Gazprom Pipeline Runs Dry

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Michael Ransom, Contributing EditorLast Modified: 08:05 p.m. DST, 21 June 2014

KIEV, Ukraine -- The violent conflict between Russian separatists and Ukrainian militias is slowing down, if only momentarily, due to a ceasefire declared by Ukrainian president Petro Poroshenko on Wednesday, 18 June. While bloodshed may be decreasing, Russia has initiated a new economic offensive, shutting off the primary gas pipeline running between the two nations.

According to Russian officials, Ukraine has run up an oil bill totaling more than $4 billion, although Poroshenko's administration denies this figure. The issue at hand is not whether Ukraine owes its northeastern neighbor for unpaid gas, but rather the size of the debt. Ukrainians have been vocal about Russian price-gouging, claiming that exports to Ukraine are sent at a steep premium when compared to other countries. Also, according to Poroshenko the value of Russian oil fluctuates at president Vladimir Putin's convenience.

While Russia closed the tab on 16 June, the move will not immediately impact the Ukrainian markets. Like much of Russian diplomacy, shutting off the pipeline is more a show of power than anything else. For now, the gas reservoirs throughout Ukraine are full and will provide energy for months. Even so, winter months are brutal in Ukraine, and officials will need to act fast to secure reliable gasoline preserves for wintertime.

The feud impacts communities outside of Russia and Ukraine. Gazprom, the corporation responsible for the supply termination, is the largest gas company in Russia and one of the largest international suppliers. European Union nations rely largely on the circulation of Gazprom oil through Ukraine, which is then sold and traded further west into EU countries. The uncertain relationship between Russia and Ukraine, especially in light of the ongoing Ukrainian civil war, leaves EU member nations at the mercy of regional stability.

Sensing the gravity of the situation, EU representatives have tried to middleman a compromise between Ukrainian and Russian executives, to no avail. Gazprom will require Ukraine to pay at least half of the debt before any more oil crosses the border. Ukraine has dismissed the offer, citing the longstanding price inflation and demanding that the costs be set at a rate consistent with the international market.

At the end of the day, both Ukraine and Russia have much to gain by cooperation, and more to lose if the regional friction continues to silence synergy. A good portion of Gazprom revenue comes from Ukrainian consumers and the network of markets throughout the EU. And similarly, Ukrainian winters could prove dangerous without the necessary raw materials.

The stalemate is expected to drag on, as both parties are sure of their facts and figures regarding oil transactions. Russia and Ukraine will both plead their case to international mediators in the coming months, but considering the average length of arbitration and settlement agreement, it will likely come down to the combined efforts of Kiev and Moscow to resolve the dispute and steady the market.

Follow Michael on Twitter Twitter: @nahmias_report Contributing Editor: @MAndrewRansom

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The Weight of First | Pres. Johnson Sirleaf

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Ayanna Nahmias, Editor-in-ChiefLast Modified: 17:13 PM EDT, 3 February 2012

MONROVIA - Liberia's re-elected President Ellen Johnson Sirleaf who is the first and only female President in Africa, has named the first ministers of her new cabinet on Thursday.  She appointed new finance and foreign affairs ministers but retained her defense minister.

President Johnson Sirleaf, a Nobel Laureate, has vowed to continue to implement the changes she initiated during her first term.  She was sworn in for a second term in power this week and is being watched by her countrymen and the world to see if she will be more aggressive in her efforts to eradicate the corruption which plagues Liberia and other African nations.

She has also promised to cut poverty and high youth unemployment which is rampant in a nation that has been besieged by protracted nine year civil war. U.N. peacekeepers have overseen the country's security since the end of some 14 years of war in 2003. But the world body is under pressure to end the costly, 9,000-strong mission.

Foreign investors compound the issue of high unemployment and housing shortages by importing workers and seizing control of land. Under her governance, more foreign corporations have been awarded the right to harvest trees for lumber often displacing residents and leaving the terrain vulnerable to run off and mudslides.

This type of Neo-Colonialism is spreading across the Continent as Western countries seek to openly exploit the vast natural resources of Africa. Liberia is mineral rich and since the discovery of vast oil reserves off of its Coastal shelf it is poised for exploitation and the resultant corruption that can occur when multinational petroleum companies strike deals with the government.

President Johnson Sirleaf must remain vigilant against the type of exploitation that occurs in Nigeria's oil and gas industry. In the Delta region of Nigeria, the environment is extremely polluted as the country does not enforce any environmental protections regulations. The citizenry's health and lifestyles are also adversely impacted by lax and sometimes criminal disregard for how these companies drill and dispose of the oil and gas.

