Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on May 18, 2014
Crimea may yield trillions in oil riches for Russia and Putin
When Russia seized Crimea in March, it acquired not just the Crimean Peninsula but also a maritime claim more than three times its size with the rights to underwater resources potentially worth trillions of dollars.
Russia portrayed the takeover as reclamation of its rightful territory, drawing no attention to the oil and gas rush that had recently been heating up in the Black Sea. But the move also extended Russia’s maritime boundaries, quietly giving Moscow dominion over potentially vast oil and gas resources while dealing a crippling blow to Ukraine’s hopes for energy independence.
Moscow did so under an international accord that gives nations sovereignty over areas up to 230 miles from their shorelines. Russia had tried, unsuccessfully, to gain access to energy resources in the same territory in a pact with Ukraine less than two years earlier.
“It’s a big deal,” said Carol Saivetz, a Eurasian expert in the Security Studies Program of the Massachusetts Institute of Technology. “It deprives Ukraine of the possibility of developing these resources and gives them to Russia. It makes Ukraine more vulnerable to Russian pressure.”
Gilles Lericolais, director of European and international affairs at France’s state oceanographic group, called Russia’s annexation of Crimea an “obvious” play for offshore riches.
In Moscow, a spokesman for President Vladimir Putin said there was “no connection” between the annexation and energy resources, adding that Russia did not even care about the oil and gas. “Compared to all the potential Russia has got, there was no interest there,” spokesman Dmitry Peskov said Saturday.
Irving-based Exxon Mobil, Royal Dutch Shell and other major oil companies have already explored the Black Sea, and some petroleum analysts say its potential may rival that of the North Sea. That rush, which began in the 1970s, lifted the economies of Britain, Norway and other European states.
William B.F. Ryan, a marine geologist at the Lamont-Doherty Earth Observatory of Columbia University, said Moscow’s Black Sea acquisition gave it potentially “the best” of that body’s deep oil reserves.
Oil analysts said that mounting economic sanctions could slow Russia’s exploitation of its Black and Azov Sea annexations by reducing access to Western financing and technology. But they noted that Russia had already taken over the Crimean arm of Ukraine’s national gas company, instantly giving Russia exploratory gear on the Black Sea.
“Russia’s in a mood to behave aggressively,” said Vladimir Socor, a senior fellow at the Jamestown Foundation, a research group in Washington that follows Eurasian affairs. “It’s already seized two drilling rigs.”
The global hunt for fossil fuels has increasingly gone offshore, to such places as the Atlantic Ocean off Brazil, the Gulf of Mexico and the South China Sea. Hundreds of oil rigs dot the Caspian, a few hundred miles east of the Black Sea.
Nations divide up the world’s potentially lucrative waters according to guidelines set forth by the 1982 Law of the Sea Treaty. The agreement lets coastal states claim what are known as exclusive economic zones that can extend up to 230 statute miles from their shores. Inside these zones, states can explore, exploit and manage deep natural resources, living and nonliving.
The countries with shores along the Black Sea have long seen its floor as a potential energy source, mainly because of modest oil successes in shallow waters.
Just over two years ago, the prospects for huge payoffs soared when a giant ship drilling through deep bedrock off Romania found a large gas field in waters more than half a mile deep.
Moscow moved fast.
In April 2012, Putin, then Russia’s prime minister, presided over the signing of an accord with Eni, the Italian energy giant, to explore Russia’s economic zone in the northeastern Black Sea. Ryan, of Columbia, estimated that the size of that zone, which existed before the Crimean annexation, amounted to roughly 26,000 square miles, about the size of Lithuania.
A month later, oil exploration specialists at a European petroleum conference made a lengthy presentation, the title of which asked: “Is the Black Sea the Next North Sea?” The paper cited geological studies that judged the waters off Ukraine as having “tremendous exploration potential” but saw the Russian zone as less attractive.
In August 2012, the Ukrainian government announced an accord with an Exxon-led group to extract oil and gas from the depths of Ukraine’s Black Sea waters. The Exxon team had outbid Lukoil, a Russian company. Ukraine’s state geology bureau said development of the field would cost up to $12 billion.
When Russia seized the Crimean Peninsula from Ukraine on March 18, it issued a treaty of annexation between the newly declared Republic of Crimea and the Russian Federation. Buried in the document — in Article 4, Section 3 — a single bland sentence said international law would govern the drawing of boundaries through the adjacent Black and Azov Seas.
Ryan estimates that the newly claimed maritime zone around Crimea added about 36,000 square miles to Russia’s existing holdings. The addition is 31/2 times the size of the Crimean landmass, and about the size of Maine.
As for oil extraction in the newly claimed maritime zones, companies say their old deals with Ukraine are in limbo, and analysts say new contracts are unlikely to be signed anytime soon, given the continuing turmoil in the region and the U.S. efforts to ratchet up pressure on Moscow.
“There are huge issues at stake,” noted Saivetz of MIT. “I can’t see them jumping into new deals right now.”
10 Comments on "Crimea may yield trillions in oil riches for Russia and Putin"
Makati1 on Sun, 18th May 2014 8:47 am
“… When Russia seized Crimea in March,…” Well, the Empire’s MSM Propaganda Ministry is still trying to claim that Russia seized the Crimea, when the facts point to the citizens of the Crimea deciding to join Russia instead of the US Mafia in Kiev. As now two other provinces want to do also.
