Scrapped Railway Project Could Derail Putin’s Arctic Ambitions

By The Jamestown Foundation - Feb 23, 2023

• Russian President Vladimir Putin has big plans for Arctic trade and development.
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• The Russian government has canceled a key railway project despite Putin’s repeated orders to the contrary.
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• The planned railway was a critical piece of infrastructure, and its cancelation could throw a wrench in Putin’s plans.

Moscow’s ability to develop its own resource-based economy, expand the Northern Sea Route, cement ties with China and support Vladimir Putin’s ambitions to project power into the Arctic depends on the development of land-based infrastructure in the northern regions of the Russian Federation (see EDM, April 29, 2016; September 11, 2018; December 6, 2018). Yet, that ability has now been called into question, as the Russian government has canceled, despite Putin’s repeated orders to the contrary, a program to complete the broad-gauge Northern Broad-Gauge Railway. The route was intended to link settlements that support the Northern Sea Route, military bases and the locations of key sources of raw materials across the Russian North with the rest of the country (see EDM, July 6, 2021; The Barents Observer, September 27, 2021; Ura.news, December 30, 2022, Svpressa.ru, February 19). Without such a rail line, in fact, Moscow will not be able to achieve its economic and geopolitical goals in the region, according to some Russian observers, as there simply are not enough alternative routes to support them (Ura.news, October 7, 2022; Regnum, August 30, 2022).

This planned railway is crucial due to the lack of other land-based infrastructure in the Russian North. At present, few regular highways exist in the region, and the melting of the permafrost makes constructing more roads extremely difficult, time-consuming and expensive (Profile.ru, December 22, 2022). The ice roads Russia has long relied on are now ever-more difficult to maintain and accessible for ever-fewer months of the year for the same reason (T.me/Torbozne_radio, January 4; Yakutiafuture.ru, January 6). And air carriers cannot make up the gap, not only in exporting tons of raw materials but also in supplying northern settlements, ports and bases. The number of airports in the Russian North has declined by more than 80 percent since the collapse of the Soviet Union (Window on Eurasia, February 15).

These dangers are already raising alarm among Russian economic and strategic thinkers. Indeed, their calculations and concerns help explain why Putin pressed for the Northern Railway in the first place. Now, with the project having been effectively axed, their worries are mounting. (For a comprehensive discussion of the economic and political impact of Russia’s broader infrastructure problems, see Profile.ru, July 25, 2022; for their specific impact on the military in the North, see Nezavisimoye voyennoye obozreniye, December 2, 2021). In a recent article, Aleksandr Shalak lays out the impact of particular challenges in the Arctic on the domestic economy and the growth of the Northern Sea Route (Jhist.bgu.ru, accessed February 22). He points out that settlements, bases and natural-resource sites in the Russia North require land-based infrastructure because the other routes cannot carry enough cargo. However, Shalak argues, Russia will not be able to handle more than 1 percent of Asia-Europe trade on the Northern Sea Route or otherwise project power into the Arctic Sea, regardless of what Russian leaders might be saying.

As a result, and with growing frequency in recent years, Russian officials have placed their hopes in the construction of a major railway across the Russian North. Discussion of such a line goes back to imperial times (Svpressa.ru, February 19; for general discussions of building railways in the north, largely on the model of the Trans-Siberian Railway, see Historicus.ru, accessed February 22). Actual construction began using Gulag prisoners at the end of Stalin’s rule, though it was suspended upon his death. And a new push for this line emerged in the past decade, with many brave words being said about what it would mean for the Russian North and the country more generally. But, in reality, little work was actually carried out on the ground. Now, even planning has been suspended, a development that makes it unlikely that, in this decade or the next, the Russian North will have the land-based infrastructure that Moscow needs if its hopes are to be realized.

