Funny thing is that something like half of Russian gas goes through Ukraine and some more is just across the border in Belarus. AFAIK that hasn't stopped. Just goes to show you the complexity of international relations.
Makes you wonder if one side or the other will “accidentally” damage those pipelines. Like obviously they can’t overtly do it but you know, stuff gets damaged every day in combat zones… it would certainly immensely hurt Russia’s strategic position to have their gas exports cut off.
> I never knew until recently how tied up Russia's oil strategy was to their military / political thinking.
Oil strategy is tied to everyone's military/political thinking. Especially the top oil producers like Russia, US, etc. US was the top oil producer from 1850s to 1950s. It's one of the reasons we became a world power. We aren't maintaining military bases in saudi arabia because we are fans of islam. We didn't invade iraq because of freedom or democracy. We've been trying to topple venezuela for 2 decades because they have the largest oil reserves in the world. Some even think we are suddenly concerned about muslims in xinjiang because the chinese found oil there.
Germany invaded the soviet to take the baku oil fields. Oil has been central to most major world invents the last 150 years. What do you think our issue with iran is? Their huge oil and gas fields. You could argue the ukraine war is about oil and gas too.
If we ever got fusion energy or anything like that, one of the major sources of war would be gone.
' Oil strategy is tied to everyone's military/political thinking. '
Now people may begin to understand why Biden's son was installed in 2014 on board of directors of a Ukraine oil producer at 50,000 USD per month. It was not by happenstance nor for knowledge of oil & gas.
https://www.bbc.com/news/blogs-echochambers-27403003
More convinced that the only thing stopping wars will be energy abundance not reliant on fossil fuels. Countries will still fight over natural resources, but probably less
There's an argument here that this war is a step in the transition from wars over "oil" (read: energy supply) to wars over water. There's a little bit of both here, and it's made the war difficult for outsiders to read.
If only they used the profits to build a great economy with more to offer. They have no shortage capable and even brilliant people, but they've got a management problem at the national level.
They also have significant market share exporting certain commodities like Nickel, Palladium &c. -- but not close to gas/oil, true.
Since new investment into fossil fuel projects will go to nearly zero from here (and old equipment becomes defunct unless it is replaced), expect there gas/oil exports to decline significantly in the next years/decades. Putin didn't only mess up Ukraine now, he also wrecked his own country for at least a generation to come.
There's a couple great books, The Prize and The Quest, by Daniel Yergin, who is an energy expert. It greatly clarifies the current situation.
Update: I just saw he's published a newer book as well, https://www.amazon.com/New-Map-Energy-Climate-Nations/dp/159...
"The New Map: Energy, Climate, and the Clash of Nations" which I haven't read, but probably just updates the story as it evolved over the past 10 years.
This is the most interesting thing i saw in a while. It is tragic that our news channels are incapable of delivering such insights- german newspaper/tv all fell for putins silly „historic“ farytales..
For reference, Yamal was only re-opened a week or two ago. I don't think you can read too much into it closing again (yet). Yamal can give 33 billion cubic meters a year and Nord Stream 1 can give 55 billion.
As far as "bids" remaining, it could be something as benign as not having any demand at the price, or currency/volatility issues.
What i didn't realize until very recently was that natural gas can be liquefied and sold on an open market like a barrel of oil. With that in mind, these pipelines are not as critical. Additionally, pipelines operate by contracts which offer very generous discounts years in advance; Liquefied gas, on the other hand, is a commodity and is sold at market prices.
Seems logical to assume that Russian gas will still be sold, and that there will be buyers. Russia will be offering substantial discounts on it as well.
While natural gas can be liquefied, the infrastructure for LNG is much less mature than for gas pipelines. You still need to have the LNG terminals to be able to import the gas (and also at the export terminals as well).
Historically, LNG import terminals are concentrated in East Asia, which is generally too far away from major gas producers for a pipeline to be worthwhile to build but the energy consumption was high enough to warrant investing in such infrastructure. The US also built several LNG import terminals, but then the fracking boom caused so much natural gas to be produced that several of these were converted into LNG export terminals instead.
One of the side effects of the costs of building LNG infrastructure is that natural gas prices are very heavily regionalized: natural gas is far cheaper in the US (where it's pipeline delivery) than it is in Japan (with LNG imports).
