Russia And China Finally Sign Historic $400 Billion “Holy Grail” Gas Deal
05/21/2014 by Tyler Durden
There was some trepidation yesterday when after the first day of Putin’s visit to China the two countries did not announce the completion of the long-awaited “holy grail” gas dead, and fears that it may get scuttled over price negotiations. It wasn’t: moments ago Russia’s Gazprom and China’s CNPC announced, that after a decade of negotiations, the two nations signed a 30 year gas contract amounting to around $400 billion. And with the west doing all it can to alienate Russia and to force it into China’s embrace, this is merely the beginning of what will be a far closer commercial (and political) relationship between China and Russia.
So far there have been no public pricing details on the deal which accrording to Gazprom CEO Aleksey Miller is a “commercial secret”, and which is believed to involve Russia supplying 38 billion cubic metres of gas per year to China via a new eastern pipeline linking the countries.
According to Itar-Tass, the compromise between Russian gas export monopoly Gazprom and Chinese National Petroleum Corporation (CNPC) on Russian gas price is estimated at $75 billion, citing the Deputy Head of the National Energy Security Fund Alexei Grivach. The differences on the price for 38 and 60 billion cubic meters supplies a year were $1.5 billion and $2.5 billion, he added, so the subject of the negotiations is quite a significant one.
Gazprom expected a base price of $400 for 1,000 cubic meters, an expert of the Eurasian Development Research Center of the Chinese State Council said in April, whereas the CNPC’s proposal was $350-360 for 1,000 cubic meters.
A memorandum of understanding was signed in the presence of Russian President Vladimir Putin and President of China Xi Jinping on the second day of Putin’s two-day state visit to Shanghai. The price China will pay for Russian gas remains a “commercial secret” according to Gazprom CEO Aleksey Miller. Gas will be delivered to China’s via the eastern ‘Power of Siberia’ pipeline.
RT producers were informed of the landmark energy deal prior to its signing after a conversation with Miller.
Under the long-term deal, Gazprom will begin providing China’s growing economy with 38 billion cubic meters of natural gas per year for the next 30 years, beginning in 2018. The details of the deal were discussed for more than 10 years, with Moscow and Beijing negotiating over gas prices and the pipeline route, as well as possible Chinese stakes in Russian projects.
Just ahead of Putin’s visit to Shanghai, Russian Prime Minister Dmitry Medvedev gave reassurance that the agreed price would be fair.
“One side always wants to sell for a higher price, while the other wants to buy for a lower price,” Medvedev said. “I believe that in the long run, the price will be fair and totally comparable to the price of European supplies.”
A major breakthrough in negotiations came on Sunday as Gazprom chief Aleksey Miller sat down with his CNPC counterpart, Zhou Jiping, in Beijing to discuss final details, including price formulas.
Although Europe is still Russia’s largest energy market – buying more than 160 billion cubic meters of Russian natural gas in 2013 – Moscow will use every opportunity to diversify gas deliveries and boost its presence in Asian markets.
“I wouldn’t look for politics behind this, but I have no doubt that supplying energy to the Asia Pacific Region holds out a great promise in the future,” Medvedev said.
In October 2009, Gazprom and CNPC inked a framework agreement for the Altai project which envisions building a pipeline to supply natural gas from fields in Siberia via the western part of the Russia-China border.
In March 2013, Gazprom and CNPC signed a memorandum of understanding on Russian gas supplies to China along the so-called eastern ‘Power of Siberia’ route. When both pipelines are activated, Russia can supply Asia with 68 billion cubic meters of gas annually.
Last year, China consumed about 170 billion cubic meters of natural gas and is expected to consume 420 billion cubic meters per year by 2020.
Regardless of what the final price ended up being, and whether or not China got the upper hand in the negotiations, the final outcome is there and it is real: as a result of his disastrous foreign policy in the past two months, Barack Obama finally pushed Russia into China’s hands, culminating with a deal that was ten years in the making and was never certain, until the Ukraine crisis.
