Several surprising events occurred recently a continent away that could boost alternate energy usage in Europe and around the world.
As series of comments by Russian Gas authorities likely sent shivers down the backs of European politicians and probably resulted in review meetings that were burning the midnight oil.
First, back in March, during an official visit to Beijing, Russian President V. Putin agreed to start construction of a natural gas pipeline to China within five years.
"There was no word on the long-sought oil pipeline to the Far East. In 2003, Russia's cabinet decided against building a pipeline directly into China, as Beijing wanted; instead they decided to build a pipeline to their Pacific coast where it could supply oil to more Pacific nations, particularly Japan. The new agreement calls for a branch oil pipeline into China, but only a feasibility study is planned at the current time."
The notion of Russian natural gas going to China is causing unease among Moscow's European customers who already are facing the likelihood of shortages in the years ahead. ( Source: see Peak Oil Review)
Secondly, adding to European concerns was a comment by Russian Economy Minister Gref who warned that oil and gas production would fall in the "mid-term", even though Russia announced that its oil production for January-February was up 1.6 percent over last year.
Third were warnings from Russian gas supremos to its European gas buyers.
"Russia's planned oil pipeline to Asia will help cut deliveries to Europe, which is currently being oversupplied with Russian crude," the head of Russia's pipeline monopoly Transneft Semyon Vainshtok told the Russian daily Nezavisimaya Gazeta
"We have overfed Europe with crude. And every single economic manual says that excessive supplies depress prices," Semyon Vainshtok added "So far we cannot reduce supplies as all our exports are going to Europe. But as soon as we divert (flows) to China, South Korea, Australia, Japan it will immediately take away crude from our European colleagues," he added.
His new comments are likely to come under much closer scrutiny after another Russian monopoly, state gas behemoth Gazprom, shocked Europe last week by saying it would supply gas elsewhere if its expansion in Europe was blocked. The UK gave in to this pressure, today. Shares of Centrica, Britain's largest energy provider, rose as much as 6.4 percent on reports the British government would not block a takeover attempt by Gazprom.
The European Union said Gazprom's threats only confirmed Europe's views that it needed to diversify its energy imports.
Finally today, in a move to reinforce Russia's China Energy option, President Vladimir Putin abruptly shifted course in front of a stunned group of Energy bosses and environmentalists alike when he called for rerouting the proposed Far East oil pipeline away from environmentally sensitive Lake Baikal, caving into year long pressure from Russian and global environmental groups.
On the day of the 20th anniversary of Chornobyl, Putin decided: "If there is the tiniest danger of polluting Baikal, then, taking into account future generations, we must do everything not simply to minimize this danger but to eliminate it,"
Here an account of the event from the Russian Press
At Wednesday's meeting, during a discussion of problems facing Siberia, Putin raised the issue of the Far East pipeline. After Vainshtok, (the president of pipeline monopoly Transneft), defended the route and Transneft's ability to shield Baikal from any danger, Putin suggested hearing what the experts had to say. Geologist Nikolai Lavyorov, vice president of the Russian Academy of Sciences, stood up. Pointing to a map of Baikal's basin, he said that rerouting the pipeline at least 40 kilometers from the lake's shoreline would ensure that if there were an accident, pollutants would head north, away from the lake.
Then Putin suddenly stepped forward and, using a marker pen to indicate the spot on the map, declared: "The route will go to the north of the area pointed to by academician Lavyorov. Let's consider it a done deal."
Everyone was in shock.
In the picture above, Vainshtok, (the president of pipeline monopoly Transneft) left, Putin and Lavyorov looking at a map of the Baikal basin at a meeting with Siberian governors and Cabinet members in Tomsk
on Wednesday.
People will likely be scratching their heads for a long time trying to figure out Putin's motivations on this one. Is Putin posturing before the G8 summit or ahead of the arrival of German Chancellor Angela Merkel.? Are we now seeing he kinder side of Putin ( a Gorby-like makeover) ? Is Russia trying to soften it's bad-boy, big bear image in front of the world? Your guess is as good as mine.
"Lake Baikal, which contains 20 percent of the Earth's fresh water, sits on a continental rift that widens by about 2 centimeters each year. The area is prone to seismic disturbances that environmentalists worried would trigger a natural disaster if the pipeline ripped open near the lake."
What the Russian press is saying:
His remarks stunned Semyon Vainshtok, the president of pipeline monopoly Transneft, who had just made the case for the safety of the planned route, which was to come within 800 meters of the lake.
Peter Westin, MDM Bank's chief economist, said the public would like Putin's move, calling it "good political strategy."
Vainshtok, who appeared in a state of shock, said he was taken aback by Putin's decision but that "I am a soldier, and the president is the commander in chief. Orders are not discussed." He defended Putin, adding: "The position of the president is that even though we have a high level of technology, if there is the slightest chance of danger, then ecological safety must come first." Commenting on Putin's abrupt decision, Transneft officials added, "This is a question about the state we live in and the way things run here."
Roland Nash, chief strategist at Renaissance Capital investment bank, pointed out that Putin's decision to shift the route came at a time when the country was awash in petrodollars and capable of incurring the additional expense. "It is nice to see that Russia can also afford these kinds of political and environmental gestures," he said.
The $11.5-billion pipeline will ship 600,000 barrels per day at the first stage, mainly to China, with supplies rising to 1.6 million bpd at the second stage, when a big terminal is build on the Russian Pacific coast.
Taken as a package, these events and comments could significantly shift Europe's focus away from a Russian focused gas-centric energy policy toward more diversified energy strategy which increasingly includes sustainable and politically independent sources of renewable energy....and the rest of the world could well follow suite.
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Walter Derzko
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