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Alexander Zapolski. Alternatives to oil and gas Russia is no more — so the Maidan goes to Moscow
Material posted: Publication date: 13-01-2015

This year in Europe, the trend has been established. As the exacerbation of the political confrontation with Russia, European countries suddenly made an unpleasant discovery. Their economies were very heavily dependent on Russian exports and imports. First of all, in terms of energy. Total Europe consumes about 480 billion cubic meters of gas per year. One third of them (about 137 billion cubic meters) produces itself, another third (150 billion cubic meters) buys from Russia, the rest gets from other regions (Africa, the Americas and the middle East). On the agenda was raised the issue of increasing energy independence from Russia. This is where it all look at Norway.

Why Norway? Because of the 27 EU oil and gas are only three: the UK, the Netherlands and Norway. 137 billion cubic meters a year are produced through their efforts. The peak of production in the UK and the Netherlands have already passed. Reserves are depleted, the volume is reduced, and this trend will not be overcome. So today all hopes are placed only on Norway. And hopes are very big and very long.

For example, all the Baltic States going in the next few years to completely abandon the Russian gas and switch to Norwegian. Similar, although not as radical plans have Finland. Again Norwegians is counting Brussels. All the forecasts, the EU believes that the expansion of production in the Norwegian sector of the continental shelf will be able to compensate for the devastation of the British and Dutch energy pantries. About his plans for the transition to Norwegian gas the other day said even Ukraine.

With these expectations at the beginning of this year all was well. Well — not to say perfect, but generally positive. On its fields Norway produces not only gas but also oil. More precisely, it all started just with oil, which in 2000 produced 1.13 billion barrels, while gas — only 47,3 billion cubic meters Over time, the oil production volumes fell, but the Directorate of petroleum (a division of the Ministry of petroleum and energy of Norway) was being sedated forecasts. Yes, oil production is declining. In 2011 it was produced in the country has only 664 million barrels, i.e. almost twice less. But, however, increases the amount of gas! From 47.3 billion cubic meters in 2000 to 106 billion cubic metres in 2011. One easily compensates for the other. Gas will replace oil and will be for many years a growing source of national income.

In a sense it was. Oil production is predicted to fall and by 2014 had reached 595 million barrels. The General background of total European oil consumption to 5.3 billion barrels it was only 10% and as it brought oil out of the attention of the public. What is there to look at it, if it is clear that 90% of oil still in the EU is imported? Thus Russia's share in imports is negligible — only 480-500 million barrels. But supporting the growth of gas extraction volumes (up to 112 billion cubic meters in 2014) not only formed a blissful picture perception, but also created in some countries outright illusion that Norwegian gas will be enough for everyone. This gave rise to all the euphoria, especially in Lithuania and Latvia, which formed the current trend.

Then — like a fairy tale: "And then came the do'er". In 2014, oil prices collapsed, revealing a number of important points that were previously hidden behind beautiful forecasted schedules. First, it became clear that the major fields operated by Norwegian already largely developed. Fresh figures for the current year is nowhere, but to draw conclusions about their potential value — based on data on changes in stocks in major mining areas during the period from the date of their inception until 2003.

District "Ekofisk". At the beginning of production in 1971, its explored reserves amounted to 669 million cubic meters of oil equivalent (ad). By the end of 2003 reserves were less than 216 million cubic meters. m ad Over 30 years of operation developed 67,7% of the resource.

Area "Statfjord". Start of production — 1979. Explored reserves — 647 million cubic meters. m ad In 2003-m there were only 51 million cubic meters. m ad Over the years produced 24 92.1% of the resource.

District "Gullfaks". Start of production — 1986. Explored reserves — 361 million cubic meters. m ad In 2003-m there were only 43 million cubic meters. m ad Over the years produced 17 88% of the resource.

The Area Of The "Oseberg". Start of production — 1988. Explored reserves — 438 million cubic meters. m ad In 2003-m margin was already only 125 million cubic meters. m ad Over the years produced 15 73,1% of the resource.

In 1995, Norway started the development of the largest deposits found on the Norwegian shelf — the area of "Troll". Its explored reserves amounted to 1612 million cubic meters. m ad In 2003 where there were only 1,355 million cubic meters. m ad on the one hand, like many more. But on the other... just 8 years already deflated to 15.9%.

Since then, Norway shock rapidly increasing production. So even stocks "Troll" far left is clearly much less than if we assume a linear relationship. Some experts even say that there they remained no more than 6-8 years of production. Similarly, languish, and other fields. And some of them, such as, for example, the area "Frigg" fully developed.

The second important point is the fact that since the end of last century in the North and Barents seas (and not only on the Norwegian continental shelf) not found any really large deposits of energy resources. To say that oil and gas there is over. Proved reserves in Norway alone is estimated at about $ 3.7 billion cubic meters. m ad in existing fields. However new, not yet opened, was found only 676 million cubic meters And the average size of reserves one area does not exceed 32 million cubic meters of It — if be considered statistically, dividing the total figure by the number of districts "in pieces" (21). And if you look at the real picture, in 13 districts proven reserves do not exceed 10 million cubic meters including 9 districts — do not exceed 5 million cubic meters.

In plain Russian it means that, as before, once invested in construction of mining area, and then only to swing and swing, no longer work. It is on stocks like "Troll" can be had in a wide range of play figures the cost of production per barrel. In the end, the cost is allowed to designate at least three pennies. As a result, only postponed the calendar date for sustainability of the project and the receipt of net profit. With small fields such jokes turn the impossible.

