EDITORIAL: Russia, Running Dry

EDITORIAL

Russia, Running Dry

According to a stunning, nearly 200-page analytical report released last week by the United Nations (see page 24):

The threat of depletion of Russia’s proven and accessible oil resources in 20-30 years time has become a real threat, mainly because of inadequate exploration in the past decade and more difficult extraction conditions, which require work in remote regions with harsh climate. Even during the recent boom years (2002–2008) the depletion date came nearer (from 26.3 to 21.9 years) (Figure 1.8). Reserve replacement is progressing very slowly and the crisis has clearly worsened the situation.

The situation with natural gas reserves is better, mainly due to huge deposits, which are sufficient for 70 years of production. But the expected depletion date for natural gas has moved closer by 9.4 years in the last decade, canceling out reserve replacement.

You read that right:  Within this century, Russia is likely to totally exhaust its reserves of both gas and oil.  Crude oil, by far more important to Russia in terms of generating essential foreign exchange, may be entirely gone as soon as 2030. 

Let’s repeat that:  Within two decades, three at the most, there will be no more crude oil for Russia to sell abroad unless new sources are found or the current rate of is drastically curtailed.  Within one generation, Russia’s gas resources may also disappear (if the last decade’s trend continues in the next, Russia’s gas will likely exhaust in 2070).  Russia’s hard currency reserves, before this century is out, will rapidly dwindle to nothing, the value of the ruble will plummet, the stock market will collapse and the price of imported goods will soar far beyond the means of ordinary people, an apocalypse in a country which produces virtually no worthy consumer products of its own.

The reason is simple:  Russia is guzzling oil and gas in a pathological manner because its industry is profligately wasteful and the climate demands extreme consumption which the Kremlin must vastly subsidize since it rules an impoverished population.  And Russia is selling oil abroad at a frenzied rate in order to bolster its flagging domestic economy and to fund the savage cold-war aggression of the KGB Kremlin.  By contrast, Russia is failing to invest energy proceeds in development of new energy assets, squandering them instead on cold-war politics.  This wicked one-two punch to the nation’s economic solar plexus will soon bring the national economy to its knees.

Little wonder, then, that the Kremlin is flailing about with desperation moves like seeking gas reserve on the Arctic sea floor. Even if it could recover such reserves, which is laughable, they would only slow Russia’s descent into an oblivion where it must act like a normal country and produce marketable goods for sale, something Russia has proved time and time again that, because of its benighted leadership, it simply cannot do.

A shocking one-quarter of all Russian GDP is produced by Moscow, a city with just 10% of Russia’s population.  What does that say about the productivity and living standards of the other 90% of the country?  It’s a prospect almost too horrible to contemplate.  Just as in Soviet and Tsarist times, the Kremlin is usurping the nation’s wealth for political adventures and corruption, leaving the vast majority of the population to wallow in extreme poverty and degradation.

As we’ve shown many times before, Russia’s economy has not been diversified at all by the Putin regime, and depends utterly on energy revenues to maintain itself.  The world gaped slack-jawed in horror at what happened when, because of the global economic crisis, demand for crude oil fell dramatically.  The loss of revenue severely undermined the foundations of the Putin economy, and sent Russia into the worst tailspin of any major nation on the planet.  The stock market collapsed, losing 80% of its value over the course of a couple of months.  What will happen to Russia when the country has no more oil at all to sell on world markets?

Quite simply, the economy will implode just like the USSR’s did not so very long ago.

Oblivious of these facts because they have allowed their government to implement a shocking crackdown on civil society, liquidating independent media and seizing total control of the TV news from which most Russians get their information, like bleating sheep Russians continue to “baa” their approval of the Putin regime even as it hurtles them towards a bottomless abyss of failure and despair.

About these ads

30 responses to “EDITORIAL: Russia, Running Dry

  1. The report, De Facto, predicts almost the exact date of Russia’s collapse.

    Question is whether it’ll happen in 20 years or 70 (my guess is somewhere in between).

    It’s probably the only way to bring about change and provoke a deadly crisis which will explode into full scale revolution.

    Amen.

    • Did you count shale gas and coal in?
      Russia does have some.

      • Having some is not the same as being able to get it out, dimwit. And “some” is not enough to save Russia from her fate.

        BTW, thanks for following our comment rules and adding value to our blog by documenting your claim.

    • Ever seriously considered a possibility of a revolution in a nuclear state, dude?

  2. The Nord Stream project is part of an exclusionary agreement between Moscow and Berlin—nicknamed in circumvented Warsaw the “Molotov-Ribbentrop Pact,” after the 1939 Soviet-Nazi deal to carve up Poland.

    Molotov-Ribbentrop pipeline is then transformed from an instrument of blackmail into an undersea white elephant.

