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Tuesday, October 25, 2016

Shale blitzkrieg in Ukraine failed

Europe swept the shaft of the publications that the “shale revolution” on the continent still canceled for tens of years, if not forever. Among the deeply disappointed – Poland, UK, the EU as a whole has increased its energy dependence on Russia due to the conflict in Ukraine, and Ukraine itself, kupivshiysya on the promises of the US and wanted to sell the EU Donbass gas.

“Great shale gas revolution”, in which the need long and hard to convince the Americans to Europe, seems to be close to an inglorious end. As the “revolution of dignity”, they started in Ukraine, including implementing plans on severance of relations between Russia and EU in the gas sphere.

European hangover

“Classified 55 documents were essentially modernized variant of the purchase from the natives of their treasures of beads and mirrors”

The European Union, poverissimo in USA promises about energy independence from Russia, and who beat the pots with Moscow, will have a difficult rethinking of current realities. Published this week forecast the news Agency Bloomberg has just confirmed what earlier unsuccessfully tried to convince the European energokontsernov representatives of Gazprom, independent analysts and sober-minded businessmen: widely raspiarenny “shale boom” will inevitably result in zilch.

“Hydraulic fracturing (fracturing technology) as the path to independence was a dream that just did not come to fruition. I would not say that the idea of shale gas in Europe died, but it was much harder than we thought” – diagnosed the situation, Bloomberg Intelligence analyst Philipp Chladek.

Difficulties was indeed rife – from European legislation, greatly complicating the life of the gas companies (fracking is banned in France, Germany and many European countries), before the fall in oil prices that has made extraction of shale gas unprofitable, and swarnavahini of expectations that are not backed by serious research exploration.

For example, the British company Cuadrilla Resources over the last six years have been unable to drill any wells in Poland. “It’s not easy. Drilling costs in Europe are high, much higher than in the US, and at every step there are many rules and regulations,” he complained to journalists the head of the Polish office Cuadrilla Marek Madea. “The problem in Europe is that the number of wells never reached a critical mass that would justify the cost,” – said in turn, Director of global energy and natural resources Eurasia Group Michael Barron. Indeed, if the United States has about 1,700 drilling rigs in Europe is only 80.

It is worth noting that Poland was among few European countries, initially actively supported the idea of shale gas production on its territory. The more that Polish reserves, according to preliminary calculations, were one of the biggest (5.3 trillion cubic meters, according to EIA estimates). That’s only according to a report by Polish experts, made in 2012, when the most optimistic calculations, you can actually remove only from 346 to 768 billion cubic meters. As a result, in the same year on further shale gas exploration in Poland Exxon Mobil refused, and, subsequently, Shell, Chevron, Total and Marathon Oil.

With similar challenges faced and the UK, like Poland, infected with a “shale fever”. A year ago, the local Geological service has denied the assessment of the presence in the South of England, large reserves of shale oil and gas, saying that from a theoretical 4.4 billion barrels are technically recoverable from 50 to 220 million, accounting for only about 0.5% of the volume extracted with the 80-ies of the last century on the continental shelf in the North sea. That is not a third as it was told before the lobbyists from the office of the Prime Minister David Cameron, selling lift the moratorium on the development of shale deposits. This moratorium was imposed in 2011 after drilling area in North-West England, were recorded tremors.

The deeper the bedding layers, high density of population, the activity of the ecologists and the laws that do not allow the landowner to do on his land as he pleases, – all these factors, according to experts, made it unlikely commercial success of shale gas production in the Old World. “It is clear that in Europe, the slate will never make a revolution, as it was in the United States” – bitterly says the same Michael Barron.

License to slavery

What is not held in civilized Europe, qualified for the Ukraine, which is a great gas game was originally prepared for the unenviable fate of a sacrificial lamb.

In 2010 Exxon Mobil and Shell are licensed to explore for shale gas in Ukraine. In spring 2012, Shell declared the winner of the competition to develop Yuzovsky site (Donetsk and Kharkiv region), and Chevron – Olessky (Lviv and Ivano-Frankivsk region). In the autumn of the same year, Shell starts drilling exploration well in the Kharkiv region.

At the same time “Naftogaz of Ukraine” enters into first contracts with the Americans. “We have been in the United States, were in the main offices of Exxon Mobil, ConocoPhillips, Shell and others. Concluded the relevant agreement on cooperation, signed agreements on areas of interest, that is, we already give them the corresponding coordinates, identify areas of interest, where it would be possible to confirm our capabilities for the extraction of shale gas,” proudly reported to the Deputy Board Chairman of Naftogaz Vadim Chuprun.

