THE "GAS WARS"
The title of the present study may appear outdated or at least out of place in the current contingency in which the research efforts of modern technology are targeted primarily at renewable energy resources that produce no polluting emissions and reduce the use of depletable fossil fuels (coal, crude and natural gas) which are among the main causes of the pollution of the atmosphere (dust and gas emissions) and of the resulting climate change (the increase of temperature of the planet). The "gas war" seems even more out of place if you are referring to the recent essay of energy expert Jeremy Rifkin ("the Third Industrial Revolution", October 2011) which, with no doubt, decreed the end of the carbon era and predicts a fair and sustainable future in which:
hundreds of millions of people around the world will produce green energy in their homes, in factories and offices;
they will share this same energy with others in the same way they now share information through the Internet.
If this is a potential scenario for the future, the media is currently depicting a new "Cold War" evolving around natural gas between the two superpowers, the United States and the Soviet Union. Following the trail of the era that ended in 1991 during which competed the rival spheres of ideological influence - communism and liberalism - the new cold war is now fought to control the markets, namely the natural gas markets, that affect the lifestyle of the world and, in particular, of European countries.
The United States do not suffer from the considerable dependence that European countries have on the Russian Federation in terms of supplies of natural gas. The U.S., in an attempt to reduce this "interference", have encouraged modern technologies for the production of a type of gas known since the end of World War II: shale gas. It is not easy to extract and it is contained in-between horizontal layers of shale rocks.
In recent years, the extraction technique has been developed following both the depletion of some conventional gas deposits and the increased demand for gas. Currently conventional gas is the one extracted with a traditional technique, through the drilling perpendicularly though the earth's surface; non-conventional gas is instead the one contained between two layers of shale, shale gas.
To extract it a far more advanced technique of extraction is required:
Firstly, the vertical drilling (as for the conventional gas) is used to reach the chosen layer of schistose rock;
Secondly, the procedure requires the "horizontal crushing" of the rocks during which water at very high pressure mixed with chemical additives and sand is pumped against the schistose layer until an "output corridor" for gas is obtained (chemical additives facilitate the crushing; the sand serves to purpose of keeping the output corridor open).
The U.S. has considerable reserves of shale gas, as we shall see in the following table. Furthermore, shale gas has a greater carbon content if compared to conventional gas and therefore a higher yield.
We should also highlight, for the purposes of putting the new "Cold War" in its updated version, that the State Department for Energy has recently authorized U.S. group "Cheniere Energy" to start the export of shale gas on international markets. It is clear that the United States aspire to reduce the Russian interference and are trying to create an alternative for European countries in the supply of gas.
GAS RESERVES COMPARISON
(bln of cubic meters)
(bln of cubic meters)
the two (1)
|Former USSR countries
|Middle East & Africa
|Central Asia & China
(1) : + in favour of non conventional reserves;
- in favour of conventional reserves.
At this stage we should introduce a further important aspect of this topic: at present, does a gas war have any sense at all since air pollution and the resulting climate change are mainly attributable to the use of "exhaustible" fossil energy resources?
Why are we not using only renewable sources of energy that do not produce emissions? There are numerous answers to these questions:
the high cost of renewable energy sources' systems (photovoltaic, wind, etc.);
psychological concerns against the risk of nuclear power plants as a result of a series of catastrophic events (Chernobyl, Fukushima, etc.);
the difficulties faced by the recycling of solid waste for biomass;
the indifference of the international community, distracted by more immediate needs and pressing against climate change, and the absence of a global governance regarding this specific area.
In summary, the road for the survival of the planet is well known, in some cases we're on our way, in others we are facing hurdles that could take us to the so-called "point of no return", when no further corrective action will be effective anymore. For how long? And in the meantime?
At present, natural gas still maintains its role as a vital source of energy for various reasons, the main ones are:
as already stated, the absence of a "global governance" capable of imposing a law (not a framework convention, as the Kyoto Protocol) defining the measures to be implemented and the ones against the countries defaulting;
the plants using "renewable" energy resources are still not economically competitive;
the definition of the rules of behavior and associated fines have been postponed (see the conclusions of the recent summit in Durban), pending a binding agreement that will come into force only in 2020;
according to a recent report presented in Bologna (Salone internazionale dell'Industrializzazione Edilizia) on October 7 2011, Italy has produced 11% of its energy through renewable resources in 2010. By contrast, Italy is number one in the world for the number of solar panel plants installed in one year (2010) having doubled the power generated by them in 2010 from 3.6 gigawatts to 6.9 gigawatts in 2011.
The confirmation of the role of gas as a primary "utility" also involves the hunting and hoarding of new deposits. It is during such clashed that the media talk about "gas wars" and pose the question "is this still the Cold War?".
This is especially the case when the location of the gas fields or the territories through which a pipeline will pass are still matter of controversy.
