A New World Energy Order Is Emerging From Putin's War on Ukraine - Bloomberg - 0 views
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blocs start to align in what looks like a new world energy order.
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“This represents the biggest re-drawing of the energy and geopolitical map in Europe — and possibly the world — since the collapse of the Soviet Union, if not the end of World War II,
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For Berlin, loosening its energy dependence on Russia is not simply about hitting Moscow’s main revenue stream. It’s a threat to roll back “Ostpolitik,” a totemic post-World War II policy of rapprochement with the Soviet Union, and by extension later Russia, that involved economic and political engagement, notably through oil and gas links.
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Yet as customers desert Russia, its partnership with the oil titans of the Middle East, with which it jointly leads the OPEC+ coalition, has so far stayed intact. Russia and Saudi Arabia are the world’s top oil exporters, accounting for 29% of the global total.
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“The U.S. can try to make Saudi Arabia increase production, but why would they accept a break in the alliance, which is key for them?”
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Riyadh’s OPEC+ partnership with Moscow calmed years of distrust between the two oil rivals, and saved the kingdom from relying exclusively on Washington.
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“Saudi Arabia doesn’t want to switch horses mid-race when they do not know if the other horse is actually going to show up,”
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Gulf Arab nations accused the U.S. of a lack of support in the face of repeated attacks by Iranian-backed militia on Saudi oil facilities and Gulf tanker traffic, and on Abu Dhabi this year. In a measure of the discord, the United Arab Emirates abstained in a U.S.-led United Nations Security Council vote to condemn Russia’s invasion.
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“Now that we are in a crisis moment, we’re reaping the effect of that lack of trust that’s been building over the years,” said Karen Young, senior fellow at the Middle East Institute in Washington.
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Another source of friction lies in U.S. efforts to reinstate the nuclear agreement with Iran, Saudi Arabia’s regional rival.
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Demonstrating just how exceptional the times are, a U.S. delegation traveled to Russian ally Venezuela last weekend in an overture to a country that holds the largest known crude reserves in the world.
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Venezuela has been subject to international sanctions since the Trump era that have crippled its ability to sell oil. While there is not yet talk of allowing exports to resume, President Nicolas Maduro responded by offering to turn on the taps anyway, saying that state oil company PDVSA is prepared to raise output to as many three million barrels a day “for the world.”
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the U.S. visit was “unexpected, surprising, a complete change in policy orientation,” with energy as the strategic catalyst.
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“But I think there is a more important geopolitical move that is redefining the West,” he added. The U.S. is looking to confine the spheres of influence enjoyed by Russia and especially China, and for Venezuela that means a gradual process “to reincorporate with the West, through energy.”
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China will continue to carry on “normal trade cooperation” with Russia, including in oil and gas, said Zhao Lijian, a foreign ministry spokesperson. China is considering buying or increasing stakes in Russian companies such as Gazprom PJSC,
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Even assuming a discount on the price per barrel, state-owned importers would weigh very carefully the impact on their global business of large purchases from a country that’s subject to so many sanctions, according to Qin Yan, an analyst with research house Refinitiv.
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Neither would buying energy from Moscow be an easy solution, even if it meant less pollution, said Li Shuo, a climate analyst at Greenpeace East Asia. “To change China’s current energy structure, to replace a lot of coal it uses now with Russia’s oil and gas, would be a huge project for China, and it would take time,”
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In Europe, the EU is refusing to budge on its climate commitments as it seeks to slash imports from its biggest supplier this year and replace flows from Russia completely by 2027. Those efforts were given a jolt by a suggestion that Moscow might shut off gas supplies through the Nord Stream 1 pipeline to Europe.
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“We simply cannot rely on a supplier who explicitly threatens us,” EU Commission President Ursula von der Leyen said as she unveiled the bloc’s plans this week.
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as Scholz told the Bundestag, Russia’s attack on Ukraine means “we are in a new era.” The world today “is no longer the same world that it was before.”