Prof. ST Hsieh
Director, US-China Energy Industry Forum
626-376-7460
July 9, 2022
One does not have to like Putin as a person, one also can blame him as a politician for all the trouble of this world today, specifically the war in Ukraine. But Putin is smart and capable, probably outrank many contemporary western leaders.
Putin’s warning to the west that (continued) sanctions risk energy price spike catastrophe should be taken seriously. Because western sanctions against Russia so far have backfired and European nations already facing serious energy crisis. For example, German has acknowledged in public that her economy may collapse soon, if Putin cuts off natural gas export.
But as German Vice Chancellor Habeck pronounced that “I’ll be the first one who will fight for a further strong EU sanction package,” unfortunately if he were successful, Putin would cutoff natural gas immediately. So Habeck immediately hedged his bet by saying that: “strong sanctions mean it must hurt and harm Russia and Putin more than it does our economy.” It is clear that Habeck thinks “German First,” no German can blame him! A rhetoric question for Habeck and other politicians is, considering German’s economy and people, “as well for the European market and for the security of supply in Europe,” why not talk with Putin for ending the war in Ukraine? Would a cease fire in Ukraine resolve or stop Europe’s “cold winter” crisis?
Habeck said “It is with a heavy heart that we had to ask for this (in public.)” It is a humiliating moment for this generation of Germans, but he immediately shifted the political bag to previous German administrations: “It was a grievous mistake that Germany was so dependent on one country with the energy supply, and this country is Russia.” Post WWII German economy recovery was based on Russian natural gas especially the East Germany. If Habeck were the smart post-WWII leader of Germany who would not commit “a grievous mistake,” without cheap Russian natural gas, then most likely German won’t be invited to be a member of G7.
As of now, Ukraine is not seeing eye to eye with Germany on moving forward with the war. It is a challenge for politicians in Germany, if the war drags to this winter, how to explain the “manmade cold winter” to Germans for a broken Ukraine?
Fortunately, US and Canada are exporting energy to Europe and we will have enough Natural Gas and electric power for a comfortable winter season.
UPDATE 3-Putin warns West: sanctions risk energy price spike catastrophe
Guy Faulconbridge Fri, July 8, 2022, 6:59 AM
* Putin sees ‘catastrophic’ energy consequences
* Putin warns West that sanctions risk chaos
* European powers fear Russian gas cutoff
* Europe relies on Russia for natural gas and oil (Recasts headline and first paragraph)
LONDON, July 8 (Reuters) – President Vladimir Putin warned the West on Friday that continued sanctions against Russia over the war in Ukraine risked triggering catastrophic energy price rises for consumers around the world.
Putin, who casts the sanctions imposed on Russia as a declaration of economic war, said that Western calls to reduce reliance on Russian energy had made global markets “feverish” with spikes in oil and gas.
European Union customers have said they want to wean themselves off Russian gas while Group of Seven leaders said last month that they wanted to explore “price caps” on Russian fossil fuel, including oil.
“Sanctions restrictions on Russia cause much more damage to those countries that impose them,” Putin told the leaders of Russia’s oil and gas industry, including Rosneft Chief Executive Igor Sechin and Deputy Prime Minister Alexander Novak.
“Further use of sanctions may lead to even more severe – without exaggeration, even catastrophic – consequences on the global energy market.”
Putin’s Feb. 24 invasion of Ukraine and the West’s imposition of the most severe sanctions in modern history have undermined the assumptions of the energy and commodities markets – while crimping global growth.
As Putin grapples with a major war, the biggest geopolitical crisis and the biggest Russian economic challenge since the 1991 fall of the Soviet Union, the 69-year-old Kremlin chief has repeatedly signalled he is in no mood to back down.
Energy is one area where the Kremlin still holds sway – and European powers including Germany fear he may be about to cut supplies.
Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s largest exporter of natural gas and the world’s largest wheat exporter. Europe imports about 40 percent of its gas and 30 percent of its oil from Russia.
GLOBAL SUPPLY
With prices already rising, the world is bracing for further supply disruption from Russia: The Nord Stream 1 pipeline under the Baltic, a vital supply route to Germany, is due to undergo maintenance from July 11 to July 21.
“We know that the Europeans are trying to replace Russian energy resources,” Putin said. “However, we expect the result of such actions to be an increase in gas prices on the spot market and an increase in the cost of energy resources for end consumers.”
In the last few months, Russia has cut off gas flows to Bulgaria, Poland, Finland, Danish supplier Orsted, Dutch firm Gasterra and Shell for its German contracts, after they all rejected a demand to switch to payments in roubles in response to European sanctions.
Putin said that the West’s economic “blitzkrieg” had failed but admitted damage had been done to the $1.8 trillion economy.
“We should feel confident in ourselves but you should see the risks – the risks are still there,” Putin said.
Putin said the situation on the Russian fuel and energy sector remained stable, citing an increase in oil and gas condensate output to 10.7 barrels per day in June.
But he said Russian energy companies should prepare for an EU oil embargo set to come into force around the end of the year.
“The government is currently considering options to develop the railway and pipeline infrastructure to supply Russian oil and oil products to friendly countries,” Putin said.
Germany’s Habeck Urges Canada to Help Thwart Putin on Gas
Brian Platt and Arne Delfs Thu, July 7, 2022, 10:55 AM
(Bloomberg) — Germany’s vice chancellor made a public plea to the Canadian government to release a turbine that’s caught up in sanctions against Russia and critical for gas flows to Europe.
“I’ll be the first one who will fight for a further strong EU sanction package, but strong sanctions means it must hurt and harm Russia and Putin more than it does our economy,” Habeck said in a phone interview late Wednesday. “Therefore, I ask for understanding that we have to take this turbine excuse away from Putin.”
Chancellor Olaf Scholz said the government is “doing everything to prevent an energy shortage” and wants the turbines to be delivered. “It would be good if they would be there, even though they are not necessary” for the maintenance, Scholz told ZDF television.
Germany is facing the prospect of energy rationing in the coming months, which would hit businesses and consumers and drag Europe’s largest economy into recession.
“We need capacities in Nord Stream 1 to fill up our storage,” said Habeck. “Filled storage capacities in Germany are not only important for the German market, but as well for the European market and for the security of supply in Europe.”
The higher prices coupled with a supply shortage is putting companies such as Uniper SE at risk. Germany’s biggest buyer of Russian gas is in talks with the government over a bailout as it struggles to fulfill delivery contracts amid the price surge. Habeck said the situation risks creating “cascading effects” for Germany’s energy system.
“If it’s a legal question for Canada, I want to make clear that I’m not asking them to deliver it to Russia, but to bring it to Germany,” Habeck said. “It is with a heavy heart that we had to ask for this.”
Canadian officials were non-committal when asked about Germany’s plea for help on the sanctioned turbine.
Habeck instead cited Germany’s past policy mistakes and his personal duty as a cabinet minister in explaining his plea for Trudeau’s assistance.
“It’s part of the oath I have given to the German people” to ensure energy security, he said. “It was a grievous mistake that Germany was so dependent on one country with the energy supply, and this country is Russia.”
Exclusive: Ukraine urges Canada not to hand over gas turbine to Russia
Kyiv has repeatedly called for more sanctions to be imposed.
“If the decision is made by the Canadians to hand over the turbine, regardless of whether it’s to Gazprom or to Germany for it to hand it over further … this would be a precedent of two G7 countries circumventing sanctions imposed against Russia,” the energy ministry source said.