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Changing landmarks: The geo-politics of gas

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Russia takes control of Turkmen (world?) gas

By M K Bhadrakumar

From the details coming out of Ashgabat in Turkmenistan and Moscow over the weekend, it is apparent that the great game over Caspian energy has taken a dramatic turn. In the geopolitics of energy security, nothing like this has happened before. The United States has suffered a huge defeat in the race for Caspian gas. The question now is how much longer Washington could afford to keep Iran out of the energy market.

Gazprom, Russia's energy leviathan, signed two major agreements in Ashgabat on Friday outlining a new scheme for purchase of Turkmen gas. The first one elaborates the price formation principles that will be guiding the Russian gas purchase from Turkmenistan during the next 20-year period. The second agreement is a unique one, making Gazprom the donor for local Turkmen energy projects. In essence, the two agreements ensure that Russia will keep control over Turkmen gas exports.

The new pricing principle lays out that starting from next year, Russia has agreed to pay to Turkmenistan a base gas purchasing price that is a mix of the average wholesale price in Europe and Ukraine. In effect, as compared to the current price of US$140 per thousand cubic meters of Turkmen gas, from 2009 onward Russia will be paying $225-295 under the new formula. This works out to an additional annual payment of something like $9.4 billion to $12.4 billion. But the transition to market principles of pricing will take place within the framework of a long-term contract running up to the year 2028.

The second agreement stipulates that Gazprom will finance and build gas transportation facilities and develop gas fields in Turkmenistan. Experts have estimated that Gazprom will finance Turkmen projects costing $4-6 billion. Gazprom chief Alexei Miller said, "We have reached agreement regarding Gazprom financing and building the new main gas pipelines from the east of the country, developing gas fields and boosting the capacity of the Turkmen sector of the Caspian gas pipeline to 30 billion cubic meters." Interestingly, Gazprom will provide financing in the form of 0% credits for these local projects. The net gain for Turkmenistan is estimated to be in the region of $240-480 million.

From all appearance, Gazprom, which was headed by Russian President Dmitry Medvedev for eight years from 2000 to May 2008, has taken an audacious initiative. It could only have happened thanks to a strategic decision taken at the highest level in the Kremlin. In fact, Medvedev had traveled to Ashgabat on July 4-5 en route to the Group of Eight summit meeting in Hokkaido, Japan.

Curiously, the agreements reached in Ashgabat on Friday are unlikely to enable Gazprom to make revenue from reselling Turkmen gas. Quite possibly, Gazprom may now have to concede similar terms to Kazakhstan and Uzbekistan, the two other major gas producing countries in Central Asia. In other words, plain money-making was not the motivation for Gazprom. The Kremlin has a grand strategy.

Coincidence or not, Russian Deputy Prime Minister Igor Sechin traveled to Beijing at the weekend to launch with his Chinese counterpart, Vice Premier Wang Oishan, an energy initiative - a so-called "energy negotiation mechanism". The first round of negotiations within this framework took place on Saturday in Beijing. There has been an inexplicable media blackout of the event, but Beijing finally decided to break the news. The government-owned China Daily admitted on Monday, "Both China and Russia kept silent on the details of the consensus they reached on energy cooperation in the first round of their negotiation in Beijing on the weekend."

Without getting into details, China Daily merely took note of the talks as "a good beginning" and commented, "It seems that a shift of Russia's energy export policy is under way. Russia might turn its eyes from the Western countries to the Asia-Pacific region ... The cooperation in the energy sector is an issue of great significance for Sino-Russian relations ... the political and geographic closeness of the two countries would put their energy cooperation under a safe umbrella and make it a win-win deal. China-Russia ties are at their best times ... The two sides settled their lingering border disputes, held joint military exercises, and enjoyed rapidly increasing bilateral trade."

It is unclear whether Gazprom's agreements in Ashgabat and Sechin's talks in Beijing were inter-related. Conceivably, they overlapped in so far as China had signed a long-term agreement with Turkmenistan whereby the latter would supply 30 billion cubic meters of gas to China annually for the 30-year period starting from 2009. The construction work on the gas pipeline leading from Turkmenistan to China's Xinjiang Autonomous region has already begun. China had agreed on the price for Turkmen gas at $195 per thousand cubic meters. Now, the agreement in Ashgabat on Friday puts Gazprom in the driving seat for handling all of Turkmenistan's gas exports, including to China.

