push of a button.

“Commercial shale gas production in Europe can begin not earlier than in 2016-2018 even with positive geological surveys. But production volumes will not bring about major changes in the European gas market due to a decline in conventional gas production,” the report said.

Which, sadly for Europe, means that Putin will be dictating his terms on the energy-strapped continent for a long, long time.

Itar-Tass adds that while Great Britain is pinning hopes on its Bowland Basin, geological prospecting for shale gas there has so far failed to produce positive results and has been complicated by public protests and closeness to major cities such as Liverpool, Leeds and Manchester.

Shale gas production in Europe can also encounter certain problems such as the need to drill a large number of wells and use chemicals for boosting the inflow of gas, which may be difficult to do in densely populated Europe where environmental and water safety concerns are high on the agenda.

What other potential drilling locations are there? Not many, but one stands out: Ukraine.

France has prohibited the use of hydraulic fracturing technology for the production of shale gas in 2011. Germany, the Netherlands, France, and Bulgaria followed suit with complete bans or partial restrictions.


However, the governments of Poland, Britain and Ukraine have offered tax benefits in order to encourage shale gas production.


But Tatyana Timochko, the head of the Ukrainian Ecological League, warned that commercial shale gas production in Ukraine could cause irreparable damage to the environment. She said, citing findings by Ukrainian scientists from the National Academy of Sciences, that it would take an area of about two hectares to drill just one well.


According to the expert, this will mean stripping the area “down to clay” in order to get a stable solid surface for process equipment, whereupon “thousands of hectares of fertile land will be ruined irrecoverably.” “This technology [of underground hydraulic reservoir fracturing] requires 5,000 to 20,000 cubic metres of water mixed with chemicals to be pumped down to a depth of 3-5 kilometres, with only 20-25% of this water coming back to the surface afterwards,” she said.


After passing through radioactive rock, the water mixed with rocks, clay, sand and chemicals will come back to the surface, but it is not known how it will be recycled, Timochko said.


“This water will get back to the surface and then what? It’s nothing like the Marcellus Formation in America where the public forced [the authorities] to build a plant for recycling this mass only 15 years later. Until then it was dumped into the desert, into some pits there. But density [of population] there where the Marcellus Formation is, are 2 persons per square kilometre, while in the Kharkiv and Donetsk regions it is 78-84,” she said.


Timochko stressed that “there is simply no place to dump this solution” in Ukraine. “All this dirt will stay on the surface and will poison surface water,” she warned. She also spoke of possible consequences of shale gas production in areas where coal was or still is mined.


“Mines have already created manmade faults and if hydraulic fracturing starts, the degree of ground shaking will increase. These are manmade earthquakes that the British spoke of and that forces them to stop shale gas production in England,” Timochko said.

So yes, difficult, contested, unpopular. But quite feasible. All one needs, to quote Rahm Emanuel, is a "crisis." Like the civil war currently above the Dnieper-Donetsk basin.

Which brings us back to what we wrote in the last week of July, namely that the "Company In Which Joe Biden's Son Is Director Prepares To Drill Shale Gas In East Ukraine."

There is only one problem: the shale drilling would have to be situated in the Donetsk Republic region, which just so happens... is currently blanketed by a civil war.

Which for all those confused, should lay out the big picture, read energy, interests of Ukraine, Europe as well as Russia in east Ukraine very, very clearly.

And while the map above is quite useful to understand the underlying motives behind Europe's deadliest conflict in years, the one below is just as, if not more, relevant. If only for the next 2-4 years.


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Thu, 08/14/2014 - 10:07 | 5092005 bigdumbnugly
bigdumbnugly's picture

i suppose in retaliation that france could shut off the supply of french maids to ukraine - but the ukraine probably could brush that off pretty easily.     .  .  .        it is the one place that has better women than that in house anyway.

Thu, 08/14/2014 - 10:09 | 5092014 barre-de-rire
barre-de-rire's picture

there is no fraking gaz enough quantity this is BS, europ & usa are fucked. face it, why the fuck usa wanna putin's head... think about it...


fraking gaz is unicorn.

Thu, 08/14/2014 - 10:11 | 5092027 BigJim
BigJim's picture

If half of Europe has to freeze to death to save the petrodollar, I'm sure the US elites are fine with it.

Thu, 08/14/2014 - 10:13 | 5092029 bigdumbnugly
bigdumbnugly's picture

yes, everyone must make certain sacrifices...

