Russia’s suicide – KyivPost – Ukraine’s Global Voice
History will show that Vladimir Putin’s fatal miscalculation was his belief that Europe would collapse if he invaded Ukraine due to his overreliance on Russian energy. This was not the case. He also failed to understand that overreliance works both ways: the Euros needed his oil and gas but he, in turn, relied entirely on their market. In other words, Putin should have parked his imperial ambitions in the West until he diversified his customer base and built pipelines and liquefied natural gas (LNG) facilities in the East to export to the China, the world’s largest buyer of energy. Instead, he invaded Ukraine and then blackmailed and abused the rest of Europe into sending him scrambling to sign new suppliers and alternative energy sources. Europe finds new sources more easily and Russia cannot replace Europe with new customers. He lost economically.
Putin is also failing on the battlefield. The Ukrainians are fighting back valiantly with Western firepower. Consider his current situation: he has definitely alienated Europe. Even if he gets his prey, the Ukraine, it will be decimated and ungovernable. The Russian army is damaged. Its economy has no future without European purchases of oil and gas in the absence of a Chinese market. The European Union and Britain impose sanctions and pledge to end their dependence on Russian oil, gas and coal. Energy and food are the lifeblood of economies and Putin’s weaponization of both will not be forgotten.
It cannot replace the European market with China and other Asian markets for years, and moreover, gas pipelines crossing vast territories become obsolete when it comes to natural gas. LNG is the future of energy, relatively clean and powerful. Its popularity and portability by ship to anywhere in the world at lower cost is growing exponentially, but Russia, with more gas than any country on earth, has missed the mark and lags far behind in the development of this technology. He can’t catch up now because the Western expertise, capital and companies that Putin relied on to build Russia’s oil and gas industry have fled in protest of the war. And the Russians won’t be able to raise the hundreds of billions needed to build pipelines or LNG projects to connect gas and oil fields in the Arctic and Siberia to Asia.
The United States, Australia and Qatar dominate the production and distribution of LNG. Their plants, terminals and fleets cost billions but deliver huge volumes of gas safely with minimal emissions. The process involves cooling the gas to minus 162 degrees Celsius, which reduces the volume of the gas by 600 times to a non-toxic liquid that is easy to store and transport. An LNG vessel, more than three football pitches long and carrying five cryogenic tanks, provides the equivalent of three days’ gas flow from Russia’s largest European gas pipeline. They constantly roam the oceans.
Germany is building several LNG terminals and the rest of Europe dozens more. Russian oil and coal are banned by law and gas boycotts are in the works. Germany is burning its own coal again, and nuclear facilities in France and Germany have been mothballed or expanded. The Europeans have signed giant natural gas contracts with Algeria, Saudi Arabia, Azerbaijan, and negotiations are underway with Central Asia’s Turkmenistan and Kazakhstan as well as the United States, l Australia, Qatar and Norway. On the demand side, European countries are imposing strict conservation measures on industry and individuals to get through this winter because Putin threatens to shut off gas altogether. In the longer term, Europe will transition to a post-Russian energy situation.
Worse for Putin, his much-vaunted energy deal with China isn’t worth the paper it was written on due to ongoing geopolitical and geographic challenges. Dreams of large quantities of gas flowing through pipelines through Siberia have been all but scuttled by cost, distance, terrain and construction challenges. The cost of shipping LNG from the US, Australia or the Middle East to China and Asia is significantly lower and has made such projects unviable.
The most ambitious pipeline to pivot to China is the Power of Siberia 2 pipeline. The strategy is to link fields in West Siberia, which now supply Europe, to China via Mongolia. An even crazier idea behind it was that the line would allow Moscow to arbitrate between European and Asian markets – a sort of Putin’s version of world control. He wanted to militarize the gas markets, but that’s not how they work.
Worse, even the most optimistic scenarios – if such a link could be completed – are that Russian pipeline volumes to China would never match volumes to Europe. On top of that, they would get much lower prices because China would bargain hard knowing that Russia was too dependent on their business. The reality today is that every nation in the world realizes that Russia is not a trustworthy partner, neighbor, supplier or customer until there is a regime change.
Russia is a commodity-based economy run by a dictator like a war machine. Since he took power, 11 million Russians have left. Attempts at manufacturing or technology have been catastrophic failures. With the help of the West, in 2021 Russia was the world’s largest exporter of natural gas, followed by the United States – a pre-eminence that will never return. Now that Putin is trying to sell his oil and LNG outside of Europe, his companies are finding it a tough sell. As one expert wrote: “Its isolation from the West has devastated Russia’s strategic position in its negotiations with China and India, notoriously price-conscious buyers who retain close ties with other major commodity exporters. Notably, the price of Russian crude oil recently fell from a premium of $1.50 a barrel over the benchmark price to a discount of $25.80 a barrel, Bloomberg said.
Putin destroys Russia. His plan for conquest and control was flawed from the start. He belongs to a dock in The Hague, not to a palace or to the head of a country with a nuclear arsenal. It resurrected the Cold War and captured America’s attention. He militarized the trade with a plan to put all his export eggs in one basket – Europe – and then take him hostage and force him to accept any peace deal he wanted to offer Ukraine. Instead, he united and strengthened NATO whose members support Ukraine. The only option for Europe and the world is to defeat Putin.
Diane Francis – Veteran Columnist writes about power, money, technology and white collar crime
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