And yes, this was all predictable from day one. Here is what we said precisely two months ago:
If it was the intent of the West to bring Russia and China together – one a natural resource (if “somewhat” corrupt) superpower and the other a fixed capital / labor output (if “somewhat” capital misallocating and credit bubbleicious) powerhouse – in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely “going according to plan.”
For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead… and quite a few steps east.
While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the “Holy Grail” energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.
Here is what will likely happen next, as explained by Reuters:
Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow’s seizure of the Black Sea peninsula from Ukraine would be counter-productive.
The underlying message from the head of Russia’s biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.
The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.
* * *
To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the “Asian axis”, the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.
To conclude with the traditional geopolitical balance of power summary: Putin wins (again), Obama loses (again), and the monument to the dollar’s status as world’s reserve currency gets yet another tarnishing blow.
The Paul Craig Roberts Dilemma: World War Or The End Of The Dollar
by Paul Craig Roberts via The Institute for Political Economy,
Is the US or the World Coming to an End?
It will be one or the other
2014 is shaping up as a year of reckoning for the United States.
Two pressures are building on the US dollar. One pressure comes from the Federal Reserve’s declining ability to rig the price of gold as Western gold supplies shrivel and market knowledge of the Fed’s illegal price rigging spreads. The evidence of massive amounts of naked shorts being dumped into the paper gold futures market at times of day when trading is thin is unequivocal. It has become obvious that the price of gold is being rigged in the futures market in order to protect the dollar’s value from QE.
The other pressure arises from the Obama regime’s foolish threats of sanctions on Russia. Other countries are no longer willing to tolerate Washington’s abuse of the world dollar standard. Washington uses the dollar-based international payments system to inflict damage on the economies of countries that resist Washington’s political hegemony.
Russia and China have had enough. As I have reported and as Peter Koenig reports here http://www.informationclearinghouse.info/article38165.htm Russia and China are disconnecting their international trade from the dollar. Henceforth, Russia will conduct its trade, including the sale of oil and natural gas to Europe, in rubles and in the currencies of its BRICS partners.
This means a big drop in the demand for US dollars and a corresponding drop in the dollar’s exchange value.
As John Williams (shadowstats.com) has made clear, the US economy has not recovered from the downturn in 2008 and has weakened further. The vast majority of the US population is hard pressed from the lack of income growth for years. As the US is now an import-dependent economy, a drop in the dollar’s value will raise US prices and push living standards lower.
All evidence points to US economic failure in 2014, and that is the conclusion of John Williams’ April 9 report.
This year could also see the breakup of NATO and even the EU. Washington’s reckless coup in Ukraine and threat of sanctions against Russia have pushed its NATO puppet states onto dangerous ground. Washington misjudged the reaction in Ukraine to its overthrow of the elected democratic government and imposition of a stooge government. Crimea quickly departed Ukraine and rejoined Russia. Other former Russian territories in Ukraine might soon follow. Protesters in Lugansk, Donetsk, and Kharkov are demanding their own referendums. Protesters have declared the Donetsk People’s Republic and Kharkov People’s Republic. Washington’s stooge government in Kiev has threatened to put the protests down with violence. http://rt.com/news/eastern-ukraine-violence-threats-405/ Washington claims that the protests are organized by Russia, but no one believes Washington, not even its Ukrainian stooges.
Russian news reports have identified US mercenaries among the Kiev force that has been sent to put down the separatists in eastern Ukraine. A member of the right-wing, neo-Nazi Fatherland Party in the Kiev parliament has called for shooting the protesters dead.
Violence against the protesters is likely to bring in the Russian Army and result in the return to Russia of its former territories in Eastern Ukraine that were attached to Ukraine by the Soviet Communist Party.
