Instability In Oil And Gas Producing Countries Brings Risk To Some, Rewards To Others

By Claude Salhani

Along with causing considerable hand wringing among Western leaders, Russia’s recent annexation of Crimea has raised concern in the oil and gas world — an already volatile sector of the economy that regularly contends with political upheaval in the energy-producing countries it relies on.

The oil business in particular does not react well to sudden disturbances in the economy or drastic political changes like what happened in Kiev last month. So many things can go wrong between when oil is extracted from a field in, say, Kuwait, Saudi Arabia, or Azerbaijan, and when it’s piped to a refinery and shipped to a port facility to await loading onto a tanker for transportation to its final destination.

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In times of peace, sending oil onwards is a pretty straightforward transaction.  The oil comes in, is refined, travels by pipeline or tanker to its destination, and all goes smoothly.

However, when oil or gas has to pass through a conflict zone or unstable country, the dangers multiply with every transit point and can trigger a logistical nightmare. The moment insurance companies smell trouble, they tend to raise their rates, and the added cost is passed on to the consumer. It is usually the added costs of insurance that raises prices at the gasoline pump.

On the other hand, crises and conflict can offer opportunities for other parties to make or save money.

Russia, one of the world’s largest producers of oil and gas, may have a hard time offloading some of its production if sanctions are imposed by the West in retaliation for its actions in Ukraine. Already, one of its major oil customers is using that as leverage.

Turkey said this week that it would try to squeeze a discount out of Russia for the gas it currently purchases from them. Turkey’s Minister of Energy and Natural Resources, Taner Yildiz, said the issue of obtaining cheaper gas from Russia will be on the agenda at the next meeting of the management of Russian oil giant Gazprom, due to be held in the coming days. Yildiz’s comments were reported April 21 by Turkey’s TRT Haber TV.

He called reports that Gazprom has refused to agree to a discount “untrue” and said the contract between the two countries “gives every reason to Turkey to demand a discount on the gas it receives from Russia.”

Yildiz also said the meeting will include discussion of an increase in the supply of Russian gas to Turkey.

The Turkish state pipeline company, Botas, imported 38.42 billion cubic meters of gas from various sources in 2013, less than the 43.09 billion cubic meters it imported in 2012.

Officially, gas prices are not made public. But thanks to the Turkish media, it’s an open secret that Turkey is currently buying Russian gas at $425 per 1,000 cubic meters. Turkey also pays $335 for 1,000 cubic meters of Azerbaijani gas, which is supplied via the South Caucasus Pipeline (Baku-Tbilisi-Erzurum pipeline).

The country pays $490 for 1,000 cubic meters of Iranian gas. Turkey has contracts with Russia to supply 20 billion cubic meters of gas per year, with Iran to supply 10 billion cubic meters of gas, and with Azerbaijan to buy 6.6 billion cubic meters.

Turkey also has agreements with Algeria and Nigeria to supply 4.4 billion and 1.2 billion cubic meters of liquefied natural gas per year, respectively. A diversified supply network reduces risk, after all, and it’s anyone’s guess where the next trouble spot might occur.

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Airbus Military’s A-400M gives Euro troops greater autonomy

airbus_military_170414_1By Claude Salhani – Trend:

Turkey received its first military transport airplane this week, the new A-400M, a state of the art all purpose transporter from Airbus Military. The transporter will offer European air forces added autonomy. Most Western military were dependent on the U.S. for long range transport until the A-400M.

A “versatile airlifter” the A-400M performs three very different types of missions: it is able to perform both tactical missions directly to the point of need and long range strategic/logistic ones. And it can also serve as an air-to-air refueling “tanker.” Four unique counter-rotating Europrop International (EPI) TP400 turboprops power the A400M. It offers a wide flight envelope in terms of both speed and altitude. And it can be used to help in humanitarian operations.

The transport plane was launched in 2003 to respond to the combined needs of seven European Nations regrouped within OCCAR (Belgium, France, Germany, Luxemburg, Spain, Turkey and the UK), with Malaysia joining in 2005. This is one of the major reasons for its extreme versatility. Its maiden flight took place on December 11, 2009.

