The Navy’s Red Hill closure task force is cleaning up miles of pipelines in preparation for their eventual removal, a key step in efforts to shut down the facility for good.
“We’re on path, you know, making good progress, ” said Rear Adm. Marc Williams, the naval engineer that has been tasked with the day-to-day operations of the closure task force. “We’re now into seven of the 14 tanks that were operational.”
The underground fuel farm contains 20 massive tanks that were built to collectively store up to 250 million gallons of fuel at full capacity. Built during World War II, the facility was meant to protect the military’s Pacific fuel reserve from enemy attacks. A series of pipelines connect the tanks to Joint Base Pearl Harbor-Hickam, in what’s regarded as an engineering marvel.
But the unique underground nature of the facility also posed unique operating and maintenance challenges as it aged over eight decades. Those challenges persist as the Navy works to shut it down.
The Navy is currently working to remove residual fuel sludge from the pipeline through a process known as “pigging.” Steven Chow, an engineer with Naval Facilities Engineering Command Hawaii, explained the process gets its name from the “squealing ” sound it produces as teams work through the pipes.
“How this works, is like a squeegee, ” explained Chow as he showed a massive sponge-like object that Navy teams pull through the pipe with machinery to clear it out. He said “at the receiving end is where actually you’re going to have containment center. So as you pull the fluid through, it’ll be captured.”
Drew Suesse, an Environmental Protection Agency facilities engineer who lives in Kaimuki, has been checking the Navy’s work as it goes about the massive closure effort. He said “EPA has staff in the tunnels on-site, kind of continuously keeping an eye on the Navy’s progress.”
Suesse said that they are “continuing to address some of the unexpected site conditions that might be coming up, ” noting that with a facility that’s over 80 years old, “there’s always little quirks.”
The facility was built just 100 feet over a critical aquifer most of Oahu relies on for drinking water. For years the Navy insisted that wasn’t a problem, arguing that the facility was well maintained and that it was critical for national security despite several spills and mishaps.
But in 2021, fuel from the facility contaminated the Navy’s Oahu water supply that serves more than 93, 000 people. Thousands of residents reported serious rashes, gastrointestinal issues and other ailments.
Not long after, reports emerged showing that several military officials and personnel who had worked at the site had raised concerns about poor maintenance. The pipelines were badly corroded and many of the tanks hadn’t been inspected in years. Military officials admitted that the facility and pipeline would need heavy repairs and renovations to safely remove the millions of gallons of fuel inside.
The military established a task force of experts from across each military branch led by Vice Adm. John Wade that officially began operations in October 2022. Between repairs, planning and defueling, the mission took 18 months and removed the 104, 703, 574 gallons inside.
But the long-term closure and remediation is a whole separate beast.
“Every time we enter a tank, every time, it’s a learning evolution, ” Williams said. “We learn something new and use that to carry forward (and ) try to go faster, but we’re not worried about going faster for the sake of going faster … we’re not sacrificing thoroughness for expediency.”
Suesse said that “we’re kind of finding that every tank is a little bit of a snowflake, every one is a little bit different and unique … some of those tanks haven’t been opened in a number of years and so they’ve opened up the tanks and they found the kind of infrastructure that needs to be verified that it’s clean (and ) make sure there’s no fuel left in those tanks.”
A report released in November by the Pentagon’s Inspector General office on Red Hill found that records on the facility were, at best, spotty.
When Pentagon investigators visited JBPHH in 2022 and asked to see engineering drawings and schematics for the interconnected fuel system, they were directed to a technical library. Their report described it as “disorganized, with documents overflowing into the hallway, a lack of labeling, and piles of engineering drawings scattered on various tables.”
A Navy contractor told investigators there was no one on staff to “collect and integrate drawings from projects that changed the (fuel ) infrastructure over time.” Investigators wrote that they ultimately “determined that Navy officials did not have accurate and up to date as-built drawings of … tanks, pipelines, and supporting infrastructure.”
“There are some old legacy instrument wells that, you know, maybe we’re not made aware of, or didn’t have the greatest record keeping over 80 years, ” Suesse said. “So it is really important that we’re keeping an eye on that and making sure that those, like, originally unidentified things are drained or removed.”
Williams said that the pigging is taking care of much of the last immediate concerns. He said that “the remaining threat to the environment inside the facility is the trapped fuel in the pipeline, and that operation is capturing the vast majority of that. And then, really all that’s left from an environmental risk standpoint is the sludge, and sludge is immobile.”
But he added that it’s not something he’s taking lightly.
“It’s really just a matter of not letting complacency slip in, ” Williams said. “Because we’re going to be cutting pipeline out 5 to 10 feet at a time—10 miles of it.”
The long-term impact of Red Hill’s operations is hard to quantify. The ongoing closure is being watched carefully by local agencies and community groups.
Last month the Honolulu Board of Water Supply filed a federal civil tort complaint in the U.S. District Court of Hawaii in which it said it is suing the Navy over its handling of the leaks at and around Red Hill, particular harm that may have come to the aquifer. BWS has estimated the cost of past, current and future impacts from fuel leaks at $1.2 billion.
“The hard part is, is people want to see things go faster, but there is a very detailed process, ” Williams said. “There’s gonna be more data to collect, so that will drive decisions on the environmental side going forward … the environmental processes is a lengthy process now that that’s going to be measured in decades, not years.”
CALGARY, Alberta, April 25, 2024 (Newswire.com)
– MOBILTEX, a leader in innovative monitoring solutions for critical infrastructure, is proud to announce the successful completion of the ISO 9001:2015 certification for its Quality Management System. This achievement underscores MOBILTEX’s dedication to maintaining the highest standards of quality and efficiency within all areas of our business including engineering design, procurement, manufacturing, shipping, sales, service, and technical support.
Det Norske Veritas (DNV) awarded the certification following an extensive audit to ensure the MOBILTEX quality management policies and procedures meet the strict standards and guidelines under the new standard. The ISO 9001:2015 certification is a globally recognized standard that ensures organizations meet customers’ needs through an effective quality management system. MOBILTEX’s commitment to consistent quality and continuous improvement is at the core of its business operations.
Ed Quillty, CEO of MOBILTEX, remarked, “Achieving the ISO 9001:2015 certification is a testament to the ethos of excellence that every team member embodies. We are committed to deploying management systems that can meet the high standards our customers expect from our products and services.”
Geoff Maffett, Vice President of Operations at MOBILTEX, also commented on the certification, stating, “While MOBILTEX has always had a stellar reputation for quality and reliability, the ISO certification process has helped us assess and further refine our management system to meet or exceed the high standards of the global marketplace.”
This achievement highlights MOBILTEX’s ongoing initiatives to enhance customer satisfaction and business performance through systematic improvements and a robust quality management framework.
ABOUT MOBILTEX
MOBILTEX Data Ltd. [an XPV Water Partners company] is headquartered in Calgary, Alberta, Canada, and is proud to serve hundreds of industrial, municipal, and commercial customers around the globe — delivering mission-critical integrity monitoring solutions on over 260,000 kilometers of pipeline assets. MOBILTEX innovative field and cloud-connected technologies deliver significant operational, safety, and ESG benefits to Water Utilities, Energy, and Critical Infrastructure operations. As our reputation grows, we continue to invest and expand our patented IIoT and AI/ML advancements while leveraging 5G cellular and satellite communications across our portfolio. MOBILTEX is widely recognized in the industry for innovation, reliability, and our world-class service and support. For more information, visit www.mobiltex.com.
About XPV Water Partners
XPV Water Partners is comprised of experienced water entrepreneurs, operators, and investment professionals dedicated to make a difference in the water industry. XPV invests in and actively supports water-focused companies to enable them to grow and deliver value for all stakeholders. For more information, visit www.xpvwaterpartners.com.
Here are the takeaways from Putin’s sit-down with Carlson.
Putin isn’t done with his war
The main message Putin sought to convey to Americans: There’s no point helping Ukraine with more money and weapons. And Carlson, who has himself previously questioned U.S. support for Ukraine as it seeks to defend its people and its land in the face of Russia’s assault, was all too happy to help deliver that message.
“If you really want to stop fighting, you need to stop supplying weapons. It will be over within a few weeks. That’s it,” Putin claimed, adding that it was up to the U.S. to tell Ukraine to come to the negotiating table.
But that’s not really the full story, as Putin himself made clear in two telling responses to Carlson’s follow-up questions.
First, asked whether Russia had achieved its war aims, Putin said: “No. We haven’t achieved our aims yet because one of them is de-nazification.” The claim that Russia is seeking to “de-nazify” Ukraine is widely seen as code for the removal of the country’s democratically elected (Jewish) president, Volodymyr Zelenskyy. In a strong indication of what he meant by his comment, Putin said “we have to get rid of those people” who he claimed, without basis, “support” Nazism.
Second, when Carlson asked whether Putin would “be satisfied with the territory that you have now,” the Russian autocrat refused to respond, returning to his point about de-nazification and insisting he hadn’t yet finished answering the previous question. We’ll take that as another no.
DUBAI — The vast, global efforts to arrest rising temperatures are imperiled and must accelerate, U.S. Vice President Kamala Harris told the world climate summit on Saturday.
“We must do more,” she implored an audience of world leaders at the COP28 climate talks in Dubai. And the headwinds are only growing, she warned.
“Continued progress will not be possible without a fight,” she told the gathering, which has drawn more than 100,000 people to this Gulf oil metropolis. “Around the world, there are those who seek to slow or stop our progress. Leaders who deny climate science, delay climate action and spread misinformation. Corporations that greenwash their climate inaction and lobby for billions of dollars in fossil fuel subsidies.”
Her remarks — less than a year before an election that could return Donald Trump to the White House — challenged leaders to cooperate and spend more to keep the goal of containing global warming to 1.5 degrees Celsius within reach. So far, the planet has warmed about 1.3 degrees since preindustrial times.
“Our action collectively, or worse, our inaction will impact billions of people for decades to come,” Harris said.
The vice president, who frequently warns about climate change threats in speeches and interviews, is the highest-ranking face of the Biden White House at the Dubai negotiations.
She used her conference platform to push that image, announcing several new U.S. climate initiatives, including a record-setting $3 billion pledge for the so-called Green Climate Fund, which aims to help countries adapt to climate change and reduce emissions. The commitment echoes an identical pledge Barack Obama made in 2014 — of which only $1 billion was delivered. The U.S. Treasury Department later specified that the updated commitment was “subject to the availability of funds.”
Meanwhile, back in D.C., the Biden administration strategically timed the release of new rules to crack down on planet-warming methane emissions from the oil and gas sector — a significant milestone in its plan to prevent climate catastrophe.
The trip allows Harris to bolster her credentials on a policy issue critical to the young voters key to President Joe Biden’s re-election campaign — and potentially to a future Harris White House run.
“Given her knowledge base with the issue, her passion for the issue, it strikes me as a smart move for her to broaden that message out to the international audience,” said Roger Salazar, a California political strategist and former aide to then-Vice President Al Gore, a lifetime climate campaigner.
Yet sending Harris also presents political peril.
Biden has taken flak from critics for not attending the talks himself after representing the United States at the last two U.N. climate summits since taking office. And climate advocates have questioned the Biden administration’s embrace of the summit’s leader, Sultan al-Jaber, given he also runs the United Arab Emirates’ state-owned oil giant. John Kerry, Biden’s climate envoy, has argued the partnership can help bring fossil fuel megaliths to the table.
Harris has been on a climate policy roadshow in recent months, discussing the issue during a series of interviews at universities and other venues packed with young people and environmental advocates. The administration said it views Harris — a former California senator and attorney general — as an effective spokesperson on climate.
“The vice president’s leadership on climate goes back to when she was the district attorney of San Francisco, as she established one of the first environmental justice units in the nation,” a senior administration official told reporters on a call previewing her trip.
Joining Harris in Dubai are Kerry, White House climate adviser Ali Zaidi and John Podesta, who’s leading the White House effort to implement Biden’s signature climate law.
