The West can’t decide who runs Russia, but it can choose where to buy its oil, gas and uranium

When President Biden appeared in Poland yesterday, he said Russian leaders could not stay in power if they continued to bully Ukraine. To this end, global economic sanctions aim to isolate President Putin not only from the civilized world, but also from his people. What is more likely is that Russia will be gradually squeezed out of the global energy supply chain.

The Russian economy is centered on the sale of oil and natural gas. The country is also a supplier of nuclear energy and uranium technologies to operate these plants. Pulling the plug will be difficult. But it can be changed over a few years. The United States, Australia and Qatar can supply natural gas while oil producers in the Middle East are always looking for new markets. In the meantime, Australia, Canada, Namibia and Niger can replace uranium.

“The Russian invasion of Ukraine is a transformational turning point in world affairs, and the tectonic plates are shifting both economically and politically,” said Lori Esposito Murray, chair of economic development at The Conference Board. “The world that emerges from this crisis will be markedly different from the world order that preceded it. Even if Russia wins the battle against Ukraine, it will lose the war because the sanctions will not be lifted without a diplomatic resolution or regime change.

Her comments came at a symposium sponsored by the United States Energy Association in which this journalist was a panelist. Murray went on to say that the economic sanctions – joined by 40 nations – are the toughest ever imposed: the value of the ruble has fallen precipitously, meaning no one wants to own it because they can’t buy anything. The Russian stock exchange was closed while its central bank raised interest rates to 20%. Its economy is expected to contract by 15% this year.

For example, Russian oil and gas sales account for 60% of its exports. Raw materials represent a quarter of its gross domestic product. Europe depends on Russia for 39% of its natural gas. And these countries are now building liquefied natural gas terminals to separate themselves from Russian gas; the Nord Stream 2 gas pipeline will not be allowed unless Putin goes there. Notably, Iran was cut off from the international banking system and subsequently lost about half of its oil export revenue and 30% of its foreign trade.

Deadly decision

At the same time, Russia supplies 20% of Europe’s uranium and 16% of that country’s nuclear fuel. But the war in Ukraine has caused countries to question their relationship with Russia. Russia began supplying uranium soon after the nuclear non-proliferation efforts of 1991-93, which took uranium from bombs and channeled it into nuclear energy for peaceful purposes.

But Russia attacked two nuclear power plants in Ukraine. One was Chernobyl, which was the site of the worst nuclear accident in history. And the other was the largest nuclear power plant in Europe. Ms Murray says President Putin was signaling that he was not afraid to escalate the war – to invoke the nuclear option. In his view, Putin acted to break the will of NATO, made up of countries that experienced cowardly radiation scares in 1986.

But the sanctions are well underway, creating a global ripple effect. “In the short term, the entire global energy sector will experience major disruption, and major change will result,” Murray says. “Long term, there are alternatives to the markets that Russia serves – whether it’s nickel, oil or gas, we’ll see those changes. Russia has destroyed its reputation as a reliable supplier.

“Australia and Canada will step up their efforts on uranium,” Clinton Vance, chairman of the US energy practice at Denton’s law firm, added at the conference. “These changes will not meet all needs, but they will be substantial. There will be a lot of disruption in the short term, but I think the markets will adjust in the medium term. »

War will not create a global recession – if there is no escalation. However, the dispute underscores what some have argued for: the production of more shale oil and gas in the United States. In this country and in Europe, natural gas prices have skyrocketed. “The world is so lacking in energy that everything is needed,” Tellurian chief executive Charif Souki told this writer.

Consider: Tellurian will build an LNG production and export facility in Lake Charles, Louisiana. When the 20 billion dollars “Driftwood” terminal is completed in five years, it will be able to send 28 million tonnes of LNG per year around the world. The Bechtel Group is designing the site and next year construction of the facility will begin.

Green energy can hit yellow lights

According to Nick Akins, president of the American Electric Power, during the information event. The current conflict is the time for a thorough examination – on what it takes to maintain a reliable and secure energy network.

He argues for an “all of the above” energy strategy. Currently, coal accounts for around half of AEP’s electricity mix. Since 2010, his company has sold or retired 13,500 megawatts of coal. It will close eight more coal-fired plants by 2030 or 5,600 megawatts. AEP will replace much of that with renewable energy: 16,000 megawatts of regulated wind and solar power through 2030. It already owns or operates more than 1,900 megawatts of renewable energy. The utility’s goal is to be net zero by 2050.

“We need to make sure we are energy independent,” says Akins. “Suppliers are increasingly concerned about the risk of laying out raw materials. Latency times for new components are 6 to 10 times longer. This part will catch up, but we can also work on these other technologies to further stimulate the clean energy economy.

In the short term, the consensus is that the high price of natural gas will lead to an increase in the use of coal. This will in turn lead to an increase in greenhouse gases. But that won’t last: Most countries have set net-zero goals and configured their policies to promote the use of green energy — a trend that builds on modern, American-made technologies. As the world moves away from fossil fuels, global dependence on Russian oil and natural gas is also decreasing.

However, green energy could be blocked by war. This is because Ukraine provides about 50% of the neon gas used in the world to produce semiconductor chips. Ingas creates them from Mariupol and Cryoin and Iceblick do it from Odessa. Two of these companies ceased their activities.

Solar panels and wind turbines use these materials, which condition energy so that it can be fed into the transmission system. The chips also make the grid smarter, allowing consumers to adjust their power consumption while creating more room for green electrons. The devices further enable utilities to detect faults and prevent outages.

Demand exceeded supply. But the good news is that semiconductor manufacturers are preparing by diversifying their suppliers. Delivery times, however, can be quite long, even for established product lines.

Its a threat. “Every aspect of our world is going digital,” Peter Londa, chief executive of Tantalus Systems, said during the program. “To do that, you need semiconductors. They have very granular energy consumption and power quality data that utilities absolutely need. »

And cyberattacks are just as worrying, he adds. “There is an increased level of activity and threat, particularly from Russian IPs attempting to impact infrastructure.” Energy companies must therefore fortify and protect their assets.

Russia may be decimating Ukrainian cities. But the war will destroy the Russian economy. The West does not have the power to decide who leads Russia. But it can choose its energy suppliers: it pledges to get rid of its dependence on Russian oil, gas and uranium – contextualized by the fact that the planet is already green. Although the realignment will cause economic hardship for the West, it is nothing compared to what Ukrainians have endured.

About Keith Tatum

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