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Vladimir Litvinenko: “The U.S. policy of global dominance will result in the continued high cost of energy resources for Europe”

Владимир Литвиненко: «Следствием политики глобального доминирования США станет сохранение высокой стоимости энергоресурсов для Европы»
© Форпост Северо-Запад

The U.S. does not abandon attempts to reduce Russia's federal budget revenues from the export of raw materials by any means. One of the most odious initiatives in this area is the introduction of a ceiling on domestic oil prices. Janet Yellen, Head of the US Treasury Department, even announced a figure of $60 per barrel; i.e., no matter what the market conditions are, it is strictly forbidden to pay more to Moscow starting from December 6.

Is our country able to withstand the growing sanctions pressure, which is becoming more and more sophisticated? What should be the response to challenges such as the undermining of Nord Stream and the denial of access to the results of the investigation? What projects could compensate for the decrease in natural gas sales to Europe, which have already fallen by more than a third? Forpost addressed these and other questions to Vladimir Litvinenko, Rector of the St. Petersburg Mining University, a leading expert in the field of the fuel and energy complex.

- Vladimir Stefanovich, after a series of explosions at Nord Stream, it became absolutely clear that the US will stop at nothing, if only its share on the European super-marginal gas market continues to grow. This means that sooner or later Gazprom's exports to the Old World will drop to zero. Is it possible to replace the falling out volumes by importers from other countries?

Vladimir Litvinenko: In my opinion, the debate around our abundant resource base should be based on somewhat different issues. Not by whom to replace such a large consumer as the EU, but in what way to use the natural capital for the development of the domestic economy in the most effective way. And, above all, to stimulate domestic demand.

© / строительство межпоселкового газопровода протяжённостью более 11 км в Тюменской области

Russia has the largest natural gas reserves on the planet, accounting for about 20% of the world's total. Naturally, there is enormous potential here, and not just financial. For example, more and more compressed natural gas or LNG-powered buses are appearing on our roads. Even the naked eye can see that the level of emissions from their exhaust pipes is much lower compared to diesel vehicles. In other words, expanding their production and building specialized infrastructure, including fuel stations, will not only create new jobs and entire value-added chains, but will also significantly reduce the anthropogenic impact on the environment.

If we talk about exports, then, of course, we need to differentiate our supplies. We believed for too long that we would be heard by the Europeans, but it never happened. Since 2008, when the first EU energy package was adopted, Brussels has pursued an openly discriminatory policy toward Gazprom, trying to force it into the position of "the last supplier" and in every way hindering its new projects.

For example, in 2016, the European Commission announced that Nord Stream 2 falls under the Third Energy Package, although previously it had been considered that this was an internal EU legislation and could not be applied to offshore pipelines. As a result, Gazprom, which by that time had already invested heavily in the project, was confronted with the fact that it could export only 50 percent of its announced capacity, with the rest to be reserved for third-party companies. No one in Brussels was interested in the fact that there were simply no such companies in Russia. This is a rather strange position, but it clearly demonstrates who drove Europe to the current energy crisis.

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As for our gas industry, it has all the chances not to remain "underdog" but, on the contrary, to become much stronger, leaning on two pillars - the pipeline and LNG. President Vladimir Putin has already voiced the idea to redirect methane flows from the damaged pipelines to Turkey and to create a powerful gas hub on its territory. As you know, there is also a project for the second branch of the Power of Siberia.

Simultaneously, the state needs to create the most favorable conditions for the development of the LNG sector. This is our strategic geopolitical resource, which has not yet been fully disclosed. According to expert estimates in 2030, the global consumption of liquefied natural gas will amount to 600-700 million tons (currently 380 million or 524 billion cubic meters - Ed.), so the Russian producers should not miss their chance and take the most significant niche in the world market. So far our share is about 9%, which is unacceptably low.

In order to change the situation, it is necessary, first of all, to establish the target use of the explored reserves and prospective resources on Yamal and Gydan solely for LNG production. The potential natural gas reserves there exceed 20 trillion cubic meters, which allows us to talk about creating a cluster capable of bringing up to 140 million tons of liquefied gas per year to the market without affecting pipeline supplies. It goes without saying that implementation of such a large-scale project is impossible without a set of state support measures for specialized enterprises, creation of the relevant port infrastructure and further construction of the icebreaker fleet, which will ensure the logistics of the Northern Sea Route in the western and eastern directions.

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Again, we are not just talking about exports. LNG is an extremely promising resource that can be used for domestic consumption. For example, for autonomous gasification, as well as bunkering or motor fuel. Buses, truck transport, rail transport in non-electrified areas. These are all tremendous opportunities that need to be realized to increase the profitability of the core business and reduce the burden on the environment.

- Janet Yellen, head of the U.S. Treasury, has proposed a price ceiling of $60 a barrel for Russian oil. How adequate is this figure and how realistic are the very fact of such sanctions?

