The Saudi strategy

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This is different, and it seems kind of plausible.

A year ago, driven primarily by the Bakken shale, and amid much fanfare, the United States passed Saudi Arabia as the largest producer of oil in the world. With the news came much discussion about whether shale development finally had the United States back on the road to “energy independence.” Americans had not enjoyed energy independence for some 50 years.

A few months ago, Schlumberger posted a chart that shows how misguided this notion is. The Saudis, the Russians and the Americans all produced roughly the same amount of oil in 2014. Yet the Americans had to drill 35,000 new wells to reach this production level, while the Saudis had to drill 400.

What this means is that the Saudis (and to a lesser extent the Russians) need only to open up the spigots on their existing wells to deliver as much oil as the world may need. And this costs them very little to do. This is why the Saudis are so easily able to endure the crash of oil prices, while in America, oil and gas companies have been rushing to slash capital budgets.

In short, the Saudis may not be first in production these days, but they certainly are first in reserves. They simply choose not to produce it all. Instead, they husband their resources for another day, when the reserves will be even more valuable. In the meantime they extract the highest price they can get from existing production. And every day the world spends down its oil resources, the Saudis strengthen their control over the world oil supply.

http://www.crainscleveland.com/article/20150619/BLOGS05/150619769/the-saudi-strategy

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1. The Russian pipeline waltz

This is an eventful period for EU-Russia gas relations. Six months ago Russian President Vladimir Putin surprised the energy world by dismissing the long-prepared South Stream project in favour of Turkish Stream. Like South Stream, Turkish Stream is intended to deliver 63 billion cubic metres (bcm) of gas per year through the Black Sea to Turkey and Europe by completely bypassing Ukraine from 2019.

Yesterday, during the St. Petersburg International Economic Forum 2015, Gazprom unexpectedly signed a set of Memorandums of Intent with the European gas companies E.ON, Shell and OMV. These plan for the construction of two additional gas pipeline strings along the Nord Stream pipeline system that connects Russia and Germany through the Baltic Sea. This project would double the current capacity of Nord Stream from 55 bcm per year to 110 bcm per year.

Both Turkish Stream and an expanded Nord Stream indicate that Russia does not intend to abandon its position in the European market (by for example shifting attention to Asia).

As illustrated in the figure below, current EU-Russia gas trade is based on three key axes: the Nord Stream pipeline, the Yamal-Europe pipeline through Belarus and the pipeline system crossing Ukraine. Of these three routes, only the Ukrainian gas transportation system is not controlled by Gazprom.

http://www.bruegel.org/nc/blog/detail/article/1651-the-russian-pipeline-waltz/

[Romeo.lima333]

2. which should be driver to renewable energy independence then we can leave that whole region

to itself - let them have at each other

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8. It's an interesting idea.

I find it interesting that the Saudis and Russians are starting to talk too, the two cheap providers (Oil and gas) of the two competing forms of cheap energy. If they decide to collude instead of compete ...

I think we are leaving Mesopotamia anyway, we are still struggling with the idea, but it's coming.

But all of that argument in the OP falls apart if Iran gets free access to the market, which I think is kind of why the Saudis are irate, their control is directly threatened by Iran.

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3. Second gas pipeline under Baltic in the works

he pipeline will have the same capacity as the existing Nord Stream pipeline – 55 billion cubic metres of gas per year – and if built will double the quantity of gas exported to Germany from Russia.

"The construction of additional transport infrastructure along the shortest route between gas fields in northern Russia and markets in Europe will contribute to increasing the safety and reliability of deliveries for new contracts," said Gazprom CEO Alexei Miller.

Germany is the largest buyer of Russian natural gas, with a total volume of 40 billion cubic meters in 2013. Gazprom supplies 30 percent of the EU's gas needs.

Nord Stream is an offshore natural gas pipeline from Vyborg in the Russian Federation to Greifswald in Germany. At 1,222 kilometres (759 miles) in length, it is the longest sub-sea pipeline in the world.

http://www.thenews.pl/1/10/Artykul/210809,Germany-and-Russia-to-build-second-gas-pipeline-under-Baltic-

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4. Greece eyes up Russian gas deal

Greek prime minister Alexis Tsipras is in Russia for talks on a possible gas deal with his Russian counterpart. The planned Turkish Stream pipeline would pump gas through Greece and avoid Ukraine completely.

http://www.dw.de/greece-eyes-up-russian-gas-deal/av-18526199

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5. Russia 'considering Greek loans'

Russia is willing to consider giving financial aid to Greece, a Russian government official said, ahead of talks between the leaders of the two countries.

Greek prime minister Alexis Tsipras travelled to Russia as his country struggles to reach a deal with its creditors for new loans it needs to avoid defaulting on debt payments at the end of the month.

Without the bailout, Greece could be headed for bankruptcy or an exit from the euro.

Mr Tsipras's visit has given rise to speculation that the Greeks may be seeking Russian loans. He meets Russian president Vladimir Putin later today.

http://www.independent.ie/world-news/russia-considering-greek-loans-31314530.html

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6. Russia and Saudi Arabia agree to cooperate in nuclear energy

Russia and Saudi Arabia yesterday signed an agreement to cooperate in the development of nuclear energy for peaceful purposes. The document was signed by Rosatom director general Sergey Kirienko and the president of the King Abdullah City for Atomic and Renewable Energy (KA-CARE) Hashim Abdullah Yamani.

http://www.world-nuclear-news.org/NP-Russia-and-Saudi-Arabia-agree-to-cooperate-in-nuclear-energy-19061501.html

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7. . nt

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9. An Arabian warrior prince in Putin’s court

The unannounced arrival by the Saudi Deputy Crown Prince and Defence Minister Mohammad bin Salman al Saud in Russia and his meeting with President Vladimir Putin on Thursday is a dramatic development in the politics of the Middle East. It might draw comparison with Henry Kissinger’s secretive China visit forty-four years ago.

Without doubt, to borrow the immemorial words from the English poet Matthew Arnold, the sea seems calm and the air is sweet, and yet if you come to the window, you can hear the grating roar of pebbles, which the waves draw back, and fling at their turn at the high strand. To be sure, the Sea of Faith between the United States and Saudi Arabia that was full and round the earth’s shore ever since the improbable meeting between Franklin Roosevelt and King Abdul Aziz ibn Saud of Saudi Arabia on board a cruiser 70 years ago in the Great Bitter Lake in the Suez Canal, seems reduced to a melancholy, long, withdrawing roar, retreating.

And on a darkling plain, ignorant armies seem preparing for a clash by night. The many-splendored Arnoldian metaphor reduces itself to several templates of Middle Eastern and global politics.

King Salman of Saudi Arabia has sent his most beloved son as a personal envoy to meet Putin. The king’s choice of Mohammad bin Salman (MbS), a young man, thirtyish, as the trusted interlocutor with Putin at a momentous point in the Kingdom’s history is hugely symbolic, because the prince is also widely regarded as hugely influential figure today in steering the Saudi foreign and security policies in a radically new direction, as the kingdom steps out of the shadows of the seven-decades old alliance with America.

http://atimes.com/2015/06/an-arabian-warrior-prince-in-putins-court/