Here we shall limit ourselves to the contrasts in the eastern Mediterranean, between the two Cypruses ("Aphrodite" field) and between Israel and Lebanon ("Leviathan" field), and in the Black Sea between Russia and Ukraine over the supply of natural gas to Europe through Ukraine.
The existing tensions between the two republics on the island of Cyprus (Greek Cyprus and Turkish Cyprus) has been aggravated with the start of the drilling on September 12, 2011 by Greek Cyprus of the "Aphrodite" field, on the southern end of the disputed island. The reserve is located in the "Exclusive Economic Zone" in Greek Cyprus. The local government has contracted for the exploitation of the field a U.S. Company, "Noble Energy", acting in joint venture with an Israeli company.
Turkey, on the basis of a previous agreement signed with Northern Cyprus, has put in place the monitoring and surveillance of the Aphrodite field believing that the proceeds from the future exploitation should also be shared with the Turkish Cypriots (this is the heart of the dispute); Turkey has also deployed warships in the Aegean Sea, disputed between Turkey and Greece.
Please note that Northern Cyprus has been under Turkish influence since 1974 (year of the military coup in Greece and the following Turkish invasion in the Northern part of the island) and until 1983 when it obtained independence and was "federated" to Turkey that still keeps a detachment of 35 thousand Turkish soldiers in Cyprus.
The EU, for its part, has sought to reduce the tension between the two Cypruses and has attempted to revive the attempts for the reunification of the two republics. An impossible mission given the 2004 special referendum in which Greek Cyprus declared it was against any reunification.
A similar controversy is taking place in the south-east of the island facing the Mediterranean coast between Israel and Lebanon for the exploitation of the "Leviathan" field, with an estimated capacity of 280 billion cubic meters, following an agreement between the aforementioned U.S. Company "Noble Energy" and the Israeli "Delek".
Israel proclaims its ownership on the field against the interference of Lebanon while the Lebanese President, Michel Suleiman, on September 5th last year met with the CEO of ENI, Paolo Scaroni. The meeting, according to the media, highlighted the willingness of the company ENI / Gazprom-Russian to get their hands on
"Leviathan" gas in order to convey it through the "South Stream" gas pipeline, which will be mentioned later.
South Stream and Nabucco Pipelines
Black Sea ( Russia and Ukraine)
During the final phases of the Cold War, Ukraine has come to be in a state of subordination and, more generally, cultural marginalization with respect to the Soviet Union. This subordination had become an "indissoluble union" whereby many young Ukranians chose to "exile" to Russia, the Russian language became a guarantee of future success and accommodation once schooling was over.
However, certain events led to the breaking of this union:
The nuclear disaster at Chernobyl in 1986 (we are in the early years of "perestroika" by Gorbachev);
the creation in Ukraine of the Ukrainian People's Movement (1989), a mass movement that brought together nationalists and "communist reformers" with the objective of recovering the wealth looted from Moscow and giving birth to democratic reforms.
With independence (August 24, 1991), the first presidents of the Republic were from the Communist Party (Leonid Kravchuk, Leonid Kucma) and guaranteed the control of the country, despite difficulties in various areas of management.
Then, with Russia facing internal instability, Ukraine also showed its weaknesses:
a Russian-speaking minority in the East (from Kiev to the border with Russia);
an economy characterized by the exhaustion of coal deposits: it was therefore necessary to acquire gas supplies from abroad. To be underlined that the pipeline infrastructures through its territory belong to Ukraine;
the Crimea issue (an autonomous region in the post-Soviet period) with the port of Sevastopol leased to Russia and the distribution of the Black Sea fleet (with the "best bits" ceded to the Russian Federation).
At the ideological level, all this has been reflected into the splitting of the Ukrainian population between those "for" and "against" Russia, or rather pro-Russian and pro-Western. In this regard, the presidential elections of 2004 witnessed an event of great importance: the so-called "orange revolution", from the color of the scarves worn by the pro-western rallies. The elections were won by Victor Janukovich, pro-Russian, but the outcome was not accepted by Victor Yushchenko and Julia Tymoshenko's pro-western party that claimed the results were rigged. Following a protest in the streets, the runoff was repeated and was won by Victor Yushenko, pro-Western, whose mandate began on January 23, 2005.
The "gas war" between Russia, in the role of the main supplier of gas (though at reduced prices), and Ukraine, whose heavy industry was threatened by the exhaustion of coal deposits on its territory and whose population faced difficult times during the winter, falls in this context.
When Ukraine requested to reduce the price it paid for gas, Russia responded that, in case of insolvency, supplies would have been suspended. Ukraine reacted by shifting on its own network the quantities of gas destined for Europe. Russia reacted and raised the price of gas to market prices. In summary, the contract for the supply of gas from Russia to Ukraine reflects the evolution of relations between the two countries and the struggle for leadership between pro-Western and pro-Russians that has been taking place in Kiev.
