In a long-awaited moment in aÂ hotly contested zone currently occupied by the Russian military,Â Ukraineâ€™s citizens living in the peninsula of CrimeaÂ voted overwhelmingly to become part of Russia.
Responding to the referendum, President Barack Obama and numerous U.S. officialsÂ rejected the results out of handÂ and theÂ Obama Administration has confirmed he will authorize economic sanctions against high-ranking Russian officials.
â€œAs I told President Putin yesterday, the referendum in Crimea was a clear violation of Ukrainian constitutions and international law and it will not be recognized by the international community,â€Â Obama said in a press briefing. â€œToday I am announcing a series of measures that will continue to increase the cost on Russia and those responsible for what is happening in Ukraine.â€
But even before the vote and issuing of sanctions,Â numerous key U.S. officials hypedÂ theÂ need to expedite U.S. oil and gas exportsÂ to fend off Europeâ€™s reliance on importing Russiaâ€™s gas bounty. In short, gas obtained viaÂ hydraulic fracturing (â€œfrackingâ€)Â isÂ increasingly seen as a â€œgeopolitical toolâ€ for U.S. power-brokers, as The New York Times explained.
Perhaps responding to the repeated calls toÂ use gas as a â€œdiplomatic tool,â€Â the U.S. Department of Energy (DOE) recently announced it willÂ sell 5 million barrels of oil from the seldom-tapped Strategic Petroleum Reserve. Both theWhite House and DOE deny the decision had anything to do with the situation in Ukraine.
Yet even as some sayÂ we are witnessing the beginning of a â€œnew cold war,â€ few have discussed the ties binding major U.S. oil and gas companies with Russian state oil and gas companies.
The situation in Ukraine is a simple one at face value, at least from an energy perspective.
â€œControl of resources and dependence on other countries is a central theme connecting the longstanding tension between Russia and Ukraine and potential actions taken by the rest of the world as the crisis escalates,â€Â ThinkProgress explained in a recent article. â€œUkraine is overwhelmingly dependent on Russia for natural gas, relying on its neighbor for 60 to 70 percent of its natural gas needs.â€
At the same time, Europe also largely depends on Ukraine as a key thoroughfare for imports of Russian gas via pipelines.
â€œThe country is crossed by a network of Soviet-era pipelines that carry Russian natural gas to many European Union member states and beyond; more than a quarter of the EUâ€™s total gasÂ needs were met by Russian gas, and some 80% of it came via Ukrainian pipelines,â€ explainedÂ The Guardian.
Given the circumstances, weaning EU countries off Russian gas seems a no-brainer at face value. Which is why itâ€™s important to use the brain and look beneath the surface.
ExxonMobil and Rosneft
The U.S. and Russian oil and gas industries can best be described as â€œfrenemies.â€ Case in point: the tight-knit relationship between U.S. multinational petrochemical giant ExxonMobil and Russian state-ownedÂ multinationalÂ petrochemical giantÂ Rosneft.
ExxonMobil CEO Rex Tillerson sung praises about his companyâ€™s relationship with RosneftÂ during a June 2012 meeting with Vladimir Putin.
â€œIâ€™m pleased that you were here to be part of the signing today, and very much appreciate the strong support and encouragement you have provided to our partnership,â€Â said Tillerson. â€œ[N]othing strengthens relationships between countries better than business enterprise.â€
A year later, in June 2013,Â Putin awarded ExxonMobil an Order of Friendship. But what does the friendship entail?
In 2012,Â ExxonMobil and Rosneft signed an agreementÂ â€to share technology and expertiseâ€ with one another. Some of the details:
-Forming of aÂ joint venture to explore offshore oil and gasÂ in the Kara Sea and the Black Sea
–Rosneft acquiring a 30 percent stake in 20 ExxonMobil-owned offshore oil and gas blocksÂ in the Gulf of Mexico.
â€œThe 20 blocks have a total area of approximately 111,600 acres (450 square kilometers) in water depths ranging between 2,100 and 6,800 feet (640 and 2,070 meters),â€Â explained a Rosneft press release.
