by Aleksei Kettunen
GAZPROM–EU: 6–0
Yesterday on Wednesday the EU negotiated with Gazprom in Moscow. The EU negotiators had three aims:
- Pressure Russia into extending the special winter pricing on gas supplies to Ukrainian due to end in March,
- Force Russia to further unilateral concessions by forcing all European energy purchases to happen through a new “European Energy Union”,
- Pressure Russia to resurrect the canceled South Stream gas pipeline project and build it in accordance with the restrictive rules of the Third Energy Package.
The Russian response was a cold shower.
Firstly, Gazprom said there is no need for a special summer agreement on Ukrainian gas purchases, as a valid contract already exists.
In practice, this means that all the concessions Kiev has received for the winter season are temporary and there is no space for negotiations. If the EU wants to ensure their gas transits through Ukraine then it must put pressure on Kiev to comply with existing agreements. If Kiev needs gas it cannot afford to pay – thus endangering transit deliveries to EU countries – it is not Russia’s problem. The same applies to Kiev’s gas debts; the EU will have to pay both the Ukrainian gas debts and any future gas purchases.
Secondly, Gazprom announced that the South Stream gas pipeline project is dead and will not be realized. The project collapsed under US and EU pressure. The greatest obstacle turned out to be EU’s Third Energy Package. It heavily restricts how Gazprom could use their own pipeline; Gasprom could only use 50% of South Stream’s capacity and would be forced to offer the remaining 50% of the transportation capacity to third parties. Although all of the agreements between Gasprom and the various transit and consumer countries were made before the Third Energy Package entered into force, the European Commission now demands that it is applied retroactively.
Russia’s solution is as follows: Gazprom will build the pipeline to Turkey and extend it the Turkish-Greek border. The pipeline will end in a gas distribution hub near the EU border. If the EU wants to buy gas, it will have to build a pipeline to Turkey at its own expense. It will also need to expand the gas transport capacity between its South European member countries – and do so under the constraints imposed by its own Third Energy Package.
The final punch to EU arrogance was Gazprom’s declaration that after the completion of the gas hub and the Turkish pipeline Gazprom will end all gas transit through Ukraine. Russian gas will only be available through Turkey! The Ukrainian pipeline network will be used exclusively supply gas to Ukraine. Gazprom based its decision on Ukraine’s instability and the high transit risks.
Maroš Šefčovič, the week-old European Commissioner for Energy Union must have had the worst day of his life. EU arrogance hit a brick wall. A major scandal is brewing about how Germany ruthlessly secured its own gas supply through the Nord Stream Pipeline and then used all means possible to sabotage the South Stream pipeline. There is no better cause inflame the North-South conflict in the EU. The prospective users of the South Stream pipeline are sure to feel “eternal gratitude” to the United States for killing the project.
The perpetual EU candidate Turkey will feel Schadenfreude watching the EU’s plight while calculating the future revenues from gas transits. Turkey also happens to be Gazprom’s second-largest customer after Germany. The biggest loser will be Ukraine, the world’s preeminent gas siphoner and blackmailer.
Despite all the arrogant talk the EU has no real alternative to Russian natural gas. Brussels has to swallow it pride and come to its senses.
Now we are anxiously waiting for the Western mainstream media’s spin on the story.
Sources:
ЕК: Россия решила перенаправить идущий через Украину газ на новую трубу в Турцию
Миллер: Снять риски транзита через Украину ЕС поможет только «Турецкий поток»
See also:
A few thoughts:
I’ve read that the North Stream pipeline is only 50 pct utilized, because of the EU energy policy. If EU backed down, even temporarily until the “crisis” is over, the piped gas through Germany could possibly double in volume and thus reach neighboring countries.
This brouhaha is another reason why Turkey should be very wary about joining the EU. Brussels would apply the Third Energy Package to internal Turkish pipelines if they became a member.
The EU came up with the Third Energy Package supposedly to loosen control of Russian hands on the gas and hopefully lower the price some day. Instead it will only raise the cost of gas for everybody in the EU because they will have to pay for extra pipeline construction by themselves. And even then they have to deal with Turkey as a transit country instead of dealing with Russia directly. How do they know Turkey will be a better transit partner than Ukraine?
