In January, Russia made a world-changing move. It completed a new oil pipeline and port complex that sets Russia up to become a more powerful oil exporter than Saudi Arabia. The ramifications for Europe and Asia are profound: The shape of the global economy—and the global balance of power—will soon be altered forever.
December 28 was a big day of ceremony in Russia. Prime Minister Vladimir Putin pushed a button that transformed global oil dynamics. The button released thousands of barrels of Siberian crude into a waiting Russian supertanker and heralded the opening of Russia’s first modern Pacific-based oil export facilities.
The multibillion-dollar, state-of-the-art oil terminal was a “great New Year present for Russia,” Putin said during the inauguration. The strategic terminal, located in the city of Kozmino on the coast of the Sea of Japan, is one of the “biggest projects in contemporary Russia” he said, not only in “modern Russia,” but “the former Soviet Union too.”
Putin has every right to be enthusiastic about his new port. Kozmino will unlock a two-way gate through which Russia’s vast Siberian oilfields will gush into Asia’s energy-hungry economies—and Chinese, Korean and Japanese currency will flow into Russia.
If the seven ships scheduled to berth in January are all filled, the port of Kozmino will instantly become Russia’s third-most important oil outlet. As of January 20, five of the ships had set sail will full cargoes.
In a symbolic move highlighting Russia’s warming relationship with China, Hong Kong received the first shipment.
Kozmino’s importance will exponentially grow over the next year. Currently, all Siberian oil shipments into Kozmino are delivered by train—but that will soon change. Phase one of the East Siberian-Pacific Ocean Pipeline (espo) was also completed during December. Phase two will connect the Siberian fields directly to the new port. When phase two is finished in 2014, total exports could jump from the current rate of 250,000 barrels per day to over 1 million. Kozmino will transform into one of the largest oil centers in the world—capable of handling 14 percent of total Russian oil exports. It will be one of the most strategic geopolitical assets in Russia’s arsenal.
Russia pumped more than 10 million barrels of oil per day during November. With Saudi Arabian production falling, Russia is now the world’s largest oil exporter. Toss in Russia’s natural gas exports, and Russia is the biggest energy superpower in the world by far. That does not even count Russia’s massive uranium resources and nuclear expertise.
But here is why the new port in Kozmino could radically affect the future of both Asia and Europe. For over a century, Russia’s entire energy infrastructure has focused mainly on supplying Europe. That has now changed forever!
Russia’s Energy Weapon
The first and now-complete phase of the espo pipeline, which connects Russia’s Siberian oil fields to within just a few kilometers of China, is already destabilizing global oil dynamics and shifting them in Russia’s direction. “espo is what political strategists might call a ‘game-changer,’” wrote the Telegraph. “It means that Russia will be able to send its oil either east or west—so it can drive a harder bargain when selling crude to Europe” (Dec. 26, 2009; emphasis mine throughout).
Previously, when Russia has had pricing disputes with Europe, Moscow had to play the embargo card with an obvious bluff. It had no alternative outlet for its oil. Without the Europeans, its oil would sit in the Siberian oil fields of Samotlor and Tyanskoye, costing money instead of making it. But now Moscow can turn off the tap to Europe and still pump in the profits by opening the pipe wide to its energy-hungry Asian partners.
But Russia’s stranglehold on Europe is about to get even tighter—much tighter. By 2012, the espo pipeline will be twinned with a pipeline for natural gas exports so Russian gas supplies can also flow east instead of west if necessary.
This development is truly scary to Europeans.
Moscow has already demonstrated that it is unafraid to turn off Europe’s energy supplies when it feels it needs to. In the middle of winter 2006, Russia shut off gas supplies to Germany and several other countries in order to punish Ukraine. Since then, it has used the same method each winter to strong-arm its former Eastern European satellites back into accepting Russian dominance.
The message is clear: Russian oil and gas supplies are a strategic weapon to be used—or not used—to freeze opponents into submission.
Europe’s Only Choice
Europe, in a tenuous relationship with Russia to begin with, desperately needs to secure another energy source. Only one other region in the world can supply the energy to warm and lubricate modern Europe’s homes and industries: the Middle East. Countries like Germany, which imports 90 percent of its oil, are now likely to become much more dependent on one of the most volatile regions of the world for energy supplies.
It is inevitable that Berlin will seek to expand its ties with oil-rich Gulf Cooperation Council members: the United Arab Emirates, Qatar, Bahrain and especially Saudi Arabia, the world’s second-largest petroleum producer. Europe has no choice but to become much more intimately involved with the affairs of the Middle East, from where it currently gets 40 percent of its oil.
It is therefore no surprise that Germany, the most dominant nation in Europe, has made sure it has troops on the ground surrounding this Middle Eastern “golden triangle” of energy production (Gulf Cooperation Council members plus Iran and Iraq). On the seas, the European Union’s naval presence is growing too. The European anti-piracy task force operates in both the Gulf of Oman and the Gulf of Aden. Forty percent of the world’s ocean-borne oil is shipped through the Gulf of Oman.
Europe is critically dependent on imported oil. And Germany knows it must have a strong presence in the world’s most oil-rich region if it is to secure its flow and the country’s future.
The Bible predicts that a major military clash will soon occur in the Middle East—specifically between a European power, led by Germany, and radical Islam, led by Iran.
Daniel 11:40-45 indicate that Iran will continue to push at this European power until it finally responds in “whirlwind,” blitzkrieg-type fashion. As we have explained for almost 20 years—and has been borne out repeatedly in real-world events—the “king of the south” spoken of in these verses is radical Islam under the leadership of Iran. And as Trumpet editor in chief Gerald Flurry wrote as far back as November 1996, a big part of Iran’s push against Europe “is probably going to involve oil.”
Amid an Unstable Climate
The Middle East is a powder keg that could explode at any time. Syria dominates Lebanon and is stirring up trouble there. Iran is about to create a nuclear weapon and has said it wants to wipe Israel off the map; it is test-firing missiles that can strike European capitals. Israel knows that the window to prevent Iran from getting the bomb is closing. Hamas is preparing to violently take East Jerusalem as a Palestinian capital.
And to top it off, the world is suffering through its worst depression since the 1930s. Oil prices remain above $70 per barrel, and the International Energy Agency has indicated that world oil production will now peak in 2020—10 years sooner than it previously estimated. Some analysts think the world has already reached peak oil production.
In this climate of global instability, Russia’s recent moves on the world’s oil stage will be amplified in dramatic fashion. By unlocking Siberia’s energy reserves, Russia is simultaneously binding Asia together and lighting a fire under Europe.
Watch for the development of an Asian alliance between Russia, China and Japan. And watch for Europe’s next moves toward the Middle East.