With Washington out on a limb issuing threats hand over fist, Washington is pushing Europe into two highly undesirable confrontations. Europeans do not want a war with Russia over Washington’s coup in Kiev, and Europeans understand that any real sanctions on Russia, if observed, would do far more damage to Europeans. Within the EU, growing economic inequality among the countries, high unemployment, and stringent economic austerity imposed on poorer members have produced enormous strains. Europeans are in no mood to bear the brunt of a Washington-orchestrated conflict with Russia. While Washington presents Europe with war and sacrifice, Russia and China offer trade and friendship. Washington will do its best to keep European politicians bought-and-paid-for and in line with Washington’s policies, but the downside for Europe of going along with Washington is now much larger.
Across many fronts, Washington is emerging in the world’s eye as duplicitous, untrustworthy, and totally corrupt. A Securities and Exchange Commission prosecuting attorney, James Kidney used the occasion of his retirement to reveal that higher ups had squelched his prosecutions of Goldman Sachs and other “banks too big to fail,” because his SEC bosses were not focused on justice but “on getting high-paying jobs after their government service” by protecting the banks from prosecution for their illegal actions. http://www.counterpunch.org/2014/04/09/65578/
The US Agency for International Development has been caught trying to use social media to overthrow the government of Cuba. http://rt.com/news/cuba-usaid-senate-zunzuneo-241/
This audacious recklessness comes on top of Washington’s overthrow of the Ukrainian government, the NSA spying scandal, Seymour Hersh’s investigative report that the Sarin gas attack in Syria was a false flag event arranged by NATO member Turkey in order to justify a US military attack on Syria, Washington’s forcing down Bolivian President Evo Morales’ presidential plane to be searched, Saddam Hussein’s “weapons of mass destruction,” the misuse of the Libyan no-fly resolution for military attack, and on and on. Essentially, Washington has so badly damaged other countries’ confidence in the judgment and integrity of the US government that the world has lost its belief in US leadership. Washington is reduced to threats and bribes and increasingly presents as a bully.
The self-inflicted hammer blows to Washington’s credibility have taken a toll. The most serious blow of all is the dawning realization everywhere that Washington’s crackpot conspiracy theory of 9/11 is false. Large numbers of independent experts as well as more than one hundred first responders have contradicted every aspect of Washington’s absurd conspiracy theory. No aware person believes that a few Saudi Arabians, who could not fly airplanes, operating without help from any intelligence agency, outwitted the entire National Security State, not only all 16 US intelligence agencies but also all intelligence agencies of NATO and Israel as well.
Nothing worked on 9/11. Airport security failed four times in one hour, more failures in one hour than have occurred during the other 116,232 hours of the 21st century combined. For the first time in history the US Air Force could not get interceptor fighters off the ground and into the sky. For the first time in history Air Traffic Control lost airliners for up to one hour and did not report it. For the first time in history low temperature, short-lived, fires on a few floors caused massive steel structures to weaken and collapse. For the first time in history 3 skyscrapers fell at essentially free fall acceleration without the benefit of controlled demolition removing resistance from below.
Two-thirds of Americans fell for this crackpot story. The left-wing fell for it, because they saw the story as the oppressed striking back at America’s evil empire. The right-wing fell for the story, because they saw it as the demonized Muslims striking out at American goodness. President George W. Bush expressed the right-wing view very well: “They hate us for our freedom and democracy.”
But no one else believed it, least of all the Italians. Italians had been informed some years previously about government false flag events when their President revealed the truth about secret Operation Gladio. Operation Gladio was an operation run by the CIA and Italian intelligence during the second half of the 20th century to set off bombs that would kill European women and children in order to blame communists and, thereby, erode support for European communist parties.
Italians were among the first to make video presentations challenging Washington’s crackpot story of 9/11. The ultimate of this challenge is the 1 hour and 45 minute film, “Zero.” You can watch it here: http://www.youtube.com/watch?v=QU961SGps8g&feature=youtu.be
Zero was produced as a film investigating 9/ll by the Italian company Telemaco. Many prominent people appear in the film along with independent experts. Together, they disprove every assertion made by the US government regarding its explanation of 9/11.
The film was shown to the European parliament.
It is impossible for anyone who watches this film to believe one word of the official explanation of 9/11.