Europuppets in full stupidity mode:
European Parliament Welcomes Scrapping of South Stream Pipeline.
http://sputniknews.com/europe/20150115/1016934814.html
EU Parliament Supports France’s Call to Postpone Mistral Delivery to Russia.
http://sputniknews.com/europe/20150115/1016939313.html
EU Parliament Calls for Benchmarks Before Lifting Anti-Russian Sanctions.
According to the bloc’s legislative body, these benchmarks should include “respecting the ceasefire, unconditional withdrawal of Russian troops and illegal armed groups, exchanging all prisoners and restoring Ukraine’s control over its whole territory, including Crimea.”
http://sputniknews.com/europe/20150115/1016939800.html
,Although all of the agreements between Gasprom and the various transit and consumer countries were made before the Third Energy Package entered into force, the European Commission now demands that it is applied retroactively. ‘…
Thus shows us clearly what kind of unelected scumbags we are dealing with.
In The ,EU’ treaties and signed contracts obviously mean nothing, zero, zilch!
As an honest and law abiding German I feel ashamed for all their despicable shenanigans.
The end game for these thugs is probably to bankrupt Germany in plain sight, impose on us a second Versailles! I start pittying people who have kids with no future if Merkel lets the Brussel politbüro go on with their destructive US policies.
Gerhard Schroder inked the Nord Stream deal with Gazprom on the last few days of his term as Chancellor of Germany. It is my opinion this move preempted the Anglo-Zionist Empires iron grip on Germany’s future. He played the double agent role and met his obligation to the German People, rather than do the bidding of his handlers from NATO. What scandal? Gerhard Schroder gained Germany and Russia room to maneuver in the deep war with the Anglo-Zionist Empire!
This is potentially great news, but Turkey hasn’t proven itself to be the most reliable partner, and when leaders do stand up to the West, color revolutions are usually the result. Assuming the government of Turkey can’t be pressured/blackmailed/overthrown, this will prove to be a very big move.
The Swiss National Bank free floated the Swiss Franc from its peg to the EURO today. The world central banks are releasing all pegs of the dirty float to begin the regime of a clean currency float free of the USD as the a de facto world currency. China will soon release its undervalued currency from the USD peg and the scene will be set for massive turbulence in world markets. The BIS + IMF + SDR will be the retrofitted solution to the collapse of the BIS + IMF + USD system. Russia is part of the systemic change. They endured major currency turbulence as Central Bank of Russia free floated the ruble. The world is likely to see a more honest money in the sense that you will pay tribute, but it will be straight up…rather than the deception of shrinking the USD unit of account to exact tribute. I wonder if oil and gas will be denominated in SDR?
Brilliant. But it only comes into effect after the pipeline to the Bosphorus is built, is that correct?
How will this play out with Zionazi plans to pit puppet Ukraine and the invertebrate supine protoplasmic jellies of Europe against Russia?
Will it speed up the war provocations? Will it cause the jellies to develop backbone?
Romania was self-sufficient in natural gas and oil resources until joining EU (through a massive campaign of brainwashing after the complete destruction of industry by the western powers). There was plenty of oil, despite the germans taking huge quantities during the WW2 (people should know that Romania had a hard choice to make after the secret Ribbentrop-Molotov treaty, which gave Bessarabia plus some more territories to the Soviet Union; things were not so black and white at the time and it was basically the russians/bolsheviks who declared war first).
Anyway back to the natural resources, as a (secret) condition to join the EU, Romania had to basically give all her natural and oil resources (plus distribution) to an austrian company called OMV (which might have some russian ownership, too). After that, the romanians get something like 6% (similiar to what Russia was getting during the years of drunken Yeltzin) and the prices had be brought up to the EU level (despite salaries for locals working in these companies staying the same, except the new austrian administrators).
With this new situation, EU might try to increase the exploitation/stealing from Romania and the newly discovered resources in the Black Sea. The locals will get peanuts (as usually) for their own resources and their own extracting infrastructure built with many sacrifices during the years of socialism.
All the poor countries from EU are simply colonies and the local population can’t really do much about it because of the brainwashing that is taking place and the corruption of politicians.