Thu, 08/14/2014 - 10:20 | 5092051 Latina Lover
Latina Lover's picture

Frantic phone Victoria Nuland to new Russian Ambassador:

Nudelman: Quick, crank up the color revolution machine, need to overthrow Putin NOW!

Ambassador: A slight problem Vicky... we have a problem with intercepted......(call falls off), replaced by Russian Voice,  sorry wrong country.

Thu, 08/14/2014 - 10:52 | 5092212 kaiserhoff
kaiserhoff's picture

There's no shortage of coal in the Sudatenland.  Never was.

This is mostly a greeny thang.  It ain't eary being green.  It can frost your balls.

Thu, 08/14/2014 - 11:11 | 5092286 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

EU to Putin, "Frack you!!"

Thu, 08/14/2014 - 13:47 | 5093160 Carl Spackler
Carl Spackler's picture

 Genau ! 

There is plenty of coal to create electricity until long after all of us are dead.

Germany's energy question is controlled by a set of internal political handcuffs.

The Green Party and its supporters have given Putin political leverage by saying nein to coal and nuclear.

Over time, Putin has seized this political opportunity with Russia's eco-friendly nat gas.


Thu, 08/14/2014 - 14:09 | 5093262 Whitehall
Whitehall's picture

Germany sure seems to have an increasing appetite for American coal imports.

I see the hand of the FSB behind the anti-nuclear attacks.

Thu, 08/14/2014 - 20:18 | 5095010 german Wunderkind
german Wunderkind's picture

the rest of germany sits on a lot of coal too...

Thu, 08/14/2014 - 10:33 | 5092087 barre-de-rire
barre-de-rire's picture

negativ vote dont be such morrons :


in 2011 california estimatin been lowered by 96%.... usa do not have  fracking gaz... this is total bullshit, it is unicon, you want to believe there is alternative to  natural gaz so you messing in europ... but when you will have fracked the ground, destabilized the ground for pollution & earthquakes and ground slides... you will one more time  say " russia fault " ?


wake up ffs.


polish was the most estimated country in europ for fracking gaz. they  off the system  6 month ago, estimation way above reality, now the dream has ended.  NO  FRACKING GAZ  in the world  as sustainable way as we consume natural gaz  !

Thu, 08/14/2014 - 10:13 | 5092030 Harbanger
Harbanger's picture

I don't see how Putin dictating his terms on the energy-strapped continent as the article says, can be good for EU-Russian relations.

Thu, 08/14/2014 - 10:24 | 5092062 bigdumbnugly
bigdumbnugly's picture

short term, no.

gotta think long term though.

it'll eventually get resolved on russia's terms, both sides will get what they need, and then make merry together.

Thu, 08/14/2014 - 17:02 | 5094211 Whitehall
Whitehall's picture

Reagan warned the Euros about the dangers of building their economies on Russian energy.

The Russians, in turn, spread a lot of money around to stop the EU from being independent on Russian energy.

On the other hand, Americans rushed in after the fall of the Iron Curtain to fix the Russian reactors in Eastern Europe so that they were no longer dependent on Russian fuel and technical assistance.

Fri, 08/15/2014 - 09:49 | 5097043 Analyse2
Analyse2's picture


Is there any French maid in Ukraine ?

Fri, 08/15/2014 - 10:00 | 5097139 Analyse2
Analyse2's picture

BTW France is far less dependant than a lot of other countries ... But remains always the target of the neo-cons since the dirty Irak war !

The French tend to prefer electric heating as 75% of their electricity is produced by their nuclear plants (USA 19%, UK 18%, Japan 18%, Germany 16%).

Thu, 08/14/2014 - 10:07 | 5092007 LawsofPhysics
LawsofPhysics's picture

Who runs bartertown?

Thu, 08/14/2014 - 10:25 | 5092011 GetZeeGold
GetZeeGold's picture



That would be Gazprom.


We could do something about that....but we won't.

Thu, 08/14/2014 - 10:37 | 5092126 Harbanger
Harbanger's picture

We got Joe Bidens son a jiab there, that's something.

Thu, 08/14/2014 - 10:45 | 5092158 NoDebt
NoDebt's picture

And besides, how much trouble could one Biden cause, right smack dab in the middle of the greatest Russia vs. The West conflict since the cold war?

Yeah, I'm sure it'll be fine.

Thu, 08/14/2014 - 10:51 | 5092211 Harbanger
Harbanger's picture

I thought Putin and Obama don't get along.  How does the VP's son get a job with a russian gas company headquartered in Moscow?

Thu, 08/14/2014 - 11:16 | 5092313 corsair
corsair's picture

Uhmmm...maybe because it is UKRAINIAN gas company (headquartered in Limassol, Cyprus).