In this regard in 2009, during the negotiations for a new contract for the supply of gas, the Ukranian Prime Minister in office, Julia Timoshenko, although pro-Western, attempted a rapprochement with Moscow following disagreements with President Victor Jushenko, also namely pro-Western. The contract signed was strongly in favor of Russia and led to the denunciation of Timoshenko who was sentenced to seven years of imprisonment and the disqualification from public office for three years.
Returning to the price of gas supplies, the last episode was the Treaty of Kharkiv (Ukraine) in April 2010; with this treaty the President of the Republic Janukovich has tried to solve two problems that most beset the management of Kiev:
the price of gas supplies to Ukraine: $ 226 per 1000 cubic meters (compared to 336 USD of the 2009 contract);
the extension of the lease of the Sevastopol naval base until 2042.
As highlighted previously, it should be noted that the Russian gas pipeline on the territory of Ukraine does not guarantee the necessary continuity of operation; to short-circuit this issue and to counter to Ukraine, Moscow has resorted to the construction of two alternative pipelines: the North Stream and the South Stream, the latter would compete with another project, the "Nabucco" pipeline supported by the European Union and the United States in order to reduce the excessive dependence on Russia in terms of supplies of gas!
North Stream Pipeline
Let's look at some their features:
The North Stream is ready to supply northern Europe once the connection between on-shore (which pass through Russian territory) and offshore (across the Baltic Sea) sections are completed. The project, initiated in 2002, was signed in 2005 by a partnership between the Russian company Gazprom, as the majority shareholder (51%), and associated companies in Germany, Holland, and France. The executive director of the project is former German Chancellor Gerhard Schroeder. In September last year the North Stream gas pipeline was connected to the European distribution network. As for 2012 the North Stream will "move" 55 billion cubic meters of gas annually. The imports of gas in Europe in 2007 were 312 billion cubic meters. They will reach 512 billion cubic meters in 2030;
South Stream will allow the transit of 65 billion cubic meters of gas annually. The project stems from an agreement between Gazprom and Italian oil and gas company ENI in 2008. Gazprom (50% shareholder) has extended the participation of companies from other countries (Bulgaria, Romania, Hungary, Greece, Serbia, Croatia). The international agreement allowing this new pipeline was signed in 2009 in Sochi, a city on the Black Sea, and both PM Putin and Berlusconi were present. The route of the pipeline is 900 km long and stems from the Black Sea at a depth of up to 2000 meters. The construction will last 5 years and should be completed by 2014.
The "Nabucco" pipeline competes with the North Stream and South Stream projects. It was initially proposed by Austrian company OMV and the Turkish Botas in 2002 with the support of the European Union and of the United States. The development phase began in 2005 with the signature of the members who joined the project between 2005 and 2008. The countries involved are: Turkey, Bulgaria, Romania, Hungary, Austria and Germany. The fee is 16.6% for each member.
However, according to recent updates, the Nabucco project is losing interest in relation to the possible purchase by Russia of the existing pipeline infrastructure in Ukraine and thus the U.S.-EU pipeline would face the following developments:
the supply for the Nabucco pipeline would face difficulties originating from the competition from China for the gas fields in Azerbaijan and Turkmenistan;
furthermore, Turkey has already signed an agreement with Azerbaijan to build a gas pipeline in Anatolia to be fed with the production of the Azeri field "Shah Deniz";
therefore, the Nabucco pipeline could be economically replaced by two pipelines (two "joints" of the South Stream) with lower capacity but less expensive. This would put out of the game the plan of the United States and the European Union to balance Russia's gas supplies to Europe.
Through the events taken into account thus far, we can now affirm that some sort of gas wars are actually taking place. There are other strategic areas of the planet where further "outbreaks" of conflicts related to new deposits in disputed waters and/or to the definition of the ownership of such reserves are already taking place. One refers to the Arctic Ocean (continental shelf of the North Pole), others are in the Atlantic Ocean, Caribbean Sea, Pacific Ocean, Indian Ocean...
But to put it in jargon, what about climate change? Is it possible to underestimate the predictions of industry experts that affirm that by the end of the century (2100) the global temperature will rise by two degrees with the serious risk of surpassing the the point of no return? It is an inescapable problem that involves the responsibility of the entire international community who has the role of solving the issue. Yes, but how?
The definition of a solution is a complex task because several factors will contribute, some of which cannot be determined yet. The outcome of the Durban Summit on Climate Change (November 28 - 9 December 2011) highlights the criteria and the potential guidelines that will be turned into concrete measures, at least referring to the period running from 2012-2020, with controls assigned to certain regional institutions. In fact in Durban:
the end of the Kyoto Protocol was postponed to 2020;
a "green fund" of $ 100 billion USD was established to help developing countries in developing enforcement measures against global warming and floods;
above all, on the basis of a proposal from the United States (that at the time had not signed the Kyoto Protocol), an "ad hoc group" tasked with drafting a binding agreement on climate change that will go in effect in 2020 has been appointed.