Thanks, this explains a lot; Do you think it's reasonable to assume that due to pipeline closures and Russian isolation, gas prices will keep rising? I'm reading up on this selfishly - as i purchased some natural gas stocks like $OVV and $AR as the conflict was unwinding.
Is LNG route open for Russia? Seems like it's their only option at this point. And Pipelines are simply not safe as it should be easy to sabotage them for the enemy combatants.
I also noticed that in EU there are rumblings about legislation that would force Gas companies to be taxed at a higher rate to continue to pave the way for green energy. Not sure what are the prospects of this in the US.
It is more expensive. The reason why Lithuania and Poland built LNG terminals is not because it is economical or fun compared to pipelines. It is a pure sunk cost. The reason is to secure their supply incase Russia wants to exert influence through the gas supply like it did with Ukraine until 2015 when Ukraina started buying all gas from the EU instead.
They therefore cap the price they pay to what is available on the open LNG market, if the regular supply does not come through.
This is like comparing buying bottled water instead of using the taps in your house. Yes, technically you can do this, but transporting that bottled water is painful, and at the scale of a whole country doing it, is a huge logistical challenge. You could eventually get to the point where LNG replaced the pipelines, but that's not going to happen overnight, and the European energy grids need to heat homes this winter.
That's not quite it. The bottled water / tap water comparison is still transporting exactly the same commodity. Liquefied natural gas, however, is much denser than its non-liquefied equivalent.
Per Wikipedia, Nordstream 1 can deliver 55 G(m^3)/yr of natural gas. Per a US government source (https://www.eia.gov/todayinenergy/detail.php?id=50598), the United States has an LNG export capacity of about 12 G(ft^3)/day, or about 120G(m^3)/yr.
I imagine the operational costs of a direct pipeline are lower than the cost of liquefaction, transport, and re-gasification, but from the notice that LNG exists this is probably has an O(1) effect on price, not O(10).
Fortunately, Europe is also beginning to exit "this winter," so the energy situation is less dire than if this invasion had occurred in December going into January.
I am quite afraid of Russia shutting off the gas and oil supply. I hope Europe doesn't give up on sanctions then, at least not right away.
Betting on Russia needing the income more than we need the resources.
Power will go out completely around here and partially in many other regions, but we can live through that.
Having solar (plus wind and batteries) is a major boon, and this would undoubtedly drive demand through the roof once people have no choice. Sadly, there isn't enough supply for everyone, especially power hungry industrial sites, and trucks/cars still run on fuel.
Solar concentrators would be easy to start producing locally, but they don't run well in cold temperatures and cloudy weather, plus they still need batteries of some sort.
I am certainly empathetic to having power and lights go out... In the midwestern USA, we survived last year with rotating blackouts during an unexpected winter storm that reached deep into Texas to parts that haven't seen snow in 50 years, and some parts ever receiving snow on recorded record.
That being said, people are dying because of cheap power and gas. I know it's easy for me to say halfway across the world from behind a keyboard, but I really hope you guys elect to have your power shut off (If that's what it takes) to help the people of the Ukraine. Russia knows Europe is energy dependent on it, and it's the one area we haven't totally cut them off on. It's a small sacrifice that would save a hundred thousand lives.
In the midwest, the grid operators had a plan to divert available power to critical places first like hospitals, traffic lights, etc. It was freezing hold and I had power for 45m every 2 hours for a few days. I survived, there were places I could go, life went on.
While what happened in Texas is good for empathy, it’s not exactly the same. The power outages there were due to a poorly regulated electrical market where the power stations froze in predictable ways.
Notice that it was only Texas utilities that experienced the most major issues.
As a German I'm uncertain of what I'd want. I can totally imagine next winter being harsh, lacking power and heating. I'm less afraid of that than I am of it being a cause for people to use it to build national pride along the lines of "do without for the sake of Germany and your fellow man"...
I don't think I'll have a problem living without heating in the winter... electricity is probably harder. I think the media message that will go along with it might change something in Germany I don't want to see.
Russia has no need of the income because it is in a denomination they can’t now spend.