What a beautiful and timely example of the Russian character as described in the article you linked yesterday (at least, I read it yesterday) by Dmitri Orlov, “Peculiarities of Russian National Character” Russia is not being confrontational, but if EU and empire of chaos are going to be a**holes about it, they can go to hell!
scr
Building Turkish Stream won’t take long. All the pipes are there, ready to go, as they were ready to start building the under-water part of South Stream.
If Europe keeps to most of the South Stream design, and considering some of it is already built, they should not take long to build the new, as the routes are decided and the land bought etc. The only thing they need is some way to hook that plan into Greece which is where Russia will terminate their pipe.
How this will work if Greece leaves the EU?? that’s interesting. Or if Greece stays in but is always broke? worse than Ukraine but already twice robbed clean…..
@Bob Kay – at the risk of going off topic I would like your opinion on the domestic value of the USD when the SDR starts to come into play. I can’t really conceive of no inflation, but I don’t know if US residents are looking at high or hyper inflation. These masters of rigging all the indexes will set the value of the dollar where they choose – I think – as the world’s currencies get reset to the SDR. Any thoughts about the impact for the US domestic economy? I would appreciate your opinion.
As for Turkey in the gas deal, I suspect the quasi-monopoly that Russia is handing to that nation and the leverage over several EU countries, with all the revenues that come with, will all have a great stabilizing effect on Turkey’s geo-political role. She becomes a vastly more iconic gateway between Asia and Europe than ever before. This has to rock the psyche of the country. I believe Turkey settles into its ancient, fully globalist position between east and west and ceases even to care much about something so flimsy as EU membership. It’s no longer a case of if EU will let Turkey join, but if Turkey will let EU play in the great expanding trade adventure to the east.
Grieved said, “I would like your opinion on the domestic value of the USD when the SDR starts to come into play.”
The Federal Reserve Bank has increased the base money of the USD from approximately 900 Billion USD after the collapse of the IMF USD credit system in 2008, to 4.2 Trillion USD base money at the end of QE in 2014.
Base money is the standard for the USD as a unit of account. I think the books will balance at the end of the USD and the reset to SDR. The USD unit of account has already been devalued by 79% if you think about the fraction of increase of base money on the balance sheet of the Fed.
Gold is a wild card in the basket of currencies, with its elastic price it can absorb a lot of the USD base devaluation on the balance sheet of the central banks. I think the world will spread the losses so the USD will not absorb the total base money devaluation. The world has no interest in wiping out the USD, as many central banks and private interests have much of their wealth in USD.
So, it is my opinion based on the increase of USD base money and political realism, that the USA and the rest of the world will split the USD devaluation. This would mean USD will lose about 40% of its value for central banks which are hedged with gold and 80% for private entities including us as individuals with USD promises to pay in our pension funds and savings accounts. The central bank gold hedge will balance the accounts. This accounts for China’s huge purchases of gold to offset the devaluation of their USD reserves.
So, it is my opinion that the USD paper will lose about 80% of its buying power in the reset, however this will be ameliorated by the world which has much to lose from the chaos which might cripple world trade. I think the reset will domestically devalue the USD between the extreme of 80% and the best outcome of 40% ‘haircut’. So, 60% devaluation of USD value would be a good guess in my opinion.
I think the free float of currencies and the massive moves in the currency markets are a tell that the reset is in place and on the move. The system will absorb the shock and gold is in place to add credibility in the key markets. Above all the oil must flow! The modern world ends if oil trade is interrupted and we descend into the Mad Max world. It is my opinion the very wealthy will lose a large fraction of their USD wealth, as they cannot hedge into gold the way central banks can.
We may be entering an era of relative peace, as no one will be able to fight wars on credit. War is expensive and the reserve status of the dollar enabled additional decades of the AZ Empire’s war on terror. We can thank China for financing the war on terror as they absorbed the USD paper in exchange for transfer of capital and know how from the USA. These compromises underlie my thought that the reset will be a negotiated hard landing, but the passengers on space ship earth will survive with world trade intact!
Remember….this is just my opinion and I am often more wrong than right when I venture into prediction of a complex system I barely comprehend.