Russia and China have a heavy agenda to discuss in energy cooperation far beyond the price of Turkmen gas supplies. But suffice it to say that Gazprom's new stature as the sole buyer of Turkmen gas strengthens Russia's hands in setting the price in the world gas (and oil) market. And that has implications for China. Moscow would be keen to ensure that Russian and Chinese interests are harmonized in Central Asia.

Besides, Russia is taking a renewed interest in the idea of a "gas cartel". Medvedev referred to the idea during the visit of Venezuelan President Hugo Chavez to Moscow last week. The Russian newspaper Nezavisimaya Gazeta reported on Friday that "Moscow finds the idea of coordination of gas production and pricing policy with other gas exporters to be too tempting to abandon". The daily quoted Miller as saying, "This forum of gas exporters will set up the global gas balance. It will give answers to the questions concerning when, where and how much gas should be produced."

Until fairly recently Moscow was sensitive about the European Union's opposition to the idea of a gas cartel. (Washington has openly warned that it would legislate against countries that lined up behind a gas cartel). But high gas prices have weakened the European Union's negotiating position.

The agreements with Turkmenistan further consolidate Russia's control of Central Asia's gas exports. Gazprom recently offered to buy all of Azerbaijan's gas at European prices. (Medvedev visited Baku on July 3-4.) Baku will study with keen interest the agreements signed in Ashgabat on Friday. The overall implications of these Russian moves are very serious for the US and EU campaign to get the Nabucco gas pipeline project going.

Nabucco, which would run from Turkey to Austria via Bulgaria, Rumania and Hungary, was hoping to tap Turkmen gas by linking Turkmenistan and Azerbaijan via a pipeline across the Caspian Sea that would be connected to the pipeline networks through the Caucasus to Turkey already existing, such as the Baku-Tbilisi-Ceyhan pipeline.

But with access denied to Turkmen gas, Nabucco's viability becomes doubtful. And, without Nabucco, the entire US strategy of reducing Europe's dependence on Russian energy supplies makes no sense. Therefore, Washington is faced with Hobson's choice. Friday's agreements in Ashgabat mean that Nabucco's realization will now critically depend on gas supplies from the Middle East - Iran, in particular. Turkey is pursuing the idea of Iran supplying gas to Europe and has offered to mediate in the US-Iran standoff.

The geopolitics of energy makes strange bedfellows. Russia will be watching with anxiety the Turkish-Iranian-US tango. An understanding with Iran on gas pricing, production and market-sharing is vital for the success of Russia's overall gas export strategy. But Tehran visualizes the Nabucco as its passport for integration with Europe. Again, Russia's control of Turkmen gas cannot be to Tehran's liking. Tehran had keenly pursed with Ashgabat the idea of evacuation of Turkmen gas to the world market via Iranian territory.

There must be deep frustration in Washington. In sum, Russia has greatly strengthened its standing as the principal gas supplier to Europe. It not only controls Central Asia's gas exports but has ensured that gas from the region passes across Russia and not through the alternative trans-Caspian pipelines mooted by the US and EU. Also, a defining moment has come. The era of cheap gas is ending. Other gas exporters will cite the precedent of the price for Turkmen gas. European companies cannot match Gazprom's muscle. Azerbaijan becomes a test case. Equally, Russia places itself in a commanding position to influence the price of gas in the world market. A gas cartel is surely in the making. The geopolitical implications are simply profound for the US.

Moreover, Russian oil and gas companies are now spreading their wings into Latin America, which has been the US's traditional backyard. During Chavez's visit to Moscow on July 22, three Russian energy companies - Gazprom, LUKoil and TNK-BP - signed agreements with the Venezuelan state-owned petroleum company PDVSA. They will replace the American oil giants ExxonMobil and ConocoPhillips in Venezuela.

At the signing ceremony, Medvedev said, "We have not only approved these agreements but have also decided to supervise their implementation." Chavez responded, "I look forward to seeing all of you in Venezuela."

Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Meanwhile, the US elite wastes billions in futile wars of occupation in Afghanistan and Iraq...

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Russia takes control of Turkmen (world?) gas

By M K Bhadrakumar

From the details coming out of Ashgabat in Turkmenistan and Moscow over the weekend, it is apparent that the great game over Caspian energy has taken a dramatic turn...

A self-described "Conservative Republican's" take on the same subject:


Phew! Bush Dirty Diapers!

By Karl Schwarz


As the bad news unfolds in the Caspian Basin that the US is being 'shut out' of its delusional Grand Chessboard scheme, there are other forest fires, tornados, hurricanes, earthquakes, volcanoes erupting in the US and UK that may well spell the doom of BushCo and the Imbecile Great Decider at the helm. He is now expendable and vulnerable to both impeachment and possible war crimes charges. Pay attention to how expendable 'Gorgon' Brown suddenly has become. Bush is next as should be most of those in DC.

The Russians are often brilliant strategists, and never, even for a moment underestimate, them.

Some time around 2000, there was an "investment club" created. It was somewhere around $20 to $22 billion dollars and was promoted by a lot of high profile names mentioned often in this 9-11 / Caspian Basin fiasco, and some not mentioned at all. Names like George H W Bush, Tricky Dick Cheney, Nicholas Brady, John Sununu and others. All of their names surfaced in our investigation of what was going on in the Caspian Basin. They had all purchased front row seats to get at those trillions, and trillions and trillions of dollars in Caspian oil and gas.

Of course, that is the same John Sununu that had to resign from the Reagan Administration. Not sure what the connection was but the day he resigned Pan Am filed for bankruptcy. They must have seen trouble coming in losing their 'best customer.' Then there is the same Nicholas Brady of the GHWB Administration, the Brady Bonds fiasco and board member of Amerada Hess. The 9-11 Commission Chairman, Thomas Keane, is chairman of Amerada Hess and major shareholder, so, yes, he probably would have ignored the 'truth' for a board member involved in this Caspian Basin Investment Club.

There is a very real possibility that this 'investment club' was involved in getting 9-11 done, and it is also a possibility that they are about take a major hit due to Junior losing the Caspian Basin. I frankly hope they take a mega-billion dollar red ink shower and lose it all.

I hope they enjoy their front row seat for the aria, as the Fat Lady begins to sing, and that they lose those billions of still more stupidity of what they thought they could pull off and rip-off via the Caspian Basin.

The days of oil are numbered except for petrochemicals, the days of natural gas run as long as the Earth produces natural gas as a natural process of our planet. It is very apparent that Russia has now emerged as the dominant global giant in natural gas. What they control and how they will use that if pushed the wrong way could cause a meltdown in many parts of the world. The EU is paying attention and it is past time the US did, too.

The day is coming fast that automobiles will be powered by hydrogen and water, not oil and gasoline. I cannot foresee a time in the future that natural gas will NOT be the KEY energy issue, and Russia has already won that war, hands down. If this were a hockey game it would be Russia 50, US 0. If it were a basketball game it would be Russia100, US 0. If it were a tennis match it would be Russia 6-0, 6-0, 6-0.

We lost, that's the proverbial bottom line. Game, set and match. It is over. Finis.

The next generation of and for mankind is nanotechnology, and it will be powered by natural gas, not oil. My company scientists are experts in that matter. Russia has just taken the lead on the NOW and the FUTURE, and has left the US behind, wallowing in its Oil-on-the-Brain mindset.

My sources in Houston inform that Big Oil is realizing fast that the BushCo brain-damaged fraud of its 'Global War on Terror' has blown up in its face like a nuclear bomb. To that extent, Big Oil is no longer heeding Daddy Bush's calls to go help Junior with his dirty diapers.

Why it took them so long to recognize 'catastrophe' is incredible. Maybe it is due to their blinding, delusional blizzard of '$$$' they were dreaming of making from the Caspian Basin, like sugar plums dancing in their heads. Maybe it is because the wealthy can afford to not pay attention to the realities right in front of their noses. I have suspected for a long time that many of the Wealthy Elite in the US are running on either 'lobotomy mode' or autopilot in 'stuck-on-stupid' gear.

