Ukraine overthrows Yanukovych amid US/Russia power struggle over natural gas

The popular uprising in Ukraine has resulted in ex-President Yanukovych fleeing the capitol on Saturday, apparently retreating to the safety of Kharkiv, a city in Russia-friendly Eastern Ukraine. While it’s extremely historically significant that a popular uprising has overthrown a Russia-backed government, the events also illustrate a global power struggle centering on natural gas supplies, hydraulic fracturing, and Europe’s reliance on Russia for natural gas.

Ukraine is not only a key linkage point between Europe and Russia, the country also has significant shale deposits from which shale gas can be extracted through fracking (a.k.a. hydraulic fracturing). Coincidentally, the two regions of shale deposits, centered around Lviv in western Ukraine and Kharkiv in the east, happen to be key cities in Yanukovych’s overthrow. Lviv freed itself from rule by the central government months ago. Further, the platoon of police officers who “defected” on Friday, joining the protesters, were from Lviv. Kharkiv is the city to which Yanukovych has fled, and which was the scene of an assembly of regional political bosses who have voted to reject actions by the Parliament.

The crisis in Ukraine began a few years ago when Russia cut off gas supplies to Europe because Ukraine had raised trans-shipment fees. Ukraine houses several natural gas pipelines that have historically linked Russia and Europe, and through which Russia supplies Europe with most of its natural gas. Since then, Russia has begun work on two pipelines, Nordstream and South Stream, which are meant to bypass the pipelines going through Ukraine, letting Russia directly sell natural gas to Europe.

At the same time the US State Department set up a program, the Unconventional Gas Technical Engagement Program, whose purpose is to export hydraulic fracturing technology to countries all around the world. One focus of the program is also to help Europe free itself from dependency on Russian natural gas. The pattern followed by the UGTEP is to start by educating governments about the benefits, downplaying hazards, while assessing regulatory requirements in each country. An example is a USAID document, UKRAINE SHALE GAS: ENVIRONMENTAL AND REGULATORY ASSESSMENT, assessing the possibility of exploiting shale gas deposits in Ukraine. The document was meant to prepare the Ukranian government to exploit their shale gas deposits, or specifically:

1. Help the government of Ukraine to develop an environmentally sound framework for pursuing shale gas development
2. Develop more refined environmental reviews for shale gas development
3. Develop improved regulatory approaches
4. Assist in the development of more transparent and efficient contract tendering

Therefore, the US Government’s goal is to develop shale gas in Ukraine using Hydraulic Fracturing. The task is very expensive, well beyond Ukraine’s financial capabilities, leading the country to seek financial aid from either the European Union or Russia. In January 2013, Ukraine signed a deal with Royal Dutch Shell allowing that company to begin exploratory work ahead of fracking operations, and in November 2013 Ukraine signed a similar deal with Chevron. Meaning that Western powers were making progress in Ukraine, until the country performed an about-face and embraced Russia.

The crisis began when Ukraine chose to partner with Russia rather than the EU. That pitted the West (US and EU) against Russia in a battle for dominance over Ukraine.

The protesters in the street were angered by that turn of events, preferring to partner with the EU rather than Russia. Now that the protesters have succeeded in removing Yanukovych from power, the door is open to Western powers reasserting the control necessary for Western oil companies to go about the job of Fracking Ukraine. Unless the country dissolves into a civil war.

Examiner

15 Comments on "Ukraine overthrows Yanukovych amid US/Russia power struggle over natural gas"

Feemer on Sun, 23rd Feb 2014 2:48 pm 



This has oversimplified this issue. The protesting started when the Ukrainian president rejected an EU trade deal. Then it grew into anti-government and anti Yanukovych. The people are tired of a corrupt government with a dictator as president. They also want to be more european (at least western Ukraine does), hopefully they sign that trade deal.

Eddie on Sun, 23rd Feb 2014 3:47 pm 



I guess they haven’t seen Greece Spain Portugal , Italy ……..

Northwest Resident on Sun, 23rd Feb 2014 5:37 pm 



The author of this article claims a “US/Russia power struggle over natural gas” in the title, but the article doesn’t even begin to make the case for that bold claim. No doubt, American oil companies would love to get into Ukraine and start fracking away, but that hardly amounts to a “US/Russia power struggle.” Blaming what is going on in Ukraine on a power struggle over oil/gas ignores the violent history of Ukraine and bypasses the actual reasons that really explain why the situation is getting out of hand.

bobinget on Sun, 23rd Feb 2014 8:32 pm 



Speaking of Chevron’s shale interests, they are hardly confined to the Ukraine.