Best wishes….rk
European pariahs present their upside down values: Konstantin Kosachev regrets the position of certain lawmakers at the European Parliament who recommended that “a strategy to counteract the Russian propagandistic campaign against the European Union, the union’s eastern neighbours and against Russia itself should be worked out,” Kosachev wrote in his Twitter blog.
“European everymen (and even a Russian one, which sounds incredible) are supposed to be shielded from ‘undesirable’ information coming from Russian sources,”
http://itar-tass.com/en/russia/771451
Another good news: Duma moves to outlaw ‘undesirable’ foreign groups
http://rt.com/politics/222883-russia-undesirable-groups-bill/
As I noted a few weeks ago, the South Stream cancellation changed everything. We may have to wait for a response from the west. I think it took 2 days the last time.
The Paris attack will benefit the Euro/EU/Sanctions skeptics, which is now a problem for Merkel and her party and they face a growing challenge from the right.
Not noted by many, but the European court and bank are in a struggle with the German court and bank as the EU attempts to impose its right over the nation state.
There’s a perhaps ‘perfect storm’ brewing for the EU. I don’t expect it to exist in its current configuration for much longer. Perhaps the German anonymice who disagreed with me may want to comment now?
Questions worth asking:
Is the US allied with the EU or the individual nations of the union?
How would NATO go about invading a member nation? Is there such a clause in the agreement?
Putin’s judo moves in regard to South Stream and the pipelines through Ukraine are quite the example of using the enemy’s strength against itself.
The pipeline could go up the coast of Bulgaria then onto the old SouthStream route. This would make Bulgaria very happy and could take Greece out of the links.
Just a question of who would finance and own it, China perhaps?
JohninMK
Russia has a strategy, China has a strategy, the USA has a strategy. Europe has no strategy. It is piggy in the middle and will be the loser. Europe is blindly following and is controlled by the USA. The US does not care a jot about Europe only about the threat to its dominance and global hegemony. Europe must regain its sovereignty and start to think for itself again.
“The EU should back the Southern Gas Corridor, a project rivaling the South Stream gas pipeline . [Maros Sefcovic, former Slovak ambassador to Israel]….. [He] told the jury at the EU Parliament at his hearing on Monday evening that Brussels’ decision to halt South Stream was well-grounded.”
It is almost certain that the U.S./NATO/Israel bloc would have continued to seek the sabotage of Russian resource supplies to the EU (and its reputation as a supplier). The move by Russia was well calculated and an appropriate response to ongoing economic warfare/resource supply sabotage operations.
p2. Indeed, the affiliation of Maros Sefcovic to Israel (former Slovak ambassador to Israel)
and his efforts to sabotage Russian energy supplies to the EU relate to Israel’s rival energy supply projects.
“Israel is lobbying the European Union to decide next week on investing in a pipeline from its Mediterranean gas fields to Cyprus that would provide a new alternative to Russian energy supplies…. Shalom estimated that the pipeline would cost $6 billion — analysts put it closer to $10 billion — and said European backing for the deal, which involves Houston-based Noble Energy Inc. (NBL) and Netanya, Israel-based Delek Group Ltd. (DLEKG), was essential.” (Israel Pushing EU to Invest in Pipeline Through Cyprus, Bloomberg, Dec 4, 2014)
In addition to conducting destabilisation/partition/regime change operations within Russia and supporting Georgia in its offensive against S Ossetia [1] (that killed Russian peace keepers and provoked a corresponding military response), Israel is also involved (through proxy assets within the U.S.) in economic warfare operations against Russia [2].
Referrences:
1. “For past seven years, Israeli companies have been helping [the] Georgian army to prepare for war against Russia through arms deals, training of infantry units and security advice.” (War in Georgia: The Israeli connection, Ynetnews, 10/08/2008)
2. “what David Petraeus has done for counter-insurgency warfare, Stuart Levey [succeeded by David Cohen] has done for economic warfare” [Senator Joe Lieberman]. These operations also involve
Jack Lew (US Treasury Secretary) and Daniel Glaser (assistant secretary for terrorist financing at the US Treasury Department).
