All comments and evaluation of the decision of the Stockholm arbitration in respect of counterclaims of “Naftogaz of Ukraine” and “Gazprom” it was reduced to one simple question, who won? But if it’s a draw, from what account? 0:0 or 1:1? All say that the decision is of an interim nature (no specific numbers): it generates approaches and standards, resolution of the main dispute.
In other words, the decision of the Stockholm arbitration is one of principle, but the principles of these for some reason, nobody speaks. Meanwhile, talking here not about a dispute between two business entities, and about a coup or revolution (someone like that) in the world energy market.
So, what is so fundamentally revolutionary is contained in the decisions of the Stockholm arbitration?
The first – the rejection of the principle of “taкe or pay” (take or pay) undermines the entire system of the gas market, initially built on complex infrastructure projects. The construction of pipelines requires large long-term investments, and, therefore, guarantee a return. Payback is provided by the permanent loading of the pipeline, and of served the principle of “taкe or pay” principle, which was laid in all the contracts, “Gazprom” and guaranteed the required level of payment regardless of the conjuncture of supply and demand.
The second – the refusal from binding gas prices to oil prices means the final section of the oil and gas market. The binding of the final gas price to the spot (one-time) deliveries, coupled with the rejection of “taкe or pay” completely kills the long-term contract as a kind of contractual relationship. Gazprom’s (read Russia) deprive the lungs of long-term funds (contract for 10-15 years with guaranteed delivery and payment is a loan on preferential terms in any Bank in the world).
Third (in my opinion, most importantly) – the Stockholm arbitration outside the scope of the contract between “Naftogaz of Ukraine” and “Gazprom” in the political space and deciding on the basis of the overall situation means that contract law no longer exists. Starry-eyed dreams about the existence of a common (politically neutral) market based solely on technical indicators, finally dispelled.
The changes are so fundamental that any attempt to explain the Russian-Ukrainian contradictions looks at least odd. It should be noted that the decision of the Stockholm arbitration completely fit into the framework of the Third energy package of the EU, which contradicts not only the WTO rules and market principles (discrimination manufacturer and supplier in favor of the supposedly consumer).
Why “allegedly”? For the first 5 years of the Third energy package in gas prices in Europe increased on average for the industry at 32% and households by 27%. This rise in the share value of the gas was 0.4% for industry and less than 5% for households. The increase was due to higher taxes and costs for local transportation.
Simply put, benefited from the introduction of new rules, not consumers, but local suppliers and transit countries of gas. For example, the average export price of “Gazprom” over the years, barely 200 $/thousand cubic meters, while European consumers pay an average of about 900 $/cu. m. it Turns out that to deliver gas from the Arctic circle to Germany 4 times cheaper than to ship it then to the BMW plants in Bavaria. In addition, the Third energy package is contrary to international law, claiming the priority of group interest over the bilateral intergovernmental agreements. The result of which was the refusal of Bulgaria from South stream without any penalties, costs “Gazprom” and the losses they incur.
A similar process (transition from a direct contractual prices to the spot, the revision of international standards and politicization of the economic agenda) were in the 70-ies of XX century in the oil market. The national revolution in the middle East (Maummar Gaddafi, Saddam Hussein, the overthrow of the Shah of Iran, etc.) brought critical sources of energy under direct control of US companies (seven sisters).
In the end the US abandoned the gold content of the dollar. The formation mechanism of oil prices cartel “sisters” changed the financial agreement, commodity exchange of new York has United with the stock, and between producers and buyers have entered a speculative stratum (Institute traders). Any design activity was only possible under a financial operator. It was the era of the so-called “petrodollar”, which today is built the whole world economy.
What are the similarities of the current gas process the oil in the ‘ 70s? First of all, that there is a change of energy of the leader. Before driving force of the energy made by oil and gas considered a regional product trapped in the pipe, where one side of the buyer and seller. Now gas is almost forced out of energy oil, which is mainly used for the production of gasoline and diesel fuel.
Technology liquefaction and tanker transportation has transformed the gas into a global commodity, and price pegging to the oil basket has lost all meaning. This became especially obvious after the emergence of the idea of creating a gas OPEC. The fact that the main driver of the oil market was and still is Saudi Arabia and the largest gas reserves in the world are Russia and Iran.
Iran almost has reoriented its exports to China. Central Asia launched a pipe to the East, and Russia launched the project of construction of gas pipeline “Power of Siberia” concluded with Beijing long-term 30-year contract on those conditions (including the “taкe or pay”), which rejects Europe. The start of gas supplies is scheduled for 2019, the year of completion of the contract with Ukraine, the contract that the Stockholm arbitration was buried today.
Furthermore, Russia is negotiating with China to build a second gas pipeline “Altai”. And if “Power of Siberia” is focused on the fields in Eastern Siberia, Altai and the Western Siberia, the main resource base for gas supplies to Europe. Changing not only the geography of the global energy market, but its principles and approaches.
If Russia and Iran be allowed to build pricing in the gas sector without taking into account previous financial obligations in dollars, as it tried to make the middle East the colonels in the 70-ies, the collapse of the entire modern system of global trade. This was the reason for the start of the “shale revolution” in the United States, the adoption of the Third energy package of the EU and the Ukrainian crisis. And to the energy security of Europe these processes have nothing to do.
It will be recalled that the revision of the global rules was preceded by a period when Europe (especially Germany) and Russia tried to develop mutual projects based on the direct exchange of assets. German companies were to get stakes in Russian oilfields, as “Gazprom” in the European distribution networks. This principle was originally built the “Nord stream”. If the principle was implemented, today we had a qualitatively different geopolitical and geo-economic situation (Europe from the Atlantic to the Pacific ocean).
To understand about at what point a global conflict we are and what this conflict is fraught, it is necessary to recall the consequences of the oil crisis of the 70s a Series of national revolutions and coups in the middle East, a full-scale middle East war, embargo, the creation of the G-7 (the so-called United West) and the financial G-10 (Basel Committee on banking supervision) as an instrument for the subordination policy of the Central Banks of leading countries of the world the requirements of fed. Now the financial G-10 rose up to G-30 (part of it, and the Central Bank of the Russian Federation) and has become a basic condition for the functioning of the world economy, based on the “petrodollar”.
In fact, after the oil crisis was laid the institutional foundations of the modern world, which today are under pressure from the developing countries. A key marker of the destruction of these foundations should be the creation and resource producing countries (China, India, Russia) private financial system. Until that happens, all infrastructure projects will be implemented in the context of the global financial operator, with the payment of fees and interest for the service transaction. And as proved by Thomas Piketty, the return on capital is always higher entrepreneurial income.
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