The conclusion is increasingly difficult to avoid that elements of the US government blew up three New York skyscrapers in order to destroy Iraq, Afghanistan, Libya, Somalia, Syria, Iran, and Hezbollah and to launch the US on the neoconservatives agenda of US world hegemony.
China and Russia protested but accepted Libya’s destruction even though it was to their own detriment. But Iran became a red line. Washington was blocked, so Washington decided to cause major problems for Russia in Ukraine in order to distract Russia from Washington’s agenda elsewhere.
China has been uncertain about the trade-offs between its trade surpluses with the US and Washington’s growing encirclement of China with naval and air bases. China has come to the conclusion that China has the same enemy as Russia has–Washington.
One of two things is likely: Either the US dollar will be abandoned and collapse in value, thus ending Washington’s superpower status and Washington’s threat to world peace, or Washington will lead its puppets into military conflict with Russia and China. The outcome of such a war would be far more devastating than the collapse of the US dollar.
China Threatens the West As the U.S. Shows a Slight Reaction to Russian Aggression
March 13, 2014 By Sara Noble
China is warning the West to not impose sanctions on Russia because “sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences.”
Jedidiah Noble, who is not a geo-political strategist – he’s actually an engineer – predicted exactly this. If Jedidiah can make these predictions, why is it Mr. Obama can’t?
Mr. Obama has done little to stop Putin from rebuilding the Soviet Union. Putin remains in Georgia and has overtaken Crimea with barely-disguised Russian troops slipping in and out of the iron curtain they have erected between Ukraine and Crimea.
Yesterday, in a press conference with Ukraine’s PM, Mr. Obama gave Crimea away without even a whimper.
Mr. Obama gave away the missile defense shield and got nothing in return. He has drawn red lines and drawn lines without calling them red lines, but has done nothing retaliatory except move the line back.
China has been a menace to Japan and is threatening to take over sixteen islands in the East China Sea. The islands have value for their fisheries but mostly it’s a power grab by China and it will give China a strategic advantage in any military conflict. Mr. Obama has done little to nothing to support Japan.
When Russia moved into Crimea, Mr. Putin spoke with China’s leaders. He allegedly worked out some sort of deal. One can be sure that China’s imperialistic vision is part of the deal.
Russia used the imaginary threat to Russian populations living in Crimea as an excuse to go into Crimea once freedom fighters overturned the government in Ukraine. Now one can expect China to use an imaginary allegiance to Russia as an excuse for taking further steps.
In addition to our facing land grabs, we are in trouble economically if Russia and China join forces. We are deeply in debt to both Russia and China to say nothing of the fact that our dollar is threatened as the world currency.
China responded to the West threatening Russia with sanctions in this way: ”We don’t see any point in sanctions,” said Shi Mingde, China’s Ambassdor to the EU. “Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don’t want this.”
The sanctions are only travel bans and asset freezes on people and companies accused by Brussels of violating the territorial integrity of Ukraine.
Russia’s Deputy Economy Minister Alexei Likhachev responded by promising “symmetrical” sanctions by Moscow.
Mr. Obama is allegedly speaking with Beijing and working on a deal but there is no sign there will be a result favorable to the U.S. Mr. Mingh’s statement is a warning, but then again who could see that coming.
Can we even survive two more years of Mr. Obama?
Remember to vote in November!
China Accuses the U.S. of Lying about Syria and has no Logic for War. U.S. doesn’t care about International Law
China has accused the U.S. of lying about Syria and is saying the U.S. has no regard for International laws.
They also refer to Iraq and Afghanistan in how the U.S. has made a mess of those countries and Bush has not been held accountable. They say Obama will not be held accountable by the American people for Syria either, in a couple of year.
They say that the chemical weapons were from the Rebels (as per an AP investigation) but the U.S. is ignoring the truth!
Video & More: Sherrie Questioning All: China Accuses the U.S. of Lying about Syria and has no Logic for War. U.S. doesn’t care about International Law.