Thu, 08/14/2014 - 11:30 | 5092397 Harbanger
Harbanger's picture

Yes my wrong, I'm still hungover.

Thu, 08/14/2014 - 10:47 | 5092180 Freddie
Freddie's picture

While the USA was killing innocent people in Iraq and Afghanistan and American boys were being blown up - Russia was building endless gas pipelines connecting probably 2/3rds of the world's population. 

While the USSA was building defective expensive shit like the F-35 (which could be greased by an old Mig-21) - Russia was building state of the art missiles.

The Pentagon has a pretty good idea how good Russian ICBMs, anti-ship, tank and aircraft missiles are and how bad the F-35 is.

Thu, 08/14/2014 - 10:15 | 5092025 Urban Redneck
Urban Redneck's picture

If you're a Ukey, the answer is "Barry( MasterBaiter) Runs Barter Town!"

Thu, 08/14/2014 - 10:22 | 5092072 Latina Lover
Latina Lover's picture

I wonder what is the value of a natural gas pipeline with no gas.....LOL

Thu, 08/14/2014 - 10:43 | 5092162 Urban Redneck
Urban Redneck's picture

The need the pipelines to extract the 30 billion cubic meters of gas that now belongs to the IMF and transport it to Germany.

Thu, 08/14/2014 - 12:32 | 5092765 Latina Lover
Latina Lover's picture

What Gas? The supposed gas that is to be fracked from Donbass?  The locals may have an issue with that.

Thu, 08/14/2014 - 13:30 | 5093074 Urban Redneck
Urban Redneck's picture

All the gas the Ukrainians still haven't paid Gazprom for... The locals can choke on Christine Lagarde's cock.

Thu, 08/14/2014 - 10:07 | 5092008 Peter Pan
Peter Pan's picture

Before you know they will be fracking in Fukushima as well.


Thu, 08/14/2014 - 10:10 | 5092021 GetZeeGold
GetZeeGold's picture



Global warming is gonna kill us all first.

Thu, 08/14/2014 - 10:11 | 5092026 Peter Pan
Peter Pan's picture

Either Global Warming or Nuclear Winter. Take your pick.

Thu, 08/14/2014 - 10:14 | 5092032 GetZeeGold
GetZeeGold's picture



Awesome......I get to chose!


So I'll let you know.

Thu, 08/14/2014 - 12:59 | 5092913 KnuckleDragger-X
KnuckleDragger-X's picture

You don't get to choose but you get to play....

Thu, 08/14/2014 - 10:09 | 5092010 Sudden Debt
Sudden Debt's picture


like that will ever happen :)


Anything you try to do here with the landscape takes 1 to 2 decades before you get the paperwork :)

And than only 1 citizen call block it all if he files a complaint :)

We're not America you know :)

Thu, 08/14/2014 - 10:19 | 5092055 Reptil
Reptil's picture

and I'm happy about that.
shale gas is a scam. it fucks up the groundwater and aquifers.
clean water will be scarce, energy is plenty.
Spain and Germany are already producing too much from alternative sources.
too much for the energy cartel to accept, that is.

the problems we face are not technical
they're because minds are clouded. the wrong people are at the helm. and the wrong descisions are made.
fuck this war. it's pointless.

Thu, 08/14/2014 - 10:20 | 5092063 Harbanger
Harbanger's picture

Same things happens here in the more progressive localities.  Just another reason why people in America say we are becoming more and more like the Europeans.

Thu, 08/14/2014 - 10:20 | 5092066 shovelhead
shovelhead's picture

All that and straight cucumbers too.


Just because.

Thu, 08/14/2014 - 10:09 | 5092013 timeless21
timeless21's picture

just amazeballs

Thu, 08/14/2014 - 10:55 | 5092015 Two dogs
Two dogs's picture

This is a curious article: Death toll soars as fighting intensifies in Ukraine - not so much for the content but because it's in the Washington Post.  I like the last bit:  That leaves the option for the convoy to go through a portion of the border farther south that is under the control of pro-Russian rebels. This scenario would all but certainly not involve the Red Cross and is viewed with hostility by the Ukrainian government.

moving on: where are the trucks now?

Thu, 08/14/2014 - 10:14 | 5092034 Smiley
Smiley's picture

Wonder how hard would be to design and build some LNG super tankers and get them on a rotation to European ports?  Gonna get REAL cold come the end of October...

