{"id":1498,"date":"2014-03-19T14:42:45","date_gmt":"2014-03-19T04:42:45","guid":{"rendered":"http:\/\/www.khanfactor.com\/blog\/?p=1498"},"modified":"2014-03-19T14:42:45","modified_gmt":"2014-03-19T04:42:45","slug":"exxonmobil-russia-and-ukraine-by-steve-horn","status":"publish","type":"post","link":"https:\/\/www.khanfactor.com\/blog\/?p=1498","title":{"rendered":"ExxonMobil, Russia and Ukraine by STEVE HORN"},"content":{"rendered":"

In a long-awaited moment in a\u00a0hotly contested zone currently occupied by the Russian military<\/a>,\u00a0Ukraine\u2019s citizens living in the peninsula of Crimea\u00a0voted overwhelmingly to become part of Russia<\/a>.<\/p>\n

Responding to the referendum, President Barack Obama and numerous U.S. officials\u00a0rejected the results out of hand<\/a>\u00a0and the\u00a0Obama Administration has confirmed he will authorize economic sanctions against high-ranking Russian officials<\/a>.<\/p>\n

\u201cAs 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,\u201d\u00a0Obama said in a press briefing<\/a>. \u201cToday 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.\u201d<\/p>\n

But even before the vote and issuing of sanctions,\u00a0numerous key U.S. officials hyped<\/a>\u00a0the\u00a0need to expedite U.S. oil and gas exports<\/a>\u00a0to fend off Europe\u2019s reliance on importing Russia\u2019s gas bounty. In short, gas obtained via\u00a0hydraulic fracturing (\u201cfracking\u201d)<\/a>\u00a0is\u00a0increasingly seen as a \u201cgeopolitical tool\u201d for U.S. power-brokers<\/a>, as The New York Times explained.<\/p>\n

Perhaps responding to the repeated calls to\u00a0use gas as a \u201cdiplomatic tool,\u201d<\/a>\u00a0the U.S. Department of Energy (DOE) recently announced it will\u00a0sell 5 million barrels of oil from the seldom-tapped Strategic Petroleum Reserve<\/a>. Both theWhite House and DOE deny the decision had anything to do with the situation in Ukraine<\/a>.<\/p>\n

Yet even as some say\u00a0we are witnessing the beginning of a \u201cnew cold war<\/a>,\u201d few have discussed the ties binding major U.S. oil and gas companies with Russian state oil and gas companies.<\/p>\n

The ties that bind, as well as\u00a0other real logistical and economic issues<\/a>\u00a0complicate the narrative<\/a>\u00a0of exports as an\u00a0\u201cenergy weapon.\u201d<\/a><\/p>\n

The situation in Ukraine is a simple one at face value, at least from an energy perspective.<\/p>\n

\u201cControl 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,\u201d\u00a0ThinkProgress explained in a recent article<\/a>. \u201cUkraine is overwhelmingly dependent on Russia for natural gas, relying on its neighbor for 60 to 70 percent of its natural gas needs.\u201d<\/p>\n

At the same time, Europe also largely depends on Ukraine as a key thoroughfare for imports of Russian gas via pipelines.<\/p>\n

\u201cThe 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 EU\u2019s total gas\u00a0needs were met by Russian gas, and some 80% of it came via Ukrainian pipelines,\u201d explained<\/a>\u00a0The Guardian.<\/p>\n

Given the circumstances, weaning EU countries off Russian gas seems a no-brainer at face value. Which is why it\u2019s important to use the brain and look beneath the surface.<\/p>\n

ExxonMobil and Rosneft<\/strong><\/p>\n

The U.S. and Russian oil and gas industries can best be described as \u201cfrenemies.\u201d Case in point: the tight-knit relationship between U.S. multinational petrochemical giant ExxonMobil and Russian state-owned\u00a0multinational\u00a0petrochemical giant\u00a0Rosneft<\/a>.<\/p>\n

ExxonMobil CEO Rex Tillerson sung praises about his company\u2019s relationship with Rosneft\u00a0during a June 2012 meeting with Vladimir Putin.<\/p>\n

\u201cI\u2019m 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,\u201d\u00a0said Tillerson<\/a>. \u201c[N]othing strengthens relationships between countries better than business enterprise.\u201d<\/p>\n

A year later, in June 2013,\u00a0Putin awarded ExxonMobil an Order of Friendship<\/a>. But what does the friendship entail?<\/p>\n

In 2012,\u00a0ExxonMobil and Rosneft signed an agreement<\/a>\u00a0\u201dto share technology and expertise\u201d with one another. Some of the details:<\/p>\n

-Forming of a\u00a0joint venture to explore offshore oil and gas<\/a>\u00a0in the Kara Sea and the Black Sea<\/p>\n

–Rosneft a<\/a>cquiring a 30 percent stake in 20 ExxonMobil-owned offshore oil and gas blocks<\/a>\u00a0in the Gulf of Mexico.<\/p>\n

\u201cThe 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),\u201d\u00a0explained a Rosneft press release<\/a>.<\/p>\n

