Russian oil roulette

g4520Like a big bang yesterday a news spread about still unheard discovery of oil and gas in the Russian territories around the Kara sea. Large quantities of crude oil were found in the basin of the Kara sea in the Arctic, which could make this region to become the largest shell site of crude oil, even bigger than the Gulf of Mexico.  This statement was revealed ​​by Igor Sechin, chief man of the company Rosneft. However, since this only more interesting is that the general partner of Rosneft in this business is American company Exxon. All this happens in a period of creeping “cold war” on the territory of Ukraine and sanctions imposed from USA towards Russia. Although these American sanctions in July were designed to withhold dollars for “Rosneft” and block access to modern technology, they were not designed to stop the joint projects of American and Russian companies. With new sanctions on 12th September, however it is stated that American companies have deadline until 10/10/2014. to end its operations in Arctic.  In the document, titled “Directive 4” from the pages of Department of  Treasury of the United States it is clearly and explicitly written what is the subject of these sanctions, while in the document entitled “Sectoral Sanctons Identification” we see a list of companies that are affected by them.

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Like all other events, this story has its stronghold in geopolitical trends and things which happening behind the scenes, and therefore I will try to look over its very beginnings and the start of strategic partnership between Exon and Rosneft since the August 2011. Specifically, these two companies on August 31 st, 2011, signed an agreement on strategic cooperation, including research of the Arctic basin.  This agreement was signed in the presence of the Prime Minister of Russia at that time Vladimir Putin, president of Rosneft Eduard Khudainatov, deputy prime minister of Russia at that time Igor Sechin and President of Exxon company Niel Duffin.  This contract which later is expanded, involves investment of $ 3.2 billion that would be spent on research of 3 blocks in the Kara Sea. The ratio of the joint venture company is 66.7% owned by Rosneft and 33.3% owned by Exxon. Geographical details of the contract can be viewed HERE.  According to Bloomberg “Univerzitetskaja” geological structure is the size of Moscow city and big enough to contain at least 9 billion barrels of oil, or the wealth that is worth about $ 900 billion at today’s prices. Russians already mobilized an army that is sent to the destination in order to protect the sites. They only question now is are they going to be able to exploit and drill this oil without Exxon, and also is Exxon going to respect sanctions, remains to be seen.

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One reason is actually indicative of all these analogies and the point that I want to depict in this text. At the time of signing this agreement even before signatures there were required some certain negotiations and guarantees before the exact date of signing. If we put all this in the time frame we come to the conclusion that negotiations on this project in the Kara Sea were lasted from at least the beginning of 2011, if not sooner. That year in the world and geopolitical relations was active only one country, and that country was Libya. The same Libya that today is ruled by anarchy, tribal conflicts and chaos, while members of parliament held its sessions at rented Greek ferry in the port of Torbuk. In all previous thoughts about everything what is happening on the global chessboard, I marked only two milestones important for Russia but with a different outcome. The first such milestone is of course Libya, and the second is Syria. When Libya is in focus for many of us will never actually be clear, why Russia has not vetoed a shameful Resolution 1973 of the UN Security Council, which created a legitimate option for military action. If Russia vetoed at that time this resolution, I believe that today in Libya, people would live much better, and Russians would avoid moving of “military zone” towards Ukraine and tightening the belt around Russia. One of the two decisive vote for this military intervention in Libya was given by Bosnia and Herzegovina, and this was ninth vote, and tenth vote was from Portugal. But before voting the delegation of Portugal firmly insisted that they declare themselves after Bosnia and Herzegovina delegation, because after 9 votes it is not important too much how Portugal will vote, unless any of the permanent members put veto, which has not happened. I don´t know why Bosnia and Herzegovina voted for this resolution, but I guess it´s because we are protectorate, and not a sovereign state, no matter how someone would be annoyed by this observation, but voting for this resolution is an obvious proof.   Once again Bosnia and Herzegovina demonstrated that we are artificial banana creation and not country. Except this at that time we had many of our companies started their jobs and operations in Libya, even from this side we voted against ourselves. From the other permanent members, Russia and China abstained and not vetoed, which in diplomatic terms means that the aggression against Libya is just about to start. How voted permanent and non-permanent members of the UN Security Council you can see in the picture below.