What in retrospect should have been arranged from the time in 1991 when Ukraine gained its independence as the USSR was liquidated. But at that time, given that Ukrainian industry was designing and building very many components for the Russian space program and the Russian military, there should have been a barter deal, essentially, that Ukraine will design and manufacture whatever Russia needs for space program, rocketry, etc., and for other machinery, and in turn Russia will deliver whatever gas, oil or other fuel that Ukraine would need. There should never have been payments of money from either side.—And perhaps Ukraine could study the example of China and also develop industries to manufacture consumer goods for the EU countries, at a reasonable lesser cost. Thus there might be a market for Ukrainian industrial output on two fronts. But today, the Novorussians will surely be against it, will not want any rebuilding of Donbas done unless that whole industrial region is stripped away from Ukraine.—Yet I am not convinced that the whole Novorussian thesis, that from the start the Ukrainian regime even if “fascist” intended to “exterminate” them, is not simply a “conclusion searching for facts to support it” or “actions seeking reasons to justify them”. President Yanukovich himself, as I understand, was really their man.
What credible government directive was there ever to drive them out or commit genocide?
Outsiders, like Strelkov himself confessed,
or for agrument’s sake, conceding that some outsiders hired snipers to start killing people on the Maidan Square,—from both ends so to speak, provoked this what I think
is the dumbest war of the 21st century thus far, and outsiders, Russians from one side, the “West” from the other side, stand to reap whatever benefits might accrue.
Israeli fields are nowhere near enough to act as an alternative to Turkish Stream. Only the addition of Qatari and Iranian resources can provide Europe with a genuine alternative to Russian gas.
Hence the great urgency to overthrow Assad. The Qatari pipeline will have to go through Syria.
There will be NO hyperinflation. I sincerely wish economic commentators would do a little research into how and the reasons behind dollar hegemony. The US is currently in a dominant position with regard to the ability to manipulate the value and quantity of dollars. Ost have no concept as to why it is so. Now do your research.
ME Janssen said…
A few thoughts:
I’ve read that the North Stream pipeline is only 50 pct utilized, because of the EU energy policy. If EU backed down, even temporarily until the “crisis” is over, the piped gas through Germany could possibly double in volume and thus reach neighboring countries.
This brouhaha is another reason why Turkey should be very wary about joining the EU. Brussels would apply the Third Energy Package to internal Turkish pipelines if they became a member.
The EU came up with the Third Energy Package supposedly to loosen control of Russian hands on the gas and hopefully lower the price some day. Instead it will only raise the cost of gas for everybody in the EU because they will have to pay for extra pipeline construction by themselves. And even then they have to deal with Turkey as a transit country instead of dealing with Russia directly. How do they know Turkey will be a better transit partner than Ukraine?
15 January, 2015 16:42
1) Turkey will not be joining the EU – Period. Why should it? Why would it? The EU doesn’t want it – the EU can’t afford it.
It’s been obvious forever, that Turkey joining the EU would destroy the EU, but it looks like the EU will destroy itself without even having to admit Turkey in the first place!
Additionally, the only reason Turkey has ever been pushed as a member of the EU is with US backing because the US knows that having Turkey in the EU fatally weakens the EU, but yet again, it looks like the EU has done that just fine to itself without even having to let Turkey into the ‘club’.
As for Nord Stream carrying only 50% of capacity – yes it does. But Russia will hold the EU to it’s own policies until they’re totally abandoned rather than let the EU use that sort of wriggle room to save themselves a problem. There’s no way Russia will pump full capacity through Nord Stream without the EU abandoning its more onerous restrictions.
Dei iudicium
Exactly. The zionazi “homeland” was never envisioned as just a “bolt hole”, but as HQ to replace Wall Street as the HQ of western fascism. That scenario is pretty much been done now, with the zionazis alternatively using the USA and EU indiscriminately in their wars, especially now against (mainly) Russia.
вот так
Bob Kay – an interesting comment on what will become a major issue – as good as any I’ve seen. The AZ empire is a classroom bully. When you stand up to a bully, they normally back down. Just watch out for back alley ambushes!
@Bob Kay at 21:35 – if you should happen to read this, thank you for the response. I accept that you’re not an expert but I know you’re much more current with the thinking around this subject than I am.