It has a maximum payload of up to 37 tons (81, 600 lb) and a volume of 340 m3 (12, 000 ft3). The A400M can carry numerous pieces of outsized cargo including, vehicles and helicopters that are too large or too heavy for previous generation tactical airlifters, for example, the NH90 or CH-47 Chinook helicopter, or two heavy armored vehicles. It can also carry a heavy logistic truck, a rescue boat, or large lifting devices, such as excavators or mobile cranes needed to assist in disaster relief, besides the ability to carry 116 troops with all their gear.

The four unique Europrop International (EPI) TP 400 turboprops allow the plane to fly distances of up to 4,700 nm / 8,700 km, at a cruising altitude up to 37,000 ft, and at a speed of up to Mach 0.72. If need be, it can fly up to 40,000 ft for special operations.

Its capability to fly faster and higher means it can respond more rapidly to crises, because greater distances can be flown in a one crew duty day. The A400M is hence much more efficient than its predecessors. Also, as it can fly higher, it can cruise above poor weather and turbulence found at medium altitudes, resulting in less fatigue for the crews, and passengers or troops alike.

Its unique short landing characteristics make the A400M the only large airlifter that can fly equipment and personnel directly to the site of action, where these materials are urgently needed. In addition to its Europrop EPI TP400 Turboprops, which are less sensitive to ingestions than jet engines, the A400M is fitted with a twelve-wheel main landing gear and an efficient absorption of shock-loads into the airframe structure for operations from stone, gravel or sand strips, and is designed to minimize risk of foreign object damage.

This allows the A-400M to land and take off from any short unprepared airstrip no more than 750 meters, or 2500 feet, with a payload of about 25 tons.

Airbus Military has received orders for 172 planes, each costing US$181.5 million. Two planes have been delivered to date. Turkey’s was the second.

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Caught in the Syrian tempest Saudi Arabia replaces chief spy

By Claude Salhani –

A Saudi royal decree announced that the kingdom’s top spy, Prince Bandar bin Sultan, the head of the country’s intelligence services was being relieved of his post, at his own request, and that his deputy would replace him.

Politics in the desert kingdom are not simple, to say the least. To better grasp what is happening in the country, one needs to look at Saudi Arabia’s involvement in Syria. And to better understand what is happening in Syria it is important to zoom out of the picture a little bit and to take in a wider scope, one that includes Iran.

Saudi Arabia’s battle with Syria is nothing personal. Well, it is actually, and we will come to that in a moment. But what is really driving the House of Saud – and what has been driving it since the beginning of the Syrian revolt – is Saudi Arabia’s mistrust and fear of Iran. More precisely, fear of what they regard as Iran’s desire to expand its influence, and its desire to obtain nuclear weapons.

Saudi Arabia and most of the other oil rich emirates regard Iran as a threat to their immediate security, from both internal and external approaches. Internally by instigating the Islamist element and externally by obtaining nuclear weapons.

In the past the Saudis had relied on the United States for their defense. Indeed, a pact first reached between King Abdel Aziz ibn Saud and President Franklin D. Roosevelt at the close of WWII, guaranteed the United States would be able to buy cheap gas from Saudi in return for providing protection to the kingdom.

But now the region has changed and the rules of engagement have also changed drastically. So important is the issue of making certain that Iran does not walk away from the Syrian conflict with a victory that in July 2012 the king appointed one of the most noted and capable men of the kingdom to handle the Syrian dossier.

Indeed, Prince Bandar bin Sultan had served as his country’s ambassador to Washington for nearly three decades. While in D.C. the Saudi envoy became the center of Washingtonian diplomatic life, where fine wines and cognac and Cuban cigars were abundant. Bandar spared no expense to entertain his guests. He became close to the Bushes and was a frequent guest at the Bush ranch in Texas, so much so that he was given the nickname “Bandar Bush.”

Upon leaving Washington, Bandar served as head of the National Security Council, often carrying messages back and forth between Washington and Riyadh.

When it became apparent that the war in Syria would drag on, the king appointed Bandar as the kingdom’s chief spy and front man in charge of overseeing Saudi’s role in the Syrian conflict. What exactly is that role? It is twofold. First it is to try and check Tehran’s influence in the region. And second – we mentioned the personal aspect of the conflict – was to get back at Syria for the killing of Lebanon’s former prime minister, Rafik Hariri, who enjoyed immense Saudi backing.

