Gazprom’s Force Majeure Claim Rattles Nerves in Germany

Yesterday’s declaration by state-owned Russian energy giant Gazprom that ‘unforeseeable circumstances’ could make it unable comply with European gas contracts is placing Germany in an even more precarious position. The prospect of Russia shutting down the flow of natural gas to Germany seems more probable. With Gazprom threatening to send less gas to Germany and other European nations, German firm Uniper, a major energy importer, has rejected the claim. According to a company spokesperson, Uniper rejects the force majeure claim put forward by Gazprom. Realistically, Uniper’s rejection does not change matters one way or another.

The Nord Stream 1 pipeline is scheduled to come off its 10-day maintenance period and resume operations on Thursday. It’s unclear if the pipeline will start operating at a reduced capacity, or at all. Despite Berlin claiming to have reduced its overall dependence on Russian gas from 55% to 35% it is still highly dependent on Nord Stream 1. The two other pipelines providing natural gas to Germany from Russia were closed off.

Many analysts still seem to agree that Nord Stream 1 will resume operations, albeit in a limited capacity, perhaps. However, Germany’s nightmare scenario of Putin halting gas deliveries entirely is haunting Berlin and Brussels. The nation is already falling behind efforts to top off its natural gas storage supplies before winter sets in. We discussed this in an earlier entry last week. Gas rationing and other conservation steps will have a detrimental effect on the German economy.  A number of companies are concerned such measures will force them to close permanently.

Germany is not the only target either. A dozen EU nations have seen their gas supplies from Russia either severely reduced or cut off entirely. The lack of a European-based energy sharing plan and the shortsighted thinking of EU leaders on the energy-security front are now coming home to roost.

Ukraine Update 7 March, 2022 (Evening)

  • Europe’s reliance on Russian natural gas has slowed efforts to sanction Russian energy and runs the risk of driving a wedge into the trans-Atlantic unified front that has performed impressively in sanctioning Russia and aiding Ukraine. Europe has been trying to wean itself off of Russian energy for years now, but progress have been at a snail’s pace and uncertain. Mostly because Europe has found it next to impossible to locate a replacement source for its blanket energy needs.  Today, the German government confirmed it will continue to buy Russian natural gas, oil and coal despite Russia’s invasion of Ukraine and the growing mountain of sanctions on Moscow. In a statement, German Chancellor Olaf Scholz said his country and the remainder of Europe are too reliant on Russian energy imports for the continent to cut trade links, even in the short term. This is why Germany made it a point to exempt energy from the sanctions the West has placed on Russia. Natural gas, oil and coal from Russia are the lifeblood of German and European industrial output, heating and electricity output. If Russia chooses to put the screws to European energy exports, Western unity could splinter.
  • The Pentagon confirmed today something many of us in the fields of geopolitics and defense have noticed over the past few days. With progress slowing to a crawl on the ground, Russia is relying more on long-range fires. These include artillery, multiple-launch rocket fire, cruise missiles, and close air support, which is being used in an effort to weaken Ukrainian defensive positions and strong points of resistance. Other terms used are softening the enemy or preparing the battlefield. The good news is that the reliance on long-range fires signals that Russia is not ready to resume the pushes towards numerous Ukrainian cities and other objectives. The bad news is that at some point, the advances will commence again.
  • The number of Ukrainian refugees is now approaching 1.8 million at last count and the number is anticipated to exceed 2 million within the next 24 hours. Europe is on the verge of a major refugee crisis, the likes of which have not been seen in decades.

the burgeoning iran-china partnership

With most doors on the international front now closed to Iran, it was only a matter of time before the Tehran regime turned to China for a lifeline. A major partnership between China and Iran has been discussed by the two governments for well over a decade. A diplomatic track aimed at bringing such a partnership into reality has been active since around the time of Mahmoud Ahmadinejad’s tenure as the Iranian president.

Now it would appear that the deal has become a near-certainty. A strategic partnership proposal between China and Iran is on the table awaiting approval from the Iranian legislature . The deal binds the two nations together through the next 25 years with economic and military cooperation making up a large part of the new arrangement. Under the terms of the deal Iran will provide crude oil to China for 25 years, giving Tehran a sorely needed long term, secure market for Iranian oil. The two nations will cooperate deeply in many areas from energy, to tourism, and cybersecurity. China will be granted ‘unprecedented privileges.’ It will assume control of Iran’s telecommunications infrastructure, and ease the introduction of 5G technology to the nation. China will also invest billions of dollars in Iran as part of the Belt and Road Initiative.

