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US Threatens Russia Over Petrodollar-Busting Deal

04/04/2014
by Tyler Durden

On the heels of Russia’s potential “holy grail” gas deal with China, the news of a Russia-Iran oil “barter” deal, it appears the US is starting to get very concerned about its almighty Petrodollar

  • *U.S. HAS WARNED RUSSIA, IRAN AGAINST POSSIBLE OIL BARTER DEAL
  • *U.S. SAYS ANY SUCH DEAL WOULD TRIGGER SANCTIONS
  • *U.S. HAS CONVEYED CONCERNS TO IRANIAN GOVT THROUGH ALL CHANNELS

We suspect these sanctions would have more teeth than some travel bans, but, as we noted previously, it is just as likely to be another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.

As we explained earlier in the week,

Russia seems perfectly happy to telegraph that it is just as willing to use barter (and “heaven forbid” gold) and shortly other “regional” currencies, as it is to use the US Dollar, hardly the intended outcome of the western blocakde, which appears to have just backfired and further impacted the untouchable status of the Petrodollar.

If Washington can’t stop this deal, it could serve as a signal to other countries that the United States won’t risk major diplomatic disputes at the expense of the sanctions regime,”

And here is Voice of Russia, “Russia prepares to attack the Petrodollar:

The US dollar’s position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.

The existence of “petrodollars” is one of the pillars of America’s economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer want to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom’s natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .

The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.

First, it was the Minister of Economy, Alexei Ulyukaev who told Russia 24 news channel that the Russian energy companies must should ditch the dollar. “ They must be braver in signing contracts in rubles and the currencies of partner-countries, ” he said.

Then, on March 2, Andrei Kostin, the CEO of state-owned VTB bank, told the press that Gazprom, Rosneft and Rosoboronexport, state company specialized in weapon exports, can start trading in rubles. “ I’ve spoken to Gazprom, to Rosneft and Rosoboronexport management and they don’t mind switching their exports to rubles. They only need a mechanism to do that ”, Kostin told the attendees of the annual Russian Bank Association meeting.

Judging by the statement made at the same meeting by Valentina Matviyenko, the speaker of Russia’s upper house of parliament, it is safe to assume that no resources will be spared to create such a mechanism. “ Some ‘hot headed’ decision-makers have already forgotten that the global economic crisis of 2008 – which is still taking its toll on the world – started with a collapse of certain credit institutions in the US, Great Britain and other countries. This is why we believe that any hostile financial actions are a double-edged sword and even the slightest error will send the boomerang back to the aborigines,” she said.

It seems that Moscow has decided who will be in charge of the “boomerang”. Igor Sechin, the CEO of Rosneft, has been nominated to chair the board of directors of Saint-Petersburg Commodity Exchange, a specialized commodity exchange. In October 2013, speaking at the World Energy Congress in Korea, Sechin called for a “global mechanism to trade natural gas” and went on suggesting that “ it was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies “. Now, one of the most influential leaders of the global energy trading community has the perfect instrument to make this plan a reality. A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar.

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.

It can be said that the US sanctions have opened a Pandora’s box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We’ll soon find out.

Finally, those curious what may happen next, only not to Iran but to Russia, are encouraged to read “From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran’s Access To Gold.”

Source

“Kosovo and Syria: Two Convenient Lies” an essay by Norma Brown

Posted on August 28, 2013
Asylum Watch

When I contacted Norma Brown about her writing an opinion on this administrations plans to attack Syria in response to Syria’s apparent use of chemical weapons in their civil war (posted here yesterday), I sent her a link to the New York Times article, Air War In Kosovo Seen as Precedent in Possible Response to Syria Chemical Attack. I knew from some of her first posts at Ooobie on Everything that she had been in Kosovo in her capacity as a then US Foreign Service Officer and that she had strong opinions about NATO’s interdiction there. I was interested in what she would have to say about Kosovo being used as a precedent for sojourn into the Syrian conflict.  So, let’s see what Norma Brown has to say on the subject.

Read Here:  “Kosovo and Syria: Two Convenient Lies” an essay by Norma Brown | Asylum Watch.

Ingleside,TX: Shell’s Olympus Hull Begins Journey to US Gulf Coast

Shell Offshore Inc.’s (Shell) Olympus hull, the approximately 32,500 metric ton main body of the Olympus TLP, departed from South Korea to begin its two month journey to the U.S. Gulf Coast.

After nearly 4 million man hours and a peak of approximately 1,300 workers on-site, construction of the Olympus hull was completed in November 2012. The hull will be transported from South Korea to Ingleside, TX on Dockwise’s world-class Blue Marlin marine vessel, a semi-submersible heavy lift ship specifically designed to transport larger equipment above the ship’s deck. The hull is expected to reach Ingleside, Texas in early 2013 where installation of the topsides will take place before the TLP departs for its final location on the Mars Field in the Gulf of Mexico.

The Mars Field, owned by Shell (71.5%) and BP (28.5%), and operated by Shell, continues to contribute to the Gulf of Mexico’s position as a critical component of the US energy supply. Discovered in 1989 and brought onto production in 1996, the Mars Field is considered one of the largest resource basins in the Gulf of Mexico. The site for the Olympus TLP, known as the Mars B development, is located about 130-miles south of New Orleans in the Mississippi Canyon and lies in approximately 3000 feet of water.