Bandar promised he would have the Syrian situation cleared up in a matter of months. Instead, it has worsened with more groups and countries and factions involved and rather than being ousted from power, as Riyadh had hoped, Syrian President Bashar Assad appears to have the upper hand once again.

Bandar tried to convince the Russians to abandon their long time friend and ally but President Vladimir Putin was adamant in his support for the regime in Damascus.
So perhaps in part due to his inability to achieve any headway, perhaps in part due to Bandar’s failing health, King Abdullah announced in a report carried on the official news agency that the prince was being replaced as head of the intelligence services by Youssef al-Idrisi. The Saudi Press Agency stated that “Prince Bandar was relieved of his post at his own request and General Youssef al-Idrissi was asked to carry out the duties of the head of general intelligence.”

Bandar had become extremely upset with the Obama administration’s lack of positive action regarding Syria and relations with Washington were at their lowest point.

The Saudis in recent months re-evaluated their policy regarding Syria and the Islamist threat and the recent appointment of Prince Nayef as Interior Minister, a powerful position in the kingdom, was an indication that Riyadh wanted to focus more on internal security and prevent trouble from erupting in the country rather than becoming more involved in Syria.

The Saudis are not without blame in the mess that is taking place in parts of the Middle East today. For years they followed a two-tiered policy; supporting terrorists on the one hand and trying to fight it on the other. It was a policy that would come back to bite. And it did.

Claude Salhani is senior editor at Trend Agency in Baku and a political analyst specializing in the Middle East, Central Asia and terrorism. You can follow him in Twitter @claudesalhani.

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Who Really Won the Cold War Now?

By Claude Salhani

Since the fall of the Berlin Wall the West was under the illusion that it had won the Cold War.
The Western powers had defeated communism, brought down the Iron Curtain, freed the peoples living under Soviet influence, brought the dreaded Berlin Wall down and saw the disbandment of the Warsaw Pact. NATO, the West, the US and democratic Europe had won. Or so it seemed.

Yes, that is all true. Communism is a memory of the past, a bad memory too.  The other side lost, but judging from where Russia stands today, it does not exactly look like a loser. Russia today controls much, if not most of Europe’s gas, an essential element to keep things moving.

Could this showdown between Russia and the West have been avoided? Would things have been any different if relations had been better? Would the Russians have acted any different had the US and the EU acted more cordially towards the Russians? This is no doubt a question historians will be asking themselves for years to come.

In fact what happened is that at the fall of the Soviet Union the West continued to treat Russia as though it was the Soviet Union. Russia is not entirely without blame either, but it probably feels that it needs to act now as the elements permitting its expansion, mainly a weak leadership in Washington and Brussels, was unlikely to present itself that frequently.

But now is when the real problems begin as neither side wants to appear weak and backtrack on their positions. The West in fact feels frustrated by the lack of retaliatory actions it can take against Russia. As a military response is not the answer the other step left to the Western powers is to apply economic sanctions.

But will those really work without at the same time punishing some allies as well?  It will be very difficult to apply sanctions on Russia without hitting at Kazakhstan and Belarus, who share the Common Economic Space with Russia.

This threat also affects countries that are planning to join the CES and the Customs Union, such as Armenia, Kyrgyzstan and Tajikistan. The five former Soviet countries have retained economies that are closely associated with Russia’s and any sanctions slapped on Moscow are every likely to have immediate negative effect on them as well.

While the powers that be are still debating what action should be applied against Russia no one seems to have an exact idea as to how much harm the sanctions might cause versus how much will they help, Kazakhstan, for example, is highly worried that sanctions targeting Russian oil companies would hurt its oil production transiting through Russia. As it would also affect Kazakh gas exports.

It is hoped that a political breakthrough will occur and that logic will prevail and that the worst will be avoided.

But just the threat of sanctions may be enough to hurt Russia, for example, threats of financial punishment may be enough to scare some countries from joining up with Russia, such as Armenia. But on the other hand, say some analysts, it may well have the reverse affect and speed up countries like Armenia, despite the fact that Yerevan was clear in its position, saying that it would not change its mind about where it stands. Armenia is a special case because it very badly needs Russia’s support over the Nagorno-Karabakh region over which it is in dispute with Azerbaijan.

So no matter how you spin it Russia seems to come out on top of the stack. Moscow may have lost its Soviet empire but it now holds more of a leash on Europe than it did with its tanks and missiles.


