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NG WarsThe term "Weapon of Mass Destruction" (WMD) is most certainly meaningless. It was coined by Bush (Jr.) as a sound bit when he needed an excuse to invade Iraq. Yet, it does convey a powerful image. Something in a small package having the capability to produce massive death and destruction is certainly terrifying. When this term is used, most people immediately think in nuclear or biological weapons, the hydrogen bomb or weaponized anthrax and so on. WMD's are never associated with "soft" occurrences and even less with political dealings. Yet, political actions are in fact the most terrifying WMD's in the world not because of the potential damage they may cause, but because of the actual damage they are causing. The most sinister element of politics is that it is distributed (spread out over time and geography) and covert. Most people usually don't even have a clue about what is going on and much less have the time or stamina to analyze data, should by some miracle it may become available. Policies carried out on a daily basis by politicians in countries big and small carry unimaginable consequences for billions of people. That's right, billions with a "B"; this is not a typographical error. The amount of wealth being destroyed every day or even prevented from becoming real is almost incalculable. Today we are going to explore one such issue: Natural Gas. We will see how a handful of players have managed to harm billions of people as they play their silly games which are designed, in ultimate analysis, to ensure their jobs and privileges.

IN THE BEGINNING

We need to start somewhere and this is not easy. We can trace the root causes of root causes back to the dawn of human beings, so any beginning will necessarily be arbitrary. In this case, we will begin with the US as a matter of convenience. By 1985 the US had a big problem: they were consuming a large percentage of world oil which they could not source themselves. They were becoming heavily dependent on other countries which were not exactly allies. Hence, they sought to bridge the gap through other means, namely to secure natural gas (NG) from alternative (or unusual) places. Many such places suddenly became viable after the disintegration of the USSR in 1991. As such and at the time the US was interested in supporting the development of gas pipelines from remote areas such as Turkmenistan, Russia, Turkey, Iran, Qatar and so on. The overall premise was that by making this gas available to "civilized" and "developed" countries from "rough" and "uncivilized" ones, the US would also benefit. This would be so because it is difficult to import gas to the US if the sources are located in landlocked countries. US needs deep ports capable of supporting large LNG (Liquefied Natural Gas) vessels. If other countries would pay for NG pipelines to those ports, overall NG transport prices to US (through maritime routes) would drop significantly. This was the overall strategy back then. However, this is now.

SOMETHING FUNNY HAPPENED ON THE WAY TO THE PORT

One of the unpredictable scientific and technical advances that could not have been taken into consideration in the 90's took the US by storm: the exploitation of disperse NG and other energy sources became economically viable.

Typically NG is to be found in large reservoirs some covering oil ones. However, most of these reservoirs have already been depleted in US. Yet, the US wasn't NG-poor. As a matter of fact the US is NG-rich. The problem was that all the remaining NG was trapped in very large areas almost always embedded in some other substrate. New technologies made possible to extract such gas; for example the "shale gas" is NG trapped in sandstone and released by fracking or horizontal drilling. The "shale oil", is an unexpected secondary source of oil originating in thermal treatments of oil-embedded rocks and sands of which the US possesses the largest reserves in the world with Canada being second. As these technologies matured it became obvious that the US went from being an energy-dependent country to an energy-independent and exporting country. This fact had a significant impact on politicians' priorities.

A second element that changed the game entirely was the dynamic situation in Arab lands (countries changed significantly through wars, politics, religion and technology) as well as former USSR countries, particularly Russia. Allies became foes, former foes became independent, new interested friends appeared and new empire-building politicians took power. This also happened (or became obvious) with China.

In summary, the US not only had no need for NG from other sources, but it could now use NG as a weapon against them should they wished to do so.

RUSSIA

Since Putin the great took over Russia, he has been searching incessantly for buyers of raw materials. We must remember that Putin's strategy is to cash-in as fast as possible on Russia's potential, and the fastest way to do so is to sell a product almost everybody desires: energetics, in this case NG. To this effect Russians partnered with other EU countries to build two major NG pipelines: Nord Stream and South Stream (see their paths below).

Nord Stream

 

South Stream

Seeing that EU had an unsatisfied need for NG and was fully dependent on Russia, the EU tried to build an alternate pipeline that would bring NG from Iraq, Azerbaijan, Turkmenistan and Egypt to Austria. This pipeline was supposed to achieve this through its connection to the Trans Anatolian Natural Gas Pipeline (TANAP). The pipeline was named Naubcco and its proposed path can be seen below.

Nabucco

Because Nabucco would constitute a "clear and present danger" to Russian profits, Russians outright purchased almost the entire current and future NG production from Azerbaijan and Turkmenistan effectively leaving Nabucco without suppliers and killing it.

Meanwhile in EU, the US (through its economic warfare against Russia) forced Gazprom Germany (the Russian NG company) to cancel about 25 projects underway in EU which could have transform it into the biggest NG energy player in the world. In retaliation Russia signed a mega NG deal with China to supply it until 2048, strengthening the Eurasian Customs Union (the Russian/Chinese free market) and the Shanghai Cooperation Organization (sort of a Russian/Chinese version of NATO).

As a side effect Russians will be enjoying a sizable capital injection from China as well as making the Rubble and the Renminbi currencies players in the energetics market (so far monopolized by the USD with some EUR use). Russia in turn supports Syria's dictators in order to ensure that this country blocks any Arab NG pipeline.

Note: please see the Glossary if you are unfamiliar with certain words.

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