[Marxism] Fwd: H-Net Review [H-Diplo]: Labelle on Grigas, 'The New Geopolitics of Natural Gas'

Andrew Stewart hasc.warrior.stew at gmail.com
Sat Jan 27 15:31:06 MST 2018

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From: H-Net Staff <revhelp at mail.h-net.msu.edu>
Date: Sat, Jan 27, 2018 at 7:07 AM
Subject: H-Net Review [H-Diplo]: Labelle on Grigas, 'The New Geopolitics of
Natural Gas'
To: H-REVIEW at lists.h-net.org

Agnia Grigas.  The New Geopolitics of Natural Gas.  Cambridge
Harvard University Press, 2017.  416 pp.  $35.00 (cloth), ISBN

Reviewed by Michael Labelle (Central European University)
Published on H-Diplo (January, 2018)
Commissioned by Seth Offenbach

The New Geopolitics of Our Times

Energy resources and geopolitics are intertwined in our modern
economies. _The New Geopolitics of Gas_ by Agnia Grigas exposes the
shift from continental geopolitics to the emerging global market in
natural gas. Grigas provides a thorough accounting of the politics,
economics, and events marking the rise of gas as a key element in a
low-carbon energy system. The book provides detailed discussions on
issues like the shale gas revolution in North America and geopolitics
in central eastern Europe. It also addresses lesser known stories
behind developments like the rising imports to China, Russia's
take-over of Crimea, and the export and trading hub of Qatar. _The
New Geopolitics of Gas_ is a valuable account of the new geopolitical
order in gas, serving as a foundation to understand daily events and
provoking thoughts for further research. The timeliness of the book,
as populist political tendencies rise, serves as a reminder of the
benefits of international trade in a commodity.

The order of the book is along regional divisions, which spreads
analysis of technical developments and international relations
throughout the reading. This serves as a good order to understand why
gas is entering a new global phase of geopolitics. Between 2005 and
2015 there were significant developments in the United States: the
development of hydraulic fracturing technology, the boom in shale oil
and gas, and the construction of liquefied natural gas (LNG) export
terminals. These events are now upending the regional division of gas
markets. The production of copious amounts of shale gas is keeping US
domestic prices low while allowing for gas exports. This gives the
United States sufficient quantities to enter the global LNG trade
dominated by traditional allies and foes. Deliveries to Asian
countries, such as Japan, represent strengthening commercial and
political ties, while deliveries to Poland offer up geopolitical
conflicts with Russia.

There are three key themes running through the book: 1) US shale gas
output; 2) LNG technology; and 3) Russia and Gazprom. Between 2005
and 2015, the extraction of shale gas in the United States
underpinned shifts in the global gas trade. As chapter 1 covers,
there are price differentials in regional markets, such as between
Asian and European markets, which emerge as opportunities for US LNG
exports to enter. These markets, such as in the Asian LNG market
between Australia and China, are dominated by regional LNG
deliveries, or pipeline gas from Central Asia. At the same time, as
noted above, politically significant deliveries can occur, like US
LNG shipments to Poland, a traditional dependent of Russian gas.
While US volumes are small in terms of the global LNG trade, there is
high political and economic significance to these deliveries.

Developments in LNG technology enabled the US shale gas revolution,
facilitating US entry into the global gas trade. Grigas provides a
detailed description of this technology and how it is inserted into
existing gas infrastructure and markets. The transport and financial
aspects of LNG make it a game-changer for countries formerly reliant
on domestic or regional supplies. Whether gas is used for heating
homes (as in eastern Europe) or power generation (such as in western
Europe and Japan), the technological and economic fit with an
existing system is well explained throughout the book.