Biden officials are leaning on that climate law — dubbed the Inflation Reduction Act — to prove the U.S. is doing its part to slash global emissions. Yet climate activists remain skeptical, chiding Biden for separately approving a series of fossil fuel projects, including an oil drilling initiative in Alaska and an Appalachian natural gas pipeline.
Similarly, the Biden administration’s opening COP28 pledge of $17.5 million for a new international climate aid fund frustrated advocates for developing nations combating climate threats. The figure lagged well behind other allies, several of whom committed $100 million or more.
Nonetheless, Harris called for aggressive action in her speech, which was followed by a session with other officials on renewable energy. The vice president committed the U.S. to doubling its energy efficiency and tripling its renewable energy capacity by 2030, joining a growing list of countries. The U.S. also said Saturday it was joining a global alliance dedicated to divorcing the world from coal-based energy.
Like other world leaders, Harris also used her trip to conduct a whirlwind of diplomacy over the war between Israel and Hamas, which has flared back up after a brief truce.
U.S. National Security Council spokesperson John Kirby said Harris would be meeting with “regional leaders” to discuss “our desire to see this pause restored, our desire to see aid getting back in, our desire to see hostages get out.”
The war has intruded into the proceedings at the climate summit, with Israeli President Isaac Herzog and Palestinian Authority leader Mahmoud Abbas both skipping their scheduled speaking slots on Friday. Iran’s delegation also walked out of the summit, objecting to Israel’s presence.
Kirby said Harris will convey “that we believe the Palestinian people need a vote and a voice in their future, and then they need governance in Gaza that will look after their aspirations and their needs.”
Although Biden won’t be going to Dubai, the administration said these climate talks are “especially” vital, given countries will decide how to respond to a U.N. assessment that found the world’s climate efforts are falling short.
“This is why the president has made climate a keystone of his administration’s foreign policy agenda,” the senior administration official said.
Robin Bravender reported from Washington, D.C. Zia Weise and Charlie Cooper reported from Dubai.
Sara Schonhardt contributed reporting from Washington, D.C.
This article is part of the Road to COP special report, presented by SQM.
LONDON — World leaders will touch down in Dubai next week for a climate change conference they’re billing yet again as the final off-ramp before catastrophe. But war, money squabbles and political headaches back home are already crowding the fate of the planet from the agenda.
The breakdown of the Earth’s climate has for decades been the most important yet somehow least urgent of global crises, shoved to one side the moment politicians face a seemingly more acute problem. Even in 2023 — almost certainly the most scorching year in recorded history, with temperatures spawning catastrophic floods, wildfires and heat waves across the globe — the climate effort faces a bewildering array of distractions, headwinds and dismal prospects.
“The plans to achieve net zero are increasingly under attack,” former U.K. Prime Minister Theresa May, who set her country’s goal of reaching climate neutrality into law, told POLITICO.
The best outcome for the climate from the 13-day meeting, which is known as COP28 and opens Nov. 30, would be an unambiguous statement from almost 200 countries on how they intend to hasten their plans to cut fossil fuels, alongside new commitments from the richest nations on the planet to assist the poorest.
But the odds against that happening are rising. Instead, the U.S. and its European allies are still struggling to cement a fragile deal with developing countries about an international climate-aid fund that had been hailed as the historic accomplishment of last year’s summit. Meanwhile, a populist backlash against the costs of green policies has governments across Europe pulling back — a reverse wave that would become an American-led tsunami if Donald Trump recaptures the White House next year.
And across the developing world, the rise of energy and food prices stoked by the pandemic and the Ukraine war has caused inflation and debt to spiral, heightening the domestic pressure on climate-minded governments to spend their money on their most acute needs first.
Even U.S. President Joe Biden, whose 2022 climate law kicked off a boom of clean-energy projects in the U.S., has endorsed fossil fuel drilling and pipeline projects under pressure to ease voter unease about rising fuel costs.
Add to all that the newest Mideast war that began with Hamas’ attack on Israel on Oct. 7.
On the upside, investment in much of the green economy is also surging. Analysts are cautiously opining that China’s emissions may have begun to decline, several years ahead of Beijing’s schedule.And the Paris-based International Energy Agency projects that global fossil fuel demand could peak this decade, with coal use plummeting and oil and gas plateauing afterward. Spurring these trends is a competition among powers such as China, the United States, India and the European Union to build out and dominate clean-energy industries.
But the fossil fuel industry is betting against a global shift to green, instead investing its profits from the energy crisis into plans for long-term expansion of its core business.
The air of gloom among many supporters of global climate action is hard to miss, as is the sense that global warming will not be the sole topic on leaders’ minds when they huddle in back rooms.
“It’s getting away from us,” Tim Benton, director of the Chatham House environment and society center, said during a markedly downbeat discussion among climate experts at the think tank’s lodgings on St James’ Square in London earlier this month. “Where is the political space to drive the ambition that we need?”
Fog of war
The most acute distraction from global climate work is the war between Israel and Hamas in Gaza. The conflagration is among many considerations the White House is weighing in Biden’s likely decision not to attend the summit, one senior administration official told POLITICO this month. Other leaders are also reconsidering their schedules, said one senior government official from a European country, who was granted anonymity to speak about the sensitive diplomacy of the conference.
The war is also likely to push its way onto the climate summit’s unofficial agenda: Leaders of big Western powers who are attending will spend at least some of their diplomatically precious face-time with Middle East leaders discussing — not climate — but the regional security situation, said two people familiar with the planning for COP28 who could not be named for similar reasons. According to a preliminary list circulated by the United Arab Emirates, Israeli President Isaac Herzog or Prime Minister Benjamin Netanyahu will attend the talks.
A threat even exists that the conference could be canceled or relocated, should a wider regional conflict develop, Benton said.
The UAE’s COP28 presidency isn’t talking about that, at least publicly. “We look forward to hosting a safe, inclusive COP beginning at the end of November,” said a spokesperson in an emailed statement. But the strained global relations have already thrown the location of next years’ COP29 talks into doubt because Russia has blocked any EU country from hosting the conference, which is due to be held in eastern or central Europe.
The upshot is that the bubble of global cooperation that landed the Paris climate agreement in 2015 has burst. “We have a lot of more divisive narratives now,” Laurence Tubiana, the European Climate Foundation CEO who was one of the drafters of the Paris deal, said at the same meeting at Chatham House.
The Ukraine war and tensions between the U.S. and China in particular have widened the gap between developed and developing countries, Benton told POLITICO in an email.
Now, “the Hamas-Israel war potentially creates significant new fault lines between the Arab world and many Western countries that are perceived to be more pro-Israeli,” he said. “The geopolitical tensions arising from the war could create leverage that enables petrostates (many of which are Muslim) to shore up the status quo.”
Add to that the as yet unknown impact on already high fossil fuel commodity prices, said Kalee Kreider, president of the Ridgely Walsh public affairs consultancy and a former adviser to U.S. Vice President Al Gore. “Volatility doesn’t usually help raise ambition.”
The Biden administration’s decisions to approve a tranche of new fossil fuel production and export projects will undermine U.S. diplomacy at COP28, said Ed Markey, a Democratic U.S. senator from Massachusetts.
“You can’t preach temperance from a barstool, and the United States is running a long tab,” he said.
U.N. climate talks veterans have seen this program before. “No year over the past three decades has been free of political, economic or health challenges,” said former U.N. climate chief Patricia Espinosa, who now heads the consulting firm onepoint5. “We simply can’t wait for the perfect conditions to address climate change. Time is a luxury we no longer have — if we ever did.”
The EU backlash
Before the Mideast’s newest shock to the global energy system, the war in Ukraine exposed Europe’s energy dependence on Russia — and initially galvanized the EU to accelerate efforts to roll out cleaner alternatives.
But in the past year, persistent inflation has worn away that zeal. Businesses and citizens worry about anything that might add to the financial strain, and this has frayed a consensus on climate change that had held for the past four years among left, center and center right parties across much of the 27-country bloc.
In recent months, conservative members of the European Parliament have attacked several EU green proposals as excessive, framing themselves as pragmatic environmentalists ahead of Europe-wide elections next year. Reinvigorated far-right parties across the bloc are also using the green agenda to attack more mainstream parties, a trend that is spooking the center.
Germany’s government was almost brought down this year by a law that sought to ban gas boilers — with the Greens-led economy ministry retreating to a compromise. In France, President Emmanuel Macron has joined a growing chorus agitating for a “regulatory pause” on green legislation.
If Europe’s struggles emerge at COP28, the ripple effect could be global, said Simone Tagliapietra, a senior fellow at the Brussels-based Bruegel think tank.
The “EU has established itself as the global laboratory for climate neutrality,” he said. “But now it needs to deliver on the experiment, or the world (which is closely watching) will assume this just does not work. And that would be a disaster for all of us.”
U.K. retreats
The world is also watching the former EU member that stakes a claim to be the climate leader of the G7: the U.K.
London has prided itself on its green credentials ever since former Prime Minister May enacted a 2019 law calling for net zero by 2050 — making her the first leader of a major economy to do so.
According to May’s successor Boris Johnson, net zero was good for the planet, good for voters, good for the economy. But under current Prime Minister Rishi Sunak, the messaging has transformed. Net zero remains the target — but it comes with a “burden” on working people.
In a major speech this fall, Sunak rolled back plans to ban new petrol and diesel car sales by 2030, bringing the U.K. into line with the EU’s 2035 date. With half an eye on Germany’s travails, he said millions of households would be exempted from the gas boiler ban expected in 2035.
In making his arguments for a “pragmatic” approach to net zero, Sunak frequently draws on the talking points of net zero-skeptics. Why should the citizens of the U.K., which within its own borders produces just 1 percent of global emissions, “sacrifice even more than others?”
The danger, said one EU climate diplomat — granted anonymity to discuss domestic policy of an allied country — was that other countries around the COP28 negotiating table would hear that kind of rhetoric from a capital that had led the world — and repurpose it to make their own excuses.
Sunak’s predecessor May sees similar risks.
“Nearly a third of all global emissions originate from countries with territorial emissions of 1 per cent or less,” May said. “If we all slammed on the brakes, it would make our net zero aspirations impossible to achieve.”
Trump’s back
The U.S., the largest producer of industrial carbon pollution in modern history, has been a weathervane on climate depending on who controls its governing branches.
When Republicans regained control of the U.S. House of Representatives in 2022, it created a major drag on Biden’s promise to provide $11.4 billion in annual global climate finance by 2024.
Securing this money and much more, developing countries say, is vital to any progress on global climate goals at COP28. Last year, on the back of the pandemic and the energy price spike, global debt soared to a record $92 trillion. This cripples developing countries’ ability to build clean energy and defend themselves against — or recover from — hurricanes, floods, droughts and fires.
Even when the money is there, the politics can be challenging. Multibillion-dollar clean energy partnerships that the G7 has pursued to shift South Africa, Indonesia, Vietnam and India off coal power are struggling to gain acceptance from the recipients.
Yet even more dire consequences await if Trump wins back the presidency next year.
A Trump victory would put the world’s largest economy a pen stroke away from quitting the Paris Agreement all over again — or, even more drastically, abandoning the entire international regime of climate pacts and summits. The thought is already sending a chill: Negotiations over a fund for poorer countries’ climate losses and damage, which Republicans oppose, include talks on how to make its language “change-of-government-proof” in light of a potential Trump victory, said Michai Robertson, lead finance negotiator for a bloc of island states.
More concretely for reining in planet-heating gases, Trump would be in position to approve legislation eliminating all or part of the Inflation Reduction Act. Biden’s signature climate law included $370 billion in incentives for clean energy, electric vehicles and other carbon-cutting efforts – though the actual spending is likely to soar even higher due to widespread interest in its programs and subsidies – and accounts for a bulk of projected U.S. emissions cuts this decade.
House Republicans have attempted to claw back parts of Biden’s climate law several times. That’s merely a political messaging effort for now, thanks to a Democrat-held Senate and a sure veto from Biden, but the prospects flip if the GOP gains full control of Congress and White House.
Under a plan hatched by Tubiana and backed by former New York Mayor Michael Bloomberg, countries would in the future log their state and local government climate plans with the U.N., in an attempt to undergird the entire system against a second Republican blitzkrieg.