The Olympus TLP, Shell’s sixth and largest tension leg platform, will also provide process infrastructure for two of Shell’s deep water discoveries, West Boreas and South Deimos. The Mars B development is the first project of its kind to expand an existing deep water Gulf of Mexico oil field. A combination of factors produced this growth, including improved understanding of the reservoir and recovery potential due to advanced seismic and modeling technologies, and new discoveries in the Mars Field.

Subsea World News – Shell’s Olympus Hull Begins Journey to US Gulf Coast.

Sonardyne, Oceaneering Demonstrate ROV Capabilities in U.S. Gulf

A recent trials partnership between Sonardyne International Ltd. and Oceaneering International, Inc. has resulted in the development of a Fly-By-Wire (FBW) system for ROV (Remotely Operated Vehicle) control in any water depth, allowing the vehicle to hold station indefinitely and navigate to real-world coordinates automatically.

A Sonardyne SPRINT system was installed on one of Oceaneering’s Maxximum ROVs and integrated with a Sonardyne Ranger 2 Ultra Short Baseline (USBL) system for acoustic aiding of the Inertial Navigation System (INS). The trials took place in the Gulf of Mexico in water depths of 3,057 metres (10,030 ft) and results showed that continuous hovering of the ROV in mid-water beyond Doppler Velocity Log (DVL) range was possible, as well as automatic navigation to waypoints.

The majority of ROV navigation systems utilize an Attitude and Heading Reference System (AHRS) and DVL to provide a relative or dead reckoned position. These systems are subject to time and distance based position errors and only operate close to the seabed, meaning mid-water operations are conducted via manual control so real world or relative coordinates cannot be easily used by the ROV pilot. To address these limitations, Sonardyne and Oceaneering have developed a novel navigation and control system solution utilising the dual output of INS and AHRS data from SPRINT to provide ROV Dynamic Positioning (DP) in all water depths with capabilities beyond current state-of-the-art, without affecting reliability or ease of use.

The system has two methods of ROV control: ‘Navigation’ and ‘Passthru’. In ‘Navigation’ mode, the ROV control system uses INS positioning optimised for DP with real-world position, velocity and attitude data at high output rates. This speeds up ROV operations by improving vehicle control precision, automating station keeping and delivering FBW capability. ‘Navigation’ mode is available continuously in all water depths when USBL data is available. If the INS solution should become degraded or is unavailable, the system automatically reverts to ‘Passthru’ mode. ‘Passthru’ mode is a dead reckoned solution using self contained AHRS data that is inherently robust and reliable when combined with DVL data.

The results of the trial showed that continuous hovering of the ROV in mid-water beyond DVL range was possible, as well as automatic navigation to waypoints. When the ROV was in DVL range of the seabed the ‘Navigation’ mode performed equally as well as the ‘Passthru’ mode but with the added benefit of real-world referenced positioning data from the USBL system. The faster update rate (20 Hz, compared to the 5 Hz rate of the DVL) has the potential to refine vehicle control precision.

Commenting on the development, Mark Carter, Business Development Manager for Inertial Systems at Sonardyne said, “Fly-By-Wire ROV control using real-world coordinates significantly improves operational efficiency compared to relative-only positioning methods. Faster navigation updates, automatic registering of waypoints and indefinite mid-water station keeping speed up ROV operations and ultimately save ROV and vessel time.”

Mark Philip, ROV Technology Manager at Oceaneering stated that, “Autonomous flight control is an increasingly important feature for ROVs. Oceaneering’s Fly-By-Wire system has greatly enhanced the efficiency of the service we provide to our customers since its introduction several years ago. The integration of the SPRINT inertial navigation system further enhances this capability by providing hands-free hovering and navigation throughout the entire water column. We place high importance on ease of operation and redundancy and are confident that our collaboration with Sonardyne satisfies these requirements.”

Sonardyne, Oceaneering Demonstrate ROV Capabilities in U.S. Gulf| Offshore Energy Today.

Enbridge to Build Crude Oil Pipeline in US GoM

Enbridge Inc., announced that it will build, own and operate a crude oil pipeline in the Gulf of Mexico to connect the proposed Heidelberg development, operated by Anadarko Petroleum Corporation, to an existing third-party pipeline system.

The lateral pipeline is expected to be operational by 2016. Construction of the pipeline is subject to finalization of definitive agreements and sanction of the development by Anadarko and its project co-owners.

The Heidelberg lateral will originate in Green Canyon Block 860, approximately 200 miles southwest of New Orleans and in 5300 feet of water. The pipeline will be 20 inches in diameter and approximately 34 miles in length.

“We are pleased to be working with Anadarko and the Heidelberg producers,” said Leon Zupan, President, Gas Pipelines. “The Heidelberg lateral pipeline is an attractive investment opportunity for Enbridge. It also furthers our objective of diversifying our offshore business to include facilities that support the substantial crude oil discoveries in the deepwater of the US Gulf Coast.”

Enbridge’s offshore pipelines transport approximately 40 per cent of the natural gas produced in the deepwater Gulf of Mexico. The company’s offshore assets include interests in 13 natural gas gathering and transmission pipelines and one crude oil pipeline in five major pipeline corridors off the coasts of Louisiana and Mississippi.

Subsea World News – Enbridge to Build Crude Oil Pipeline in US GoM.

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