    To understand why this undersea pipeline, officially known as Nord Stream, is already called by some in Poland (including foreign minister Radek Sikorski) the “Molotov-Ribbentrop pipeline,” one must realize that its primary purpose is to serve the Kremlin as an instrument for political pressure. If economic considerations and demand for Russian gas in Western Europe had been the primary motivations, a second pipeline parallel to an existing one through Baltic and Polish territory could have been built more quickly and cheaply.

    But such a pipeline would not have allowed Russia to turn off the gas to its Eastern neighbors while continuing to sell it to Germany and Western Europe, and thus would have denied the Kremlin the ability to blackmail the former, as it already has on several occasions in recent years.

    How important that is to the Kremlin becomes even clearer when it is realized that falling prices and declining demand for Russian gas throughout Europe — the result of burgeoning liquefied natural gas (LNG) supplies from elsewhere — and Gazprom’s inability to bring on stream its large remaining undeveloped resources in remote regions mean that neither the demand nor the supply for Nord Stream currently exists. Gazprom itself is on the rocks at present, with a market valuation a third of what it was two years ago. Despite all of this, as Nord Stream construction demonstrates, Putin and Co. are clearly determined to pay any price to maintain their oil-and-gas-supply trump as the only promising instrument of Russia’s neo-imperial ambitions. What makes Germany willing to be complicit in the Kremlin’s power schemes against its E.U. partners is a different question that Berlin will have to answer sooner or later.

    Unfortunately for the Kremlin, yet another event last week may doom all of these carefully laid plans. A press release by the American oil and gas exploration company Wood Mackenzie announced the discovery of huge quantities of shale gas in Northern Poland and its imminent exploitation by American companies holding 44 licenses to do that. For Poland, which currently imports three-quarters of the natural gas it needs from Russia, the 47 trillion cubic feet of gas discovered would suffice for 200 years of present consumption. The discovery further boosts proven E.U. gas resources by almost 50 percent and will almost certainly transform Poland into a major exporter to those neighboring countries that have also been at the receiving end of Russian energy blackmail.

    Even before this find, Central and Eastern European countries decided at an “Energy Security Summit” in Budapest last February to unify their gas transportation and LNG networks in order to achieve greater energy independence from Russia. With the Polish gas discovery and similar large finds of unconventional gas predicted for Hungary, Austria, and elsewhere, this energy independence could become a reality in just a few years.

    It would be poetic justice indeed if the Molotov-Ribbentrop pipeline is then transformed from an instrument of blackmail into an undersea white elephant.

    • “some in Poland” ended up badly, if you didn’t notice.

      • The USSR ended up badly, if you didn’t notice, and Russia is governed by the same clods who ran the USSR.

      • ouch wrote;

        ‘some in Poland” ended up badly, if you didn’t notice

        comments;

        the whole world did notice the assassination of the Polish President by the russian barbarians. Polish people mourn, regroup, replace the lost cadres with the better people and came out of this tragedy stronger and better while, at the same time Poland watches with fiendish pleasure the slow and revolting demise of the russian nation – ruskiye sobaki kotorye medlenno zdykhayut v sobstviennym govnie. Prastshai Nemytaya rassia which means farewell unwashed russia- poem written by M. Lermontov……

        • Voice of Reason

          aaa, I didn’t know that you relied on the great Lermontov for opinions. If so, you will surely appreciate these immortal words:

          И дикий крик и стон глухой
          Промчались в глубине долины –
          Недолго продолжался бой:
          Бежали робкие грузины!
          /Лермонтов, “Демон”/

          And wild cry and moan muffled
          Raced in the depths of the valley –
          Not long the fight continued:
          “Timid” Georgians ran away!
          /Lermontov, “Demon”/

          Here Lermontov laments the ease with which Turks defeated cowardly Georgians, who simply ran away

          • Voice of Unreason, Georgians have resisted Muslim pressure from various bloodthirsty quarters for over a thousand years. Russia was a Muslim subject – to the Islamized Mongols – when Alexander Nevsky won his great patriotic victory against Crusaders on behalf of his Muslim masters, and Georgia was still free. In fact, it took Russian deception and bullying – not conquest by force of arms – to bring down the last of the Bagrationids.

          • Voice of Reason;

            Lermontov was of scotish origins.

            • Voice of Reason

              aaa,

              Thank you for sharing with us your elementary school lesson. Any more trivia to share with us?

              • Voice of Reason wrote;

                Thank you for sharing with us your elementary school lesson. Any more trivia to share with us?

                Comment;

                Another trivia especially for you; had Mr Lermontov been a native Russian he would have never noticed that he was unwashed….

                By the way, how can I compete, being educated in France, UK and USA, with glorious, unique and perfect schooling of Soviet Union/Russia e.g.,Patrice Lumumba University, Marxist-Leninist Universities, KGB training, Stakhanovits Schools, etc. The country that produced a glorious fool like Professor Lysenko – You Russians are truly beyond contempt.