The U.S. isn’t the only place where climate action is on the ballot, Benton told the conference at Chatham House on Nov. 1.
News on Sunday that Argentina had elected as president right-wing populist Javier Milei — a Trump-like libertarian — raised the prospect of a major Latin American economy walking away from the Paris Agreement, either by formally withdrawing or by reneging on its promises.
Elections are also scheduled in 2024 for the EU, India, Pakistan, Taiwan, Sri Lanka, Indonesia and Russia, and possibly the U.K.
“A quarter of the world’s population is facing elections in the next nine months,” he said. “If everyone goes to the right and populism becomes the order of the day … then I won’t hold out high hopes for Paris.”
Zack Colman reported from Washington, D.C. Suzanne Lynch also contributed reporting from Brussels.
This article is part of the Road to COP special report, presented by SQM.The article is produced with full editorial independence by POLITICO reporters and editors. Learn more about editorial content presented by outside advertisers.
In the early morning of the last day of August, Parisians experienced for the first time a practice normally confined to tropical regions — authorities fumigating the city against the tiger mosquito. The event was a tangible confirmation of what public health stats already showed: Dengue, the deadly mosquito-borne disease, had well and truly arrived in Europe.
In 2022, Europe saw more cases of locally acquired dengue than in the whole of the previous decade. The rise marks both a public health threat and a corresponding market opportunity for dengue vaccines and treatments; news that should spur the pharma industry to boost investment into the neglected disease.
On the face of it, this shift would appear to benefit not only countries like France but also nations like Bangladesh and the Philippines that have long battled dengue.
But that assumption could be fatally flawed, experts told POLITICO.
People working in the field say the rise of dengue in the West could, in fact, make it harder to get lifesaving drugs to those who need them most, because pharma companies develop tools that are less effective in countries where the dengue burden is the highest or because wealthy nations end up hoarding these medicines and vaccines.
“It might look like a good thing — and it is a good thing — that we’re getting more products developed, but does it then create a two-tier system where high-income populations get access to it and then we still have the access gap for low- and middle- income countries?” asked Lindsay Keir, director of the science and policy advisory team at think tank Policy Cures Research.
Killer invading mosquitoes
Climate change and migration mean the mosquitoes that transmit dengue, as well as other diseases such as chikungunya and Zika, are setting up shop in Europe. The most recent annual data from the European Centre for Disease Prevention and Control shows that, in 2022, Europe saw 71 cases of locally acquired dengue: 65 in France and six in Spain.
While dengue usually results in mild or no symptoms, it can also lead to high fever, severe headache and vomiting. Severe dengue can cause bleeding from the gums, abdominal pain and, in some cases, death.
So far, the mosquito has mostly been confined to Southern Europe but it’s a worry across the Continent. In Belgium, the national public health research institute Sciensano has even launched an app where members of the public can submit photos of any Asian tiger mosquitos they spot.
The diseases spread by these mosquitoes have traditionally fallen under the umbrella of neglected tropical diseases, a group of infections that affect mainly low-income countries and struggle to attract research and development investment. But this is changing.
Policy Cures Research, which publishes an annual report on R&D investment into neglected diseases, removed dengue vaccines from their assessment in 2013. Dengue was no longer seen as an area where there was market failure, due to the emergence of a market that the private sector could tap into.
The organization is still tracking dengue drugs and biologics and their 2022 analysis showed a 33 percent increase in funding for research into non-vaccine products compared to the previous year, with industry investment reaching a record high of $28 million.
Climate change and migration mean the mosquitoes that transmit dengue, as well as other diseases such as chikungunya and Zika, are setting up shop in Europe | Lukas Schulze/Getty Images
Sibilia Quilici, executive director of the vaccine maker lobby group Vaccines Europe, said the most recent pipeline review of members found that roughly 10 percent were targeting neglected diseases. There is more R&D happening in this area, said Quilici.
Across the major drugmakers, J&J is working on a dengue antiviral treatment and MSD has a dengue vaccine in their pipeline, while Sanofi has a second yellow fever jab in development. Two dengue vaccines are already approved in the EU — one from Sanofi and another from Takeda. Moderna recently told POLITICO that it is looking closely at a dengue vaccine candidate and it already has a Zika candidate in the works.
For the few, not the many
But just because there might soon be larger markets for Big Pharma doesn’t mean the products will be suitable for the populations that have been waiting years for these tools.
Rachael Crockett, senior policy advocacy manager at the non-profit Drugs for Neglected Diseases initiative (DNDi), said increased pharma investment in a particular disease won’t necessarily lead to products developed that are globally relevant. “Industry will — and governments are also more likely to — focus on prevention,” she said.
That means tools such as vaccines will be prioritized; but in countries where dengue is endemic, the rainy season completely overburdens their health systems and what they desperately need are treatments, said Crockett.
She also said a massive increase in investment without a structure to ensure access to resulting products means “we have absolutely no guarantee that there isn’t going to be hoarding, [that] there isn’t going to be high prices.” Case in point: The U.S. national stockpile of Ebola vaccines, which exists despite there never having been an Ebola outbreak in the country.
But just because there might soon be larger markets for Big Pharma doesn’t mean the products will be suitable for the populations that have been waiting years for these tools | Noel Celis/AFP via Getty Images
Underlying many of these fears are the mistakes of the COVID-19 pandemic, which saw countries with less cash and political heft at the back of the queue when it came to vaccines.
Lisa Goerlitz, head of German charity Deutsche Stiftung Weltbevölkerung (DSW)’s Brussels office, warned if drug development picks up because of a growing market in high-income countries, then accessibility, affordability and other criteria that make it suitable for low resource settings might not be prioritized.
Vaccines Europe’s Quilici sought to allay these concerns, pointing to the pharma industry’s Berlin Declaration, a proposal to reserve an allocation of real-time production of vaccines in a health crisis. Quilici said this was a “really strong commitment …which comes right from the lessons learnt from COVID-19 and which could definitely overcome the challenges we had during the pandemic, if it is taken seriously.”
CORRECTION: This article has been updated to correct the spelling of Lisa Goerlitz.
Kyiv is unlikely to renew a gas transit deal that allows Russia’s Gazprom to export natural gas to the EU using pipelines running across Ukraine, Energy Minister German Galushchenko told POLITICO.
The 2019 transit deals runs until the end of 2024 and allows Gazprom to export more than 40 million cubic meters of gas a year via Ukraine, which earns Kyiv about $7 billion.
“I believe, by the winter of 2024, Europe will not need Russian gas at all,” Galushchenko said in a telephone interview. “If now profits from Russian gas pay for Russia’s war of aggression against Ukraine and Gazprom’s private army, the only thing they should pay for in the future shall be reparations.”
He added that the war means “bilateral negotiations are impossible.”
The land route across Ukraine is one of only two pipeline links between Russia and the West. It still accounts for around 5 percent of the bloc’s gas imports, but that’s only a third of the prewar level.
It’s not only Ukraine that’s casting doubt on the future of gas transit.
Gazprom chief Alexei Miller warned last week his company will stop exports if Ukraine doesn’t drop its efforts to seize Russian state assets to enforce a $5 billion award for the energy infrastructure Moscow illegally expropriated when it annexed Crimea in 2014. Gazprom and Ukraine’s Naftogaz are also at loggerheads over a dispute on transit fees.
“If Naftogaz continues such unfair actions, it cannot be ruled out that the Russian Federation will impose sanctions. Then, any relations between Russian companies and Naftogaz will be simply impossible,” Miller said, according to the TASS news agency.
Despite the bombs, missiles and drones wreaking havoc on Ukrainian energy infrastructure, the web of pipelines has kept pumping gas to the EU — where it ends up mainly in Austria, Slovakia, Italy and Hungary.
Russian pipeline gas is not subject to sanctions but the European Commission has plans to end the bloc’s reliance on Moscow’s fossil fuels by 2027.
However, there is growing criticism the EU countries still using Russian gas aren’t moving fast enough to diversify. Austria’s Russian gas imports are back to prewar levels. Hungary gets around 4.5 billion cubic meters a year. In April, its government signed a deal with Gazprom to secure additional volumes.
Kyiv ending the gas deal could cause problems for those countries.
“If Ukrainian transit stops, Gazprom pipeline gas deliveries to EU countries could drop to between 10 and 16 billion cubic meters (45 to 73 percent of current levels),” said a June analysis by Columbia University’s Center on Global Energy Policy. That could leave Europe with a shortfall in 2025 before additional liquefied natural gas capacity from the U.S. and Qatar comes online.
“For Europe as a whole, it’s pretty manageable. But for some countries at the end of the pipeline, Austria, Hungary and so on, the picture is a bit different,” said Georg Zachmann, senior fellow at economic think tank Bruegel. “We’d have to see a reshuffle of physical capacities, physical flows. That might come with additional cost for them.”
It would represent a much more permanent potential break with Moscow.
“Keeping the thing alive means there’s maybe a chance in the future to go back to that. But if the flows are stopped there’s a risk it’s going to be completely dismantled, and the privilege these countries had in the past of getting access to cheap Siberian gas is going to be gone forever,” Zachmann said.
Ukraine’s long-term goal is to boost its own gas production to meet EU demand, Oleksiy Chernyshov, CEO of Naftogaz, told POLITICO in May.
It’s an hour before dawn breaks over the North Sea. Aboard the KV Bergen, the officer of the watch is wide awake.
The 93-meter long Norwegian Navy Coast Guard vessel is on patrol, 50 miles out to sea. The sky is dark, the sea darker. But off the starboard bow, bright lights gleam through the rain and mist. Something huge and incongruous is looming out of the water, lit like a Christmas display.
“Troll A,” says Torgeir Standal, 49, the ship’s second in command, who is taking the watch on this bleak March morning.
It’s a gas platform — a big one.
When it was transported out to this desolate spot nearly 30 years ago, Troll A — stretching 472 meters from its seabed foundations to the tip of its drilling rig — became the tallest structure ever moved by people across the surface of the Earth. Last year, Troll, the gas field it taps into, provided 10 percent of the EU’s total supply of natural gas — heating homes, lighting streets, fueling industry.
“There are many platforms here,” says Standal, standing on the dark bridge of the Bergen, his face illuminated by the glow from the radar and satellite screens on his control panel. “And thousands of miles of pipeline underneath.”
And that’s why the Bergenhas come to this spot today.
In September 2022, an explosion on another undersea gas pipeline nearly 600 miles away shook the world. Despite three ongoing investigations, there is still no official answer to the question of who blew up the Nord Stream pipe. But the fact that it could happen at all triggered a Europe-wide alert.
The Norwegian Navy’s KV Bergen, seen in the background, after departing from the port of Bergen
Against a backdrop of growing confrontation with Moscow over its brutal invasion of Ukraine and its willingness to use energy as a weapon, the vulnerability of the undersea pipes and cables that deliver gas, electricity and data to the Continent — the vital arteries of comfortable, modern European life — has been starkly exposed.
In response, Norway, alongside NATO allies, increased naval patrols in the North Sea — an area vital for Europe’s energy security. The presence of the Bergen, day and night, in these unforgiving waters, is part of the effort to remain vigilant. The task of the men and women on board is to keep watch on behalf of Europe — and to stop the next Nord Stream attack before it happens.
The officers of the watch
But what are they looking for?
In recent weeks the Bergen has tracked the movements of a Russian military frigate through the North Sea — something that it has to do “several times every year,” says Kenneth Dyb, 47, the skippsjef, or commander of the ship.
The Russians have a right to sail through these seas out to the Atlantic, and it is very unlikely Moscow would be so brazen as to openly attack a gas platform or a pipeline. But, says Dyb, as his ship steams west to another gas and oil field, Oseberg, “it’s important to show that we are present. That we are watching.”
Recent reports that Russian naval ships — with their trackers turned off — were present near the site of the Nord Stream blasts in the months running up to the incident have reinforced the importance of having extra eyes on the water itself.