The role Russia and Gazprom play in representing pipeline gas is
explained in detail in chapter 3. Russia's involvement and building
of its LNG export capacity is described in detail, but it is the
descriptions of European pipeline projects like North Stream I and
South Stream that provide the balanced perspective of how gas is used
as a political tool by Russia. Grigas avoids explicit political
summations of Russia's use of its "energy weapon" to exercise
political domination. Arguments exist on the side of Russia and
Gazprom for their economic activities and protection and involvement
in markets, which can be construed as protecting economic interests,
rather than just politics. She provides a fair assessment and
discussion of these arguments. Nonetheless, interwoven in the text is
the joint strength of the state-backed Gazprom to conduct business
with political overtones. This is more explicit in relation to
Belarus and Ukraine, but also acknowledged in relation to events
involving Poland, Hungary, and Slovakia. The world of shady
political-gas barons and allies in Russia, Ukraine, and Germany is
well documented and described, as is the indignation of eastern
Europeans at the continued engagement of western European countries
and politicians with Russia. The chapters flow through an order of
importance and change. The first chapter provides an overview of
Grigas's argument, and chapter 2 dives right into the influential
role the United States is now playing in regional and global gas
markets. Central Asia and China are addressed towards the the latter
half of the book.

Chapter 3, concerning the power and politics of Russia and Gazprom,
provides a resonance for more historical and deeper geopolitical
threats. The build-out of the Soviet gas system to eastern and
western Europe during the Cold War sets the continent up for
political-economic tensions over gas deliveries. This tension plays
out both between Russia and Europe, and among European Union member
states, who adopt diverging strategies of engagement with Russia.
This geopolitical tension is more deeply addressed in chapter 4,
which provides a well-grounded and deep analysis of the problems and
politics at the heart of eastern European dependence on Russia.
Grigas goes on to provide well-explained summaries of the politics in
gas-rich countries of the Caucasus and Central Asia. She finishes the
book with the emerging role of China as both a global player seeking
to secure lines of supply into the country and as a large domestic
producer with robust deposits of shale gas. Within the chapters the
author expertly walks the reader through the technology of LNG, gas
extraction, transit, and how international gas markets operate.

The regional divisions within the chapters obscure some of the more
important thematic dimensions of the book. This also results in the
dilution of its long-term contribution to the topic of gas
geopolitics and economics. Buried within chapter 5 is one of the most
important assertions of the book: the loss of Crimea to Russian
military invasion was facilitated by Ukraine's gas debt to Russia.
The loss occurred because of the "huge, mismanaged energy debts" of
Ukraine resulted in the country agreeing to Russian demands for a
"debt-for-fleet" lease agreement in 1997 (p. 187). In exchange for
Russia writing off $762 million owed by Ukraine to Russia's Gazprom,
Russia would be permitted to station its "Black Sea Fleet, together
with ground forces and aircraft, in the Crimean city of Sevastopol
until 2017" (p. 187). These forces, combined with the Russian media
outlets in Sevastopol, played instrumental roles in the 2014
take-over of Crimea by Russia. Ukraine also lost most of its offshore
gas reserves in the Black Sea and the Sea of Azov. Gas geopolitics
are not only about effervescent economic markets, trading platforms,
and LNG tankers. Russia's land-grab demonstrates that the new
geopolitics of gas is also about territorial sovereignty and war.
Territorial disputes across the globe, particularly in relation to
undersea deposits, might spark other military conflicts in the Middle
East and Asia. The new geopolitics of gas has the potential to foster
instability in the post-Cold War order.

This book provides a well-researched account of the new geopolitics
of gas in Europe and globally. Notably, it joins important books on
the geopolitics of gas in Europe. These include _Red Gas_ by Per
Högselius (2013), which provides a deep account of the activities of
Gazprom and the Russian state using energy as an influential weapon
in Europe. Previously, _Crisis amid Plenty_ by Thane Gustafson (1989)
served as an influential account of the building and expansion of gas
pipelines westward into Europe. Additionally, Grigas provides a good,
updated summary on the politics of gas in the former Soviet Union.
Previously, Margarita Balmaceda provided this perspective in her book
_Energy Dependency, Politics and Corruption in the Former Soviet
Union _(2007). _The New Geopolitics of Gas_ serves as a strong
place-marker and makes a significant contribution to understanding
the new energy geopolitics in the twenty-first century.

Citation: Michael Labelle. Review of Grigas, Agnia, _The New
Geopolitics of Natural Gas_. H-Diplo, H-Net Reviews. January, 2018.
URL: https://www.h-net.org/reviews/showrev.php?id=50579

This work is licensed under a Creative Commons
Attribution-Noncommercial-No Derivative Works 3.0 United States


Best regards,

Andrew Stewart

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