Russia to Israel: We Want 30% of Your Energy Riches!
Israel - Middle East
Tuesday, November 06, 2012
Today is the day we elect a new president. Whoever gets elected will face a challenge far greater than any framed during this election season. I suspect that one candidate knows it, or at least senses it. The other is blind to it or isn’t talking.
In his address to the Democratic National Convention, President Obama called out candidate Romney for his belief that Russia is “our number-one enemy.” Obama chided Romney, “you’re new to foreign policy!”
At first glance, Mr. Romney could have come up with a long list of enemies. He could have characterized Russia in any number of ways. But, he chose some very specific words; “Russia is our number-one enemy.”
Was this intuition, or careless political gaff?
It probably goes without saying that candidate Romney is no fool, nor, is he completely unfamiliar with the shift going on in the Middle East. Men of his calibre have a tendency to sense trouble coming when others cannot. In the business world, Romney’s world, you call that “risk avoidance”.
Similarly, you can be comfortable saying that Mr. Romney knows Israel. He knows its Prime Minister, Bibi Netanyahu. Mr. Romney spent time in Israel consulting for the Israeli government during his days at Boston Consulting. He is familiar with its markets and intellectual prowess that is responsible for a large percentage of the world’s advanced technology.
During the debates, Romney in explaining his position, said this:
“Well, I’m saying in terms of a geopolitical opponent, the nation that lines up with the world’s worst actors [Russia] [also] faces a nuclear Iran. But, when these terrible actors pursue their course in the world….who is it that always stands up for the worst actors? It is always Russia. ”
The operative words in Mr. Romney debate comment were “geopolitical opponent.” And, it is Middle East geopolitics that will emerge to affect the world immediately after a newly elected president takes office.
Right now in Israel, in not-so-completely-secret negotiations, Russia’s state oil producer and Putin personal pawn Gazprom appears to be the odds-on favorite to wind-up with a major share of Israel’s Leviathan gas (and now oil) fortune before year-end.
Despite warnings from Israel’s American project partner, Israel appears almost giddy to place its future in the hands of the Russians. (Parenthetical note: where is the U.S. government?)
This is because Israel is in a funny place politically speaking. They’re tired. The whole world sees them as the villain and Mr. Netanyahu, as Vanity Fair puts it, “is less Israel’s prime minister than its editor in chief”, in describing how the Prime Minister attempts to fashion Israel’s standing, with words, in the world full of enemies.
“Netanyahu’s main lesson from his first term in office was ‘If you can’t beat them, control them,’ ” says Lior Averbach, of Globes, the Israeli business magazine.”
This mentality, in part, foreshadows Israel’s own geopolitical strategy on how to protect itself through an unlikely alignment with actors that might not be the best long term partners; including Russia.
In order to reach the oil and gas off Israel’s shore it will require some serious production experience to develop the field. And with that, Israel needs a partner.
Not only is the Leviathan the biggest worldwide gas discovery in a decade, it is also one of the most critical business and geopolitical decisions Israel will face in recent memory. It will shape the region’s oil power politics for decades to come.
On September 7th, under extraordinary secrecy, a partner selection process was leaked via a discrete press release from Israel’s gas field development partners, which said,
“we’ve received offers for the purchase of up to 30% of the rights to license from leading international companies engaged in the exploration and production of natural gas.”
Besides the obvious, what makes the negotiations super-secret is that no western oil company would dare be identified as a potential partner with Israel lest it be subject to revenge by anti-Israel foes. That is, unless it was actually chosen as a winner. The winner would be willing to accept any damage from working with the Israelis. But, they would need military support including the commitment from a navy capable of sealing off the entire Eastern Mediterranean. Perhaps candidate Romney had a reason for his emphasis on “more ships in the U.S. Navy” during the campaign.
Israel needs about $15 billion to develop its gas resources. Last week its American partner Nobel Energy announced it has also discovered oil, which significantly enriched the effort. More importantly, the Israelis need development expertise for the deep-water drilling required. And, that narrows the field of potential partners.
The media has mentioned other potential suitors, since the announcement, including energy producers from Australia, Europe, Korea and China but only Gazprom, according to Yitzhak Tshuva, President of Israel’s lead developer Delek Group, has all the right attributes.
According to various trade publications Israel was initially timid about Gazprom. But one official was quoted by the Israeli oil industry trade publication Globes as saying,
“Gazprom doesn’t live on the moon”, said an Israeli official. “It has no intention of investing billions in a reservoir just to prevent exports from it. It very well wants to develop new markets in addition to the European market” -- a market, which, Gazprom heavily controls.”
Really? Gazprom already owns the market in Europe for natural gas. They’d now control Israel’s ability to compete. They could easily push up production and drive prices so low that it would wreck the Israeli economy just as Reagan did with the Russians (because Israel’s economy is much smaller).
“The Israeli’s (blushing with giddiness) say a deal with the Russian’s gives it a geopolitical ability to develop new markets and to deter anyone from attacking facilities in which it is a partner”, says Mr. Tshuva.
(parenthetical note: where is the U.S. government)?
I’ve mentioned in a previous article, Will Russia Side with Israel to Thwart Iran Attack?, that Gazprom is Putin’s means to dominate the energy markets. Vladimir Putin loves being in control of other’s energy supplies. Through Gazprom, Putin controls 8.5% of the world’s oil production and 10% of global natural gas output. Russia has 40% of the world’s uranium enrichment capacity and most of its uranium resources.
According to Casey Energy Reports, Putin invested in Russia’s oil fields to reverse production declines. He encouraged gas exploration that now is a full quarter of the world’s known resources.
Putin is not going to let the Leviathan slip through his fingers. Vladimir Putin’s plan is working. Why else would he be befriending Israel?
Russia’s growing global influence is sapping the significance from other geopolitical powers, including the United States who is, editorially speaking, asleep at the switch.
Israel longs for peace and its new friend promises to provide it because they have “have all the right attributes”. They have the oil development technology. They control the European gas markets for Israel’s gas, and have a military to protect its rigs in the Eastern Mediterranean Sea.
But more importantly Russia has the geopolitical power Israel so desires. Russia is the only party that can keep the Shia threesome in place including Iran, Syria and Hezbollah – the opposite goal of the U.S. geopolitically speaking – and protect Israel from its neighbors; at least, temporarily.
Even if Russia comes only to plunder its riches.
About Ed DeShields
Last article: Is Romney Lying?
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