The Oseberg oil and gas field, 130 kilometers north-west of Bergen
Of course, the gas didn’t come for free. Norway has profited hugely from the spike in gas and oil prices that followed Putin’s invasion of Ukraine. The state-owned energy giant Equinor made a record $75 billion profit in 2022. Oslo is sensitive to accusations of war profiteering — and keen to show Europe that it cares about its neighbors’ energy security as much as it cares about their cash.
But the threat to the pipelines could also be more low-key. One of the many theories about the Nord Stream attack is that it was carried out by a small group of divers, operating from an ordinary yacht. In such a scenario, something as seemingly innocent as a ship suddenly going stationary, or following an unaccustomed course through the water, could be suspicious. The Bergen’s crew have the authority to board and inspect vessels that its crew consider a cause for concern.
Russia’s covert presence in these waters has been acknowledged by Norway’s intelligence services in recent weeks. A joint investigation by the public broadcasters in Norway, Sweden, Denmark and Finland uncovered evidence of civilian vessels, such as fishing ships, being used for surveillance activities. This is something that has been “going on forever,” according to Ståle Ulriksen, a researcher at the Royal Norwegian Naval Academy, but it has increased in intensity in recent years.
“We always look for oddities, anything that is unusual, like new ships in the area that have not been here before,” says Magne Storebø, 26, senior petty officer, as he takes the afternoon watch on the bridge later that day.
The sky is leaden and the horizon lost in cloud. Coffee in hand, Storebø casts his eye over the radar and satellite screens as giant windscreen wipers whip North Sea spray from the floor-to-ceiling windows. There are few ships around, all of them familiar to the crew; service vessels plying back and forth from the gas and oil platforms.
The Nord Stream incident and the new security situation has changed the way Storebø thinks about his work, he says.
He is “more aware of the consequences suspicious vessels could have,” he says. “More awake, you could say.”
Senior Petty Officer Magne Storebø keeps watch from the bridge
Soft-spoken and calm beyond his years, Storebø is philosophical about the potential dangers of his work. He has been in the Navy for four years, in which time war has broken out on the European continent and the threat to his home waters has come into sharp focus.
“If you are going to put a rainy cloud over your head and bury yourself down, I don’t think the Navy or the coastguard is the right place to work in,” he says in conversation with two shipmates later that day. “You need to adjust and to look in a positive direction — and to be ready in case things don’t go that way.”
Energy war round two
As Europe emerges from the first winter of its energy war with Russia, its gas supplies have held up better than almost anyone expected.
But as the Continent braces for next winter, the risk of another Nord Stream-style attack to a key pipeline is taken seriously at the highest levels of leadership.
“Things look OK for gas security now,” said one senior European Commission official, speaking on condition of anonymity to discuss sensitive matters of energy security. “But if Norway has a pipeline that blows up, we are in a different situation.”
EU policymakers see four key risks to gas security going into next winter, the senior official added: exceptionally cold weather; a stronger-than-expected Chinese economic recovery hoovering up global gas supply; Russia cutting off the remaining gas it sends to Europe; and last but not least, an “incident” affecting energy infrastructure.
Such an event might not only threaten supply but could potentially spark panic in the gas market, as seen in 2022, driving up prices and hitting European citizens and industries in the wallet. And nowhere is the potential for harm greater than in the North Sea.
Norway is now Europe’s biggest single supplier of gas. After Russian President Vladimir Putin and the energy giant Gazprom shut off supply via Nord Stream and other pipelines, Norway stepped up its own production in the North Sea, delivering well over 100 billion cubic meters to the EU and the U.K. in 2022. European Commission President Ursula von der Leyen visited Troll A herself in March this year — the first visit of a Commission president to Norway since 2011 — to personally thank the country’s president, Jonas Gahr Støre, for supplies that “helped us through the winter.”
“We have a huge responsibility, supplying the rest of Europe with energy,” Defense Minister Bjørn Arild Gram told POLITICO. “To be a stable, reliable producer of energy, of gas, is an important role for us and we take that very seriously. That is why we are also doing so much to protect this infrastructure.”
The vast majority of that gas is transported into northwest Europe via a complex network of seabed pipes — more than 5,000 miles of them in Norway’s jurisdiction alone. The North Sea has an average depth of just 95 meters. That’s not much deeper than the Nord Stream pipes at the location they were attacked.
“It actually doesn’t take a particularly sophisticated capability to attack a pipeline in relatively shallow waters,” says Sidharth Kaushal, research fellow at the Royal United Services Institute think tank in the U.K. A small vessel, “some divers and an [explosive] charge” are all it could take, Kaushal says.
The navy chief
After the Nord Stream incident in September, suspicion instantly fell on Russia. Moscow has a record of operating in the so-called gray zone — committing hostile acts short of warfare, often covertly.
To date, the three investigations looking into the incident have yet to confirm that suspicion. But European governments — and their militaries — are not taking any chances.
In the days immediately following the explosions, NATO navy chiefs started calling each other to try to coordinate efforts to protect energy infrastructure, says Rune Andersen, the chief of Norway’s navy, speaking to POLITICO at Haakonsvern naval base, before the KV Bergen’svoyage.
Everyone had the same thought, he says. “If that happens in the North Sea, we will have a problem.”
Andersen joined the Navy as a young man in 1988, in the last days of the Cold War. Now 54, he is used to the Russian threat overshadowing Norway’s and Europe’s security.
“After decades of attempts to integrate or cooperate with Russia, we now have war in Europe. We see that our neighbor is brutal and willing to use military force,” he says grimly. “I worked in the Navy in the ’90s when it was enduring peace and partnership on the agenda. We are back to a situation where our job feels more meaningful — and necessary.”
Kenneth Dyb, the skippsjef, or commander of the ship
However, he points out, his own forces have so far not seen any Russian movements or operations “that are different to what they were before” the Nord Stream attacks. “The job we are doing is precautionary, rather than tailored to any specific threat,” he adds.
Even so, those early discussions with NATO allies have now formalized into daily coordination via the Allied Maritime Command headquarters in the U.K., to ensure there are always NATO ships on hand that can act as “first responders” to potential incidents. British, German and French ships have joined their Norwegian counterparts in the monitoring and surveillance effort.
It is “by nature challenging” to protect every inch of pipeline, all of the time, Andersen says.
The role of the Bergen and ships like it, he adds, is just “one bit of the puzzle.” Simply by their presence at sea, these ships increase the chances of catching would-be saboteurs in the act, and hopefully deter them from trying in the first place.
The goal, in other words, is to reduce the size of the “gray zone” — or to “increase the resolution” of the navy’s picture of the activity out on the North Sea, as Andersen puts it.
In collaboration with the energy companies and pipeline operators, unmanned underwater vehicles — drones — using cameras and high-resolution sonar have been used, Andersen says, to “map the micro-terrain” around pipelines. These are sensitive enough to spot an explosive charge or other signs of foul play.
Equinor, alongside the pipeline operator Gassco, has carried out a “large inspection survey” of its undersea pipeline infrastructure, a company spokesperson says. The survey revealed “no identified signs of malicious activities” but pipeline inspections are ongoing “continuously.”
Senior Petty Officer Simen Strand speaks to the crew. “We haven’t had much to fear in the past. We are probably less naïve nowadays,” he says.
Perhaps understandably, the heightened level of alert has led to the occasional false alarm. A spate of aerial drone sightings near Norwegian energy infrastructure around the time of the Nord Stream attacks last year included a report of a suspicious craft circling above Haakonsvern naval base itself.
“After a while, we concluded it was a seagull,” says Andersen, with the shadow of a grin.
Europe on alert
The navy chief is nonetheless deadly serious about the potential threat. A Nord Stream-style attack in the North Sea is possible. Anderson will not be drawn on the most vulnerable points in the network, saying only that “easy to access” places and “key hubs” are “two things in the back of mind when we think [about] risk.”
Throughout Europe, the alert has been raised. This month, NATO warned of a “significant risk” that Russia could target undersea pipelines or internet cables as part of its confrontation with the West.
Several countries are increasing patrols and underwater surveillance capabilities. The British Royal Navy accelerated the purchase of two specialist ocean surveillance ships, the first of which will be operational this summer. The EU and NATO have established a new joint task force focusing on critical infrastructure protection, and a “coordination cell” has been established at NATO headquarters in Brussels to improve “engagement with industry and bring key military and civilian stakeholders together” to keep the cables and pipelines secure.
Norway — and Europe — are in this struggle for the long haul, Andersen believes.
Indeed, even as Europe transitions from fossil fuels to green energy, the North Sea will remain a vital powerhouse of offshore wind energy, with plans for a huge expansion over the next 25 years. Earlier this year, the Netherlands’ intelligence services reported a Russian ship seeking to map wind farm infrastructure in the Dutch sector of the North Sea. “We think the Russians wanted to investigate the possibilities for potential future sabotage,” Jan Swillens, head of the Dutch Military Intelligence and Security Service tells POLITICO in an emailed statement. “This incident makes clear that these kinds of Russian operations are performed closer than one might think.”
At the same time in the Baltic, countries are shoring up security around their infrastructure, at sea and on land. Late last year, Estonia carried out an underwater inspection of the two Estlink power cables and the Baltic Connector gas pipeline linking it to Finland, the Estonian navy says. Lithuania, meanwhile, is paying “special attention” to security around its LNG terminal at Klaipėda and the gas cargoes that arrive there, a defense ministry spokesperson says.
Torgeir Standal, left, the KV Bergen’s second in command
It was in Lithuania that Europe had its first major false alarm since the Nord Stream incident, when a gas pipeline on land exploded on a Friday evening in January. Foul play was briefly considered a possibility in the immediate aftermath but was quickly ruled out. The pipe was 40 years old, and had been subject to a technical fault.
The danger posed by Russia to infrastructure throughout Europe should not be underestimated, says Vilmantas Vitkauskas, director of Lithuania’s National Crisis Management Centre and a former NATO intelligence official.
“We know their way of thinking, [the way] they send signals or apply pressure,” Vitkauskas says. “We understand Russia quite well, and we are quite worried by what we see — and how vulnerable our infrastructure is in Europe.”
The watchers on the water
Back aboard the Bergen, life for the sailors carries on as normal. It’s a young crew, with an average age of around 30. Some are conscripts. It’s still compulsory in Norway for 19-year-olds to present themselves for national service, but only around one in four are actually recruited for the mandated 19-month stint.
The days are long. Surveillance, maintenance and exercises in search and rescue are all part of the crew’s regular routine. A helicopter from one of the Oseberg oil and gas platforms soars overhead, and the crew are drafted into an exercise winching people on and off the deck of the Bergenin the dead of night, simulating a rescue operation.
The ship needs to be ready to respond to an incident should the call come in from naval headquarters that help is required, or a suspicious vessel has been identified in their patch of the North Sea. But in their downtime, the sailors head to the gym on the lower deck, or play FIFA on the X-box in the sparse games room. Three hearty meals a day are served in the galley kitchen. There is even a ship’s band, cheekily named “Dyb Purple” after their commander. Dyb “takes it well,” says Senior Petty Officer Storebø.
In the daily whirl of activity, most of the young sailors don’t think of their work in the grand strategic sense of protecting the energy security — the warmth, the light, the industry — of an entire continent.
But the context of the Ukraine war — and the precedent set by the Nord Stream attack — has added a note of solemnity just below the surface of the comradeship and bonhomie.
“We are probably less naïve nowadays,” says 33-year-old Senior Petty Officer Simen Strand, who has a wife and two children, a boy and a girl, back home in Bergen. “We haven’t had much to fear in the past, there hasn’t been a concrete threat.”
Storebø agrees but is characteristically sanguine. “Russia has always been there … I’ve not personally felt any more unease than before.”
The next day, Storebø has the night watch, from midnight to four in the morning, as the Bergen travels back to base for a short stop before heading out to sea again.
It’s dark up on the bridge, with the glow of the control panel screens the only light inside. Twenty miles away, little lights can be seen on the Norwegian coast. A lighthouse flares to the south, at Slåtterøy, not far from Storebø’s home island of Austevoll. Beneath the waves, unseen, gas flows from the Troll field back to the mainland, where it is processed. From there, it continues its journey south to light the dark of European nights.
