Eurasia:
China and Russia is Where It’s Happening
By F.
William Engdahl
May 27, 2016 "Information
Clearing House"
- "NEO"
-
In 1865 at the
end of the US Civil War New York journalist Horace
Greeley popularized the expression, “”Go West, young
man, and grow up with the country.” Today, some 150
years later, as the colossal economy of the United
States of America sinks into obsolescence,
outsourcing, income depression, and staggering real
unemployment, with many countries of the European
Union close to the same, the slogan should properly
be changed. “Go East, young man,” and grow up with
the booming economies of Eurasia, especially Russia
and China. While NATO planes and warships
increasingly saber rattle both Russian and Chinese
territories, the two giants of Eurasia are forging
relations closer than ever in their history. Energy
alliances are at the heart of the process.
Energy
Synergies
Since May,
2014, China and Russia have agreed to staggeringly
large energy deals that make China less vulnerable
to any NATO or Mideast supply blackmail, and Russia
to any Ukraine or EU energy blackmail.
In May, 2014
Russian President Vladimir Putin and China’s
President Xi Jinping signed the so-called Russian
East Route pipeline deal, a $400 billion agreement
over 30 years that will begin sending 38 billion
cubic meters of gas annually from Russia to China
beginning 2018. It was followed in November 2014 by
an agreement for the so-called West Route gas
pipeline that will connect gas fields in western
Siberia with northwest China through the Altai area
of Xinjiang Autonomous Region. They also agreed on
provisions for possible second and third sections to
be added later that would bring capacity to an
impressive 100 billion cubic meters a year. West
Route is designated a priority and to be finished in
six years.
When both East
and West Route pipelines are operational, Russia
will supply some 59% of the current Chinese annual
natural gas consumption, replacing the EU as
Russia’s largest gas export market. Today China
consumes 169 billion cubic meters annually. At the
same Beijing meeting, the presidents of state oil
companies Rosneft and CNPC signed a deal whereby
CNPC buys a 10% stake in Rosneft subsidiary
Vankorneft which operates the huge Russian Vankor
oil field. China will receive some $7 billion worth
of Russian oil from Vankor in the
deal.
Then on April
19 this year Russian First Deputy Energy Minister
Alexei Teksler told RIA Novosti that certain Chinese
state oil companies are discussing buying the
planned 19.5% state share of Rosneft that is to be
sold privately by end of 2016. The likely candidate
would be China’s CNPC oil
company.
Yamal LNG
Project Gets China Money
Now on May 3,
the Director General of the Yamal LNG Export
Terminal project in northwest Siberia made an
announcement that clearly did not please the
Washington sanctions warriors. The Russian LNG
project consortium signed a loan agreement with
China Exim Bank and the China Development Bank who
will extend a 15-year loan to the project of 9.3
billion euros, some 75% of the estimated total funds
that Yamal needs to get into
production.
Following
Washington sanctions that blocked key Russian energy
companies from raising capital in western markets,
Yamal looked highly unlikely. As the company’s
website notes, “Launched at end 2013, Yamal is not
only one of the most complex liquefied natural gas
projects ever undertaken; it is also one of the most
competitive…because it benefits from the vast
natural gas reserves situated across the Yamal
peninsula. Complex because it is located above the
Arctic Circle.” Its partners include Russia’s
Novatek, China’s CNPC, French Total (20%) and,
significantly,
China’s Silk Road Fund.
OAO Novatek is
Russia’s largest independent natural gas producer,
concentrated in the Yamal-Nenets Autonomous Region (YNAO)
in Western Siberia, the most significant gas
producing region in Russia, accounting for
approximately 80% of Russia’s natural gas production
and approximately 16% of global gas production. Now
the Chinese are taking the major financing burden to
make the mammoth
Yamal project work.
Also
significant in terms of the process of
de-dollarization taking place in Russia, China, Iran
and other Eurasian countries, the Chinese loans will
be denominated in Euros and not in US dollars.
It appears
clearly that Washington’s enraged neoconservatives
around Victoria Nuland in the State Department and
Defense Secretary Ash Carter have made the best
contribution to bringing China and Russia together
in an unprecedented manner. They managed this
impressive feat by imposing financial and economic
sanctions on Russia and threatening China’s sea
lanes, fostering terrorism in Xinjiang and advancing
the military “Asia Pivot” as well as the TPP that
deliberately excludes China. The result is that both
Russia and China are forging deep long-term economic
ties across Eurasia that ultimately will become the
focal point for world economic growth as the China
New Silk Road—the One Belt, One Road project– links
Russia, China, Iran and the vast regions across
Eurasia with a new network of high-speed rail and
port links, energy links, pipelines, electricity
infrastructure. Russia has clearly decided to “Go
East, young man.”
It would be an
entirely new paradigm if the nations of Europe were
to also go East to open vast new markets for their
stagnating economies rather than open US Missile
defense bases, hosting advanced nuclear weapons and
station US troops on the borders of Russia.
F.
William Engdahl is strategic risk consultant and
lecturer, he holds a degree in politics from
Princeton University and is a best-selling author on
oil and geopolitics, exclusively for the online
magazine “New
Eastern Outlook” |