About the energy balance in Europe and the world, or why Ukraine can become a butterfly effect for the western world
Given the height, the crisis in the Western world will be much greater than the Great Depression. A total, devouring apocalypse is prophesied by Pavel Spydell Ryabov. And sanctions against Russia are not the cause, but only one of its triggers. At the same time, Western people are absolutely not ready for what is to come – unlike the Russian Federation, where people are resistant to 50% fluctuations in the ruble exchange rate and 75% market collapses.
About 85% of all Russian pipeline exports go to Western Europe and Turkey – Germany (over 56 billion cubic meters by 2020), Italy (20 billion cubic meters), Turkey (16 billion cubic meters)
On our gas
Last week, European officials were optimistic about the desire or even the possibility of replacing Russian gas. How realistic is this?
Some statistics to understand current balances. Global gas exports for all participants in the energy market – 1244 billion cubic meters. m (756 billion cubic meters of pipeline + 488 billion cubic meters of LNG). But if re-exports are ruled out, global gas exports amount to 940 billion cubic meters. m (452 pipes and 488 LNG). The largest exporter of gas pipeline gas in the world is Russia, almost 200 billion cubic meters. m from 756, ie not less than a quarter of gross and 42% of net exports, excluding re-exports. Russia’s sales market is, of course, Europe. About 85% of all Russian pipeline exports go to Western Europe and Turkey.
Russia’s largest trading partners are Germany (over 56 billion cubic meters by 2020), Italy (20 billion cubic meters) and Turkey (16 billion cubic meters).
Russia occupies less than 55-60% in the supply of gas pipeline gas to Germany, half in Turkey, 40% in Italy, and throughout Europe Russia’s share is 37-40% in terms of gross sales and over 80% of net! The share of Russian gas pipeline gas in China is still negligible.
In 2020, there were 3.9 billion cubic meters. m of 45. The most important deliveries to China come from Turkmenistan.
Global exports of liquefied natural gas are 488 billion cubic meters. m. The five largest exporters of LNG in the world: Australia and Qatar, each 106 billion cubic meters. m, in third place is the United States – 61.4 billion cubic meters. m, then Russia – 40.4 billion, Malaysia – 33 billion.
The United States began supplying large-scale LNG to foreign markets in 2017, Russia has actively increased its supply since 2018. Since 2017, global LNG exports have grown from 360 to 488 billion cubic meters. m, about 2/3 of the global increase in exports came from Russia and the United States.
The main channels for delivery of American LNG are Europe. In 2020, 42% and in 2021 almost half of the United States’ total exports of LNG to Europe. Major US customers are also Korea (8 billion cubic meters), Japan (6.4 billion cubic meters), China (4.4 billion cubic meters).
Russia’s largest LNG customers are Europe (17.2 of 40.4 billion cubic meters), followed by Japan (8.4 billion cubic meters) and China (6.9 billion cubic meters).
The United States and Russia account for 37% of all LNG deliveries to Europe.
With oil. Russia’s share of world oil exports is 12.3% and in exports of petroleum products – 9.7%. At least 57% of Russian oil exports and 76% of exports of oil products are sent to so-called unfriendly countries.
Europe’s dependence on the supply of Russian oil is almost 30%, and for oil products below 40%! If it is cleared from re-export, the proportion will be greater. Since 2020, Russia has become China’s main trading partner in terms of oil supply among all countries.
The tables show annual deliveries of oil and oil products in millions of tonnes (exporters in rows, importers in columns).
China will take everything
So, the main question. Can Europe, for example, replace Russian gas with American gas? Europe’s dependence on Russian gas is estimated at 60%, with more than 80% dependence on gas pipeline gas.
Europe consumes 540-560 billion cubic meters. m of gas, net imports amount to 320-350 billion cubic meters. m. About 200 billion cubic meters. m comes from Russia, where the pipeline is 180 billion. Gas production, which works at the border, infrastructure for condensation, LNG tankers and all American gas power is about 60-70 billion cubic meters in net exports. m per year, half of which is contracted in Asia. Deliveries to Europe 2020 from the USA were 25.6 billion cubic meters. m, 2021 about 30 billion cubic meters. m. Therefore, the stories of the replacement of Russia in the European gas market by the United States are quite entertaining.
To be realistic, we can at best talk about the planned exchange of 5-7 billion cubic meters. m per year, perhaps 10, provided that some of the deliveries are redirected from Asia. But not every year. And obviously not in the long run.