All is quiet but Storebø can’t afford to lose focus. “Coffee and music help,” he says. “I like the night shifts.”
As the officer of the watch, he has to be ready, should the radar, the satellites, or his own eyes see something out of the ordinary — ready to call the captain and raise the alarm.
That’s the job, he says. “You always have it in the back of your mind.”
European Commission President Ursula von der Leyen has declared Europe’s dependence on Russian oil and gas “history.”
But others, from senior Ukrainian officials to MEPs and industry insiders, say that chapter of history is still being written.
Significant quantities of Russian hydrocarbons, particularly oil, are still flowing around sanctions and into the European market, they say, earning payments that fund Vladimir Putin’s war machine.
“I had a friend in New York in the 1990s who complained cockroaches would get into his apartment through any available hole — that’s what Russia is doing with its energy,” Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskyy, told POLITICO. “We have to fix these holes to stop Russia receiving this blood money they are using to finance the military machine that is destroying our country and killing our people.”
Crude oil is notoriously difficult to track on global markets. It can easily be mixed or blended with other shipments in transit countries, effectively creating a larger batch of oil whose origins can’t be determined. The refining process, necessary for any practical application, also removes all traces of the feedstock’s origin.
A complex network of shipping companies, carrying the flags of inscrutable offshore jurisdictions, adds a further layer of mystery; some have been accused of helping Russia to hide the origin of its crude exports using a variety of different means.
“Unlike pipeline gas, the oil market is global. Swap and netting systems, and mixing varieties are common practice,” said Mikhail Khodorkovsky, a prominent exiled critic of Putin and the former CEO of oil and gas giant Yukos.
“The result of the embargo is a significant increase in Russian transportation costs, a significant redistribution of income in favor of intermediaries, and some additional discount due to the narrowing of the buyers’ market.”
Crude workarounds?
The EU has largely banned Russian fossil fuels since the invasion of Ukraine in February 2022, with exceptions for limited quantities of pipeline crude oil, pipeline gas, liquefied natural gas (LNG), and oil products.
But large volumes of Russian crude oil — a bigger source of revenue than gas — are still being shipped onto global markets, leading some experts to suspect they are finding their way to Europe’s market through the back door.
“Since the introduction of sanctions, the volumes of crude oil Russia is exporting have remained more or less steady,” said Saad Rahim, chief economist at global commodities trading firm Trafigura. “It’s possible that Russian oil is still being sold on to the EU and Western nations via middlemen.”
Crude oil is notoriously difficult to track on global markets | Image via iStock
One potential route into Europe is through Azerbaijan, which borders Russia and is the starting point of the Baku-Tbilisi-Ceyhan (BTC) pipeline, operated by BP. The port of Ceyhan, in Turkey, is a major supply hub from which crude oil is shipped to Europe; it also receives large quantities from Iraq through the Kirkuk-Ceyhan pipeline.
François Bellamy, a French MEP and member of the European Parliament’s Committee on Industry, Research and Energy, aired suspicions about this route in a recent question to the Commission. Data show that Azerbaijan exported 242,000 barrels a day more than it produced between April and July last year, he said — a large margin over domestic production, which stood at 648,000 barrels a day last month and is in long-term decline, according to ministry figures.
“How can a country diminish its production and increase its exports at the same time? There is something completely inconsistent in the figures and this inconsistency creates suspicions that sanctions are being circumvented,” Bellamy said.
A spokesperson for the Commission said it is working to crack down on loopholes in sanctions regimes and has appointed the EU’s former ambassador to the U.S., David O’Sullivan, as a special envoy tasked with tackling circumvention. The official also pointed out that data cited by Bellamy on Azerbaijani oil transactions, the most recent publicly available, “happened before the sanctions entered into force so there is no question of evasion of sanctions there.”
“Azerbaijan does not export Russian oil to the EU via the BTC pipeline,” said Aykhan Hajizada, spokesperson for the country’s foreign ministry, adding that while “Azerbaijan continues to use all non-sanctioned oil regardless of source,” it “remains committed to conducting its supply and trading operations with the utmost care and diligence, in line with relevant laws and regulations.”
BP has previously been forced to deny that the BTC pipeline carries Russian oil, and data seen by POLITICO for crude shipments from Ceyhan shows a recent dip in the volume of exports to the EU, from around 3 million tons per month (about 700,000 barrels per day) in early 2022 to around 2 million tons a month this year.
Slick operations
At the same time, though, Turkey doubled its direct imports of Russian oil last year and has refused to impose sanctions on Russian crude despite simultaneously offering military and humanitarian support to Ukraine.
Finland’s Centre for Research on Energy and Clean Air (CREA) warned late last year that “a new route for Russian oil to the EU is emerging through Turkey, a growing destination for Russian crude oil,” where it is refined into oil products that are not subject to sanctions and sold on.
“We have enough evidence that some international companies are buying refinery products made from Russian oil and selling them on to Europe,” said Ustenko, the Zelenskyy adviser. “It’s completely legal, but completely immoral. Just because it’s allowed doesn’t mean we don’t need to do anything about it.”
On Monday, British NGO Global Witness released a report that found Russian oil has consistently been sold at prices far exceeding the $60 cap imposed by G7 countries in December last year.
“The fact Russian oil continues to flow round the world is a feature, not a bug, of Western sanctions,” said Mai Rosner, a campaigner who worked on the report. “Governments offered the fossil fuel industry a wide-open back door, and commodity traders and big oil companies are exploiting these loopholes to continue business as usual.”
Chinese President Xi Jinping’s marathon three-day visit to Moscow was hailed by the Kremlin as the dawn of a new age of “deeper” ties between the two countries, as Russia races to plug gaping holes left in its finances by Western energy sanctions.
But while Vladimir Putin insisted a new deal struck during the negotiations on Wednesday will ensure Russia can weather the consequences of its invasion of Ukraine, analysts and European lawmakers say he’s overestimating just how much Beijing can help him balance the books.
Prior to the full-blown invasion, Russia’s oil and gas sector accounted for almost half of its federal budget, but embargoes and restrictions imposed by Western countries have since created a multi-billion dollar deficit.
With the country’s ever-influential oligarchs estimated to be out of pocket to the tune of 20 percent of their wealth — and industry tycoon Oleg Deripaska warning the state could run out of money as soon as next year — Putin is seeking to reassure them he’s opened up a massive new market.
“Russian business is able to meet China’s growing demand for energy,” Putin declared Tuesday, ahead of an opulent state banquet.
But analysts and Ukrainian officials have been quick to point out that actually stepping up exports of oil and gas to China will be a technical challenge for Moscow, given most of its energy infrastructure runs to the West, not the East.
Putin on Wednesday announced a major new pipeline, Power-of-Siberia 2, that will carry 50 billion cubic meters of gas to China via Mongolia to fix that problem.
But “in reality, it’s pretty unclear what has actually been agreed,” said Jade McGlynn, a Russia expert at King’s College London. “When it comes to terms and pricing, Beijing drives a hard bargain at the best of times — right now they know Russia’s not got a strong hand.”
Details of the financing and construction of the project have not yet been revealed.
And with predictions of a financial downturn swirling, Beijing may not need more energy to power sluggish industries, McGlynn added.
Yuri Shafranik, a former energy minister under Boris Yeltsin who now heads Russia’s Union of Oil and Gas Producers, suggested China’s appetite for natural gas “will certainly increase” in the coming years, and pointed out that Beijing would not have signed a pipeline agreement if it didn’t need the resources.
But, if the Kremlin was hoping to replace Europe as a reliable customer, it may end up disappointed, said Nathalie Loiseau, a French MEP who serves as chair of the Parliament’s subcommittee on security and defense.
“They chose to use energy to blackmail Europe even before the war,” she said. “Now, Russia has to find new markets and must accept terms and conditions imposed by others. China is taking advantage of the situation.”
In a bid to sweeten the terms, Putin invited all of Asia, Africa and Latin America to buy Russian oil and gas in China’s domestic currency, the renminbi, at the close of Xi’s speech on Tuesday. This came after Xi had already indicated at the China-Arab Summit in December in Riyadh that he would welcome the opportunity to trade oil and gas with Saudi Arabia on similar terms.
The outreach is a nod to the 1974 pact between then-U.S. President Richard Nixon and the Saudi kingdom to accept dollars in exchange for oil, which would in turn be spent on Western goods, assets and services. Non-Western nations have, however, been threatening to move away from dollar pricing in energy markets for years to no effect.
Still, Russia’s efforts to peel away from Western-dominated energy markets are unlikely to make much difference to its fortunes in the long run, according to Simone Tagliapietra, a research fellow at the Bruegel think tank.
“What we are seeing is it’s proving extremely difficult for Russia to diversify away from Europe, and they’ve been forced to become a junior partner of China,” Tagliapietra said. “After this, Moscow won’t be an oil and gas superpower as it was before, not just because of sanctions but also because of the green transition.”
Nearly six months on from the subsea gas pipeline explosions, which sent geopolitical shockwaves around the world in September, there is still no conclusive answer to the question of who blew up Nord Stream.
Some were quick to place the blame squarely at Russia’s door — citing its record of hybrid warfare and a possible motive of intimidation, in the midst of a bitter economic war with Europe over gas supply.
But half a year has passed without any firm evidence for this — or any other explanation — being produced by the ongoing investigations of authorities in three European countries.
Since the day of the attack, four states — Russia, the U.S., Ukraine and the U.K. — have been publicly blamed for the explosions, with varying degrees of evidence.
Still, some things are known for sure.
As was widely assumed within hours of the blast, the explosions were an act of deliberate sabotage. One of the three investigations, led by Sweden’s Prosecution Authority, confirmed in November that residues of explosives and several “foreign objects” were found at the “crime scene” on the seabed, around 100 meters below the surface of the Baltic Sea, close to the Danish Island of Bornholm.
Now two new media reports — one from the New York Times, the other a joint investigation by German public broadcasters ARD and SWR, plus newspaper Die Zeit — raised the possibility that a pro-Ukrainian group — though not necessarily state-backed — may have been responsible. On Wednesday, the German Prosecutor’s Office confirmed it had searched a ship in January suspected of transporting explosives used in the sabotage, but was still investigating the seized objects, the identities of the perpetrators and their possible motives.
In the information vacuum since September, various theories have surfaced as to the culprit and their motive:
Theory 1: Putin, the energy bully
In the days immediately after the attack, the working assumption of many analysts in the West was that this was a brazen act of intimidation on the part of Vladimir Putin’s Kremlin.
Mykhailo Podolyak, an adviser to Volodymyr Zelenskyy, spelt out the hypothesis via his Twitter feed on September 27 — the day after the explosions were first detected. He branded the incident “nothing more [than] a terrorist attack planned by Russia and act of aggression towards the EU” linked to Moscow’s determination to provoke “pre-winter panic” over gas supplies to Europe.
Polish Prime Minister Mateusz Morawiecki also hinted at Russian involvement. Russia denied responsibility.
The Nord Stream pipes are part-owned by Russia’s Gazprom. The company had by the time of the explosions announced an “indefinite” shutdown of the Nord Stream 1 pipes, citing technical issues which the EU branded “fallacious pretences.” The new Nord Stream 2 pipes, meanwhile, had never been brought into the service. Within days of Gazprom announcing the shutdown in early September, Putin issued a veiled threat that Europe would “freeze” if it stuck to its plan of energy sanctions against Russia.
But why blow up the pipeline, if gas blackmail via shutdowns had already proved effective? Why end the possibility of gas ever flowing again?
Simone Tagliapietra, energy specialist and senior fellow at the Bruegel think tank, said it was possible that — if it was Russia — there may have been internal divisions about any such decision. “At that point, when Putin had basically decided to stop supplying [gas to] Germany, many in Russia may have been against that. This was a source of revenues.” It is possible, Tagliapietra said, that “hardliners” took the decision to end the debate by ending the pipelines.