Chevron Corp. (CVX), the world’s second-largest energy company by market value, will invest in Argentine shale oil and natural gas fields by bringing dollars into the country and exchanging them at the country’s official rate, said state-run energy company YPF SA.

In a presentation of the $1.24 billion shale partnership with Chevron yesterday, YPF Chief Executive Officer Miguel Galuccio said the San Ramon, California-based company won’t use pesos held in Argentina to fund the investment.

“It is a myth Chevron will use pesos,” Galuccio said. “Chevron will bring real dollars and will sell those dollars in the official market.” In Argentina’s illegal street market the U.S. dollar costs about 9.55 pesos, compared with the official rate of 5.66.

Chevron’s initial $300 million payment to YPF for wells drilled will arrive “sooner than people can imagine,” Ali Moshiri, the head of Latin America, Middle East and Africa for Chevron, said at the same presentation. The remainder is expected to arrive during the next 10 to 12 months in accordance with the pace of the shale operations, he said.

Since taking office in 2007, Argentina’s President Cristina Fernandez de Kirchner tightened control of the foreign exchange market by limiting exports, forcing companies to repatriate money held abroad and banning most purchases of foreign currency.

Investment Recovery

The YPF-Chevron accord doesn’t contain any price guarantees or secret clauses and will be governed by U.S. and Argentina laws and any disputes would go to the International Chamber of Commerce in Paris for arbitration, YPF said in the presentation. Chevron would recover the shale investments around the ninth year of the concession, according to the presentation.

The next step for YPF will be to hammer out a shale gas joint venture, Galuccio said. Companies in line to sign similar accords include Dow Chemical Co. (DOW), Bridas Corp., which is a joint venture between the billionaire Bulgheroni brothers and China’s CNOOC Ltd. (883) and Argentine billionaire Eduardo Eurnekian’s Corporacion America. Galuccio said that a shale deal to produce in Vaca Muerta’s El Orejano area may be sealed this year. He also said the memorandum of understanding signed with Bridas has expired.

Shale Production

Yesterday, the Chevron-YPF venture received final approval from Argentina’s southwestern province of Neuquen to develop the Vaca Muerta formation, which holds the world’s second-largest deposit of recoverable shale gas.

YPF’s plan submitted to Neuquen’s legislature, to which Bloomberg had direct access, specifies the venture will drill 115 wells expecting output of 11 million barrels of oil in the first year. After the first stage ends, Chevron will have an option to continue the accord, which encompasses as much as $16 billion in spending, until 2048.

From the second to 35th year, the venture would drill 1,562 wells to produce 782 million barrels at a rate of 23.7 million of barrels a year on an investment of $15.4 billion, according to YPF’s plan.

To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at [email protected]

To contact the editor responsible for this story: James Attwood at [email protected]

Posted note;
As you may have noticed, Chevron seems committed to drilling at rapid paces, hundreds of wells per year,
in order to supply demand despite expected rapid depletion.
So it will go here in North America.
Expect enormous technical strides in ‘pad drilling’.
Hydraulic fracturing is already demanding water recycling methods, new filtration materials, (carbon nano tubes, grapheme materials one atom thin stronger than steel, http://www.extremetech.com/extreme/115909-graphene-the-perfect-water-filter

A few smaller perhaps more flexible US oil companies
(EOG) have already perfected fracturing methods
exceeding expected longevity. We are only testing the
periphery of this technology.

Arthur on Sun, 23rd Feb 2014 10:35 pm 



What is happening in the Ukraine these days has absolutely nothing to do with ‘power struggles over natural gas’. Washington tries to pull the Ukraine from the Russian sphere of influence. Compare it to France trying to pull Quebec out of Canada in 1967.

http://www.youtube.com/watch?v=C0LQBcygNew

Makati1 on Mon, 24th Feb 2014 12:55 am 



Arthur, you are correct. It is another ploy of the Empire to get missiles closer to Russia. I see a war coming from this before it is all over.

This is like Russia or China getting control of Mexico or Canada and installing missile bases just outside the US border.

Anyway, Russia can just cut off the NG going to the Ukraine and the EU like they did before. They are NOT likely to give up their navy base easily.

So, does Russia break it’s Western contract for NG, invade the Ukraine, or both? We shall see.

Davy, Hermann, MO on Mon, 24th Feb 2014 1:27 am 



PLEASE MAKATI PLEASE, you and your obsession with missiles.