What appears to be this project’s death knell, at least for the time being, is instructive in its own right. It occurred not with some dramatic single action by the Kremlin but in a rolling fashion as has often been the case with the backtracking of decisions under Putin. In April 2021, to much acclaim, the Russian president called for construction of the Northern Broad-Gauge Railway to begin, with the goal of completing the project in the next few years. Yet, despite Putin’s words, nothing happened, at least in part because of the COVID-19 pandemic, increased spending for his war against Ukraine and the impact of Western sanctions. Then, in 2022, Putin issued a new order for the project to go ahead. Again, nothing happened. Instead, less than a month later, Marat Khusnullin, a Russian deputy prime minister, quietly stopped all work on the project without giving anyone reason to think it would be resumed. Indeed, many Russian experts and commentators concerned with infrastructure issues believe that this railway plan has come to the end of its line, and one has even suggested that the cancellation of this project puts “a cross on the future of Russia” (Svpressa.ru, February 19).

Khusnullin, who announced the completion of half the project, is, as many have noted, a Kazan Tatar, and some in the Russian Federation think he made this decision to find funds to pay for one of his own pet projects: a super highway connecting Moscow and Kazan (Ura.news, December 30, 2022). But whatever his true intentions, the decision highlights two factors of enormous consequence in Russia today. On the one hand, it underscores the fact that, in today’s Moscow, junior officials can sabotage even a critical security-related infrastructure project that the Kremlin leader has made clear he is prioritizing. And on the other, it shows just how tight the Russian budget has become and how that is affecting even high-priority plans, such as those for the Arctic. This in turn means that most of what Putin has talked about in developing the Russian North is just that, talk. And alarmist reactions in the West reflect the fact that too much attention is paid to what Putin says and too little to what is actually happening after he says it. Unless money is found, and soon, to restart this project, Putin and Russia will have a difficult time trying to achieve their goals in the Arctic.

By the Jamestown Foundation

Rising Energy Prices Are Pushing Millions More People Into Poverty

By Felicity Bradstock - Feb 23, 2023

• The combination of a global economic and energy crisis has plunged millions of people into energy poverty, and food and energy prices are expected to keep climbing.
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• A recent study found that between 78 million and 141 million people around the world could be pushed into extreme poverty by rising energy prices.
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• Estimates suggest high energy prices have led to an increase in overall household expenditure of between 2.7% and 4.8%.

The energy and economic crises of 2022 plunged millions into poverty last year, with many people around the world struggling to pay their energy bills and contend with rising consumer costs. While Europe and other parts of the world made it through the winter with enough natural gas to power heating, lighting, and cooking, ongoing energy shortages and rising prices are expected to exacerbate energy poverty over the coming year. 

More and more people worldwide have been experiencing poverty in the face of continually rising energy bills, other high consumer costs, and inflation across several countries. And even more have experienced energy poverty, which means that many households do not have access to essential energy services and products, making them incapable of heating, cooling, and lighting their homes, as well as cooking – activities that are essential for maintaining a decent standard of living and helping to guarantee good health. 

It is thought that 35 million EU citizens, around 8% of the EU population, were unable to keep their homes adequately warm in 2020, a figure that has risen significantly, as energy costs have increased in the wake of the Russian invasion of Ukraine. And, in addition to those that fell into energy poverty last year, even more are expected to be hit hard by the ongoing energy and economic crises this year. A recent study found that around 141 million more people worldwide could be facing extreme poverty due to the rising costs of living. 

Energy costs for households around the globe are estimated to have risen by between 62.6% and 112.9% since the beginning of the Russia-Ukraine conflict. And with no end to the conflict in sight, and with ongoing supply chain disruptions, energy and food prices are expected to continue rising for at least the next two years. Estimates suggest that overall household expenditure increased by between 2.7% and 4.8%. Based on this rise, the study suggests that between 78 and 141 million people could be plunged not only into energy poverty but into extreme poverty. 

Yuli Shan, an author of the study, stated “High energy prices hit household finances in two ways: fuel price rises directly increase household energy bills, while energy inputs needed to produce goods and services push prices up for those products as well, and especially for food, which affects households indirectly.” He added, “Unaffordable costs of energy and other necessities will push vulnerable populations into energy poverty and even extreme poverty.” 

We are seeing rising energy poverty across Europe. In the Netherlands, Statistics Netherlands (CBS) and the Netherlands Organisation for Applied Scientific Research (TNO) mapped energy poverty and found that households living in energy poverty rose by approximately 90,000 from 2020 to 2022, from over 450,000 to more than 540,000. 