In January 2013, in Davos, Switzerland takes place the solemn signing of the agreement on production sharing between the companies Shell and Nadra Yuzovsky” for 50 years, which was blessed by the presence of President Viktor Yanukovych. In November of the same year, on the eve of a new Maidan, a similar agreement on Olessky field was signed with Chevron.

These immediately classified for 55 years forward the documents were essentially modernized variant of purchase from the natives treasure for beads and mirrors. In particular, in paragraphs 22.2 and 22.4 of the agreement with Shell was said that from the starting date and before the expiration of the agreement for investors is not subject to any prohibitions or restrictions provided by the legislation of Ukraine.

For the sake of these agreements bears the right to private property. Namely, according to paragraph 37.1, the Ukrainian government has pledged to provide to the investor in the use or ownership of land necessary for the implementation of oil and gas activities, and regardless of the purpose and status of ownership, possession and use land plots. Thus, if the land is already owned by someone else, the state still had to pass it on to the investor. While the costs of the procedure of alienation of private land were to be reimbursed by the state. In paragraph 37.2 means that in case of refusal by the site owners to agree on his transfer their ownership rights may be suspended. Moreover, the investor received the right to own, use or have access to without acquiring ownership rights to the subsoil or the ground areas as needed both within and outside the Treaty area. He was allowed to crash in any place in the Ukrainian GTS, as well as build their own lines of any length.

In accordance with these agreements, the lion’s share of gas produced (80%) should accrue to the mining companies. And that’s not all: article 39.4 provides that a state may waive its share of production or payments.

It should be noted that and personally Yanukovych and Azarov’s government, these predatory agreements give Ukraine a half-century in bondage to foreign companies, until the very last day of his stay in power dutifully implemented the strategy of “shale revolution”, launched in September 2013 in Yalta in the report of the ex-US Secretary of energy bill Richardson. The strategy consisted in the replacement of Russian natural gas coming to Europe, its us shale-Ukrainian counterpart.

In January 2014, less than a month before escaping from unrest in Kiev, Azarov condescending “calmed” the Ministry of natural resources, have expressed reasonable concerns about the high probability of environmental threats for the regions of Russia adjoining the Ukrainian gas fields. “If Kharkiv region, these developments will not pose a threat, then why is it a threat to the Belgorod region, which is located tens of kilometers away?” asked the Prime Minister, did not forget to emphasize that the conducted environmental review to confirm the safety of shale gas production for Ukraine and its neighbors. Hardly Azarov was not aware that signed with Shell and Chevron agreements in the list of classified data includes the results of environmental inspections.

Ukrainian “dummy”

“Payment for participation in the pursuit of shale Mirage became the lives of thousands of civilians, millions of broken lives, burned and territorial losses Donbass”

“Shale gas is given life to American companies. Americans drove these companies out of their country. Why? Where shale gas is extracted, completely disappears drinking water every living thing dies, wild and domestic animals. People leave their homes and businesses and fleeing from those territories. So everyone stand up and say, “I don’t want them to get that done to my country!”

This is a heartfelt appeal to the Ukrainian voters on the eve of 2012 parliamentary elections has posted online the people’s Deputy of the Verkhovna Rada and a prominent representative of the United opposition Oleksandr Kuzhel, who accused the team of Yanukovych of betraying the national interests. And after only a year and a half the oligarch Sergei Taruta, appointed by the victorious allies in the region Governor of the Donetsk region, at the meeting with Director General of Shell Graham tailee already requested to expedite the deployment of two wells for the extraction of shale gas on the territory of the region.

Americans, as a result of the February event finally took control of the government in Ukraine, and without wishes Taruta didn’t hesitate, forcing traffic in the slate direction. And at the highest level. In spring 2014 Robert hunter Biden (son of Vice-President of the USA Joe Biden) introduced into the composition of the Board of Directors of the largest Ukrainian gas company Burisma Holdings, which owns the license to develop fields in the Dnieper-Donets, Azov-Kuban and the Carpathian oil and gas basins. By the way, among the Directors of the company also includes Devon Archer (friend of stepson and a former senior adviser to the U.S. Secretary of state John Kerry) and Aleksander Kwasniewski (former Polish President).