But then, the Dallas News is used to lying about oil facts and it’s future. The Russians and Chinese are the new ‘bad boys’ on the block according to the DC Mafia. Along with Iran, North Korea, and anyone else they cannot bully. They are losing Syria and are getting desperate for a world war. thanks to Russia and China, they seem to be failing at that also.
Davy, Hermann, MO on Sun, 18th May 2014 8:54 am
Oh Mak, you like to use the MSM card when it suits your purpose. Everyone knows Crimea was seized unlawfully with coercion. Your China and Russia propaganda slime is tiring Mak.
Plantagenet on Sun, 18th May 2014 10:42 am
The oil wars are just starting. Russia’s success in seizing Crimea will encourage China to become even more aggressive in its efforts to seize huge areas of the south china sea.
Perk Earl on Sun, 18th May 2014 12:20 pm
I agree Plant. Liebig’s Law of the Minimum states that yield is proportional to the amount of the most limiting nutrient, whichever nutrient it may be. In this instance it’s oil, and what we see now is country’s know the value of it in maintaining BAU and are now beginning to opt for military action to secure new sources.
The US war with Iraq to oust Saddam can to some extent be seen in the same light, however the US only benefitted from the standpoint of (possibly) more oil making it to the world market helping the world economy including the US.
With China and Russia we are now getting imperialistic military supported annexation of new regions to secure new oil sources. China sent 80 ships to secure one offshore drill rig! That is serious business.
What we are also seeing, at least so far, is a hands off approach by the US. Sure a few symbolic sanctions against Russia, but no military action of any kind, not a blockade, nothing except war exercises that amount to no net gain in regards to oil. The US may be a sleep at the wheel because evidently the politicians on Capitol hill think the US will become a net energy exporter by 2020. LOL
Make no mistake about it though, incursions, blockades and wars will ignite as world economic pressures build due to ‘Liebig’s Law of the Minimum’, oil.
Davey on Sun, 18th May 2014 1:45 pm
Perk, the ultimate minimum is food . All roads lead to food
Perk Earl on Sun, 18th May 2014 3:51 pm
And speaking of food – get this one!
http://theeconomiccollapseblog.com/archives/feeding-the-homeless-banned-in-major-cities-all-over-america
Feeding The Homeless BANNED In Major Cities All Over America
Over the past week, twelve members of food activist group Food Not Bombs have been arrested in Orlando for giving free food to groups of homeless people in a downtown park.
Makati1 on Sun, 18th May 2014 7:08 pm
In other news:
‘America Brings Hell to Ukraine as Part of its Plan for World Domination”
http://www.globalresearch.ca/america-brings-hell-to-ukraine-as-part-of-its-plan-for-domination/5382734
“… Because of American intervention, Ukraine is embroiled in what can only be described as a civil war. For the past two weeks, the Ukrainians coupists supported by the United States and NATO have openly massacred their fellow citizens with the tacit approval of the White House and without exposure from the American corporate media.
The United States behaves like a caricature of action movie villains, an evil empire which foments violence around the world in order to have its way. Yet there is nothing cartoonish about the dead people in Iraq and Afghanistan and Somalia and Syria and now Ukraine. There is no great mystery to America’s awful but very simple motive. …”
MKohnen on Mon, 19th May 2014 2:33 am
Davy,
“Everyone knows Crimea was seized unlawfully with coercion…”
How does everybody know this? I feel slow, because I don’t know this. I know that the MSM spins it that way. I know that RT spins it an entirely different way. I know that OSCE observers didn’t report the use of coercion. So I really don’t get how “everyone knows” unless your relying on the MSM that Mak is maligning.
Davy, Hermann, MO on Mon, 19th May 2014 6:01 am
Look, MK, I am not saying this was wrong for Russia to regain territory that by many historical and cultural arguments is Russian. It was ripped away from Russia by an incompetent USSR for internal political reasons. Going further with this thought the Tartars were screwed and deserve something because that was a Stalinist screw job.
By international law the way Russia initiated the transfer of Crimea by military occupation. Sure they were there by treaty but they moved off base and occupied many of the important assets with soldiers in disguise. They surrounded the Ukrainian bases. A vote was made which may have been overwhelmingly in favor of being with Russia but that vote was not proper, it did not included compensation for Ukraine, and it did not recognize the rights of the Tartars. Yet, who follows international law anymore. I just get sick and tired of countries today disregarding international law and claiming they followed it. Just more lies in a world full of lies. MK, the US is among the worst at this game. I just will not allow propagandist on this board get the last world in that their sweet Russia has no sins.
MKohnen on Mon, 19th May 2014 1:21 pm
Davy,
I agree entirely that Russia moved outside the bounds of legality when it moved troops to the legislative building, etc. I also whole-heartedly agree re: compensating the Ukraine for losses. I think that if the referendum was essentially free, the will of the Crimean people should be respected. At this point, I don’t really know what’s happening with the Tatars, but wonder how good a deal they would have gotten from Right Sector? Surveying the global news, I would definitely agree that the interim government is Kiev is strongly influenced by neo-fascism. Hopefully, if there is an election, it includes all regions, elects a more centrist government, and begins to work with all sides for resolution.