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Adieu Dominique

dominique-baudis-violence-administration-1I received a message on my Facebook page last Thursday morning alerting me of the death of one of my closest friends, a victim of cancer. Although we had not been in contact recently, each occupied by our careers and family and all the barriers that come with the passing years, we still kept in touch through mutual friends and acquaintances, passing along regards and keeping abreast through the media: he by being in it and me by covering it.

Dominique Baudis had left journalism to go into politics. He became mayor of Toulouse, France’s fourth largest city in the southwest, and was elected to the French and European parliaments.

The last time I saw him was when he invited my son Justin and I, to watch one of the Soccer World Cup games in Toulouse when France was hosting the 1998 World Cup. We met in his office in the grandiose town hall, and after a few glasses of champagne headed to the stadium with his son who was roughly the same age as mine, along with a police escort and with sirens blaring.

Baudis and I met in Lebanon just as the civil war broke out in 1975. He was the correspondent of France’s TF1 television channel and I was the correspondent of Sygma, the premier news photo agency at the time. We became close friends and together with his crew, we ventured out to cover the war.

There were many other assignments too, as we traveled around the Middle East getting ourselves into more trouble than I care to remember. But as they say, God loves fools, and He must have loved us a great deal. Indeed, there were times when we thought we would not make it out alive.

Those were incredible year and incredible times. We braved the war and the fighting daily. We navigated our way around and through a thousand and one roadblocks. We tempted the devil and then some. We took the greatest of risks believing we were invincible. Then after dark, once we had filed our stories and shipped our films, we partied. Beirut, despite the war still had a vibrant nightlife and we took advantage of that.

I tried to remember some of the crazier things we did such as the time we drove by mistake into the Palestinian refugee camp of Tel Zaatar while the camp was under siege by the Christian forces. This was the early days of the civil war and although there were reports of heavy fighting every night and reports of casualties, we had yet to see any. And Dominique was desperate for images. So he came up with a plan to follow the next ambulance we saw. As if on cue a convoy of several ambulances from the International Committee of the Red Cross drove by. Dominique perked up and told the driver to follow the ambulances.

It took several long seconds for the reality of the situation to sink in. We had ventured into the eye of the storm and the fighting was getting heavier by the minute and it became far too dangerous to try and make a break for it. Time passed and nightfall was minutes away. The Red Cross representative, a Swiss, was quite adamant: unless the fighting stopped the wounded would remain in the camp and we would stay there for the night. No one cherished the idea of spending a night in a besieged refugee camp while it was being pounded by heavy artillery and rocket fire. Finally, the ICRC managed to get a ceasefire for a few minutes, giving us just enough time to get out of the besieged camp. As we drove away several snipers, not informed about the cease-fire agreed to, open up. Thankfully, there aim was not very good.

Another time Dominique wanted to do a stand up on a roof top overlooking Martyr’s Square, the main center of Beirut and at the time the most dangerous place where rockets, mortars and artillery shells were literally raining down on the square. We ran into a French mercenary, a veteran of Cambodia called Francois, who had volunteered his services to the Christian Phalange Party. Francois was training a group of Phalangists on counter-sniper tactics.

We made our way across Martyr Square and climbed up to the roof of the Empire Cinema building. The incoming fire from small arms was intense and we had to crawl the last 20 or 30 meters while “our” side provided cover fire. Dominique did his “stand-up” lying down, with bullets flying a fraction of an inch over our heads. At one point Francois spotted the other side setting up a 60mm mortar and ordered everyone immediately off the roof. The first mortar hit the very spot were we were crouched barely 15 seconds earlier.

And of course there were many good memories, too. Adieu Dominique.

(A ceremony honoring him will take place at the Invalides, in Paris and will be attended by French President Francois Hollande.)

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Russia’s New Weapons: Passports and Pipelines

By Claude Salhani

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Culture Vulture: Vodka on the Rockies


By Claude Salhani
LAS VEGAS, July 26 (UPI) — So, you really thought the Cold War was over and done with, that the Evil Empire was defeated and the good guys won, right? Well, comrades, that is all just capitalistic propaganda.Think again, because there is a restaurant in Las Vegas, in the very heart of the capitalist temples of profligacy and decadence that attests otherwise, and puts you back in the U.S.S.R. As Lennon and McCartney would say, “boy, how lucky you are.”