There is indeed a 'core group' of Big Oil tycoons in Texas who have been called upon over the years to provide 'opportunities' for Junior, so the moron will have something to do other than be 'unemployed.' They have always received '911 emergency' phone calls from Daddy that dirty diaper duty is a must. One of those major Houston 'players' and I have spoken often. My friend is astounded at the lack of perception of the Houston and Washington power players and how it took them so long to figure out what 'stupid' looks like.

As he said to me once, "Hey, I know stupid xxxx when I see it." He does, indeed, and his comment was about Junior's cabal's likelihood of success stealing the Caspian Basin. That comment was made in 2002.

Such a call to duty is even a requirement of not being put on the 'Bush xxxx List.' Frankly, I think it's about the Best list in the world to be on these days. I have been thrown out of better clubs than BushCo and damned proud that 'smudge' is not on my resume.

This diaper is so dirty, so putrid, people have decided they have better things to do with their time and money. They invested heavily in this Grand Chessboard scheme and now it is every man for himself to see how much they can limit the damage and control their losses. My bet is there are not enough lifejackets on the USS Bush Titanic for all to survive and some have reached that pregnant "moment of truth' stage. Cut the losses with BushCo or sink with them.

The Great Decider Bush and Daddy Bush are probably already making plans to push more than a few overboard from the USS Bush Titanic just to save their pathetic Presidential 'legacies.' They have already made a 'Bush xxxx List' and it grows daily due to people turning and walking away in disgust.

There are three American Presidential legacies that should be stricken from every book, every building and aircraft carrier and every other place of 'honor'...and they are those of George H W Bush, Bill Clinton and George W Bush. We could not combine the best from these three deceitful, traitorous, treasonous, genocidal morons and come up with a single decent American President.

America, face up to this simple reality: The Bush Family has raped, ravaged and thrown you into the trash heap. They screw up everything they touch with their lie-based schemes, and their treasonous sales of our best technology to our enemies and 'friends' has tossed away decades of the best R&D any nation ever achieved. Get over the reality of the matter and figure out how you are going to survive the Sinking of America. If you do not have a lifejacket, you had better find one...and fast.

There is a very real possibility that major oil companies and major billionaire Bush Buddies are about to take a bath to the point that even the money and power landscape of America will change significantly. Yeah, some of the Wealthy Elite are way, way past angry and fed-up with the Bush Show. They are going to get hosed by this stupid strategic plan and so is the rest of America. We may soon see some down on their luck billionaires due to collective Bush Stupidity.

It is one thing to 'crap' on the presidency and the Oval Office as Clinton did, but it is quite another matter to decimate/annihilate Iraq and Afghanistan (and slaughter a couple million human beings), and to dump on Russia and China, bungle the entire Caspian Basin scheme, stab America in the back and essentially blow the entire game in spades. Only George W Bush could pull of that hat trick. Even if we had Mr. MaGoo and Elmer Fudd as president and vice president, more accomplishments would have been realized since the 2000 'elections.'

These two morons, Bush & Cheney - and their Zionist NeoCon parasites and pathological killers - are a hideous, evil plague on the planet by ANY measure. Remember, I am a Conservative Republican and I know what of I speak.

In my opinion, Bush has blown more opportunities than any President in my lifetime due to his arrogance and self-inflicted ignorance.

I told one of my readers that what is happening right now is the equivalent of being hit in the head with a (Russian) Nolan Ryan fastball, and then the umpire takes the bat and hits the batter in the head again for being too stupid to see it coming and too stupid to duck. The analogy is simply that BushCo has been knocked out, lights out, and Americans are beyond stupid if they do not wake up and look at the realities of the situation.

I know many Americans who feel that way (hit in the head by a fastball) and are stunned at what they are witnessing. This is indeed a Major National Embarrassment and it is the folks in DC, the Fed, Wall Street and corporate America who are to blame. Stay focused on that. It is not your idiot next door neighbor who thinks Bush is "hot" or the one across the street who thinks the only 'truth' in America drivels from the mouths of O'Reilly and Limbaugh. The real problem is inWashington, DC and the lunatic policies these power-drunk morons keep pushing.

