Мichael Delyagin: "Slate Revolution" – Challenge and Possibilities of Russia

Putin gathered in the Kremlin representatives of gas extracting countries. He appealed to them to counteract “pressure” of the West together. He acted with such position at the summit of countries – exporters of gas. Other obstacle – threat of shale gas from the USA – was discussed at the summit except "the third energy pack”. Putin named it “barbarour way of extraction”.

- Why did Putin decide to regale guests with quails? What did he want to achieve? If he is calling gas countries to crusade against Europe? After all he denied that gas community is going to dictate gas prices and production quotas unlike OPEC.

- The European Union firmly, ignoring commercial and professional reasoning, guided by animal hate of management of a number of its members to Russia and other ideological motives squeezes "Gazprom" from their markets. It is a significant factor in deterioration of economic conditions in Russia, it strategically threatens to important projects such as "South Stream", by the way, capitalization of "Gazprom" has collapsed more than seven times which is also essential.

Meanwhile, situation is far not hopeless.

Spot gas has not only unreliable prices, but also physical deliveries: at any time the seller can change motivation and decide that he will sell gas on which you count to someone else. It’s not a theory: already now, say, spot gas in Europe is more expensive, than the Russian pipeline gas and not casually few years ago Qatar entered moratorium on development of new fields of shelf natural gas.

South Stream - extremely problem project, but formally all problems have been solved and the game is worth the candle. If it won’t be blown up by unknown saboteurs many times, if there will be no “orange revolutions” in the countries through which it will go, if these countries (or their heads) won’t simply receive from the USA or the European Union billion dollars for the destruction of the project, than benefits of Russia are fabulous.

On the one hand, gas transmission system of Ukraine will cease to be necessary to somebody on this planet and will fall in hands of Russia, as well as Ukraine despite arrogance of its masters and oligarchs it will be compelled to begin integration with our country not in words, but in practice (as it happened to Belarus after start of Nord Stream).

On the other hand, Erdogan's dream of revenge to the European Union for long-term mockery at Turkey and transformation of this country into gas hub for all South and partly center of Europe which will have by the throat both disbelievers - Christian consumers and abjurers - suppliers (in the person of, first of all, Iran) will fail.

Actually, participation of Turkey in the intervention of Islamic fundamentalists organized by the USA in Syria was also caused by desire to destroy competing project of Assad who agreed with the authorities of Iran about construction of gas pipeline from this country, focused on the needs of Europe. It’s possible to forget about monopolism of Turkey as about regional transit country after it, the answer followed immediately.

Now Turkey captured by mass protests against Islamic fundamentalism (that, as well as events in Egypt, is extremely encouraging factor) will hardly be able to destroy South Stream so effectively as it destroyed Iranian-Syrian project.

Input of South Stream system finally leaves Turkey on roadside of Europe and will create serious preconditions for integration it with the Euroasian union (though it will hardly please the Cypriots preferring to burn the Russian deposits for the sake of tips of the European bureaucracy).

Putin learned by heart cubic meters and pumping volumes not for construction of the next gilded residence, but for preservation, despite the crash of economy, of strategic nuclear forces and air defense in a circle of people making global decisions and influencing destinies of the world.

From the point of view of interests of Russia it, you will agree, not the worst motivation, - though it’s not provided with recourses in the best way.

- What about production of slate gas? Will we conduct war also with the USA? It seems that Putin threw down a gage to the Americans, having declared such way of production barbarous. What do we have in reality? Perhaps Gazprom simply missed such way of production and now we simply kick ourselves?

- I haven’t got about “war”: critically significant part both of public funds and assets of a ruling party (up to children who are given birth in Miami for obtaining nationality) are in a pocket of the USA, no serious rivalry in this situation is impossible simply institutionally. Ratio of forces – both military, economic and political – is such that, having begun such war, management of Russia would simply have no time to capitulate.

About Putin’s humour – we should enjoy it, it’s senseless to criticize it, it is a genre not providing logical judgment by its nature.

It is possible to waste years of life for comparison of a degree of extraction of gas on the fields of "Gazprom" (which, for example, seemingly ruined so-called "Cenomanian deposits”) and in fields of slate gas. It is possible to speak long about cheap price of recultivation of soils after production of slate gas and oil (derricks are simply cut off, new earth from is banked and flowers are planted) and about elementary safety measures – not to extort anything from subsoil under settlements (we learned about it 60 years ago after terrible sink in the Saratov region).

Though what is logic against metaphor? – The same as thin four-eyes excellent student against domestic hooligan.

Therefore we will pass to essence.