              • Voice of Reason

                aaa wrote: “Another trivia especially for you; had Mr Lermontov been a native Russian he would have never noticed that he was unwashed….

                Well, aaa, everybody has heard the legend, but it is not known if Lermontov had a Scottish ancestor or not:

                http://en.wikipedia.org/wiki/Lermontov

                Lermontov was born in Moscow to a respectable noble family of the Tula Governorate, and grew up in the village of Tarkhany (in the Penza Governorate), which now preserves his remains. According to one disputed and uncorroborated theory his paternal family was believed to have descended from the Scottish Learmonths, one of whom settled in Russia in the early 17th century, during the reign of Mikhail Fedorovich Romanov. However this claim has been neither proved nor disproved, and thus remains a legend.[1]
                —————————-

                What is known is that Mikhail Lermontov was born about 220 years after any Scottish Learmonth who may have settled in Russia in the early 17th century, and his family didn’t even remember not had any records of this Learmonth. Thus, Lermontov was about 8 or 9 generations removed from this Learmonth. In other words, even if Lermontov had any Scottish blood, it would account for maybe 0.4% of his genotype.

                What is also known for sure is that he, his father, his grandparents, his greatgrandparents and his greatgreatgrandparents all were Russians and lived in Russia from birth to death.

                You think that in such situations, a Russian man a tiny 0.4% Scottish blood in him, would think and behave differently than a virtually identical Russian man without Scottish blood. This makes you the deepest racist in the World.

                Look, racists believe that black Americans behave and think differently from white Americans, even if they grew up in the same environment. But it takes a super-racist to think that two white men – a Scottish-American and a Russian-American – behave and think differently. And it takes a super-super-racist to think that two Russian men behave and think differently because one of them has 0.4% Scottish blood.

                You are the most ignorant racist on Earth, aaa. You can apply to the Guinness Book of World Records for inclusion.

                By the way, how can I compete, being educated in France, UK and USA, with glorious, unique and perfect schooling of Soviet Union/Russia. You Russians are truly beyond contempt.

                First of all, thank you for sharing with us the reasons why you think you are superior to everybody else. You indeed have a lot to brag about here. Your studying in 3 different expensive Western countries proves that your daddy must be very rich. And given that Georgia is a poor country even by African standards, your daddy’s wealth must mean that he must have stolen enormous wealth either from his fellow Georgian people in the 1990s or from Russians and other Soviet people in the 1970s and 1980s.

                Your daddy’s wealth certainly beats my daddy, because all my college education came from one country only. In fact, for my undergraduate education, I went to the college nearest to my parents’ Brookline, Massachusetts home: Harvard University, on a scholarship. My daddy didn’t have to pay for my PhD from Stanford University either: I won a national honors fellowship.

                Which community college did you study at when you were in USA, aaa? And why didn’t you take any courses in genetics or anthropology? Even the most lowly community colleges offer them.

                Here is a link to a world-wide ranking of top 100 universities. My almae matres are in bold. Which universities gave you your degrees and where are they ranked?

                http://www3.ntu.edu.sg/home/eylu/univ/Newsweek_top100_2006.pdf

                The Complete List: The Top 100 Global Universities
                Newsweek International

                1. Harvard University
                2. Stanford University

                3. Yale University
                4. California Institute of Technology
                5. University of California at Berkeley
                6. University of Cambridge
                7. Massachusetts Institute Technology
                8. Oxford University
                9. University of California at San Francisco
                10. Columbia University

                P.S. Sorry for stooping to your level.

            • Thanks aaa for that piece of information that “Lermontov was of scotish origins.” Interesting indeed.

              In the same breath ignore “Voice of Unreason” and his in bad taste comment of “Thank you for sharing with us your elementary school lesson. Any more trivia to share with us?”

              Lessons of that nature are normally taught in high school, and he has no right to talk of “us” when he is referring to himself only! But then that comment of his is understandable as he suffers from delusions of grandeur in his self importance.

              • Sorry you didn’t hear it in school, but glad now you know abt Lermont-ov.

                Have some more knowledge to share. Long live the trivia section:

                – Byron loved Greece and fought for it’s independence,

                – Carrol had a real friend called Alice, and told her tales,

                – Nabokov died a Russian-American and Humbert Humbert was not his real alter ego,

                – Pushkin introduced modern Russian language,

                – Al-gebra and al-chemia, and most other things that start with al are invented by Arabs, even al-cohol,

                – The USA and the World have equal military budgets,

                – The moon influences tides,

                – Electrons are charged negatively, positrons – positively,

                – China currency reserves are 3 time less than the US public debt (if debt was positive, of course),

                etc. Hope it was interesting.

