Russia’s New Gas Cartel

Russia’s fierce re-engagement in the Middle East has more than one strategic goal in sight. Apart from filling-in the vacuum left by the Obama administration’s disastrous policies towards Syria, Yemen, Iran and Libya, Vladimir Putin has more gains in mind. The prize goes beyond resetting the balance of power in Europe over Ukraine or halting NATO’s expansion, or even re-gaining a seat at the superpowers’ table, which has been occupied by China. Rather Putin is stitching together an organization of natural gas exporting countries or ONGEC along OPEC’ lines. The new cartel will comprise Iran, Qatar, Algeria, Egypt, Kurdistan Iraq, Syria, Lebanon and Cyprus. Israel would be deliberately left out for tactical reasons. Future coordination with Israel will be a must, but public stance and political charades would prevent any overt cooperation.

The features of such cartel-in-the-making are appearing at flashing speed. On December 10, 2016, Russian giant Rosneft oil company has expressed readiness to invest in Iranian oil and gas projects that could reach $10 bln. On December 10, 2016,Glencore PLC and Qatar finalized a deal to take a one-fifth stake in Rosneft for about $10.8 bln, sealing a deal that will bring much needed cash to Russia during an economic crunch. On December 12, 2016, Rosneft agreed to buy as much as 35 percent of a natural-gas project off Egypt, a country not on speaking terms with Qatar, joining Eni SpA and BP Plc in the largest discovery in the Mediterranean Sea. With its grip firmly on Syria, and by extension, on Lebanon, and with its economic hold and Orthodox influence over Cyprus, Russia aims at controlling all gas production in the Eastern Mediterranean, save for Israel. The recent courting of Gen. Khalifa Haftar of Libya by Russia is part of its reach into North Africa, where Algeria is another willing partner ready to join the would-be cartel. All told, Russia would be in control of billions of cubic feet of the natural gas produced outside the Western Hemisphere and by consequence, all gas supplies to Europe and partly, to Asia.
Europe would be caught-up in a stranglehold between Russia and ONGEC’s gas resources. Dictating supplies, setting prices, and determining the flow levels to all of Europe’s residential, commercial and industrial sectors would be charted by Moscow. As a result, Russia would be holding Europe hostage over its gas supplies and rattling the most powerful sabre ever brandished in its face since Napoleon or the Third Reich. Even if NATO were to expand to the farthest edges of Russia’s territory what could more tanks or troops or advanced weaponry do in the face of a mighty energy cartel? If Russia decides to cut-off gas supplies into Europe, the latter would be left with two options: freeze or yield. Russia has –by extending its influence over the Middle East- become the de facto arbiter of OPEC, and soon, the de jure partner of the future ONGEC.

President Trump needs not focus on the battles being raged in the Syrian countryside after the fall of Aleppo or whether cluster bombs are being used in Yemen by the Saudi coalition. Even the Iranian situation, which is much alarming could be set aside and dealt with at a later stage. What cannot suffer delays and does not need daily intelligence briefings to figure it out, is the unprecedented influence that Russia is gradually and surely having over the global energy markets. A role reserved to the US since the end of World War II. The A-Team assembled by President Trump including ‘T-Rex’ and ‘Mad Dog’ are uniquely positioned to weigh-in and advise on the next strategic (energy and military) steps, that are quintessential to averting such outcome.

Russia’s fierce re-engagement in the Middle East has more than one strategic goal in sight. Apart from filling-in the vacuum left by the Obama administration’s disastrous policies towards Syria, Yemen, Iran and Libya, Vladimir Putin has more gains in mind. The prize goes beyond resetting the balance of power in Europe over Ukraine or halting NATO’s expansion, or even re-gaining a seat at the superpowers’ table, which has been occupied by China. Rather Putin is stitching together an organization of natural gas exporting countries or ONGEC along OPEC’ lines. The new cartel will comprise Iran, Qatar, Algeria, Egypt, Kurdistan Iraq, Syria, Lebanon and Cyprus. Israel would be deliberately left out for tactical reasons. Future coordination with Israel will be a must, but public stance and political charades would prevent any overt cooperation.

The features of such cartel-in-the-making are appearing at flashing speed. On December 10, 2016, Russian giant Rosneft oil company has expressed readiness to invest in Iranian oil and gas projects that could reach $10 bln. On December 10, 2016,Glencore PLC and Qatar finalized a deal to take a one-fifth stake in Rosneft for about $10.8 bln, sealing a deal that will bring much needed cash to Russia during an economic crunch. On December 12, 2016, Rosneft agreed to buy as much as 35 percent of a natural-gas project off Egypt, a country not on speaking terms with Qatar, joining Eni SpA and BP Plc in the largest discovery in the Mediterranean Sea. With its grip firmly on Syria, and by extension, on Lebanon, and with its economic hold and Orthodox influence over Cyprus, Russia aims at controlling all gas production in the Eastern Mediterranean, save for Israel. The recent courting of Gen. Khalifa Haftar of Libya by Russia is part of its reach into North Africa, where Algeria is another willing partner ready to join the would-be cartel. All told, Russia would be in control of billions of cubic feet of the natural gas produced outside the Western Hemisphere and by consequence, all gas supplies to Europe and partly, to Asia.

Europe would be caught-up in a stranglehold between Russia and ONGEC’s gas resources. Dictating supplies, setting prices, and determining the flow levels to all of Europe’s residential, commercial and industrial sectors would be charted by Moscow. As a result, Russia would be holding Europe hostage over its gas supplies and rattling the most powerful sabre ever brandished in its face since Napoleon or the Third Reich. Even if NATO were to expand to the farthest edges of Russia’s territory what could more tanks or troops or advanced weaponry do in the face of a mighty energy cartel? If Russia decides to cut-off gas supplies into Europe, the latter would be left with two options: freeze or yield. Russia has –by extending its influence over the Middle East- become the de facto arbiter of OPEC, and soon, the de jure partner of the future ONGEC.

President Trump needs not focus on the battles being raged in the Syrian countryside after the fall of Aleppo or whether cluster bombs are being used in Yemen by the Saudi coalition. Even the Iranian situation, which is much alarming could be set aside and dealt with at a later stage. What cannot suffer delays and does not need daily intelligence briefings to figure it out, is the unprecedented influence that Russia is gradually and surely having over the global energy markets. A role reserved to the US since the end of World War II. The A-Team assembled by President Trump including ‘T-Rex’ and ‘Mad Dog’ are uniquely positioned to weigh-in and advise on the next strategic (energy and military) steps, that are quintessential to averting such outcome.