That's what drew fallen oil prices. The fairy tale ended. As the Norwegians say — "Snipp, snapp snute, så er eventyret ute" (that fairy tales end, and who listened — well done). The exhaustion of old fields is an inevitable consequence. The drawdown soils. The destruction of wells. The pressure drop in the reservoir. This requires accelerating the transition from extensive to intensive production technologies. For example, if the original oil and the gas itself beaten from the well under pressure, it is now necessary to push them. In particular, the method of injecting water into the formations. It came to the point that one cubic meter of oil consumed up to 5 cubic meters of water, and one cube of gas — up to 16 cubic meters of water. It's all costs. And the costs are constantly increasing. Water, driven into chalk bags, destroys wall deposits. This periodically leads to environmental disasters. In recent times due to the destruction of the stratum in the sea was thrown more than 126 thousand tons of crude oil. Often have to repeat exploration. To carry out repair work. And then drill new wells in already seems to be the old field. In the end, spending more and more money.

As he said in August this year, the General Director of Norwegian Petroleum Directorate Bente Nyland, the country plans to radically reduce costs in the oil and gas sector. "This is about fiscal discipline." The Director is even possible to understand. For ten years, from 2004 to 2014, annual spending on exploration and production increased from 70 to 230 billion NOK. I.e. three times. And this despite the fact that 2014 called peak size of investments in the sector. Already in 2015 this figure is projected to be 182 billion kroner, which corresponds to the level of 2012. This is confirmed by the statements of some of the largest Norwegian oil and gas companies — like Statoil — a complete revision of its investment plans for the next 5-7 years. Your negative contribution to this growing effort is being made by technical problems in the fields of "Valhalla", "Move", "Ula" and "Tambur" that run BP. And at the Statoil "Njord", "Asgard" and "Troy" things are not better.

It will be extremely interesting to read the next analytical report of the Petroleum Directorate, which publishes Norway in January 2015. Especially one of his section, which deals with forecasts. I think there will be many unexpected and interesting. However, most likely, already made he will confirm analysts ' findings.

Peak oil and gas production in Norway passed. Inventories are still there, and a lot of them. Until 2020-2021 year will suffice. However, even in this case, total production will decline. But slowly. Dramatic changes occurring after the turn. But now Europe is becoming more sensitive to fluctuations in energy prices.

And, curiously, very sensitive in different directions. She needed both low gas prices and high oil. High, as it turns out, it means no less than 60-62 dollars per barrel. Otherwise the entire oil and gas production industry for at least one-third of sags on costs. But low gas prices — this means no more than 450-500 dollars per thousand cubic meters. I.e. Qatari strap in 600-630 dollars per thousand cubic meters is unacceptable.

Another important point is the structure of exports of Norwegian energy. In particular, gas picture (in percent of total exports) folds into the following form: Germany — 42,4%; France — 21,3%; in the Netherlands — 9,7%; to Belgium — 8.3 per cent; to Italy — 6,7%; in the Czech Republic — 3,9%; in Spain — 3,7%; in all other countries — 4.0 per cent. It is easy to understand that for deliveries, say, to Ukraine, in Norway there is simply no gas. The issue is not a lack of transport infrastructure in Europe or the money to pay for it in Ukraine itself. None of the excess gas. From the word altogether.

And in the medium term it will become from year to year even less. I would not be mistaken if I say that the first departure from the list of buyers will be those "other countries", the list of which includes, by the way, all three Baltic States. Once there, according to the plans of Lithuania, should it occur gas independence from Russia in 2021? I think in the Baltic with these schemes is clearly went wrong. And not because of the machinations of "Gazprom".

In fact, the picture is as follows. In the long term to 2021, i.e. after 7 years, Europe will begin to form a new gas shortage in the amount of up to one third of total annual demand. And do not anyhow any, and gas was cheap. I.e. such that no one except Russia, can not deliver. Apparently, it is missing one reason which prompted the United States to implement the project "Ukraine, Maidan version 2.0".

Europe understands this perspective. After 7 years, Russia's share in European gas consumption has the potential to achieve 50%. Because now Brussels began forming a new system of European gas purchases. Its main objective is to form from individual countries like the single European gas buyer, which "Gazprom" will have to deal in Europe. And not with each country as it is today. On the one hand, this should improve the overall political stability of the EU. On the other — allow to equalize gas prices for all EU countries and lower their total value. For now, each country its contract with Russia to conclude individually. Because Macedonia 1 thousand cubes buys 564,3 dollar, Poland — 525,5, Bosnia — 515, Czech Republic — 503, Bulgaria 501, Greece — 427, UK — 313, France — 393, Germany — 379.

However, no matter how Brussels will succeed, for US, this scenario means the collapse of the idea of TRANS-Atlantic trade Union. To offer energy prices below the Russian Washington will not be able. From the word at all. In this case, neither the Europeans rested from their traditional Eurocentric views of the world, with 50-60% dependence on Russian gas acceleration drift across Europe in the direction of Moscow is inevitable. To stop this is like trying to stop the Earth's rotation. And the natural consequence of this convergence will be to increase the volume of mutual trade, and hence the consolidation of all sorts of different "not only economic" ties. Hence — the inevitable separation of Europe from the United States. Gap, which will lead to a complete loss of America any impact on the whole Euro-Asian continent. For the US, it actually means global geopolitical funeral.

To stop the script America can only total destruction of Russia with the aim of taking under its control our oil and gas fields. Or, alternatively, of creating in Russia a level of instability to it, as in Ukraine, led to the destruction of infrastructure and turned irreparable reduction in the volume of supply. Then Europe will be just nowhere to go. This explains the entire us strategy, as well as a sharp inflation rates of the us-Russian confrontation.

The US simply does not have time. To turn left just 7 years. The countdown is already underway. So in the next year in Russia should expect the most desperate attempts to organize Maidan here. Well: Russian aggression to reflect not the first time. Most importantly, we now know the answers to key questions: who, what and why.

Alexander Zapolski


Tags: Russia , geopolitics , oil , gaz

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