They all are lying to you, folks, so get it straight in your head. Those 'leaders' in Washington, DC are LIARS. When their lips are moving be very wary, be afraid of what they are *really* saying. Very afraid.

These events also raise serious questions about the sanity of the Barky Obama Black Bush strategery of 'refocusing' on Afghanistan (to try to get that pipeline deal finally done.) I can think of no reason whatsoever to spend even one second or $1 to save the reputation of Zbigniew Brzezinski and his lunatic vision for the world. The man is an idiot and Russia just proved it by pushing the US out of the Caspian Basin in one fell swoop with a contract and a pen. Seriously, his idea was dim and dumb in 1979 and it is still so in 2008. As we now know, it is dead meat lying at the bottom of the sea. Get over it and come up with a better plan.

And for the love of God, we must not allow the squander of the life of even one more American soldier on this Grand Lie.

I can bet there are plenty of 'CYA' handwringing strategy sessions going on over at Obamanation HQ and BushCo about how they are going to try to explain away this colossal failure to America. I still have yet to see that McCain has a clue as to what is unraveling right before his eyes.

Seriously, there is FUBAR, and then there is "W FUBAR" which makes the original military term mild in comparison.

Russia just made it clear to McCain: "We can afford to cut off relations with any of our partners if that's what they want. We're not interested in what [John] McCain has to say. Let him become president first, then we'll listen to him," a senior Russian diplomat told reporters on Tuesday, according to AFP.

That was in response to all of the John McGoo 'tough talk' about how he is going to reign in Russia, 'correct their attitude' and get the BushCo plan back on track.

Hint ­ cut a deal with IRAN or pack your bags in the entire Centcom area of the Middle East and Central Asia. You Bush sycophants are stinking up the world stage with your incompetence.

Another dynamic is the call for 'Gorgon' Brown to resign. Just like Tony Blair, his oratory, bullxxxx and pontificating is just making the hole deeper. Of concern there is that the Rothschild family is apparently pushing either Zionist Jack Straw or Zionist David Miliband to replace Brown so they can try to get their greed-lust game plan back on the track. Folks, it is not happening and it is not going to happen.

The Rothschild family is going to have to come to grips with the fact that they are not going to survive this intact. One of their heirs and author of "Global Warming Survival Handbook", David de Rothschild, was quoted saying that 'Jupiter and Saturn are closer to the Sun than Earth', so that is why his theory of Global Warming was valid. Yeah, well, money can't buy a brain.

I know, Forrest, stupid is as stupid does. Nothing is quite so revealing as inbreeding.

Well, the train wreck is total and getting it back on the rails might well take a generation. They just don't want Americans to figure that out yet and rise up and cast out their handpicked morons from power in the United States. That would be their worst nightmare come true...an awakened America that will not play along any more with these stupid schemes.

America, take a hint. Learn the joy of saying NO. We can stop this insanity so fast Washington, DC would need a chiropractor due to whiplash.

In a non-tearjerker moment, Ehud Olmert announced July 30 that he is stepping down...so there will be regime change in Israel, too. That one is more problematic because Olmert was pushing for peace with the Palestinians and the powers-that-be do not wish for that to happen. They want war, so the Musical 'War' Chairs game is now being played out in the US, UK and Tel Aviv to get the War Plan back on track.

Bush wants a 'peace deal' by the end of his term between Israel and the Palestinians. Well, as of Olmert's announcement that is not happening either.

This is yet another example of 'brain flatulence' that will backfire in their faces because Iran will not budge and neither China nor Russia are going to let anyone control their economies. Russia could cut the natural gas and oil off to EU and put the entire EU economy on its knees in a matter of hours...just turn off a few

master valves, and the party's over. Talk about NUKE capability and there's not a damned thing the bogus Bush Missile Shield can do about that.

Russia is now more powerful than ever, and so is China. They (the US, UK and Israel) seem to be forgetting that in the grand scheme they have created the perfect storm that can end their rule. They forgot that they are no longer in charge and in no position to dictate terms to any nation, especially to China or Russia.

Vladimir Putin and Dmitry Medvedev have proven to be chess masters of the first order and our Imbecile Great Decider can't even play a game of checkers without lying, cheating or screwing it up.