Thu, 08/14/2014 - 10:28 | 5092086 GetZeeGold
GetZeeGold's picture



Could someone please get the intern with the fancy ideas out of this damn conference room?

Thu, 08/14/2014 - 11:00 | 5092236 Smiley
Smiley's picture

Cause the old ways of doing things are working SO good these days...

Thu, 08/14/2014 - 11:38 | 5092463 Grumbleduke
Grumbleduke's picture

that's simple:

Similar to the FED, which waves a magic wand and PUFF - there's your money. Pay me interest.

You go to the beach with your preferred genie, wave the wand a few times and PUFF - there's your tanker. Lease it!

But you have to tour several beaches in Europe with that wand, for your tanker will need huge ports and tanks and cooling systems and an extra power plant to keep 'em cool. Like you.

Keep it wavin'!

Thu, 08/14/2014 - 10:16 | 5092042 alexcojones
alexcojones's picture

What Putin is trying to do, kill the petrodollar,

Got Saddam and Kaddafi killed and their countries destroyed.

Hope we all survive this royal rumble.

Thu, 08/14/2014 - 10:19 | 5092058 Smiley
Smiley's picture

Saddam and Kaddafi didn't have a firm grip on Europe's short hairs like Putin.  Crimping the oil supply has a sublte delayed effect; turing off the gas will freeze half a continent's population in a week.

Thu, 08/14/2014 - 10:18 | 5092052 KidHorn
KidHorn's picture

Europe gets more gas fron Norway than Russia. Just barely though. I didn't know that.

Thu, 08/14/2014 - 10:20 | 5092068 Reptil
Reptil's picture

Anders Fogh Rasmussen is norwegian.

Thu, 08/14/2014 - 11:32 | 5092418 goldhedge
goldhedge's picture

Whatever he is he still is a CUNT

Thu, 08/14/2014 - 10:27 | 5092083 firstdivision
firstdivision's picture

The world is quickly running out of easily extractible resources.  As long as the energy company PACs keep running the idiotic ads that there is never going to be an end to natural resources, the public is going to be ill prepared.  The end is truly nigh

Thu, 08/14/2014 - 11:28 | 5092390 Funny Money
Funny Money's picture

Did you drink the Peak Oil Koolaide, too?

Thu, 08/14/2014 - 10:28 | 5092084 vyeung
vyeung's picture

Ukraine will be useless when the South Stream comes online. EU cronies are pulling all the stops to try to stop it. Too bad, they cannot do anything about it outside of a terror attack.


Thu, 08/14/2014 - 10:41 | 5092151 shovelhead
shovelhead's picture

The producer can't own more than 50% of the pipeline.

No big deal. China's got plenty of UST's to finance.

Fuck you, Obama...again. I drink your milkshake.

Thu, 08/14/2014 - 13:36 | 5092867 gallistic
gallistic's picture

Many people are completely mislead by that erroneous impression. Of course, nobody in the MSM will bother to explain anything. They will simply give an incomplete and erroneous impression and declare "mission accomplished".

This "EU Law" about 50% ownership was passed well after the South Stream accords were signed and work had commenced. There are also other EU "requirements" and issues relating to the Third Energy Package which came into effect in March 2013.

One of the arguments fielded by the Russians (correct in my view) is that this is an illegal, classic ex post facto dick move designed to renegotiate better terms or try to torpedo the project. One cannot retroactively apply laws that came into effect after the events.

"Lavrov added that South Stream agreements were signed long ago, before EU adopted unbundling legislation; such laws can’t be retroactively applied. The Russian foreign minister said Russia expects EU to apply single standards to all pipelines."

There is a mountain of legal principles and precedents the size of Mt. Everest that hold up the Russian argument.

International law recognizes these principles (Section 11, article 2), the US Constitution recognizes these principles (Section 1, articles 9/10),  European Jurisprudence (Nullum crimen, nulla poena sine praevia lege poenali)  recognizes these principles, and also the vast majority of countries in the world.


Thu, 08/14/2014 - 10:31 | 5092099 Itchy and Scratchy
Itchy and Scratchy's picture

Jumpin' Vlad Flash is a gaz gaz gaz.

Thu, 08/14/2014 - 10:31 | 5092100 shovelhead
shovelhead's picture

Austria 52%...

No wonder they said "Fuck the EU" and signed the South Stream deal with Putin.

Bulgaria @ 100% and a nice jobs program was never in doubt.


Thu, 08/14/2014 - 10:47 | 5092101 ThisIsBob
ThisIsBob's picture

I believe Russia will happily continue to sell Gaz to all comers.  They would have to be desperate to use its deprivation as a weapon, as it is a lifeblood. It will be difficult for Europe to import or produce energy at a price that Russia can't beat.