All “free” gas exports are now being scooped up by China, which has increased gas imports by almost 10 times since 2010. In 2010, it imported 16 billion cubic meters. m, this year will definitely be over 150 billion. The conversion of energy in China is gaining momentum and gas is gradually replacing coal. This trend is for decades. Therefore, everything that the United States, Russia, Qatar, Australia, Indonesia or Turkmenistan can provide is taken by China. Therefore, there are no “free” exports that can be taken and sent to Europe to replace Russian gas. If oil dependence in Europe is estimated at 40% + (excluding re-export), then dependence on gas is 60% +.
It remains to disable
Commodity prices on the night of March 7 entered a fantastic, unprecedented growth. The agency index, which takes into account agricultural raw materials, metals and energy, showed on Friday the strongest daily increase in history, as everything grew. On Monday – a sequel, but even more hellish. At the time of the shorts, the oil pressure was 17% or almost $ 20 at Friday’s closing!
Everything is ready to disconnect Europe from oil and gas! If Russia’s rating has dropped to zero, contracts have been broken, masks have been dropped, investment has been completely paralyzed, all non-religious people are fleeing Russia, the degree of hostility has crossed all borders, foreign trade deals are impossible and imports are blocked, then torn to tears . I hope Putin does not miss the historic opportunity to throw the world into darkness. The aggressive, hostile actions of the Western world must be dealt with adequately …
The only obstacle will be the technical impossibility of a rapid shutdown of gas and oil due to the specificities of the production infrastructure.
Everything is ready to disconnect Europe from oil and gas. The only obstacle will be the technical impossibility of quickly shutting off gas and oil due to the characteristics of the production infrastructure
Hell is near
Developed countries, their entire structure in the financial system, all their reproductive processes are not adapted to high inflation. This is their weakest point. In war you must know the weaknesses of your enemies. A total economic war has been unleashed against Russia by the West (already without indulgence), they are being cut down on a full scale at all levels. Broken ties extend across the spectrum of relationships: economics, finance, politics, media, culture, visas, land transport communications, water, air and outer space. It makes sense to sit down at the negotiating table if the enemy is critically weakened and / or you have a significant trump card up your sleeve, which shifts the balance on the geostrategic map.
During the second half of 2021, I regularly noted that the current configuration of the financial system and economy in developed countries is highly deformed and critically unstable due to cost imbalances, bubbles, debt and the final stage of management deterioration. Things have gone so far that central banks are losing control of inflation and the money markets. It is not possible for the system to remain in persistent negative real interest rates for too long in the absence of forced market bonds (QE).
Debt markets in Western countries will begin to collapse due to inflation processes and the central bank’s inability to control the situation. Together with the debt market, the money market will be destabilized, stock exchanges and derivatives will immediately go out of balance. They are all interconnected. This will start a self-sufficient process of total uncertainty, a crisis of confidence and cash gaps. It will be an escape from money to goods, gold, real estate, quasi-money. Unlike in 2008 and 2020, the central bank will no longer be able to respond by lowering interest rates and QE. On the contrary, we must raise interest rates and withdraw money from the system. Nor will governments be able to build up public debt by closing holes and financing inefficiency in view of the paralysis of the debt market. All this will be reflected directly in the economy. And given the extremely low stability, the vitality of the system and the spoiled, infantile public, the consequences will be hyper-shocking. It is we who calmly get out of balance, but not the Western public.
All hell and unlimited pain in the western world is in front of us. It will not be directly related to politics or military action. This is a consequence of insoluble economic, administrative and cultural imbalances in the Western world and the accumulated deterioration that has taken place during the second decade and which has accelerated since 2020. The butterfly effect, when a seemingly isolated event or insignificant factor triggers a chain of devastating and deadly long-term consequences. And now Ukraine can become a butterfly effect for the western world. Even before the conflict, the system was very unstable and unsustainable. I explained this in great detail earlier. Another factor of uncertainty, supported by record commodity prices and logistical problems, could upset the system. It is we who are stable in the face of total isolation, fluctuations in the ruble exchange rate by 50%, a market collapse by 75%, with a rise in interest rates immediately by 1000 bp (10%), and the Western world can not withstand even another 25 bp of growth in interest rates. I recognize that with the current rapid development of events, in 3-5 years, the White House itself and the Fed, not only legally but also physically, may not exist.
The scale of the crisis in the Western world will be much larger than the Great Depression given the breaking point (the high base of decline) and the concentration of bubbles and imbalances. It will be a total, all-consuming apocalypse …
Pavel Spydell Ryabov2022-07-03