We congratulate Liberia in re-electing the first female African President and look forward to seeing what she can accomplish in her second term.

Follow Nahmias Cipher Report on Twitter
Twitter: @nahmias_report Editor: @ayannanahmias

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South Sudan. Newest Country. Newest Colony?

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10 July 2011 - Last year we reported on Land Grabs in Ethiopia and earlier this year we featured a post on Neo-Colonialism in Africa.

Yesterday, South Sudan became an independent country poised to become the 193rd member of the United Nations.  Simultaneous to its creation representatives from multinational corporations have begun to pour into Juba, the capital of the fledgling nation.  The number of foreigners arriving is so noticeable that locals have begun to complain.

Foreign powers invading and carving up Africa in order to exploit its land and resources is well-known practice.  In the 19th Century the era of European Colonization began in Africa.  At that time, the major players were the United Kingdom, Germany, France, Italy, Portugal, Spain and Belgium. These countries arbitrarily sectioned off areas of the continent without consideration of tribal or familial connection.

In South Sudan representatives from Chinese and Lebanese multinationals and smaller companies from Eritrea, Ethiopia, Uganda, Kenya, and Zambia are a few of the countries  seeking to establish a strong hold in the newly formed country.  In the wake of the announcement of the nascent state's formation these Neo-Colonialists have begun a process which will ultimately result in a transformation of the country.

Like many underdeveloped areas of Africa, Juba's dirt roads are crowded with pedestrians carrying impossibly large loads on their heads. People transporting firewood, water and produce for sale.  They traverse the country via dusty pathways and compete with large horned cows for minimal space to either side. Because inhabitants of the country have been engaged in war and survival they are ill-equipped to work the emerging economy.

Thus, it is a certainty that most of the Southern Sudanese people will be relegated to service level job as domestics, cooks, drivers or resort to criminal  activities  such as prostitution, drugs robbery and murder.  Under colonialism these were the only positions available to the indigenous people and they rarely if ever had the opportunity to advance.

While living in Nigeria as a child, I recall the slow transformation of the country as the oil wealth poured into its national coffers.  Unfortunately, the petroleum companies transferred the profits of the 'black gold' back to their countries of origin and the remainder to government official to ensure continuity of service.  Corruption in many African countries is pervasive and an expected cost of doing business.

In Nigeria bribes to government officials are used to encourage them to turn a blind eye to the adverse environmental impact of petroleum pollution to the surrounding territory. When the British Petroleum (BP) oil spill occurred off the coast of Louisiana in the Gulf of Mexico the world was justifiably horrified.

However, on the Nigerian Coastal environment, large areas of the mangrove ecosystem have been destroyed. Oil spill has also destroyed farmlands, polluted ground and drinkable water and caused drawbacks in fishing off the coastal waters. There has been continuous regional crises in the Niger Delta area as a result of oil spill pollution of the coastal ecosystem.

Between 1976 and 1998 a total of 5724 incidents resulted in the spill of approximately 2,571,113.90 barrels of oil into the Delta region environment. Some major spills in the coastal zone are the GOCON’s Escravos spill in 1978 of about 300,000 barrels, Shell Petroleum Development Corporation’s (SPDC’s) Forcados Terminal tank failure in 1978 of about 580,000 barrels, Texaco Funiwa-5 blow out in 1980 of about 400,000 barrels, and the Abudu pipe line spill in 1982 of about 18,818 barrels (NDES, 1997).

Other major oil spill incidents are the Jesse fire incident which claimed about a thousand lives and the Idoho Oil spill in January 1998, in which about 40,000 barrels were spilled into the environment (Nwilo et al, 2000)." (Source: Niger Delta Today)

Despite these gross violation of human rights and environmental protection, there is rarely any outcry from the global community about these abuses.  I distinctly remember walking along the pristine beaches of Tanzania and every so often I would encounter globules of oil washed up on the shore.

As I lifted my gaze from the globules at my feet toward the horizon I saw a mirage like view of a moored oil tanker.  The captain and its crew routinely stopped off the Tanzanian coast to clean the tanks and jettisoned the waste into the Indian Ocean.  Were this to occur anywhere in the Western world there would be a cacophonous outcry but this is rarely the case in Africa.

Given this track record of egregious violations by petroleum companies operating in Africa we can only hope and watch as South Sudan develops its economy based on its most valuable resource.

Follow Nahmias Cipher Report on Twitter
Twitter: @nahmias_report Editor: @ayannanahmias

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