Countries only need to export to the extent that they can get imports. Anything beyond that is a waste - and clearly so now that foreign reserves are being frozen and defaulted on.
Russia is keeping the gas on to keep the EU out of the war.
They keep nukes to keep EU (well, NATO) out of the war. The gas is flowing because it's their last card, if they stop the gas they will lose it and EU will be forced to look for alternatives asap and won't come back.
Selling more to China is not a good short option because as I understand there is no infrastructure, most pipes go to the west. Russia needs this money to trade with China, they won't accept Rubble.
Then there is wind power and other sources such as geothermal energy and Bio-gas Plants, which is are independant of day time.
And let's not forget the lower energy demand at night, the possibilities for supply based energy consumption, (green) gas imports from somewhere else.
Depends on the factory. Most production processes are multi-stage. Most multi-stage processes have differing energy needs across individual unit operations. You could easily schedule low energy, slow processes (testing, drying, settling, cooling, etc.) to evenings to better match power availability. This has the secondary benefit that people prefer to sleep at night. Normally you'd have to redesign the whole factory to facilitate such a process change, however.
Without natural resources Russia GDP would be lower than Polish. I think the whole reason for this war is the green transformation of the world. Military dictatorship played the wrong game and didn't mange to reform the country (it seems to be a case for all countries run by military).
This is Proxy war with US/Nato to get a trade deal in exchange for balancing China with military power (last card they've got). France and Germany were OK with this - cheap resources, you can move pouting factories to Siberia, production would be more competitive than Chinese.
> I think the whole reason for this war is the green transformation of the world.
I think you're on the right track but slightly off.
NG is "green" by EU standards and Russia does make it's money from NG sales to the EU. I think the piece you're missing is that Ukraine's current government is more friendly to the EU and Ukraine has massive, untapped NG reserves[1]. I have to think that the EU is eyeing Ukrainian NG in order to cut Russia out of it's economy.
North stream 2 has very little to do with this whole conflict. Because mining is quite expensive in Siberia, Russian gas may not be price competitive as soon as 2030. Renewable energy is getting cheaper. At some point, natural gas turbines will use hydrogen produced with nuclear and renewables to balance the peaks.
Readit News
If others are interested, this video has a great overview: https://www.youtube.com/watch?v=If61baWF4GE
Map:
https://www.nationalgeographic.org/photo/europe-map/
It's a bit misleading since it doesn't show Nordstream 1 which runs under the Baltic sea to Germany.
EDIT: Here's a better map. The above is outdated
https://upload.wikimedia.org/wikipedia/commons/d/d7/Major_ru...
Harming the pipeline would harm Ukraine financially.
Maybe Ukraine has refused since 2014 to allow eastern Ukraine (ethnic Russian) to vote on leaving due to oil wealth in that area?
Oil strategy is tied to everyone's military/political thinking. Especially the top oil producers like Russia, US, etc. US was the top oil producer from 1850s to 1950s. It's one of the reasons we became a world power. We aren't maintaining military bases in saudi arabia because we are fans of islam. We didn't invade iraq because of freedom or democracy. We've been trying to topple venezuela for 2 decades because they have the largest oil reserves in the world. Some even think we are suddenly concerned about muslims in xinjiang because the chinese found oil there.
Germany invaded the soviet to take the baku oil fields. Oil has been central to most major world invents the last 150 years. What do you think our issue with iran is? Their huge oil and gas fields. You could argue the ukraine war is about oil and gas too.
If we ever got fusion energy or anything like that, one of the major sources of war would be gone.
Now people may begin to understand why Biden's son was installed in 2014 on board of directors of a Ukraine oil producer at 50,000 USD per month. It was not by happenstance nor for knowledge of oil & gas. https://www.bbc.com/news/blogs-echochambers-27403003
Since new investment into fossil fuel projects will go to nearly zero from here (and old equipment becomes defunct unless it is replaced), expect there gas/oil exports to decline significantly in the next years/decades. Putin didn't only mess up Ukraine now, he also wrecked his own country for at least a generation to come.
Update: I just saw he's published a newer book as well, https://www.amazon.com/New-Map-Energy-Climate-Nations/dp/159... "The New Map: Energy, Climate, and the Clash of Nations" which I haven't read, but probably just updates the story as it evolved over the past 10 years.