In the U.K., energy bills will rise by 40% in April after the government reduces its subsidy scheme. Energy prices in the U.K. increased from an annual average of $1,258 in 2020/21 to $3,019 as of October 2022, meaning that the government’s Energy Price Guarantee may have only partially subsidized household energy cost rises in this period. Research from National Energy Action (NEA) shows that over 6.7 million U.K. households are now living in energy poverty, a figure that has doubled since 2020.

Meanwhile, in Germany, it is thought that around one in four Germans are living in energy poverty, compared to one in six in 2018. This is disproportionately affecting the lower classes, with a lower-middle-class person being around twice as likely to become energy impoverished than around a year ago. While the German government has attempted to alleviate cost pressures on consumers by subsidizing energy for low-income households, as well as reducing the use of natural gas, through energy-saving measures and switching to different fuels, people are still being hit hard by rising consumer prices. 

Now, experts are putting pressure on governments and international bodies to introduce policies focused on the short-term alleviation of the energy cost burden on households and an acceleration of the long-term goal of transitioning to renewable energy. The authors of the study suggested that one of the main drivers for the current energy crisis is the ongoing global reliance on fossil fuels, which has led to energy insecurity due to the dependence on a select few oil- and gas-rich powers. 

Klaus Hubacek, another author of the poverty study, explained “This crisis is worsening energy poverty and extreme poverty worldwide. For poor countries, living costs undermine their hard-won gains in energy access and poverty alleviation. Ensuring access to affordable energy and other necessities is a priority for those countries, but short-term policies addressing the cost-of-living crisis must align with climate mitigation goals and other long-term sustainable development commitments.”

With energy shortages expected to continue throughout 2023, meaning even higher energy costs, exacerbated further by the global economic and cost-of-living crises, we can expect millions more to fall into poverty. To alleviate pressures on the consumer, governments will not only have to introduce policies to subsidize energy through windfall taxes and other schemes in the short term, but they will also have to accelerate the green transition to improve long-term energy security.

Which Countries Have Planned A Phase Out Of Gasoline Cars?

By ZeroHedge - Feb 23, 2023

• The European Union last week approved a law that will ban the sale of combustion engine cars in its member states from 2035.
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• In Norway, around 80 percent of new cars sold are already fully electric.
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• Not all lawmakers favor a full phase-out of gasoline powered vehicles, with some speaking out against the ambitious timeline.

The European Union last week approved a law that will ban the sale of combustion engine cars in its member states from 2035.

For Germany and Italy as well as for Romania, Bulgaria, the Czech Republic and Hungary, the new bill sets a first deadline for the sale of gasoline-powered cars.

However, as Statista's Katharina Buchholz reports, the current governments of the former two countries, however, have already spoken out against the ban - calling into question the timeline of the phase-out that climate scientists call absolutely necessary, but that could also face delays.

You will find more infographics at Statista

Other European Union countries had already embraced the phase-out of gasoline cars: The Netherlands, Belgium's Flanders region, Sweden, Greece and Slovenia are all looking to end the sale of gas-powered cars even earlier, between 2029 and 2030.

The only country in the world beating this is Norway, an electric mobility pioneer from outside of the European Union, where around 80 percent of new cars sold are already fully electric and 100 percent are scheduled to be in 2025.

Similarly, voluntarily formed blocks of uniform vehicle standards could be dissolved in the U.S. over the issue of combustion engine cars.

California in August set a phase-out date for new sales of these vehicles, also for 2035, and while 17 states had previously tied their vehicle standards to California's under the Federal Clean Air Act, several now want out. The states going along with California's decision (or expected to do so shortly) are Washington, Oregon, Connecticut, Massachusetts, New York, Vermont and Delaware— - fewer than half of California's former allies.

While hybrids were initially expected to be phased out as well in California, some advanced hybrids with large battery power will now be allowed. Other nations treating hybrids favorably in their phase-outs are Canada, Slovenia, Singapore and Japan,but most nations want them gone also by the time their ban date comes up.