Blowing up Nord Stream, in this reading of the situation, was a final declaration of Russia’s willingness to cut off Europe’s gas supply indefinitely, while also demonstrating its hybrid warfare capabilities. In October, Putin said that the attack had shown that “any critical infrastructure in transport, energy or communication infrastructure is under threat — regardless of what part of the world it is located” — words viewed by many in the West as a veiled threat of more to come.
Theory 2: The Brits did it
From the beginning, Russian leaders have insinuated that either Ukraine or its Western allies were behind the attack. Kremlin spokesman Dmitry Peskov said two days after the explosions that accusations of Russian culpability were “quite predictable and predictably stupid.” He added that Moscow had no interest in blowing up Nord Stream. “We have lost a route for gas supplies to Europe.”
Then a month on from the blasts, the Russian defense ministry made the very specific allegation that “representatives of the U.K. Navy participated in planning, supporting and executing” the attack. No evidence was given. The same supposed British specialists were also involved in helping Ukraine coordinate a drone attack on Sevastopol in Crimea, Moscow said.
The U.K.’s Ministry of Defence said the “invented” allegations were intended to distract attention from Russia’s recent defeats on the battlefield. In any case, Moscow soon changed its tune.
Theory 3: U.S. black ops
In February, with formal investigations in Germany, Sweden and Denmark still yet to report, an article by the U.S. investigative journalist Seymour Hersh triggered a new wave of speculation. Hersh’s allegation: U.S. forces blew up Nord Stream on direct orders from Joe Biden.
The account — based on a single source said to have “direct knowledge of the operational planning” — alleged that an “obscure deep-diving group in Panama City” was secretly assigned to lay remotely-detonated mines on the pipelines. It suggested Biden’s rationale was to sever once and for all Russia’s gas link to Germany, ensuring that no amount of Kremlin blackmail could deter Berlin from steadfastly supporting Ukraine.
Hersh’s article also drew on Biden’s public remarks when, in February 2022, shortly before Russia’s full-scale invasion, he told reporters that should Russia invade “there will be no longer Nord Stream 2. We will bring an end to it.”
The White House described Hersh’s story as “utterly false and complete fiction.” The article certainly included some dubious claims, not least that NATO Secretary General Jens Stoltenberg has “cooperated with the American intelligence community since the Vietnam War.” Stoltenberg, born in 1959, was 16 years old when the war ended.
Russian leaders, however, seized on the report, citing it as evidence at the U.N. Security Council later in February and calling for an U.N.-led inquiry into the attacks, prompting Germany, Denmark and Sweden to issue a joint statement saying their investigations were ongoing.
Theory 4: The mystery boatmen
The latest clues — following reports on Tuesday from the New York Times and German media — center on a boat, six people with forged passports and the tiny Danish island of Christiansø.
According to these reports, a boat that set sail from the German port of Rostock, later stopping at Christiansø, is at the center of the Nord Stream investigations.
Germany’s federal prosecutor confirmed on Wednesday that a ship suspected of transporting explosives had been searched in January — and some of the 100 or so residents of tiny Christiansø told Denmark’s TV2 that police had visited the island and made inquiries. Residents were invited to come forward with information via a post on the island’s Facebook page.
Both the New York Times and the German media reports suggested that intelligence is pointing to a link to a pro-Ukrainian group, although there is no evidence that any orders came from the Ukrainian government and the identities of the alleged perpetrators are also still unknown.
Podolyak, Zelenskyy’s adviser, tweeted he was enjoying “collecting amusing conspiracy theories” about what happened to Nord Stream, but that Ukraine had “nothing to do” with it and had “no information about pro-Ukraine sabotage groups.”
Meanwhile, Germany’s Defense Minister Boris Pistorius warned against “jumping to conclusions” about the latest reports, adding that it was possible that there may have been a “false flag” operation to blame Ukraine.
The Danish Security and Intelligence Service said only that their investigation was ongoing, while a spokesperson for Sweden’s Prosecution Authority said information would be shared when available — but there was “no timeline” for when the inquiries would be completed.
BERLIN — German prosecutors have found “traces”of evidence indicating that Ukrainians may have been involved in the explosions that blew up the Nord Stream gas pipelines in September 2022, according to German media reports Tuesday.
Investigators identified a boat that was potentially used for transporting a crew of six people, diving equipment and explosives into the Baltic Sea in early September. Charges were then placed on the pipelines, according to a joint investigation by German public broadcasters ARD and SWR as well as the newspaper Die Zeit.
The German reports said that the yacht had been rented from a company based in Poland that is “apparently owned by two Ukrainians.”
However, no clear evidence has been established so far on who ordered the attack, the reports said.
In its first reaction, Ukraine’s government dismissed the reports.
Mykhailo Podolyak, an adviser to Ukrainian President Volodymyr Zelenskyy, denied the Ukrainian government had any involvement in the pipeline attacks. “Although I enjoy collecting amusing conspiracy theories about the Ukrainian government, I have to say: Ukraine has nothing to do with the Baltic Sea mishap and has no information about ‘pro-Ukraine sabotage groups,'” Podolyak wrote in a tweet.
Three of the four pipes making up the Nord Stream 1 and 2 undersea gas pipelines from Russia to Germany were destroyed by explosions last September. Germany, Sweden and Denmark launched investigations into an incident that was quickly established to be a case of “sabotage.”
The German media reports — which come on top of a New York Times report Tuesday which said that “intelligence suggests that a pro-Ukrainian group” sabotaged the pipelines — stress that there’s no proof that Ukrainian authorities ordered the attack or were involved in it.
Any potential involvement by Kyiv in the attack would risk straining relations between Ukraine and Germany, which is one of the most important suppliers of civilian and military assistance to the country as it fights against Russia’s full-scale invasion.
According to the investigation by German public prosecutors that is cited by the German outlets, the team which placed the explosive charges on the pipelines was comprised of five men — a captain, two divers and two diving assistants — as well as one woman doctor, all of them of unknown nationality and operating with false passports. They left the German port of Rostock on September 6 on the rented boat, the report said.
It added that the yacht was later returned to the owner “in uncleaned condition” and that “on the table in the cabin, the investigators were able to detect traces of explosives.”
But the reports also said that investigators can’t exclude that the potential link to Ukraine was part of a “false flag” operation aiming to pin the blame on Kyiv for the attacks.
Contacted by POLITICO, a spokesperson for the German government referred to ongoing investigations by the German prosecutor general’s office, which declined to comment.
The government spokesperson also said: “a few days ago, Sweden, Denmark and Germany informed the United Nations Security Council that investigations were ongoing and that there was no result yet.”
Russian foreign ministry spokesperson Maria Zakharova dismissed the reports of Ukrainian involvement in the Nord Stream bombings, saying in a post on the Telegram social media site that they were aimed at distracting attention from earlier, unsubstantiated, reports that the U.S. destroyed the pipelines.
Veronika Melkozerova in Kyiv contributed reporting.
There’s more bad news for Vladimir Putin. Europe is on course to get through winter with its vital gas storage facilities more than half full, according to a new European Commission assessment seen by POLITICO.
That means despite the Russian leader’s efforts to make Europe freeze by cutting its gas supply, EU economies will survive the coldest months without serious harm — and they look set to start next winter in a strong position to do the same.
A few months ago, there were fears of energy shortages this winter caused by disruptions to Russian pipeline supplies.
But a combination of mild weather, increased imports of liquefied natural gas (LNG), and a big drop in gas consumption mean that more than 50 billion cubic meters (bcm) of gas is projected to remain in storage by the end of March, according to the Commission analysis.
A senior European Commission official attributed Europe’s success in securing its gas supply to a combination of planning and luck.
“A good part of the success is due to unusually mild weather conditions and to China being out of the market [due to COVID restrictions],” the official said. “But demand reduction, storage policy and infrastructure work helped significantly.”
Ending the winter heating season with such healthy reserves — above 50 percent of the EU’s roughly 100bcm total storage capacity — removes any lingering fears of a gas shortage in the short term. It also eases concerns about Europe’s energy security going into next winter.
The positive figures underlie the more optimistic outlook presented by EU leaders in recent days, with Energy Commissioner Kadri Simson saying on Tuesday that Europe had “won the first battle” of the “energy war” with Russia.
EU storage facilities — also vital for winter gas supply in the U.K., where storage options are limited — ended last winter only around 20 percent full. Brussels mandated that they be replenished to 80 percent ahead of this winter, requiring a hugely expensive flurry of LNG purchases by European buyers, to replace volumes of gas lost from Russian pipelines.
The wholesale price of gas rose to record levels during storage filling season — peaking at more than €335 per megawatt hour in August — with dire knock-on effects for household bills, businesses’ energy costs and Europe’s industrial competitiveness.
Gas prices have since fallen to just above €50/Mwh amid easing concerns over supplies. The EU has a new target to fill 90 percent of gas storage again by November 2023 — an effort that will now require less buying of LNG on the international market than it might have done had reserves been more seriously depleted.
“The expected high level of storages at above 50 percent [at] the end of this winter season will be a strong starting point for 2023/24 with less than 40 percent to be filled (against the difficult starting point of around 20 percent in storage at the end of winter season in 2022,” the Commission assessment says.
Analysts at the Independent Commodity Intelligence Services think tank said this week that refilling storages this year could still be “as tough a challenge as last year” but predicted that the EU now had “more than enough import capacity to meet the challenge.”
Across the EU, five new floating LNG terminals have been set up — in the Netherlands, Greece, Finland and two in Germany — providing an extra 30bcm of gas import capacity, with more due to come online this year and next.
However, the EU’s ability to refill storages to the new 90 percent target ahead of next winter will likely depend on continued reduction in gas consumption.
Brussels set member states a voluntary target of cutting gas demand by 15 percent from August last year. Gas demand actually fell by more than 20 percent between August and December, according to the latest Commission data, partly thanks to efficiency measures but also the consequence of consumers responding to much higher prices by using less energy.
The 15 percent target may need to be extended beyond its expiry date of March 31 to avoid gas demand rebounding as prices fall. EU energy ministers are set to discuss the issue at two forthcoming meetings in February and March.
BERLIN — News this month that the number of German soldiers declaring themselves conscientious objectors rose fivefold in the wake of Russia’s full-scale invasion of Ukraine created little more than a ripple in Germany.
For many Germans it’s perfectly natural for members of the Bundeswehr, the army, to renege on the pledge they made to defend their country; if Germans themselves don’t want to fight, why should their troops?
Indeed, in Germany, a soldier isn’t a soldier but a “citizen in uniform.” It’s an apposite euphemism for a populace that has lived comfortably under the U.S. security umbrella for more than seven decades and goes a long way toward explaining how Germany became NATO’s problem child since the war in Ukraine began, delaying and frustrating the Western effort to get Ukraine the weaponry it needs to defend itself against an unprovoked Russian onslaught.
The latest installment in this saga (it began just hours after the February invasion when Germany’s finance minister told Ukraine’s ambassador there was no point in sending aid because his country would only survive for a few hours anyway) concerns the question of delivering main battle tanks to Ukraine. Germany, one of the largest producers of such tanks alongside the U.S., has steadfastly refused to do so for months, arguing that providing Ukraine with Western tanks could trigger a broader war.
Chancellor Olaf Scholz has also tried to hide behind the U.S., noting that Washington has also not sent any tanks. (Scholz has conveniently ignored the detail that the U.S. has provided Ukraine with $25 billion in military aid so far, more than 10 times what Germany has.)
Germany’s allies, including Washington, often ascribe German recalcitrance to a knee-jerk pacifism born of the lessons learned from its “dark past.”
In other words, the German strategy — do nothing, blame the Nazis — is working.
Of course, Germany’s conscience doesn’t really drive its foreign policy, its corporations do. While it hangs back from supporting Ukraine in a fight to defend its democracy from invasion by a tyrant, it has no qualms about selling to authoritarian regimes, like those in the Middle East, where it does brisk business selling weapons to countries such as Egypt and Qatar.
Despite everything that’s happened over the past year, Berlin is still holding out hope that Ukraine can somehow patch things up with Russia so that Germany can resume business as usual and switch the gas back on. Even if Germany ends up sending tanks to Ukraine — as many now anticipate — it will deliver as few as it can get away with and only after exhausting every possible option to delay.