- MUST LISTEN TO! Recorded Phone Calls I made to D.C. House Representatives regarding Syria War vote – Offices acknowledge against International Law and Rebels Most likely did Chemical Attack – BUT still considering WAR! (sherriequestioningall.blogspot.com)
- | BREAKING: Now China sends warships + 1000 marines to Syria! (truthaholics.wordpress.com)
- Russian Senator: Syria Is U.S.’s Next Yugoslavia, Iraq, Libya (potentnews.com)
- The CIA’s Benghazi Operation May Have Violated International Law (libyaagainstsuperpowermedia.com)
How to Convert the Country to Natural Gas, by T. Boone Pickens
It starts with getting into the transportation sector. When I started the Pickens Plan in 2008, there were about 200,000 vehicles on natural gas in the world; now there’s about 16 million. That growth’s coming from everywhere but the U.S. Places like Iran and Argentina. China’s already got 40,000 trucks on LNG [liquefied natural gas], and they import the stuff. And here we are in the U.S., with more natural gas than any other country in the world, and we aren’t doing a thing about it. It’s just amazing to me that these dumb f---s in D.C. don’t see this opportunity and try to capitalize on it.
The best thing to do is focus on heavy-duty trucks and give them a tax credit. It could work like a toll road, what you call a pay-for system. If you use it, you pay for it. So you give these guys a break upfront to convert to natural gas trucks, and then you tax the natural gas.
You don’t put natural gas in your corner gasoline station. You put natural gas in a truck stop. It’s a fuel that competes against diesel. There are about 8 million heavy-duty trucks in the U.S. If you convert them to natural gas, that boosts consumption by about 15 billion to 20 billion cubic feet a day. Right now we do about 70 billion cubic feet a day. So that extra demand would immediately boost the price and get drills moving again. Today natural gas is about $2.79 a gallon, compared with about $4.79 for diesel. That’s a huge advantage. But here’s the thing: If you take natural gas from about $4 (per thousand cubic feet) to $6, you only increase it by about 28¢ a gallon. So it’s cleaner by 30 percent and still cheaper by almost a half.
• Pickens is founder, chairman, and CEO of the hedge fund BP Capital. As told to Matthew Philips
Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?
By Michael, on February 12th, 2013
Will oil soon be traded in a currency that is thousands of years old? What would a “gold for oil” system mean for the petrodollar and the U.S. economy? Are Russia and China hoarding massive amounts of gold because they plan to kill the petrodollar? Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe. This has created an overwhelming demand for U.S. dollars and U.S. debt. But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade? The truth is that it doesn’t take a lot of imagination to figure that out. Demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before. So are Russia and China accumulating unprecedented amounts of gold right now because they eventually plan to cut the legs out from under the petrodollar and they want to gobble up huge stockpiles of gold before the cat is out of the bag? Of course they will never admit this publicly, but there are rumblings out there that this is exactly what is happening.
Not that you can really blame any nation that wants to get into gold right now. News outlets all over the globe are telling us that we are in the midst of a “currency war” as central banks all over the planet race to devalue their currencies.
So why would anyone want to be in paper in such an environment?
And of course the Federal Reserve is one of the biggest offenders. The Fed has been printing money like it is going out of style, and nobody at the Fed or in the U.S. government really seems too concerned that all of this money printing could be endangering the petrodollar.
But the truth is that the Fed is endangering the petrodollar. Just read some foreign news stories about the U.S. dollar. They mock us for our reckless money printing.
In the end, our recklessness will make it very easy for the rest of the world to ditch the U.S. dollar.
At some point, it will happen. In fact, there are persistent rumors that Russia and China actually intend to make it happen.
Many believe that this is the reason both nations have been hoarding so much gold recently.
Just check out how much gold Russia has been accumulating. The following is from a recent Bloomberg article…
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
And Russia’s gold hoarding appears to have accelerated last year. According to one recent report, Russia added 3.2 million ounces of gold to their reserves in 2012 alone.