  3. China May Emulate U.S. ‘Quiet Revolution’ in Shale Gas Output

    http://www.businessweek.com/news/2010-03-11/china-may-emulate-u-s-quiet-revolution-in-shale-gas-output.html

    The embarrassing revelation that Putin, a former KGB agent, may have cheated and lied about his qualifications follows a long search by US scholars for evidence of the president’s academic prowess. A copy of the thesis was eventually located in the electronic files of a Moscow technical library.

    According to Clifford G Gaddy, a senior fellow at Brookings, 16 of the 20 pages that open a key section of Putin’s work were copied either word for word or with minute alterations from a management study, Strategic Planning and Policy, written by US professors William King and David Cleland. The study was translated into Russian by a KGB-
    related institute in the early 1990s.

    China may produce a quarter of its natural gas from shale deposits within 20 years to meet growing demand for the cleaner-burning fuel, reduce imports and emulate a boom in U.S. output from the gas-bearing rock.

    Russia has become, in the precise sense of the word, a fascist state. It does not matter here, as the Kremlin’s apologists are so fond of pointing out, that Mr. Putin is wildly popular in Russia: Popularity is what competent despots get when they destroy independent media, stoke nationalistic fervor with military buildups and the cunning exploitation of the Church, and ride a wave of petrodollars to pay off the civil service and balance their budgets. Nor does it matter that Mr. Putin hasn’t re-nationalized the “means of production” outright; corporatism was at the heart of Hitler’s economic policy, too

  4. EU’s Nabucco pipeline takes step closer to construction

    (AFP) – 7 hours ago

    VIENNA — The EU’s Nabucco gas pipeline took a step closer to becoming reality on Friday when the consortium building it launched the process to find companies to supply the pipes needed for the project.

    Nabucco Gas Pipeline International said it formally started the process to find a supplier for so-called “long-lead items” — such as pipes and valves — needed for the mammoth 3,300-kilometre-long (2,060-mile) pipeline.

    “The pre-qualification for long-lead items is a substantial step towards starting construction at the end of 2011,” Nabucco managing director Reinhard Mitschek said.

    Nabucco, estimated to cost 7.9 billion euros (10.5 billion dollars), is intended to bring gas from central Asia to southeastern Europe, initially running from Azerbaijan to Ankara in Turkey and then on to Vienna.

    The EU sees it as vital to energy security following a number of third disputes which disrupted supplies of Russian gas disrupted supplies to some countries in eastern and central Europe.

  5. Bogdan from Australia

    Fantastic comment by Boris. I e-mail this Russophobe post immediately to my daughter in Poland to look at and… enjoy. Looks like not all is lost yet.

    aaa… I can only thank you with my whole heart for your beautiful take on Polands resolve to survive.

    There is one more factor that I’d like to point at.
    It is increasingly likely that this November the Conservative forces in the US will take the Congress back. That will make Obama a lame-duck who as an immensely weak character will be like in plasteline in the hands of Congress.

    Appart from that, if Sarah Palin wins presidency in 2012 (also increasingly likely), the entire landscape related to energy resource will go through truly revolutionary changes.

    Sarah Palin’s steely determination to make America energy independent will cause the sudden fall in oil and gas prices as the entire long term strategies of oil and gas producers will collapse.

    It is even possible that the oil cartel – OPEC would break entirely.

    Here we are talking about really near future of 2,5-3 years.

    The danger is that the enemies of America could embark on some large-scale international conflict or even attempt to assassinate Palin in order to prevent that.

    Here we are talking about at least thrillion dollars that instead of being transfered to hostile regimes will stay in the US.

    That would mean a death-blow to them.

  6. ouch wrote;

    some in Poland” ended up badly, if you didn’t notice

    comment;

    Kyrgez started slaughter russians, if you didn’t notice.

  7. Russia has large reserves of gas, but so does everybody else. The question is: “How close are they to major markets”?

  8. Russia has large reserves of gas, but so does everybody else.

    The question is: “How close are they to major markets”?

    And how much does it cost to get the stuff to the costumer ?

    Is it possible for for the academic underachiever
    Putin to buy off his clients i Russia and the neo-Soviet colonies in 2040 ?

    If he can’t pay them off , who will fight for the mafia boss ?

    • “If he can’t pay them off , who will fight for the mafia boss ?” What prophetic words, Boris.

      Just watch the rats deserting the sinking ship when your last paragraph becomes a reality!

  9. The discouraging part of all this is that any Russian leader who makes war on his neighbors will be popular with the Russian people. Living in a decent country is secondary.

    US could help, but not right now. The resurgence of the right wing in US really is the major hope for the future. Pressure from the right wing is why missile defenses are still in Poland.

    The Russian people themselves are the underlying problem and probably always have been. They want “respect”. It makes me feel better that the Russian people are living in poverty. Poverty is good.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s