Vladimir Litvinenko: Our President has already answered this question. He said that Russia will not deliver either oil, gas or coal to the countries which prefer to break the terms of the existing contracts to please the political situation. This is quite logical. If anyone thinks they are doing us a favor by buying Russian hydrocarbons they are profoundly mistaken. The example of the European Union, which now buys gas 8-10 times more expensive than when it was on friendly terms with our country, is a clear proof of that. It will be the same with oil. Instead of $60, the countries unfriendly to us will get it for $150. This is at best.

- The world is changing before our eyes. Who would have imagined five or six years ago that comfortable Europe may not have enough resources for stable operation of enterprises or heating of houses. What's in store for us next?

Vladimir Litvinenko: The world is indeed changing, but not at all in the direction many in the West thought it would. For years, Europe has insisted on the need for a rapid acceleration of the energy transition, imposing ephemeral problems on society. For example, such as the need to urgently stop the consumption of hydrocarbons because of their negative impact on the environment. The fact that without fossil fuels the world economy would simply collapse was deliberately omitted, as well as the fact that if we don't burn gas in our cogeneration plants, then we will have to burn coal. Otherwise, households will be left without light and heat, because wind turbines or solar panels at this stage of scientific and technological development are not capable of becoming the basis of energy. They can only be used as an auxiliary tool for its functioning.


Our German partners in the Russian-German Resource Forum, like children who have re-read Jules Verne, did not want to discuss anything but hydrogen for the last few years. This is because Berlin and Brussels have allocated enormous funds for research in this field. But to produce hydrogen from electricity generated by renewable sources in order to produce electricity again is a very strange, technologically unfeasible, and insanely expensive scheme.

As a result, attempts to intensify the energy transition by abandoning cheap Russian gas have led to the discontinuation of coal-fired cogeneration plants in the EU, the growth of quotations for all types of energy raw materials, and the need to save heat and electricity for ordinary Europeans. As a result of all the current transformations, they were the main losers, which is not surprising. After all, the Old World today is actually an American colony, and the destiny of any colony is to supply resources to the metropolis. In this case, super profits from the sale of LNG on its territory.

The strategy of American diplomacy is to ensure its dominant position in the world by any means. Including at the expense of maintaining the high cost of energy resources for Europe, as well as other goods which are traded by the United States. These are, above all, surplus agricultural products and weapons, the demand for which will only grow if the developing countries are drawn into armed conflicts, which is constantly happening.

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Other consequences of U.S. attempts to form an ideology of domination over global capital and resources are obvious. They include a sharp increase in distrust of the dollarization of world trade, a deterioration of the business climate, a decrease in investment protection, the elimination of the competitive environment through sanctions mechanisms. And, most unfortunate of all, a general decline in the level of trust in society.

- Is it possible to raise the level of trust on a global scale?

Vladimir Litvinenko: Of course, the development of partnership relations between Russia and the countries of the Middle East, China, and India provides enormous support for the international environment of trust. But in order for it to reach a fundamentally different level, we must do away with the neoliberal philosophy, the goal of which is the control by Western elites of global capital and natural resources on a global scale.

Look at what was happening in the United States in the late eighties and early nineties as the Soviet Union was falling apart. The vast majority of U.S. industries moved to Asia, a region with cheap labor. The U.S. itself emphasized the usurpation of the international financial system and began to live mainly off the profits from loans, the privatization of real estate in developing countries, which takes place at throwaway prices, and other rents.

Now, however, the White House is taking advantage of the situation to reindustrialize, since many companies are moving their production sites from Europe across the ocean, where electricity is several times cheaper. But Washington is not about to give up its ideology of neocolonialism either.

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- What does this mean?

Vladimir Litvinenko: The fact is that many developing countries, which have a rich resource base, do not have their own funds for the development of fields. The IMF, World Bank and other financial institutions controlled by the West take advantage of this situation and pull them into debts. In parallel, concession agreements are imposed on them with transnational corporations headquartered in the United States, Britain and some other post-industrial countries. These companies are given exclusive rights to prospect, explore and mine minerals in developing countries, and in return they give up only a fraction of the production or relatively small funds that are barely enough to pay off their debts. No socio-economic development is a priori possible under these conditions. Especially if the central government, succumbing to neoliberal propaganda, does not intervene in the process of subsoil use as a regulator.

This year, according to the IMF, the average debt burden of developing countries rose to 65% of their GDP. Moreover, according to forecasts, in 5 years this figure may reach 78.5%. These figures are catastrophic, threatening the rise in the cost of borrowing and inflation, they indicate that the ability to pay debts of most of these countries is actually lost.

We went through all this in the nineties. Poverty of the population, hyperinflation, unpaid salaries and pensions for many months continued until Vladimir Putin was elected President of Russia, who radically changed the conditions of work with the subsoil. And redirected the main rent from the monetization of natural resources from the pockets of unscrupulous oligarchs to the federal budget.

Obviously, today the most significant economic successes in capitalizing their resource base have been achieved by those states that are engaged in subsoil use independently, without the participation of transnational companies and Western loans. These include, for example, Russia, as well as Saudi Arabia, Qatar and the UAE. But the poorest African countries, as well as a number of Asian and Latin American countries, continue to follow the fairway of neoliberal ideology, driving themselves into an eternal debt hole.