But of even greater concern is China. Nobody really knows how much gold China has, because they do not tell us, but all indications point to the fact that Chinese gold hoarding has gone into overdrive. The following is from a Zero Hedge article from a few months ago…
Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasurys, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn’t provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PBOC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory.
As I wrote about the other day, nobody produces more gold than China does, and nobody imports more gold than China does.
Everyone agrees that China seems to have an insatiable appetite for gold, but nobody can agree on exactly how much gold they actually have. One recent estimate put China’s gold reserves at more than 7,000 tons of gold, but it could even be much higher than that. Nobody really knows.
So what are Russia and China up to?
Well, for a long time both nations have expressed displeasure with the fact that the U.S. dollar is the de facto currency of the world. Leaders from both nations have suggested the possibility of adopting a new global reserve currency, but up to this point no real contenders have emerged to dethrone the U.S. dollar.
So for now, the U.S. dollar reigns supreme in international trade. Sadly, even though most Americans greatly benefit from the petrodollar, most of them do not even know what it is. For those that do not fully understand the petrodollar, the following is a good explanation of the petrodollar from a recent article by Christopher Doran…
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.
And all of this has worked out very nicely for the United States. It has created a massive demand for U.S. dollars and U.S. debt.
But what would happen if the rest of the world rejected the petrodollar system and adopted a “petrogold” system instead?
A recent article by Jim Willie discussed how a petrogold system might work…
The crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note. It will enable peer-to-peer payments to be completed from direct account transfers independent of currency, and most importantly, not done through the narrow pipes and channels controlled by the bankers with their omnipresent SWIFT code system among the world of banks. The Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape. Any bond or bill earning almost no interest is veritable clutter. The zero bound USTreasurys open the door in a big way for replacement by a better vehicle. The new trade notes will involve posted gold as collateral, whose entire system for trade usage will bear a massive gold core that also will include silver and platinum, maybe other precious metals. The idea is to avoid the FOREX systems, to avoid the USDollar, and to avoid the banks as much as possible in a peer-to-peer system that can be executed between parties holding Blackberry devices or simple PC to complete the payments on transactions. If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative.
And Russia and China would greatly benefit from a petrogold system.
Today, Russia is the number one oil exporter on the planet.
China is the number two consumer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.
Does it make sense that they should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions?
And now Russia even has the number one oil company in the world. The following is from a recent article by Marin Katusa…
Exxon Mobil is no longer the world’s number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp – oh, whoops. I mean the title belongs to Rosneft, Russia’s state-controlled oil company.
Rosneft is buying TNK-BP, which is a vertically integrated oil company co-owned by British oil firm BP and a group of Russian billionaires known as AAR. One of the top-ten privately owned oil producers in the world, in 2010 TNK-BP churned out 1.74 million barrels of oil equivalent per day from its assets in Russia and Ukraine and processed almost half that amount through its refineries.
With TNK-BP in its hands, Rosneft will be in charge of more than 4 million barrels of oil production a day. And who is in charge of Rosneft? None other than Vladimir Putin, Russia’s resource-full president.
And Russian gas giant Gazprom supplies a huge percentage of the natural gas that Europe uses…
Gazprom, the Russian state gas company, already has Europe wrapped around its little finger. Russia supplies 34% of Europe’s gas needs, and when the under-construction South Stream pipeline starts operating, that percentage will increase. As if those developments weren’t enough, yesterday Gazprom offered the highest bid to obtain a stake in the massive Leviathan gas field off Israel’s coast.
Gazprom in control of Europe’s gas, Rosneft in control of its oil. A red hand stretching out from Russia to strangle the supremacy of the West and pave the way for a new world order– one with Russia at the helm.
Russia and China have a tremendous amount of leverage when it comes to energy. What if they got together with a bunch of oil producing nations in the Middle East and decided to set up a system where oil is traded for gold? Would not much of the rest of the world go along with such a system?
Of course if that happened the U.S. financial system would crash. We would no longer be able to export our inflation to the rest of the globe and prices would rise dramatically. Demand for U.S. government debt would go through the floor and interest rates on that debt and on everything else in our economy would skyrocket. Economic activity would grind to a standstill and the financial markets would collapse.