Rosneft obtained a\u00a0<\/a>30 percent stake in ExxonMobil\u2019s share<\/a>\u00a0in the La Escalera Ranch project in the\u00a0Permian Basin Shale<\/a>\u00a0in West Texas. It also\u00a0gained a\u00a030 percent stake<\/a>\u00a0in a portion of ExxonMobil\u2019s stake in Alberta\u2019s\u00a0Cardium Shale formation<\/a>.<\/p>\n

In 2013, ExxonMobil and Rosneft\u00a0announced a partnership to conquer the Arctic for oil and gas<\/a>, creating the\u00a0Arctic Research and Design Center for Continental Shelf Development<\/a>.<\/p>\n

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.<\/p>\n

\u201c[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,\u201d\u00a0explained a press release<\/a>. \u201cThe [Arctic Research Center] initially will be staffed with experts from ExxonMobil and Rosneft.\u201d<\/p>\n

Also part of the 2013 deal,\u00a0ExxonMobil gave Rosneft a 25 percent stake<\/a>\u00a0inAlaska\u2019s Point Thomson natural gas field<\/a>. Further,\u00a0the two companies signed a Memorandum of Understanding<\/a>\u00a0to study the possibility of jointly building a\u00a0LNG (liquefied natural gas) facility in the Russia\u2019s far east<\/a>.<\/p>\n

Then at the end of 2013,\u00a0ExxonMobil and Rosneft inked a deal to\u00a0start a pilot project for tight oil reserves development in Western Siberia\u2019s shale basins<\/a>. Rosneft owns a 51 percent stake, ExxonMobil a 49 percent stake.<\/p>\n

Despite the myriad ties to Russia, the DOE announced\u00a0Exxon was one of the\u00a0Strategic Petroleum Reserve buyers\u00a0of 500,000 barrels<\/a>\u00a0of the five million barrels of oil\u00a0the DOE offered up for sale.<\/p>\n

Tillerson recently said the ongoing events in Crimea and Ukraine at-large will have no expected impact on his company\u2019s partnerships with Rosneft.<\/p>\n

\u201cThere 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,\u201d\u00a0he said at the company\u2019s recent annual meeting<\/a>, as reported by The Wall Street Journal. \u201cWe don\u2019t see any new challenges out of the current situation.\u201d<\/p>\n

\u201cNot a U.S. Company\u201d<\/strong><\/p>\n

In\u00a0Steve Coll<\/a>\u2018s book \u201cPrivate Empire: ExxonMobil and American Power<\/a>,\u201d he documents that Lee Raymond \u2014\u00a0former CEO of ExxonMobil from 1993-2005 \u2014\u00a0was asked if his company would build more U.S. refineries to fend off gasoline shortages.<\/p>\n

Raymond\u2019s reply<\/a>: \u201cI\u2019m not a U.S. company and I don\u2019t make decisions based on what\u2019s good for the U.S.\u201d<\/p>\n

So what does this all mean when looked at in aggregate?<\/p>\n

As The Washington Monthly put it<\/a>, \u201cThe 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.\u201d<\/p>\n

And ExxonMobil is not alone in this.\u00a0ConocoPhillips<\/a>,\u00a0Chevron<\/a>\u00a0and\u00a0Shell<\/a>\u00a0also have their own unique deals with Russia. BP operated in Russia for years until\u00a0selling off its stake to Rosneft in 2012<\/a>.<\/p>\n

Climate Trump Card<\/strong><\/p>\n

Exciting as the energy geopolitics stand-off is to follow from afar, the climate disruption implications of it serve as the ultimate trump card.<\/p>\n

\u201cSadly, few seem to care about diminishing the threat posed by climate change, since it has become increasingly clear that LNG would make things worse,\u201d wrote\u00a0ClimateProgress<\/a>\u00a0Editor\u00a0Joe Romm<\/a>\u00a0in a\u00a0March 12 article<\/a>.<\/p>\n

\u201cFirst, 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.\u201d<\/p>\n

It appears the U.S. push to export LNG has trumped climate change concerns, with export facilities in\u00a0Freeport, Texas<\/a>;\u00a0Elba Island, Georgia<\/a>; and\u00a0Lusby, Maryland<\/a>\u00a0all barreling ahead through the permitting process.<\/p>\n

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.<\/p>\n

Steve Horn<\/strong>\u00a0is a Madison, WI-based freelance investigative journalist and Research Fellow at\u00a0DeSmogBlog<\/a>,\u00a0where this piece first appeared.<\/em><\/p>\n

Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In a long-awaited moment in a\u00a0hotly contested zone currently occupied by the Russian military,\u00a0Ukraine\u2019s citizens living in the peninsula of Crimea\u00a0voted overwhelmingly to become part of Russia. Responding to the referendum, President Barack Obama and numerous U.S. officials\u00a0rejected the results … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_s2mail":"yes","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false,"jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[41,11,38,313,314],"tags":[107,217,139,91,325,324,326,290,148,460,306,263],"jetpack_publicize_connections":[],"aioseo_notices":[],"views":3633,"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2ttSq-oa","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/1498"}],"collection":[{"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1498"}],"version-history":[{"count":1,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/1498\/revisions"}],"predecessor-version":[{"id":1499,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/1498\/revisions\/1499"}],"wp:attachment":[{"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.khanfactor.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}