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Opinion
July 12, 2019 www.intellinews.com I Page 25
The lack of unity in Europe was thrown into
stark relief by the vote to readmit Russia to
the Parliamentary Assembly of the Council of Europe (PACE) the week before: almost all the old members voted overwhelmingly to readmit Russia – the second set of sanctions imposed on Russia since 2014 to be dropped in six months – leading to a walkout by seven new members in protest, most of whom lie close to Russia’s border and voted to reject the motion.
Oil and energy deals
While the west was preoccupied with negotiations over jobs and Ivanka was walking about looking pretty, Putin was getting down to business.
The most important news to come out of the G20 was a deal struck between Putin and the Crown Prince of Saudi Arabia, Mohammad bin Salman (dubbed "MbS"), on extending the OPEC+ oil production cut agreement by six to nine months that left the quotas in place.
What is remarkable about this agreement is it usurped the regular biannual OPEC meeting
due to start two days later in Vienna where
the production cuts are usually thrashed out. Although Russia is a minor player in terms of total production, it is the single biggest exporter of oil and has the swing vote. Putin’s deal with MbS gives Russia leverage in OPEC and hands Putin the ability to control to some extent oil prices.
The relationship between Russia and Saudi Arabia has radically changed in the last few years. In the past Russia was reluctant to cooperate with OPEC, preferring to benefit from OPEC production cuts that drove up oil prices, unwilling to cut its own production. Now for the sake of politics Russia has agreed to forego some income to bolster prices but in return Putin has hijacked OPEC’s production setting mechanism, which has long been an American protectorate. What was supposed to
be a temporary marriage of convenience is now looking more like a “catholic marriage,” according to a recent comment by OPEC secretary general Mohammad Barkindo, as cited by Bloomberg.
The Saudis are willing participants as they feel betrayed by the US’s drive to develop shale oil production and boost their own production at OPEC's expense. The US has overtaken Russia in terms of daily production of barrels of oil and broken their dependence on the Middle East but that has driven oil prices down and hurt Saudi Arabia, which turned to Russia for help.
Between Russia’s rapidly warming relations
with Saudi Arabia, Syrian President Bashar al- Assad's almost complete dependence on Russia’s military and most recently Moscow’s support for Tehran, Russia has suddenly become a major player in the politics of the Middle East.
It is telling that as the US threatens war on Iran, Tehran rushed through a Free Trade Agreement with the Russian-led Eurasia Economic Union (EEU) to protect its supply chains. The EEU has been an object of ridicule as Russia dwarfs the other members of this trade club, but if Russia starts adding the Middle Eastern countries as members that would be a different story. It is probably no coincidence that in the same week Iran dropped the visa requirement for Chinese visitors.
But maybe the most telling deal the Russians did on the sidelines of the G20 was to persuade Japanese firms Mitsui & Co. and the Japan Oil, Gas, and Metals Corporation (JOGMEC) to buy a combined 10% stake in Russian independent gas producer Novatek's Arctic LNG project. The deal, signed during the G20 meeting, puts Japan into a joint LNG project with France's Total and China's CNPC and CNOOC, according to the Kremlin.
Japan is the kingpin in the US security system in Asia as bne IntelliNews reported in a the feature “Playing real Risk,” but the energy-hungry
Japan is playing pragmatic politics and not only
is Russia already supplying it with increasing amounts of LNG, China is rapidly expanding its influence in the South China Sea. Tokyo is starting to hedge its bets and the Japanese are not exactly a liberal democracy either.