And that would just be for starters.
Most Americans simply don’t understand that Russia and China have the power to collapse the U.S. economy by going to a gold for oil system. All they have to do is pull the trigger.
The other day I wrote an article entitled “Show This To Anyone That Believes That ‘Things Are Getting Better’ In America” which discussed all of the reasons why the U.S. economy is already collapsing. But as bad as things are now, this is nothing compared to what things will be like when the petrodollar dies.
So pay keen attention to anything in the news about Russia or China suggesting that oil should be traded for gold. When Russia and China pull the trigger, things will get messy very quickly.
CX-15 Platform Installed at Corvina Field Offshore Peru
BPZ Energy,an independent oil and gas exploration and production company, announced that the hull tower for the CX-15 platform was successfully floated off the transport vessel, uprighted and ballasted. Subsequently, the topside facility was also successfully mated to the hull tower.
The CX-15 platform is now anchored at the West Corvina field location, one mile south of the existing CX-11 platform.
Welding and other miscellaneous activities are underway and will take approximately two weeks. The Petrex-28 drilling rig, which has been inspected and accepted for work, will then be mobilized to the CX-15 platform. It is expected that the necessary environmental permit required to conduct drilling operations from the CX-15 platform will be received from the Peruvian authorities before the drilling rig is mobilized. The Company expects to spud the first well of the CX-15 drilling campaign in late October.
The CX-15 platform was safely completed and successfully delivered to BPZ Energy at Wison Offshore & Marine’s Nantong, China, fabrication facility in a record 11 months from contract signature and without a single lost time incident. Wison’s scope included the engineering, procurement and construction of the facility’s 2,500 ton Buoyant Tower hull and 1,500 ton topsides facility. This project represents not only the first use of the design, but also the first implementation of Wison’s integrated international delivery model including members from the company’s three operation centers Inc. located in Shanghai and Nantong, China, and Houston, Texas, USA.
The Buoyant Tower hull for the facility was designed and engineered through a joint venture between Wison affiliate, Horton Wison Deepwater, and GMC Limited and consists of four, ring-stiffened connected cylindrical tubes or “cells” with one central suction pile. Each cell measures 8.4 meters in diameter and 60.1 meters long, with a total hull length, including suction pile, of 69.9 meters. This design, which is similar to proven cell spar technology, was a key enabler for the project due to the fact that it will not require a derrick barge for installation as it is located in a region with minimal resident offshore construction vessels.
CX-15 Platform Installed at Corvina Field Offshore Peru| Offshore Energy Today.
Shell to Build Kitimat LNG Terminal Despite China Investment
Shell Canada’s plans to build Kitimat LNG terminal despite the company’s decision to invest $1 billion annually in China’s shale gas exploration, reports The Vancouver Sun.
Stephen Doolan, Shell Canada spokesman said: “The exploration and development of shale gas is expected to grow in China and Shell’s investments, largely with Pet-roChina, are reflective of that growth. However, the demand for energy in China and through-out Asia is expected to exceed domestic production. This demand for energy, coupled with the wider demand for LNG in Asia which is likely to grow by more than 80 million tonnes per annum between now and 2020, underscores Shell’s intent to continue to progress the LNG Canada project.”
Apache Canada, Kitimat LNG terminal plan developer, also stated that Shell’s investment decision wouldn’t influence Kitimat LNG plans.
“We are going to proceed with our plans,” said Andree Morier, communications adviser at Apache Canada, the lead company in the Kitimat LNG project.
Kitimat LNG will include natural gas liquefaction, LNG storage and marine on-loading facilities. Natural gas will be delivered via a pipeline lateral of approximately 14 kilometres from the Pacific Trail Pipelines, which will connect to the existing Spectra Energy Westcoast Pipeline system. The proximity of Kitimat LNG to the existing natural gas transmission infrastructure is one of the advantages of this project and ensures supply is readily accessible to the facility.
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