Then for the first time began a sharp escalation of the situation in Donbass with the use of combat aircraft, multiple launch rocket systems, heavy artillery and volunteer battalions, equipped with ideological nationalists and criminals amnestied. There was a systematic sweep of the areas planned for gas production. Unbearable living conditions forced the population to flee, and the total destruction of infrastructure made it impossible for him to return.

Actually, nothing new happened. At about the same barbarous, but very effective way to European immigrants once “cleaned out” for themselves in North America. Then the ancestors of the pillars of democracy and guarantors of these freedoms, not only put on the industrial stream of the extermination of indigenous people by buying their scalps, but also destroyed the main food base of the Indians, the Buffalo, whose multi-million herd in a matter of years, turned into a micro-population.

Meanwhile, by mid-summer the interest of gas companies to the Ukrainian deposits has noticeably waned. Apparently, trying to revive him, the new Ukrainian government makes a Royal gift. In early August the state company “Nadra Ukrayny” announces his intention to refuse to participate in the production of gas Yuzovsky and Olessky sites, providing “the Vikings” complete freedom of action and the absence of any control by the state.

A month later, the Verkhovna Rada adopted the law on reform of GTS, which allows foreign companies to participate in its management. The act stipulates, however, that the right to participation in the joint venture operator of the gas transportation system will be provided exclusively for American and European companies. However, even such favorable conditions are not interested in the company Shell refused to participate in the contest, then one of the most likely winners automatically become Chevron.

But in December 2014 with a difference in a couple of weeks, both companies say they will cease operations for the extraction of shale gas in Ukraine. And if the management of Shell to explain its decision to the turmoil in the area of Slavyansk, spoke about the temporary suspension of the planned works on field exploration, Chevron just came out of the project unilaterally. As formal reasons Chevron executives called the unwillingness of the Ukrainian Ministry of Finance to implement within the prescribed period the obligation to bring its regulations into compliance with the current legislation. About the reason is real long before the signing of the agreement warned by many experts, skeptically evaluating the accuracy of the information on the size of the Ukrainian reserves of shale gas and availability of its production.

The revolution has been cancelled

Thus, today it is possible with great certainty to believe that the “shale revolution”, the main strategic goal was the complete elimination of Russia from the European gas market, has died.

“I don’t know a single serious person who predicted the revolution in shale gas production in Europe for at least the next 15 years. It just can’t happen too many obstacles. Yet what we see, so to speak, the last nail in the coffin” – said the expert of the research center Chatham House in London Paul Stevens, Chevron commented on the decision to abandon the search for shale gas in Poland. “Now it is not clear who in Europe would be the first to start production of shale gas” – echoes one of the leaders of the consulting firm Poyry John Williams amid reports from Scotland, in February this year declared a moratorium on the issuance of permits for oil and gas in any unconventional way.

Moreover, Ukraine, which the us-European plans initially assigned the role of one of the main elements of the design “of the new gas order,” now referred to as reasons to continue the cooperation of Europe with Russia in the energy sphere, as the events of recent years exacerbated the problem of the EU’s dependence on supplies of oil and gas from Russia. In particular, this is stated in the report of the British Anglia Ruskin University.

That political standoff between Moscow and Kiev should not affect the gas relations of Russia and the countries of Europe, and convinced the President of the European Union of gas industry, Jean-Francois Cirelli. “Commercial compromise is the basis of a secure and competitive market. That is why it is important that this Foundation was not destroyed or weakened by political interference. Russian gas producers, particularly Gazprom, are important commercial partners for Europe. In this regard, it is important that contractual obligations are respected both today and tomorrow. We don’t know how long the tensions of Russia and Ukraine. But it is important to move away from the policy in gas issues,” he said at the IX international conference “Energy dialogue Russia – EU. Gas aspect”.

In short, the “shale Ghost, born of the geopolitical plans of the USA and wander freely around Europe, is preparing “with things on the way out”. Oil and gas giants, have invested considerably not only in technical training and “processing” of the political elite, but in a massive information campaign to convince the local population of the attractiveness of their projects, count the losses.

But even these multi-billion dollar spending is nothing compared to the loss of Ukraine. Her payment for participation in the pursuit of shale Mirage became the lives of thousands of civilians, millions of broken lives, burned Donbass, territorial losses and doubtful in meaning the state of future prospects. That, however, is natural, because the thirty pieces of silver is always very expensive.

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