"Gazprom" and management of Russia completely missed "slate revolution". The reason is simple: it is revolution not in drilling or geophysics, but in processing of its data and there are in Russia no experts in the field of appropriate computer technologies though they are based on achievements of our mathematics.

Present experts study in our country under elderly professors of precomputer era. Generation, capable to apprehend language of modern computer technologies, has been partially exterminated, partially expelled from the country by liberal reforms and terrible arbitrariness of scientific bureaucracy, there is no one to speak this language.

Thus when management asks appropriate question to the available experts, it receives answer from precomputer era … Let's ask the Neanderthal man about integral calculus and we will thank for the received answer "foremen of reorganization", Gorbachev with Yakovlev, Gaidar, Yasin, Chubais and other kudrins, ulyukayevs, gozmans and dvorkoviches.

Yes, production of slate gas is optimum in average scales. Rather large companies – simply owing to big constant costs – can easily be unprofitable. Though we see that the American state uses this business first of all for reduction in cost of energy and reindustrialization of the USA, leaving, it is necessary to mention it, great opportunities for average productions. "Gold-rush" comparable to Alaskan and Californian is still ahead there.

- If we are going to master slate production or not? Does Russia have any gas strategy in general?

- I can precisely tell you that the Russian management has no strategy as such. It’s the main thing. I haven’t hears about gas and the more so realistic power strategy (we will not treat seriously infinite reincarnations of "Power Strategy for the period till 2020" of ten-year prescription), but even they exist, they don’t have any practical value without comprehensive, basic strategy of development of society.

As for slate production, it is now just little perspective outside the USA in general. The matter is that complex of equipment necessary for correct carrying out of geophysical researches and correct processing of their results (one well needs about ten sessions of computer modeling) costs about 130 mln. Dollars, at that the number of such complexes in the USA is limited, it’s difficult to get them in rent for carrying out of work outside the country. Attempt "to save on matches" unacceptably increases risks: we saw classical examples in Poland where even serious western corporations received either empty wells, or wells with nonflammable gas.

Besides, production of slate gas in the occupied regions is inadmissible as threatens with earthquakes, - and it already deletes almost all Europe from potential places of its development.

Кроме того, добыча сланцевого газа в населенных регионах недопустима, так как грозит землетрясениями, - и это уже вычеркивает из потенциальных мест его разработки почти всю Европу.

Concerning Russia it is possible to tell that making minimum order in gas branch is much more perspective, than production of slate gas as the cost of its production is all the same in times higher, than prime cost of the Russian gas, if, of course, to make calculations without corruption, administrative and political price markups.

- Whether gas blockade of the Russian Federation when our gas will be in general ceased to be bought is possible?

- It is impossible: reasonable demand for our gas will always exist.

Statements that pipeline gas and long-term deliveries are mutually advantageous owing to their stability are promotional for "Gazprom", but are quite true. Swap market provides sharp speculative fluctuations or demands fixed control from the state and Europeans categorically aren't ready to it.

Liberalization of gas market is one more diversion of the USA against their European competitors, the last owing to specifically of the European type of intelligence aren't capable to realize it.

They will continue to force us out from the European market, but they won't do it for 100 percent. Besides, it will be possible to begin deliveries to China, though it’s extremely difficult to trade with it. Signing of unprecedentedly long-term contract with "Rosneft" illustrates it best of all: China is ready to pay enormous money in advance, so that to fix prices at a level in times below the market for decades.

However, in 2016 export of liquefied gas will significantly increase as South Korea will put big ships-gas carriers which are under construction now into operation. After that competitive price of the Russian gas in Europe, by today's estimates, will fall approximately to 300 dollars for one thousand cubic meter with the prospect of smooth decrease to 250 dollars – certainly today's dollars (in case of its noticeable depreciation the price will be higher).

“Gazprom" will satisfied, while Russia – hardly. Certainly, release of export branches from different political and administrative bores will make even in times lower export revenue, than today’s one sufficient for country development, but it will be not today's, but absolutely different, normal Russia.

- Why there were no representatives of Norway where there is a large gas production at a meeting in Moscow? Perhaps, there is more policy, than economy in gas intrigues?

- Qatar was also absent. Discussion of problems of gas sphere was conducted in interests of producers of gas, not of its consumers, while Norway and Qatar at such meeting would defend their position not as producers of gas, but as a part of the West, that is position of consumers of gas no matter how strange it sounds. To discuss gas problems with them is irrational the same way as military problems with NATO management: at best everything will be according to the instructions from Washington and honest ascertaining of the fact that it is possible to agree only with it, while one can find only performers in Brussels.

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