“Red Square” is a restaurant that serves Russian caviar and more than 200 kinds of vodkas — many of them Russian, of course, but including some that come from Belgium, Jamaica and Jordon. Not a typo, comrades, that’s the way it’s spelled on their menu, of which the last six pages are devoted exclusively to vodkas. Ask the barman, and he shrugs his shoulders. Hey, he only serves it.

The bottle of Jamaican vodka, the staff admits, still is full from the day the restaurant opened several years ago, save for a single serving. But in all fairness, the Stoli is excellent. As are the blue cheese-filled olives. Capitalism, after all, has its advantages.

Let no one tell you, though, the people who dream up the Vegas casino themes will not go the extra step for your enjoyment.

In keeping with its Soviet philosophy of maintaining secrecy, Red Square, in the Mandalay Bay Hotel, is not an easy place to find. One gets the feeling that, somewhat like the people who ran the Kremlin on the edges of the real Red Square, those who run the Vegas version wanted to add to the aura of je ne sais-quoi.

It took this eager reporter and his dinner companion a good 10 minutes of wandering among a sea of poker tables, slot machines and other tools of Western debauchery, before locating it. And that, only after swallowing my male pride and asking for directions — twice.

But then, lo and behold, there it is! Red Square, in all its Soviet splendor.

A large, decapitated statue of Vladimir Ilyich Lenin stands guard outside the establishment. However, unless you read Russian, you will need to decipher that this is indeed the place you are looking for. There are no signs for Red Square, as such, rather the name, high above the church-like entrance is chiseled in stone — or what passes for stone in Vegas — and is written in Cyrillic characters, with the reversed “R.”

You enter, nevertheless with a little trepidation, into a grandiose room decorated in deep, Soviet scarlet red. The lights are dim and at first you feel as though you should whisper. This is, in most probability, the only temple to communism left standing in the entire Western world. And remember, there certainly are not many left in the communist world, either. Even in Russia, Lenin’s portraits have disappeared from government offices, and except for a few die-hard party apparatchiks, people have largely stopped revering him.

Two or three large — and I mean large — Great Patriotic War-era posters decorate the walls. (That’s how the Soviets refer to World War II.) The images of valiant Soviet comrade-soldiers cover some of the walls, running from floor to ceiling. A painting of Comrade Lenin hangs elegantly on the far wall, high above the dining room. Big Brother is there to make sure you enjoy your evening. With every sip you almost feel obliged to raise your glass to toast the great leader, and the working class — the latter who certainly could never afford to wine and dine in such self-indulgent splendor.

The bar, one of the most intriguing aspects of Red Square, is covered with a 2-inch slab of ice. Very convenient to keep your vodkas ice cold, as they should be. And also convenient for refugees from the gulags, just in case they forgot what their front porches in Siberia felt like.

The waiters and staff are all dressed in black and sport a hammer and sickle, the Soviet emblem, in a small red square on their chest. They look like the bad guys in James Bond films. Only Ernst Stavro Blofeld, you know, the man with the white cat, and Rosa Klebb, the evil KGB woman with a stiletto hidden in her shoe, are missing.

As an observer, and a chronicler of history, I found the concept of a Soviet-styled bar intriguing and wished Red Square would use Russian music, instead of Western rock and roll, which sadly clashes with the rest of the décor.

Russian music is wonderfully rich and the Soviet Red Army Band’s harmony would add a seal of greater authenticity and zest to the place. Or preferably, listening to the songs of someone like Vladimir Vysotski — Russia’s answer to Bob Dylan — probably would encourage you to consume greater amounts of vodka, which by the way, is easy to do when you stare at all those inviting bottles.

A voice such as Vysotski’s can only be acquired after years of smoking filterless Russian cigarettes and consuming vast amounts of Russian vodka, preferably clandestinely distilled in your uncle’s backyard shed.

But all this nostalgia for the past makes me wonder if the next themed attraction will be a Third Reich bar down the hall. Or maybe the Paris Las Vegas Hotel and Casino could dedicate a room to the Vichy collaborationists?

(The Culture Vulture is a column written by UPI’s Life & Mind editor, and reflects on current trends, issues and events. Comments may be sent to

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