Rosneft obtained aÂ 30 percent stake in ExxonMobilâ€™s shareÂ in the La Escalera Ranch project in theÂ Permian Basin ShaleÂ in West Texas. It alsoÂ gained aÂ 30 percent stakeÂ in a portion of ExxonMobilâ€™s stake in Albertaâ€™sÂ Cardium Shale formation.
In 2013, ExxonMobil and RosneftÂ announced a partnership to conquer the Arctic for oil and gas, creating theÂ Arctic Research and Design Center for Continental Shelf Development.
ExxonMobil put down the first $200 million for the initial research and development work, while Rosneft threw down $250 million later. Officially, Rosneft owns 66.67 percent of the venture and ExxonMobil owns 33.33 percent.
â€œ[S]taff will be located with the Rosneft and ExxonMobil joint venture teams in Moscow to promote resource efficiency and interaction between technical and management staffs,â€Â explained a press release. â€œThe [Arctic Research Center] initially will be staffed with experts from ExxonMobil and Rosneft.â€
Also part of the 2013 deal,Â ExxonMobil gave Rosneft a 25 percent stakeÂ inAlaskaâ€™s Point Thomson natural gas field. Further,Â the two companies signed a Memorandum of UnderstandingÂ to study the possibility of jointly building aÂ LNG (liquefied natural gas) facility in the Russiaâ€™s far east.
Then at the end of 2013,Â ExxonMobil and Rosneft inked a deal toÂ start a pilot project for tight oil reserves development in Western Siberiaâ€™s shale basins. Rosneft owns a 51 percent stake, ExxonMobil a 49 percent stake.
Despite the myriad ties to Russia, the DOE announcedÂ Exxon was one of theÂ Strategic Petroleum Reserve buyersÂ of 500,000 barrelsÂ of the five million barrels of oilÂ the DOE offered up for sale.
Tillerson recently said the ongoing events in Crimea and Ukraine at-large will have no expected impact on his companyâ€™s partnerships with Rosneft.
â€œThere has been no impact on any of our plans or activities at this point, nor would I expect there to be any, barring governments taking steps that are beyond our control,â€Â he said at the companyâ€™s recent annual meeting, as reported by The Wall Street Journal. â€œWe donâ€™t see any new challenges out of the current situation.â€
â€œNot a U.S. Companyâ€
InÂ Steve Collâ€˜s book â€œPrivate Empire: ExxonMobil and American Power,â€ he documents that Lee Raymond â€”Â former CEO of ExxonMobil from 1993-2005 â€”Â was asked if his company would build more U.S. refineries to fend off gasoline shortages.
Raymondâ€™s reply: â€œIâ€™m not a U.S. company and I donâ€™t make decisions based on whatâ€™s good for the U.S.â€
So what does this all mean when looked at in aggregate?
As The Washington Monthly put it, â€œThe clout, reach, and mission of ExxonMobil mean that it runs what amounts to its own foreign policy, raising the question of how that policy relates to the foreign policy of the United States.â€
And ExxonMobil is not alone in this.Â ConocoPhillips,Â ChevronÂ andÂ ShellÂ also have their own unique deals with Russia. BP operated in Russia for years untilÂ selling off its stake to Rosneft in 2012.
Climate Trump Card
Exciting as the energy geopolitics stand-off is to follow from afar, the climate disruption implications of it serve as the ultimate trump card.
â€œSadly, few seem to care about diminishing the threat posed by climate change, since it has become increasingly clear that LNG would make things worse,â€ wroteÂ ClimateProgressÂ EditorÂ Joe RommÂ in aÂ March 12 article.
â€œFirst, natural gas is mostly methane, (CH4), a super-potent greenhouse gas, which traps 86 times as much heat as CO2 over a 20-year period. So even small leaks in the natural gas production and delivery system can have a large climate impact.â€
It appears the U.S. push to export LNG has trumped climate change concerns, with export facilities inÂ Freeport, Texas;Â Elba Island, Georgia; andÂ Lusby, MarylandÂ all barreling ahead through the permitting process.
So even if the U.S. (and/or ExxonMobil) comes out ahead in this energy-centric geopolitical brouhaha, we still all end up losing in the end.
Steve HornÂ is a Madison, WI-based freelance investigative journalist and Research Fellow atÂ DeSmogBlog,Â where this piece first appeared.