I might add gas exports are a two way street. Gas goes one way money comes the other last I heard. Russians are pretty fond of money so I suspect the “gas export game” will only go so far since no one these days can afford poor market results in our global financial markets.

green_achers on Mon, 24th Feb 2014 1:38 am 



Does it bother anyone else that our State Department, the instrument of foreign policy in the US, has a unit that’s purpose is to promote fracking around the world? All the while claiming to want to do something about climate change?

GregT on Mon, 24th Feb 2014 6:10 am 



davy,

The people that are obsessed with missiles are the people that are positioning them strategically throughout the world. Makati is only pointing out the obvious.

One article from Dec 2013:

http://rt.com/op-edge/anti-missile-system-defense-494/

“Countries which have friendly links with Russia, such as Ukraine, Belarus, Syria and Venezuela have been deliberately targeted and singled out for “destabilization.””

“It is important to see the scheme in its wider context, as a part of an aggressive neocon-inspired campaign to surround and threaten Russia. The missile defense shield is part of that strategy- so is the ongoing attempt to engineer regime change in Ukraine, and bring to power a more pro-western government in that country.”

“Imagine the furore if Russian politicians travelled to countries bordering the US, e.g. Canada or Mexico to take part in anti-American protests calling for regime change and the replacement of the current governments in those countries with ones that had promised to sign a trade deal with Russia and break links with the US. Just imagine too if Russia announced plans to erect a missile defense shield in Mexico. Or if the Kremlin was bankrolling opposition parties in Canada.”

Davy, Hermann, MO on Mon, 24th Feb 2014 1:41 pm 



@gregT – one phase “What is good for the goose is good for the gander. Explain how Makati’s and DC’s friends, China and Russia, do not play the same game. So where is the balance? I hate unbalanced arguments they treat me like I am an idiot. I may be an idiot but that is my position!

GregT on Mon, 24th Feb 2014 3:58 pm 



davy,

““Imagine the furore if Russian politicians travelled to countries bordering the US, e.g. Canada or Mexico to take part in anti-American protests calling for regime change and the replacement of the current governments in those countries with ones that had promised to sign a trade deal with Russia and break links with the US. Just imagine too if Russia announced plans to erect a missile defense shield in Mexico. Or if the Kremlin was bankrolling opposition parties in Canada.”

Now imagine WWIII. A nuclear WWIII, because that is what is at stake here. Ask yourself, what would the US government do if Russia was surrounding the US with missile batteries? Or rather what ‘should’ the US do.

“What is good for the goose is good for the gander”?. So I guess you believe that both China and Russia should start doing the same? Why? Do you think that another arms race is a good thing? I certainly do not. I only want to live my life in peace, and I am sure that I speak for the vast majority of people on this planet.

I don’t care about keeping these companies funded with tax payers dollars, the American people are already having their futures stolen from them.

http://en.wikipedia.org/wiki/List_of_United_States_defense_contractors

I believe that we can find better ways to keep economies afloat. Like taking care of our own problems at home first, instead of creating problems for so many others globally. Killing millions more is not the answer.

Davey on Mon, 24th Feb 2014 4:10 pm 



Greg you have a point but a balanced point would also include how Russia and China contribute negatively almost as much as the us. I might add their communist past set us on a path that is a significant part of the current problem

Arthur on Mon, 24th Feb 2014 4:42 pm 



@gregT – one phase “What is good for the goose is good for the gander. Explain how Makati’s and DC’s friends, China and Russia, do not play the same game.

Last time I checked, Putin-Russia did not invade Iraq, bomb Libya or started to organize an uprising in Syria or threatened Iran or any other country. That the difference.

‘Balanced’ enough?

GregT on Mon, 24th Feb 2014 4:59 pm 



Davey,

I would suggest that capitalism has played a much bigger role in our current predicaments. Resource depletion, climate change, ocean acidification, and all of the associated problems that we face, are not being addressed by furthering the capitalist agenda. Our ‘energy’ would be much better utilized by finding ways to mitigate what is coming, rather than promoting BAU. We should be looking for ways to power down society, to the return of an agrarian rural lifestyle, rather than keeping the military industrial machinery oiled with the future indebtedness of the general populous

Davey on Mon, 24th Feb 2014 5:05 pm 



Gregt agreed but I just needed wanted to make a point about the undeniable damage that Russia and China are adding to the terrible destruction by all capitalistic activities