At first glance the partnership seems to offer Iran a lucrative lifeline back into the world, and a way to circumvent the crippling effect US sanctions have had on it in the past two years. But there is a considerable amount of internal opposition to the deal. Probably not enough to derail it since it had the official support of Ayatollah Khameini, but perhaps enough opposition to make the regime’s hold on power less assured. A number of prominent Iranians have stated their opposition to the deal, and with good reason. In effect, Iran will be the junior partner in the new relationship, similar to the role Pakistan plays in the Sino-Pakistani partnership. In return for practically handing China the keys to the kingdom, Iran will receive the benefit of becoming a Chinese colony. Power will transfer, albeit gradually, and surreptitiously from Teheran to Beijing. Iranian sovereignty will be degraded.

All of this to defy the United States, and stubbornly hold firmly to the dream of an Iranian nuclear weapons program. If the Iranian government was more moderate perhaps a happy medium could be reached with Washington. Unfortunately, events have gone in another direction and now Iran stands on the verge of selling its soul to the Chinese.

Polish President Coming to Washington This Week

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Polish President Andrzej Duda is visiting the United States later this week. His first stop will be Washington DC for a working visit with President Trump at the White House. Discussions between the two leaders are expected to revolve around energy security, defense, and economic issues. It is no secret that Duda, as well as a majority of Poles, want a larger contingent of US troops to be permanently stationed in their home country. Along with this, Poland has its sights set on increasing American investment, and ultimately on acquiring American natural gas as a new energy source.

Energy security is a matter of national importance for Poland. Through its time under the bootheel of Soviet occupation, the nation relied on Russia for most of its natural gas and oil. When the Cold War ended and the Soviet Union dissolved this did not change. Poland continues to be reliant on Russian gas and oil to meet its energy needs. Duda is anxious to find an alternative source for energy, and the hope is that US natural gas will be it. Duda’s second stop on his US trip will be Houston, Texas, home to a number of major US oil and natural gas corporations.

Defense will also be a major topic. While in Washington, the Polish leader is expected to announce that his country will be purchasing thirty-five F-35 Lightning II fighters. Duda will also likely push for US troops to be relocated to Poland from bases in Germany. US and Polish defense officials have been working on a deal to bring a large military base, and permanent US troop presence to Poland. Earlier this year, Polish media reported that the US was considering basing a US Army division headquarters in Poznan, a special operations base near Krakow and making the US Air Force detachment in Lask permanent.

The plan for an increased US presence in Poland has to be weighed against the potential of it escalating tensions with Russia. A balance needs to be found given the brittle geopolitical foundation in Eastern Europe.

Friday 25 August, 2017 Update: First US LNG Shipment Arrived in Lithuania This Week

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Earlier this week Lithuania took a major step towards reducing its energy dependence on Russia. On Monday, the first LNG (Liquid Natural Gas) shipment arrived from the United States, marking the first time an ex-Soviet state has purchased and imported US natural gas. The shipment is viewed as a symbolic economic, and geopolitical act. Economically, the shipment is proof of Lithuania’s wish to cut its reliance on Russia for most of its energy needs. Importing US natural gas now, as well as Norwegian gas, puts Moscow on notice that Vilnius has alternative sources of energy available.

Geopolitically, this shipment is a strong indication of the US-Lithuanian relationship, and the significance both sides put on these relations as the security situation in the Baltics remains fluid. Helping to diminish Europe’s reliance on Russian gas has become an important policy objective for the United States. In the weeks since President Trump’s visit to Warsaw and the G20 summit in Hamburg energy assistance for Eastern Europe and the Baltics has taken on a higher priority. The Trump administration is finally grasping the importance of energy geopolitics in the current chess match with Russia.

For the moment, US LNG imports are not a threat to Russia’s firm grip on Lithuanian energy markets. This year Gazprom, the Russian energy conglomerate, has regained half of Lithuania’s natural gas market. Until the numbers of LNG shipments from the US and other energy sources rises considerably, Russia can focus its attention on other aspects of the increasingly complex, and tense geopolitical landscape in the Baltics and Eastern Europe.