Oil’s Price Increase Contributes to the Thirst for Gas

Given the increasing difficulties in its oil supply, the US’s recent energy plan has turned that country’s attention towards internal production and marketing of gas. Its subterranean reserves are considerable, although this is partially obscured by the large investment needed to exploit them and the high overall cost. In the world ranking, the USA is preceded by Iran, Russia, Qatar, Saudi Arabia and, potentially, Iraq. Now that the market price of American gas has risen by nearly 50% over the past two years, the major US companies have re-awakened. The price has reached $6 per Mbtu (million british thermal units), whereas a price of oil of around $46-47 ⁽¹⁾ on Nymex (New York Mercantile Exchange) corresponds to a gas price of $8. Foreseeing a leap in the demand for gas, American, Canadian and Mexican oil companies (Exxon Mobil, Texas Chevron, Royal Dutch/Shell, Conoco Phillips, BP USA, etc.) are concentrating on the possibility of exploiting deposits in areas under Federal protection (parks, Indian reserves and Arctic areas). They are also putting forward the commercialisation of gas from abroad with large investments in plants for the liquefaction on land, for ships which transport lng (liquid natural gas). The areas concerned in this import activity are in many cases those already at the centre of attention because of oil: Malaysia, Indonesia, Australia, the Timor Sea, Qatar and Nigeria. Other suppliers of gas to the USA which are already active are: Oman, the United Arab Emirates, Algeria, Angola, Trinidad and Brunei. All in all, for the plants which will receive this gas and the terminals on the American coast where it will arrive, a frenetic race to carry out projects and get finance has started.

It is not just for oil, then, but also for gas, that the US energy dependency, like that of Europe and China, is destined to grow and become crucial. At the centre of the Yukos affair in Russia there was, among other things, the control over commercial treaties regarding gas, both Russian as well as Kazakh and Turkmeni. In the latest Ukrainian events (80% of the gas sold by Russia to Europe passes through the Ukraine), with the new government which looks to Germany without the intermediary of Moscow, the manoeuvres around gas have played their part. As well as all this, Russia is beginning the exploitation of the gas reserves in the Jamal peninsula (Western Siberia), in the Barents Sea, in Eastern Siberia and in the Sakhalin Peninsula. The same is true for the deposits on the border with Kazakhstan. The Russian market is also relating to China and Japan, while, in the co-production of gas with the Norwegian Statoli (Barents sea), Russian Gazprom is looking to a profitable supply of gas for the American East coast. The recent accord between Moscow and Berlin for the development of the Baltic gas pipeline which will carry the gas from the Siberian deposits to Germany, will, by using International waters, cut out Byelorussia, the Ukraine, Poland and the Baltic Republics. The gas pipeline, which will utilise the bed of the Baltic Sea, is jointly financed by Gazprom and the German company Wintershall, part of the chemical giant BASF. This will cost around $10bn. The Italian company ENI has just inaugurated a submarine gas pipeline, running from the North coast of the Black Sea near the oil port of Novorossijsk to Durusu near Samsun on the Turkish coast, which carries gas 1200km. Its maximum capacity is 16bn cubic metres per year.

In Italy, where gas sales increased by 9% in 2004 to a record of 21.5bn cubic metres, Gazprom and ENI have been “negotiating” for months now: Gazprom want to directly sell at least 2bn cubic metres of methane per year in Italy, and to join the Rete Gas network, controlled by ENI. The negotiations have been about a gigantic deal: plants for gas liquefaction in Russia and for its re-conversion into gas in Italy. At the same time, Moscow is concluding accords with China, such as that for the construction of two gas pipelines of 60-80bn cubic metres per year capacity for Northern China.

There is further manoeuvring in Latin America, where the Bolivian political events are also conditioned by the gas reserves present in the country, estimated to be around 49 trillion cubic feet (alongside 480mn barrels of oil). There are dozens of billions of dollars supervised by transnational companies who blackmailed the Bolivian government into signing one-sided contracts, which fall due in 2036, when the reserves run out. An increase in the tax on oil at the wellhead, a revision of the contracts or the nationalisation of the gas are threats which are sufficient to unleash clashes without scruple (including the intervention of the Mafia) between the factions of the Bolivian bourgeoisie and the British bourgeoisie of British Petroleum and British Gas, the French bourgeoisie of Total, the American bourgeoisie of Mobil and Enron, the Spanish bourgeoisie of Repsol and the Brazilian bourgeoisie of the Petrobas of President Lula. All lined up for the defence of their own shareholders...

Finally, in Italy, manoeuvres of ample scope have been dragging on concerning the construction of a terminal for the retransformation of liquid gas at Brindisi, where there are already large energy plants: two large centres for coal (Cerano and Costa Morena), as well as the seat of the petro-chemical firm Enel. Under an old agreement between the Italian government and British Gas, lng is to be transported from Egypt and the Middle East - thus there should be storage and facilities for the re-conversion of lng to gas at Brindisi for around 6mn tonnes per year. The inhabitants of the zone where this gas will be received, stored and re-vaporised are protesting: in addition, the docks for the ships, which carry on average between 70 and 140 thousand cubic metres of gas, require the laying of about a thousand cubic metres of concrete and the pushing back of the sea by around 150 000 square metres with very great environmental pollution. But the profits, it goes without saying, will be considerable...

(1) With oil price now approximately $70 the equivalent gas price would be nearly $12.