Your answer was about what I was beginning to conceive, and to hope for. I already had absorbed the concept from somewhere that the world will participate in bringing the dollar to a landing of some kind, and help defray costs. My question has been what is the bargaining position of the US in such a reset, you answered this pretty well, I’m grateful.
A doubling of prices across the board, or even more, would not be a fatal tragedy in the US. We’re already at a pretty strong 10% per year now. It would spark a lot of honest discussion, that I don’t believe the propaganda could contain. Small price to pay actually, if it constrains the Fed’s printing ability to some kind of accountability, and if it brings a working mechanism of price discovery back into the resource and labor markets.
Everyone could adjust to the new prices and denominations, and the world could get on with economic recovery, one could almost hope. Fingers crossed ;)
I must say that I feel a lot better about the future – i.e., actually having a future – in January of 2015 than I did in January of 2014. Back then I had thought for some years that the suffocation of US hegemony would take over the whole world. It was quite depressing. But I didn’t know about Russia.
Bob Kay:
I don’t think any of your predictions about the USD will come to pass.
Right now, foreigners sell lots of surplus goods to the US to obtain dollars to buy oil and make other USD denominated trades. The US pays for this by running a budget deficit which gives Americans the surplus money they need to make excess foreign purchases.
If foreigners stopped using USD in trade and didn’t need such a copious supply of them, the trade deficit would shrink, and manufacturing would need to be repatriated to the US to compensate, thus increasing US employment and income while shrinking both deficits. Possibly the US would become a net exporter and run a budget surplus like Canada and Australia.
Any price effects would come about as a secondary impulse after everything rebalances and certainly would not be on the order of 40 or 60%. Most US purchases are within the domestic economy which is unaffected by all this.
However, the biggest leap of all is that the world is in search of another financial instrument besides the T-Bill in which to park cash savings. I see no evidence of that.
Andrew…while the internal market risk factors that I monitor are quite benign, mostly green lights with a little yellow/caution peeking through, the external market risk factors that I monitor are all screaming red. These are Epsilon Theory risk factors – political shocks, trade/forex shocks, supply shocks, etc. – and they’ve got my risk antennae quivering like crazy. I’ve been doing this for a long time, and I can’t remember a time when there was such a gulf between the environmental or exogenous risks to the market and the internal or behavioral dynamics of the market. The market today is Wile E. Coyote wearing his latest purchase from the Acme Company – a miraculous bat-wing costume that prevents the usual plunge into the canyon below by sheer dint of will. There’s absolutely nothing internal to Coyote or his bat suit that prevents him from flying around happily forever. It’s only that rock wall that’s about to come into the frame that will change Coyote’s world.
Link to Epsilon Theory – Salient Partners
There are people who would say that Greek Voters should Not Vote for the Conservatives or the Socialists in this Election, because they both are Responsible for Mismanaging the Greek Economy for Decades by means of their Incompetence and their Corruption.
These People think that unless a Patriotic Greek Party wins a Comfortable Majority of the Seats, then there will be No Flexibility and No Integrity and No Benefit with the Negotiations with the European Union, because the Conservatives and the Socialists have Already Capitulated to Austerity before the Election, and that they are Long Time Puppets for Foreign Interests.
Even if the Anti Austerity Party Syriza were to win an Overwhelming Majority of the Seats in the Greek Parliament, then this does not mean that there will automatically be a Debt Default, with Greece leaving the Eurozone.
Greece should remain a Member of the European Union and a Member of NATO, because Greece was a Member of NATO before the end of the Cold War, and the Promise that Anglo-America gave to President Mikhail Gorbachev and to the Rest of the World was that NATO would Not expand beyond Germany.
The European Union will make Many False Promises to Deceive the Greek Voters, as they have done on Many Occasions, because Election Promises are Not worth Listening to, neither is it Proper to Reward Incompetence and Corruption.
There are Many Greek Voters who think that the Patriotic Syriza Party are the best Political Party in this Election for Managing the Economy of Greece.
Mr Kay
thank you for your explanation about the sdr .you made it much more accessible to me .the next logical question is how us commoners can protect our savings and retirement in case the sdr scenario comes to pass .is there a way to contact you other than this blog or follow some of your writings or articles if available .I would be very interested and thankful .