Hello, they cannot handle Afghanistan or Iraq Any American who thinks they can handle China or Russia does not have enough brain cells firing at the same time to find a light switch. They also cannot handle America if we all stand up in unison and say 'NO!'

If you have been paying attention, the Russian-UK oil partnership of TNK-BP is imploding. The people at BP recently announced that they had recalled the remaining 60 employees from Russia and powerful forces inside of Russia are forcing out the British CEO of TNK-BP. This all coincided with the recent announcement that TNK-BP was one of the three Russian oil and gas giants that were granted full access to develop Venezuela's vast oil reserves...perhaps as much as 4 trillion barrels. My bet is BP has not been invited along for the party in Venezuela.

This was in part predictable since the UK is harboring wanted fugitive Boris Berezovsky. Mr. Berezovsky was the former Yeltsin man and liaison to those same Caspian Basin nations that BushCo and the UK allies so desperately wanted to take over and control. They lost, now they are scrambling to turn their loss into a victory without America figuring out that the official clock reads '00:00' left in the game.

Simple rule ­ when a 'team' of schemers and liars cannot get a deal done after 30 years of lying and scheming, it is time for both a new plan and a new team. This has now turned out to be 'a swing and a miss' for three long, agonizing decades.

Of course, it did not help matters when Alexander Litvinenko was murdered on British soil and the UK pointed the finger of blame at Putin. That was a stupid move on the part of the Brits, but like Bush, they specialize in stupid moves over in London. That ranked right up there with our Black Poodle Condi Rice jetting all over the world to do 'arf-arf photo ops' and then scurrying around to piss on the feet of the Russian Bear.

Matters inside of TNK-BP started coming unraveled when the UK continued its protection of their CIA-MI6 Zionist ex-oligarch Berezovsky and would not extradite him to Russia to face charges for crimes against Mother Russia. It was Berezovsky who tried to sell out the Caspian Basin to the US and UK and the entire Caspian Basin despises this Zionist Jew traitor.

One of the little known facts about how Big Oil is positioned in this global game is that Conoco owns 35% of LUKOil and there are no problems whatsoever between Russia and Conoco. They are getting along fine and kicking BushCo black and blue all over the world with LUKOil as their partner.

Evidently, the management of that American oil company figured out long ago that BushCo would crap the diaper, and they wisely chose to team up with who the winners would eventually be.

Just think, BushCo could have spent that $5 trillion Iraq war waste on alternative energy and domestic oil and gas production...and completely weaned the US from dependence on foreign oil. No, that was too logical and would mean that the Caspian Basin profits would be lost to them and their cronies.

But I digress, that would require that the goons in DC be able to grasp idea that is was worthy for them to develop a real energy strategy, that to do something for America just might be the moral thing to do. No, alas, we cannot have realities contradict the delusional bullxxxx of the current regime in Washington, DC.

Well, those profits from global oil and gas control are being lost to 'others' anyway, so now it is time for America to demand a 'full accounting' regarding Use of Funds on that $5 trillion Bush blew through. It is way past time for a full accounting on what these idiots in DC did with $5 trillion that they heaped on the backs of the American taxpayers and have nothing to show for it but lies and failure, two destroyed nations and at least two million dead people.

Such is the tragedy of myopic, arrogant, greedy people chasing stupid strategic visions and plans that were, in reality, nothing but a stinky dirty diaper from the day they launched their grand scheme on September 11, 2001.

Folks, just prepare yourself for this: Not only is the Fat Lady about to sing the aria but it will be in an ear-shattering alto in B flat that will shatter 'Glass Towers" in DC, London and Wall Street. And, damn, is she one Ugly Fat Lady.

Ugly has come home to roost on the New World Order as defined by the Bush Family. Unfortunately, it has come home to roost on America, too. Maybe God will help us through this but, if so, it will not be because of these evil idiots in DC.

The American elite has repeated the same cardinal errors the its British forbears did. In the latter case, the strategic geniuses of the Foreign Office and what Veblen called "the clubs" destroyed their own empire at vast expense - and at the cost of tens of millions of lives in the process. Because Britain was (is) not a democracy, no one was held accountable, and no lessons were learned.

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