Much attention in recent years has focused on Nord Stream 2, the ill-fated Russo-German natural gas project. Yet tensions between the U.S. and Germany over the latter’s entanglement with Russian energy interests date back to the late 1950s, when it first began supplying the Soviet Union with large-diameter piping.
Throughout the Cold War, Germany’s involvement with NATO was driven by a strategy to take advantage of the protection the alliance afforded, delivering no more than the absolute minimum, while also expanding commercial relations with the Soviets.
In 1955, the weekly Die Zeit described what it called the “fireside fantasy of West German industry” to normalize trade relations with the Soviet Union. Within years, that dream became a reality, driven in large measure by Chancellor Willy Brandt’s détente policies, known as Ostpolitik.
Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German | Thomas Lohnes/Getty Images
That’s one reason the Germans so feared U.S. President Ronald Reagan and his hard line against the Soviets. Far from welcoming his “Mr. Gorbachev, tear down this wall” demand, both the German public and industry were terrified by it, worried that Reagan would upset the apple cart and destroy their business in the east.
By the time the Berlin Wall fell a couple of years later, West German exports to the Soviet Union had reached nearly 12 billion deutsche mark, a record.
That’s why Germany’s handling of Ukraine isn’t a departure from the norm; it is the norm.
Germany’s dithering over aid to Ukraine is a logical extension of a strategy that has served its economy well from the Cold War to the decision to block Ukraine’s NATO accession in 2008 to Nord Stream.
Just last week, as the Russians were raining terror on Dnipro, the minister president of Saxony, Michael Kretschmer, called for the repair of the Nord Stream 1 pipeline, which was blown up by unknown saboteurs last year, so that Germany “keeps the option” to purchase Russian gas after war ends.
One can’t blame him for trying. If one accepts that German policy is driven by economic logic rather than moral imperative, the fickleness of its political leaders makes complete sense — all the more so considering how well it has worked.
The money Germany has saved on defense has enabled it to finance one of the world’s most generous welfare states. When Germany was under pressure from allies a few years ago to finally meet NATO’s 2 percent of GDP spending target, then-Vice Chancellor Sigmar Gabriel called the goal “absurd.” And from a German perspective, he was right; why buy the cow when you can get the milk for free?
Of course, the Germans have had a lot of help milking, especially from the U.S.
American presidents have been chastising Germany over its lackluster contribution to the Western alliance going as far back as Dwight D. Eisenhower, only to do nothing about it.
The exception that proves the rule is Donald Trump, whose plan to withdraw most U.S. troops from Germany was thwarted by his election loss.
Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German.
Biden’s decision to court the Germans instead of castigating them for failing to meet their commitments taught Berlin that it merely needs to wait out crises in the transatlantic relationship and the problems will fix themselves. Under pressure from Trump to buy American liquefied natural gas, then-Chancellor Angela Merkel agreed in 2018 to support the construction of the necessary infrastructure. After Trump, those plans were put on ice, only to revive them amid the current energy crisis.
By virtue of its size and geographical position at the center of Europe, Germany will always be important for the U.S., if not as a true ally, at least as an erstwhile partner and staging ground for the American military.
Who cares that the Bundeswehr has become a punchline or that Germany remains years away from meeting its NATO spending targets?
In Washington’s view, Germany might be a bad ally, but at least it’s America’s bad ally.
And no one understands the benefits of that status better than the Germans themselves.
U.S. gas companies will be urged to up their exports to Europe via the U.K. under a new transatlantic energy partnership agreed by Rishi Sunak and Joe Biden.
The new “U.K.-U.S. Energy Security and Affordability Partnership” announced Wednesday includes a commitment from the White House to “strive to export at least 9-10 billion cubic metres of liquefied natural gas (LNG) over the next year via U.K. terminals,” No. 10 Downing Street said. The aspiration includes both gas for U.K. consumption and gas that might be re-exported to mainland Europe via pipeline.
The U.K. has three LNG terminals — two in Milford Haven, Wales and one in Medway, Kent — and has become a major hub for LNG supplies to Europe from the U.S.; a vital lifeline as the Continent has sought to replace Russian pipeline gas since Moscow’s invasion of Ukraine.
The new partnership between the U.S. and the U.K. mirrors in many ways an existing U.S.-EU task force that also focuses on energy security. It will be led by a “joint action group” consisting of senior White House and U.K. government officials, Downing Street said, with the first virtual meeting to be held on Thursday.
Alongside helping to guarantee U.K. and EU gas supply, it will work on global investment in clean energy and efficiency, plus the promotion of nuclear energy, including small modular reactors, in third countries. British Prime Minister Sunak and U.S. President Biden discussed the partnership at the G20 summit in Indonesia last month.
“This partnership will bring down prices for British consumers and help end Europe’s dependence on Russian energy once and for all,” Sunak said. “Together the U.K. and U.S. will ensure the global price of energy and the security of our national supply can never again be manipulated by the whims of a failing regime. We have the natural resources, industry and innovative thinking we need to create a better, freer system and accelerate the clean energy transition.”
The LNG commitment will be dependent on U.S. gas exporting companies. As is the case with its task force with the EU, the U.S. government will likely play the role of encouraging companies to direct their cargoes to the U.K.
The two sides will “proactively identify and resolve any issues faced by exporters and importers,” Downing Street said, adding: “We will look to identify opportunities to support commercial contracts that increase security of supply.”
Adam Bell, a former U.K. government energy official and now head of policy at the Stonehaven consultancy, said there was a “diplomatic upside” to the U.K. facilitating gas flows to the EU: “Especially this winter when we’ll want pipes to flow the other way; Europe has the stores that we don’t.” The U.K. would also benefit from shipping charges as the gas passes through its network, Bell added.
LVIV, Ukraine — Russia’s missile barrages on Ukraine are having much less impact than Vladimir Putin might have wanted, thanks to Ukrainian improvisation and ingenuity.
The Russian military targeted Ukraine’s power grid last week, firing an estimated billion-euros worth of missiles at the country’s energy infrastructure — but for all that money the net result was to cause blackouts only for a day.
“We are very well prepared, and we think out of the box to coordinate after missile attacks,” Volodymyr Kudrytskyi, chairman of Ukrenergo, Ukraine’s state-owned electricity company, told POLITICO in an exclusive interview.
Engineers game-plan possible scenarios to be ready with “re-routing schemes” to compensate for the loss of a transmission station or — even worse — damage to a generating station. “So even with catastrophic damage, even during these hard times, we are still able to reconnect and deliver energy. Of course, we must curtail consumption to maintain the system’s stability,” he added.
Kudrytskyi says: “We can switch on the lights for 80 to 90 percent of Ukrainians within a day of an attack — although you must understand that’s not precise because it largely depends on the nature of the damage. It takes a few more days after restoring basic delivery to fully stabilize the system.”
That’s remarkable considering Ukraine has lost around 50 percent of its electricity capacity, he said, because of the damage caused by the Russian attacks — part of the Kremlin’s strategy to enlist “General Winter” to wear down Ukrainians and break their spirit. “In my humble opinion, we are doing quite well. This kind of assault, the scale of it, on a power grid has never been seen before in the modern world and therefore we must invent solutions. We don’t have anyone else to consult because simply nobody has ever experienced anything even close to this before,” Kudrytskyi said.
Ukrainians now joke that the country’s notoriously poor public services have improved since Russia’s invasion — instead of waiting weeks for electrical or water repairs, things get fixed in a matter of hours, they quip. And while the missile attack is deepening their anger toward Russia, they are also taking some solace and pride in the ingenuity behind the restoration of power and resumption of the water supply, which relies on Ukrenergo energy for pumping purposes, after missile and drone strikes.
The joke is not lost on Lviv’s mayor, Andriy Sadovyi, who told POLITICO that improvisation is part of the secret behind switching the lights back on.
“The power system wasn’t built with the idea that it would have to withstand attack,” Sadovyi said with a chuckle.
‘Coded to be ingenious’
He said Ukrainians have shaken off a debilitating Soviet mentality, one that says nothing is possible when a problem emerges. “We have discovered we’re coded to be ingenious, to improvise, to come up with solutions, to use what’s available and what’s at hand,” he said.
Last week, as with previous Russian assaults on Ukraine’s energy infrastructure — notably on October 10 — the country’s electrical engineers swung quickly into action to re-program computer systems to re-route power from undamaged transmission stations. The improvised patch-ups take time; and repairing physical damage — when possible — takes even longer.
Foreign experts working in the country also highlight Ukrainian improvisation — and not just in the energy sector.
“Where there’s a will, there’s a way. They are doing some amazing things,” says Terry Taylor, a 75-year-old British water engineer who left a comfortable retirement in Oxford to bring his decades of experience working in Asia and Africa to Ukraine.
Taylor’s been overseeing a project for a Danish charity in Mykolaiv, the southern coastal city which has withstood a months-long Russian siege. Thanks to Russia’s sabotaging a pipeline in April, Mykolaiv has been without potable water for half-a-year. “There’s a stunning unity of purpose and passion here; it really is remarkable,” Taylor said. “People just get on with it; clean away debris and repair as best they can,” he told POLITICO.
When it comes to the power grid, the Ukrainians were also prepared — even before Russia’s invasion in February. They had been storing up stocks of spare parts, switches and cabling. “We accumulated significant stock of materials and equipment, probably one of the largest in the world,” Ukrenergo’s Kudrytskyi said.
Until October, when Russian targeting of energy infrastructure started in earnest, Ukraine had even been able to export electricity to the EU, but it is now in need of imports. Kadri Simson, the EU energy commissioner, visited Kyiv on November 1 and expressed the bloc’s readiness to help replenish stocks amid the latest waves of Russian attacks. And it’s a big job.
Strong message
The huge stocks of equipment and material that Ukraine has laid by are running out fast, Kudrytskyi said.
Mayor Sadovyi in Lviv admits that if the attacks continue and the winter is a harsh one, improvisation will have its limits. Sadovyi said that in last week’s attack the Russians managed to cause some damage to the interconnection with neighboring Poland.
“Today my message must be strong. We must be ready to survive without electricity and heating for one, two, maybe three weeks,” he said.
He said Lviv and Ukraine are going to need tens of thousands of diesel- and thermal-power generators.
How many exactly? He pulls a face when asked indicating that it is almost incalculable. Lviv bought three huge diesel generators six months before the war, and they have been used three times to maintain the hot water system for 50 percent of the city’s population, he said.
One of his biggest worries is how to keep Lviv’s main hospital going, which has been expanded enormously to rehabilitate both military and civilian war wounded and to manufacture and fit prosthetics. Sadovyi and other city mayors in Ukraine are in frequent contact to compare notes and to offer each other advice and assistance when they can.
But as the first snows of the season fall and with temperatures already dropping below zero Celsius, he’s in no doubt his city, where he has been mayor for 16 years, could soon be in a perilous position — a sentiment echoed by Kudrytskyi for the whole of Ukraine.
“We are preparing as best we can to build up resilience and we have to be ready for worst-case scenarios,” Kurdrytskyi said. “So, outages may be longer than the standard current five hours, but we are doing everything we can to try to prevent that happening.”
“But our stock is being exhausted,” he said. “We need spare parts, cabling relays for sure, but also some quite large items,” such as transformers and switching equipment. “We need them quickly and we can’t wait for them to be manufactured — we must find them somewhere soon,” Kudrytskyi said.
Aside from that, the energy boss makes a plea — echoed by city mayors like Sadovyi and national Ukrainian political leaders — for the West to supply more air-defense systems to shield the power grid from Russian missiles and air strikes.
“We are fighting on an energy front. More air-defense systems would increase our chances to avoid massive damage to our grid. So the more air-defense systems, the less damage,” he said.
“Because even if you look at the last big onslaught last Tuesday, we managed to knock out 70 or so of the 100 missiles launched at us, giving us a better bet to keep the system integrated, keep it running and to repair [it] than might otherwise have been the case,” Kudrytskyi said.