Sri Lanka, on the other hand, has been setting the toughest goals of any country, issuing not just a phase-out of new gasoline car sales, but a full road ban for combustion engine cars, tuk-tuks and motorcycles by 2040. But the country has also attracted international attention in the recent past for issuing sweeping legislation whose implementation proved problematic. For some smaller countries without their own carmakers or their subsidiaries, a gas car phase-out can actually be easier to implement in some ways. Cape Verde, which along with many other nations around the globe signed the COP26 declaration to ban the sale of new combustion engine cars by 2040, internally set the goal to achieve this feat even earlier, by 2035. To do so, it would merely have to ban the import of gas-powered cars by that date.

By Zerohedge.com

 

Chemical Giant Enters U.S. Shale With $1.4 Billion Acquisition

By Tsvetana Paraskova - Feb 22, 2023

One of the world’s largest chemical makers, UK-based INEOS, has entered U.S. oil and gas production after agreeing to buy Eagle Ford assets from Chesapeake Energy for $1.4 billion, thus gaining access to cheaper natural gas.    

The deal marks INEOS Energy’s entry as an operator into the U.S. onshore oil and gas market, as it acquires 2,300 wells producing net 36,000 barrels of oil equivalent per day (boed). The acquisition, which includes production and exploration leases across 172,000 net acres, is expected to be completed in the second quarter of the year, with an effective date of October 2022.  

“The deal marks our entry into the US market and is another significant step in the INEOS Energy journey. Over the last two decades, US onshore oil and gas production has provided security of supply for the global market and competitive advantage for US industry,” INEOS Energy’s chairman Brian Gilvary said in a statement.

Chesapeake Energy, for its part, is on its way to exit the Eagle Ford basin as it plans to focus on the premium assets and returns it has in the Marcellus and Haynesville shale gas basins and gain more exposure to U.S. LNG exports.

“Today marks another important step on our path to exiting the Eagle Ford as we focus our capital on the premium rock, returns and runway of our Marcellus and Haynesville positions,” Chesapeake president and chief executive officer Nick Dell'Osso said in a statement.

“We are pleased to have secured an aggregate of $2.825 billion to date and remain actively engaged with other parties regarding the rest of our Eagle Ford position.”

Last month, Chesapeake Energy agreed to sell approximately 377,000 net acres and approximately 1,350 wells in the Brazos Valley region of its Eagle Ford asset, along with related property, plant, and equipment, to WildFire Energy I LLC for $1.425 billion.   

By Tsvetana Paraskova for Oilprice.com

Oil Major Eni Books Highest Annual Earnings In Over A Decade

By Tsvetana Paraskova - Feb 23, 2023, 

Italy’s Eni (NYSE: E) reported on Thursday its highest annual net profit in over a decade, joining other international oil majors in reporting high or record earnings for 2022 on the back of soaring oil and gas prices.

Eni’s adjusted net profit surged to $14.1 billion (13.3 billion euros) for 2022, up by $9.5 billion (9 billion euros) compared to 2021, due to a strong operating performance and higher results of equity-accounted entities, the Italian company said today.   

However, the slide in prices in the fourth quarter resulted in fourth-quarter earnings slowing from the previous quarter and in line with analyst forecasts, although they were nearly 50% higher than in Q4 2021. The slowdown in exploration and production in the fourth quarter sent Eni’s shares dipping by 3.6% in Milan mid-day and down by 4% in pre-market trade in New York.  

Commenting on Eni’s gas deals last year, chief executive officer Claudio Descalzi said, “During the year, we were able to finalize agreements and activities to fully replace Russian gas by 2025, leveraging our strong relationships with producing states and fast-track development approach to ramp-up volumes from Algeria, Egypt, Mozambique, Congo and Qatar.”

Despite a weaker performance for the fourth quarter, Eni joins the other international majors in reporting bumper annual profits for 2022.

Each of the world’s biggest oil and gas majors reported record profits for 2022 earlier this month, doubling their combined net earnings from 2021 and booking the best-ever year for Big Oil.

Combined, the net profits of Exxon, Chevron, BP, Shell, Equinor, and TotalEnergies surged to $219 billion for 2022, up from around $100 billion booked for 2021, as oil and gas prices surged following the Russian invasion of Ukraine and the majors raised oil and gas production to meet growing demand for oil and limited gas supply from Russia to Europe.

By Tsvetana Paraskova for Oilprice.com