As far as "bids" remaining, it could be something as benign as not having any demand at the price, or currency/volatility issues.
Historically, LNG import terminals are concentrated in East Asia, which is generally too far away from major gas producers for a pipeline to be worthwhile to build but the energy consumption was high enough to warrant investing in such infrastructure. The US also built several LNG import terminals, but then the fracking boom caused so much natural gas to be produced that several of these were converted into LNG export terminals instead.
One of the side effects of the costs of building LNG infrastructure is that natural gas prices are very heavily regionalized: natural gas is far cheaper in the US (where it's pipeline delivery) than it is in Japan (with LNG imports).
(Some regions are sparse because don't really use gas outside specialized industrial uses)
They therefore cap the price they pay to what is available on the open LNG market, if the regular supply does not come through.
https://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_dis...
Per Wikipedia, Nordstream 1 can deliver 55 G(m^3)/yr of natural gas. Per a US government source (https://www.eia.gov/todayinenergy/detail.php?id=50598), the United States has an LNG export capacity of about 12 G(ft^3)/day, or about 120G(m^3)/yr.
I imagine the operational costs of a direct pipeline are lower than the cost of liquefaction, transport, and re-gasification, but from the notice that LNG exists this is probably has an O(1) effect on price, not O(10).
Fortunately, Europe is also beginning to exit "this winter," so the energy situation is less dire than if this invasion had occurred in December going into January.
Betting on Russia needing the income more than we need the resources.
Power will go out completely around here and partially in many other regions, but we can live through that.
Having solar (plus wind and batteries) is a major boon, and this would undoubtedly drive demand through the roof once people have no choice. Sadly, there isn't enough supply for everyone, especially power hungry industrial sites, and trucks/cars still run on fuel.
Solar concentrators would be easy to start producing locally, but they don't run well in cold temperatures and cloudy weather, plus they still need batteries of some sort.
That being said, people are dying because of cheap power and gas. I know it's easy for me to say halfway across the world from behind a keyboard, but I really hope you guys elect to have your power shut off (If that's what it takes) to help the people of the Ukraine. Russia knows Europe is energy dependent on it, and it's the one area we haven't totally cut them off on. It's a small sacrifice that would save a hundred thousand lives.
In the midwest, the grid operators had a plan to divert available power to critical places first like hospitals, traffic lights, etc. It was freezing hold and I had power for 45m every 2 hours for a few days. I survived, there were places I could go, life went on.
Notice that it was only Texas utilities that experienced the most major issues.
Cheap power raises living standards. How do people die from voluntarily choosing less expensive energy?
I live near a turbine that runs on gas in the summer, and oil in the winter when demand for gas is high.
I also suspect that prices will rise, encouraging people to turn their thermostats down and limit travel.
Time to get started.
Countries only need to export to the extent that they can get imports. Anything beyond that is a waste - and clearly so now that foreign reserves are being frozen and defaulted on.
Russia is keeping the gas on to keep the EU out of the war.
There are many possiblities.
https://en.wikipedia.org/wiki/Energy_storage
Then there is wind power and other sources such as geothermal energy and Bio-gas Plants, which is are independant of day time. And let's not forget the lower energy demand at night, the possibilities for supply based energy consumption, (green) gas imports from somewhere else.
Dead Comment
This is Proxy war with US/Nato to get a trade deal in exchange for balancing China with military power (last card they've got). France and Germany were OK with this - cheap resources, you can move pouting factories to Siberia, production would be more competitive than Chinese.
US and rest were not happy about this.
I think you're on the right track but slightly off.
NG is "green" by EU standards and Russia does make it's money from NG sales to the EU. I think the piece you're missing is that Ukraine's current government is more friendly to the EU and Ukraine has massive, untapped NG reserves[1]. I have to think that the EU is eyeing Ukrainian NG in order to cut Russia out of it's economy.
[1]https://en.wikipedia.org/wiki/Natural_gas_in_Ukraine
That sounds like something that would take decades..
And a few decades from now the EU plans to be carbon neutral.
[1] https://www.dw.com/en/european-commission-declares-nuclear-a...
[2] https://time.com/6139049/europe-natural-gas-green-energy