The EU is under immense pressure to cap the price of imported natural gas to contain energy costs — but many of the companies making a fortune selling cheap U.S. gas to the Continent at eye-watering markups are European.
The liquefied natural gas (LNG) loaded on to tankers at U.S. ports costs nearly four times more on the other side of the Atlantic, largely due to the market disruption caused by a near-total loss of Russian deliveries following the invasion of Ukraine.
The European Commission has come under fierce pressure to sketch out a gas price cap plan, but some countries, led by Germany, worry such a measure could prompt shippers to send gas cargoes elsewhere. The Commission is also reluctant, and its proposal issued Tuesday sets such demanding requirements that they weren’t met even during this summer’s price emergency.
But a large part of the trade is in European hands, according to America’s biggest LNG exporter.
“Ninety percent of everything we produce is sold to third parties, and most of our customers are utilities — the Enels, the Endesas, the Naturgys, the Centricas and the Engies of the world,” said Corey Grindal, executive vice president for worldwide trading at Cheniere Energy, rattling off the names of big-name European energy providers.
Cheniere, which this year saw 70 percent of its exported LNG sail to Europe, sells its gas on a fix-priced scheme based on the American benchmark price, dubbed Henry Hub, which is currently at about $6 per million British thermal units.
On average, the price across all Cheniere contracts is 115 percent of Henry Hub plus $3, Grindal said. That works out to about €33 per megawatt-hour. For comparison, the current EU benchmark rate, dubbed TTF, is €119 per MWh.
It’s a big markup for whoever is reselling those LNG cargoes into Europe’s wholesale market, profiting from fears that there may not be enough gas to last the winter.
Despite fears that any EU cap will send gas to higher bidders in Asia and result in bloc-wide shortages, Grindal gave a resounding “no” when asked if a cap would have any impact on how Cheniere does business with European companies.
“Our balance sheet is underpinned by those long-term contracts,” he added.
Translation: If buyers choose to trade their precious cargoes away for higher profits beyond Europe once they receive them, that’s their decision.
Blame game
“The United States is a producer of cheap gas that they are selling us at a high price … I don’t think that’s friendly,” said French President Emmanuel Macron | Ludovic Marin/AFP via Getty Images
The difference between U.S. and EU gas prices hasn’t gone unnoticed by European politicians — but most of the finger-pointing has been at American producers rather than the resellers closer to home.
“In today’s geopolitical context, among countries that support Ukraine there are two categories being created in the gas market: those who are paying dearly and those who are selling at very high prices,” French President Emmanuel Macron told a group of industrial players last week. “The United States is a producer of cheap gas that they are selling us at a high price … I don’t think that’s friendly.”
Macron’s dig conveniently ignored that the largest European holder of long-term U.S. gas contracts is none other than France’s own TotalEnergies.
At the company’s latest earnings call last month, TotalEnergies CFO Jean-Pierre Sbraire trumpeted the fact that the firm’s access to more than 10 million tons of U.S. LNG annually “is a huge advantage for our traders, who can arbitrage between the U.S. and Europe.”
“And now, given the price of LNG, each cargo represents something like $80 million, even $100 million. So, when we are able reroute or to arbitrage between the different markets, of course, it’s a very efficient way to maximize the value coming from that business,” Sbaire added. “Cash flow generation of this order of magnitude marks the start of a new era for the company.”
Spain’s Naturgy — which has some 5 million tons of U.S. LNG a year from Cheniere under contract — has also earned nearly five times more trading gas so far this year compared with 2021 thanks to “the increased spread between [Henry Hub] and TTF,” it wrote in its half-year report.
Long-term contracts with the U.S. weren’t always so profitable. In fact, from 2016 to at least 2018, buyers were mostly losing money on the fixed deals, leading some to sell them off.
In 2019 Spain’s Iberdrola, for example, pawned off its 20-year Cheniere contract to Asian trader Pavilion Energy, which is now benefiting from selling into a high-priced global market.
In the U.K, Centrica tried — and failed — to sell off its LNG portfolio in 2020 when government-ordered lockdowns drove real-time prices through the floor. That included a 20-year fixed Cheniere contract set to run through 2038.
Now that real-time prices have shot back up, Centrica — part of Shell-owned British Gas — is reaping the rewards and eagerly snapping up more long-term contracts, most recently a 15-year deal with U.S. LNG exporter Delfin beginning in 2026.
“This is a really important profit stream for us,” Centrica CFO Chris O’Shea told investors on a Friday trading update call.
Unlike some producers — for example in the Middle East — which restrict the final destination of the LNG to consumers in Asia and prevent it being sold onward at a higher price, American gas changes ownership the minute it’s loaded onto a ship and comes with no strings attached.
That leaves buyers free to redirect the precious supply wherever it’s most profitable — sometimes at the expense of their downstream clients, if it’s cheaper to break those pre-existing domestic delivery commitments.
“We can only control what we can control,” said Cheniere’s Grindal. “U.S. LNG is destination-free.”
But as far as getting it on the ship at previously agreed prices, “our focus is being that reliable supplier, being committed to the obligations that we’ve made to our customers, and we’re committed to doing everything that we can to help the EU in this situation.”
The Russian government said it suspended indefinitely a months-old deal allowing grain shipments to leave Ukraine’s ports, citing an attack on a base in occupied Crimea as the reason.
According to a statement issued Saturday by Russia’s foreign ministry, Moscow “suspends participation” for an “indefinite period” in a deal brokered by the U.N. to make sure agricultural products made in Ukraine can reach global markets.
The deal is considered critical to global food security given Ukraine’s role as a major producer of grain, which is then normally shipped via the Black Sea to markets worldwide, especially in Africa and the Middle East.
“The Russian side cannot guarantee the safety of civilian dry cargo ships,” the foreign ministry said, citing an alleged drone attack by Ukraine on the port at Sevastopol in Crimea in the early hours of Saturday morning.
Ukrainian Foreign Minister Dmytro Kuleba said in a tweet that Moscow was using a “false pretext to block the grain corridor.”
The Russian ministry statement repeated claims made earlier in the day that British experts had supported Ukraine in the attack on Crimea, with Moscow also accusing U.K. forces of being behind explosions that critically damaged the Nord Stream gas pipeline without providing supporting evidence. London denied the claims.
Ukrainian President Volodymyr Zelenskyy’s chief of staff, Andriy Yermak, accused Russia of “blackmail” and “fictitious terror attacks.”
The export deal, dubbed the Black Sea Grain Initiative, was supposed to run until November 19 when all sides would have needed to agree to extend it. The agreement enabled Ukraine to restart exports of grain and fertilizer via the Black Sea, which had been stalled when Russia invaded the country in late February.
Since the U.N.-backed grain deal was signed in Turkey on July 22, several million tons of wheat, corn, sunflower products and other grains have been shipped out of Ukraine.
The U.N. said it was “in touch with the Russian authorities” regarding the suspension of the agreement.
“It is vital that all parties refrain from any action that would imperil the Black Sea Grain Initiative which is a critical humanitarian effort,” Stéphane Dujarric, spokesman for U.N. Secretary-General António Guterres, said in a statement.
Nahal Toosi contributed reporting from Washington.
The British Navy stands accused by the Russian government, without evidence, of blowing up the Nord Stream natural gas pipeline under the Baltic Sea, a claim the U.K. rejected as “false.”
“According to available information, representatives … of the British Navy took part in the planning, provision and implementation of a terrorist attack in the Baltic Sea on September 26 this year — blowing up the Nord Stream 1 and Nord Stream 2 gas pipelines,” the Russian Defense Ministry said on Saturday, according to media reports.
The accusation did not include any further information or evidence to support claims of state sabotage. The Russian government also said that U.K. operatives helped plan a drone attack on its fleet at the Black Sea port of Sevastopol in Crimea on Saturday.
The U.K. Defense Ministry quickly denied Moscow’s claim.
“To detract from their disastrous handling of the illegal invasion of Ukraine, the Russian Ministry of Defense is resorting to peddling false claims of an epic scale,” the British ministry said in a tweet. “This invented story says more about arguments going on inside the Russian government than it does about the West.”
Russia had already blamed the West in general terms for undersea explosions that damaged the Nord Stream pipes last month. Those blasts have likely rendered the energy infrastructure unusable, according to the German government.
An investigation by Danish and Swedish authorities is ongoing into the explosions, which took place inside the two countries’ exclusive economic zones close to the Baltic Sea island of Bornholm.
Russia had already stopped gas transit through the pipeline sparking concerns earlier this year that it would use gas supply to blackmail Europe as its brutal war on Ukraine continues.
While the first phase of Nord Stream had been operating for nearly 11 years, the second phase of the project — dubbed Nord Stream 2 — had not yet been brought into commercial operation.
The EU’s energy crisis response is getting bigger, slowly. But so, too, is the threat posed by Russia’s freeze on Europe’s gas supply.
A new package of measures to bring down the price of gas and protect consumers this winter and beyond — including plans to fully leverage the EU’s collective buying power — will be formally proposed by the European Commission next week.
But there remains uncertainty about key aspects of the package — including whether the preferred intervention of many countries, an EU-wide cap on gas prices, will be part of it, and if so, in what form. It could also take until November to get next week’s proposals fully signed off and operational, officials said.
Even as energy ministers deliberated over the measures in Prague on Wednesday, Russia issued new, veiled warnings about the depths of Europe’s vulnerability.
Speaking at an energy conference in Moscow, the head of Gazprom Alexey Miller warned European homes could still freeze this winter even though EU countries have nearly filled their gas storage capacity.
At the same event, Vladimir Putin discussed the sabotage of the Nord Stream pipelines — an act that many Western governments suspect was the work of Russia. Then he added pointedly that the incident had shown how “any critical infrastructure in transport, energy or communication infrastructure is under threat — regardless of what part of the world it is located, by whom it is controlled, laid on the seabed or on land.”
Noting that one of the pipelines is still potentially operational after the attack, Putin insisted Russia was ready to send gas through it to ease Europe’s pain this winter — bringing his overarching strategy of gas blackmail against Europe right up to date.
“The ball, as they say, is on the side of the European Union. If they want it, let them just open the tap,” Putin said. “We are ready to supply additional volumes in the autumn-winter period.”
Putin may still be hoping that when the reality of winter without Russian gas begins to bite, European governments will be more open to such overtures — and more willing to rein in support for Ukraine in exchange for an energy lifeline.
For the EU’s part, Energy Commissioner Kadri Simson was clear that while the bloc faced “difficult times,” countries would withstand the challenges ahead if they “act together, decisively and in solidarity.”
Speaking at the close of an informal summit of EU energy ministers on Wednesday, she added that the next crisis package will also contain a proposal for a new benchmark price for gas and further measures to reduce demand across the bloc.
But while a row over capping the price of gas has dominated the debate in recent weeks, momentum has shifted to the idea of joint purchasing on the international market. It is hoped that through this measure the bloc can avoid the situation seen this year when member states outbid one another for supplies when filling gas storage facilities — driving up the price for all.
European Commissioner for Energy Kadri Simson | John Thys/AFP via Getty Images
In an informal policy paper issued on Wednesday, Germany and the Netherlands set how such a measure could work, by beefing up the existing EU Energy Platform, which was established months ago but then barely used. Efforts to buy gas jointly should be coupled with better EU-wide coordination of gas storage next year, the German and Dutch paper said.
The proposals point to the extent to which the EU is no longer simply planning how to survive this winter without rolling blackouts. It’s now firmly planning for a crisis next winter too.
Executive Director of the International Energy Agency Fatih Birol, who also attended Wednesday’s summit in Prague, warned ministers that “the next winter may well be even more difficult.”
That message was echoed in a sobering briefing from the EU Agency for the Cooperation of Energy Regulators, which outlined how challenging 2023 and potentially 2024 could be for the bloc’s energy supply. Amid an expected surge in demand in Asia for liquefied natural gas (LNG), the EU will face greater competition for limited LNG supplies from sources such as the U.S. and Qatar.
In short, every molecule of gas that remains in European storage after this winter might be vital — and Vladimir Putin knows it.
Victor Jack and America Hernandez provided additional reporting.