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What surprised me personally, and even some more serious geopolitical analysts was certainly the stance of Russia, which in a similar situation some time later made ​​it clear that it will not happen the same thing (mistake) with Syria. As a reason for this Russian decision we can take the geographical proximity of Syria to their boundaries, and the fact that in Tartus, the second largest Syrian port on the Mediterranean sea, is a Russian base, for which from Moscow clarify that it is used only for the overhaul and repair of ships. So, of course we can conclude that these two reasons were enough for Russia to take a tougher stance and to ban potential air strikes on Syria, which was obviously not the case with Libya.  An additional argument and one that I wanted to point in the text, and which goes in favor of the setback voting about Libya is signing of this very lucrative oil contract between Exxon and Rosneft. During the same year of  2011. in the month of May there was a meeting of “Arctic Council” in Nuuk the capital of Greenland. This meeting was primarily driven by the fierce debate between Russia and the United States, about who have right to claim its territories in Arctic. On that meeting some things never get defined and many of the borders in the Arctic remained questionable. Guided by this I believe that the Arctic after latest Russian discoveries, could come back into focus of wrangling and power struggle, even maybe in one kind of shout diplomatic conflict that has never been closed. What emerged from that meeting in Nuuk is that Russia and Norway, which is a NATO member, signed an agreement on areas in the Barents Sea, which solved their mutual long-silent conflict over these territories. Except this in the Arctic region still remain a huge number of unsolved questions, which will in the future, and especially with the research of new crude oils increasingly rise geopolitical focus and tensions.

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The reason for the signing of this agreement between Rosneft and Exxon could be also of technological nature. Because why would the Russians signed a contract with an American company unless there is not something in mutual interests. In the report from 2007. of the Norwegian green group Belona which declares to protect the natural environment in one part they showed their concerns for hydrocarbon technology that Russia possesses because it was “old and inefficient”. Regarding to this it is easily possible that the contract with Exxon was signed because they possess necessary hydrocarbon technology, which is needed for the exploration and exploitation of the oil and gas sources.  In the latest brochure Exon distinguished that they have experience more than 90 years for working in the areas of the Arctic. There should be added that this is certainly not the first project that Exon works with Russia, and prior to this there is a project “Sakhalin 1“, whose main contractor was Exon, where they broke down many records when it comes to drilling and quantity of oil. Rosneft as younger company certainly has less experience in wells such as these in the Arctic, which have higher technological requirements than Rosneft wells in Siberia from which they currently draws the bulk of their profit.

So, things are pretty clear, while aggression was taking place in Libya because of its regime where guilt has not been proven, on the world stage behind the curtain there were conducted these negotiations about capital cash investments between the most powerful Russian state-owned company and most successful American company. I’m pretty sure that Russia has not vetoed a resolution on Libya, inter alia, because of this agreement between Rosneft and Exxon. Somehow I get the impression that the Russians “swallowed” somehow Libyan resolution regarding to this contract. The presence of the Prime Minister at that time, and now President of Russia, is seen as a legitimate state interest of the Russian Federation which is respected, but Americans as Danaans who bear gifts and do not wait, today they brought a present to Russia named by “Crisis in Ukraine” in front of their own door. I am convinced that Ukraine and Russia, should be defended even in 1999 in Yugoslavia, and not to mention how thy should been defended in Libya in 2011. Russians probably knew very well what they risk, although they was hardly able to predict this really unnecessary war in Ukraine and exhaustion in front of their doorstep.

Today we have what we have. This crisis in Ukraine has brought many innocent lives on both sides, one country is divided, and the ghosts of fascism awakened irremediable and whatever the conflict is over, I believe that in this part of the world the situation will always be unstable. Knowing that Russian capitalism is identical to American, but our Serbian traditional ties with them as Orthodoxy, inverted flag, and that the sun rises in the “East” and on the other side depleted uranium from the “West” will always be an argument that sets them apart. That’s exactly why I want Russia consider us on the same way as we thought of them, because in addition to money and capital around which revolves the world, there is something else, something much deeper, which remains after us, and what we inherited, and capitalism force us to forget… Except my personal motives there are also some rational, which are best described by Mr. Willy Wimmer, a former deputy of the Bundestag and admitted friend of our Serbian people. In one of his texts at the beginning of the Ukrainian crisis he posted three questions which I will paraphrase below and with that I will finish this text.

1. Can there be peace in the world if the only hegemonic force is USA?

2.  Is there possible respect of international law and world power balance if we do not have Russia?

3. When the EU will stop to be like a soap bubble in the hands of the USA?

 

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One thought on “Russian oil roulette

  1. My prediction is that Russia CANNOT afford more territory.
    It cannot afford empire.
    It will have trouble maintaining its existing borders.
    And it has a lot of ambitious, rich, well equipped, clever,and malevolent neighbors including North Korea, Japan, China, India, Pakistan, Afghanistan, Chechnya and Turkey.
    Now consider the powerful Western. Armies in NATO to the west:
    Germany, UK, France and America UNITED against Russia alone.
    9 out of 10 most powerful armies of the world face off with Russia or are one country away.

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