If Europe keeps wanting to dance to the US tune, there are plenty of other ways to fuck them up, but most likely they will do it to themselves anyway.

Thu, 08/14/2014 - 10:34 | 5092112 youngman
youngman's picture

COME January this is going to get exciting....and Ukraine will steal half the gas too.....could get interesting

Thu, 08/14/2014 - 13:42 | 5093128 gallistic
gallistic's picture

Once South Stream comes online, Ukraine will be irrelevant as a transit country.

But until then...

Thu, 08/14/2014 - 10:52 | 5092137 earleflorida
earleflorida's picture

funny how the truman and eisenhower doctrines carved out the middle-east for the big three (us, uk, and france), but a quarter century later, it's all about ussa period... with britain (barely hanging onto 1st world status?) and what's left of france as a shrinking-violet, `lotus flower', lost in obscurity-- as a darwinian economic world power draws close to extinction,... [?]

years ago the ussa could not afford to lose the eu for its trading partner (beggard'd thy neigbors, indeed?) and explicitely dictated to all concern via usa containment absolutely no encroachment on Saudi, Kuwait, UAE, Iraq, and IRAN... indeed,  basically all of the ME and north africa ( yes iran you belong to us... which the adament persians say-- I don't think so?), period!

but how things have changed... haven't they?

to think of the 200 year  (1823) old monroe doctrine applicable to the persian gulf, indian ocean via pacific down to the truly exceptional atlantist! is simply preposterous,...

so now that russia controls the heat equivalent to 33% of europe with algeria ready to blow-up with al Qaeda circling its jihadists toyota wagon-train... what 'IS' one too due?!?

Thu, 08/14/2014 - 10:40 | 5092143 Lea
Lea's picture

Shale gas, not feasible. Not an option.

It's going to be a cold winter in Europe. 

Thu, 08/14/2014 - 10:45 | 5092166 Phuk u
Phuk u's picture

Sweden does not use Russian gas at all and some of the percentages per country are out.

Thu, 08/14/2014 - 10:46 | 5092179 Son of Captain Nemo
Son of Captain Nemo's picture

Bombing "ISIS" to rescue the Yazidis on the "hilltop"... possibly invading Libya to stabalize the oil resources just like in Iraq... Supporting our best friend in the whole wide world in it's continued destruction of a prison they created in Gaza without the "fallout" of bad PR...., Ferguson MO and the journalsits being detained from reporting the truth...  Stopping a 256 vehicle convoy of humanitarian aid and making yourself look even worse in the eyes of the World by not letting it go through...

Putin... Checkmate!


Thu, 08/14/2014 - 11:31 | 5092411 Funny Money
Funny Money's picture

No checkmate.  Putin plays checkers better than Barry, but he's not brilliant by any means.

Thu, 08/14/2014 - 10:57 | 5092220 bvrulez
bvrulez's picture

how can russia own europe in terms of gas supply, if it only serves 33%? E.On is currently re-negotiating (again) its contracts with gazprom. OTC gas spot is down (!) from way over 25 to 17 euros.

russia is a RELIABLE and fair trade partner of europe.

dont talk bullshit.

Thu, 08/14/2014 - 11:04 | 5092252 ThisIsBob
ThisIsBob's picture

The people who hand over the hard cash for it, know that.  Politicians and pundits don't want to.

Thu, 08/14/2014 - 10:59 | 5092231 yogibear
yogibear's picture

Victoria Nuland and Hillary Clinton will fix everything by pushing the launch buttons.

Thu, 08/14/2014 - 11:18 | 5092318 carbonmutant
carbonmutant's picture

After 2016 Gazprom will have a pipline to nowhere and a MultiBilion Euro shortfall if they don't start cutting deals.

Thu, 08/14/2014 - 14:03 | 5093219 Whitehall
Whitehall's picture

Here's some advice for the Europeans from 6 years ago.  If they had followed it, the nukes would be coming on line about now:

Thu, 08/14/2014 - 14:51 | 5093495 Rootin' for Putin
Rootin' for Putin's picture

Gazprom should stop shipping gas as soon as the shale comes online, and then 18mths later when its all gone, go back to business as usual

Tue, 08/19/2014 - 17:55 | 5116823 MeelionDollerBogus
MeelionDollerBogus's picture

So what if there's earth-quakes & poisoned water?

This is just blatantly rayciss against movers 'n' shakers who are smart'n'savvy.

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