A photo of workers of the state oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) drilling an oil well. CREDIT: YPFB

By Franz Chávez
LA PAZ, Jun 19 2023 (IPS)

One of the largest natural gas reservoirs in South America is showing signs of decline and the hopeful expectations that emerged in 2006, to turn Bolivia into a regional energy leader, are waning.

When the fossil fuel bonanza was already showing signs of fatigue, then president Evo Morales (2006-2019) announced in the middle of his election campaign, in March 2019, the discovery of what was described as a “sea of ​​gas” in the department of Tarija, in the south of the country.

But the certainty of a future natural gas boom gave way to a downward trend in the sector that is currently affecting production and sales and has shattered the hopes that gas would remain the engine of internal development for a long time to come, according to industry experts.

“They strangled the goose that laid the golden eggs,” said Gonzalo Chávez, an analyst with a PhD in economics, who pointed to a 3.2 billion dollar drop in gas revenues between 2014 and 2021. The decline is attributed to the lack of exploration of new reserves.

In 2014, oil and gas revenues amounted to nearly 5.5 billion dollars, compared to less than 2.3 billion dollars in 2021, according to Chávez’s calculations. The fall is considerable, more so given that in 2021, public spending totaled 2.6 billion dollars. The economy grew that year by 6.5 percent, according to the Ministry of Economy and Public Finance.

The state-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) “has shown that it does not now have the technical or financial capacity to explore or develop new fields,” economic analyst Roberto Laserna told IPS.

The company’s website reported that the investment in exploration and exploitation of hydrocarbons for the period 2021-2025 amounts to 1.4 billion dollars, and quotes its president, Armin Dorgathen, as stating that the aim is “to change this situation of the importation of fuels.”

On Jun. 12, the YPFB announced that the testing stage at the Chaco Este X9D oil well, located in the province of Gran Chaco in Tarija, “recorded hydrocarbon flows in two reservoirs,” as part of the effort the company is making to show that it is pulling out of the production rut.

Dorgathen announced that the discoveries will contribute an average production of 8.76 million cubic feet per day of natural gas and 281 barrels per day of crude oil.

Questions that IPS sent to YPFB a few days earlier, regarding the drop in gas revenues, received no response.

In the 21st century Bolivia remains dependent on hydrocarbons, both for its energy consumption – 81 percent of which comes from fossil sources – and for its tax revenue – 35 percent of which comes from the industry since the Hydrocarbons Law was introduced in 2005.

This landlocked Andean country of 12.2 million people has an economy traditionally based on extractive activities, especially tin, lead, zinc, copper, gold and silver mining, and more recently and abundantly on fossil fuels, after the discovery of large gas deposits at the beginning of this century.

One of the first measures adopted by Morales upon taking office in 2006 was the total nationalization of the industry, leaving the entire production and marketing chain in the hands of the YPFB. And thanks to the gas boom, 38 billion dollars in oil and gas revenues were obtained in the period 2006-2018, when the steady decline began.

A photo of the Chaco Este X9D well, exploited by YPFB in the Gran Chaco province of the department of Tarija in southern Bolivia. CREDIT: YPFB

Hasty actions

To try to pull out of the crisis, Minister of Hydrocarbons and Energy Franklin Molina announced on Apr. 28 to Congress 18 new exploration and exploitation projects, 11 of which are to be carried out this year, with an investment of 324 million dollars – a plan considered unrealistic by industry observers.

The 11 projects, where oil appears to take precedence over gas, are located in four of Bolivia’s nine departments: La Paz in the west,Tarija in the southeast, Santa Cruz in the east, and the central Chuquisaca.

“The fact that we do not have gas and we are net fuel importers is the fault of flawed government policies” in the sector, financial analyst Jaime Dunn wrote on his social networks.

According to the expert’s calculation, the fiscal deficit for the year 2022 reached 1.7 billion dollars, largely due to the fuel subsidy, because a 159-liter barrel of oil is bought on the international market for an average of 90 dollars and is sold domestically for 27 dollars.

Long gone are the “sea of ​​gas” dreams that in April 2002 led President Jorge Quiroga (2001-2002) and his Minister of Economic Development Carlos Kempff to announce that after a study of 76 oil fields by a US company, it was estimated that the country’s proven and probable gas reserves totaled 52 trillion cubic feet (TCF).

But only 10.7 TCF of proven natural gas reserves were certified in 2018.

The search for new reserves runs up against a legal framework that protects the environment and indigenous lands, where part of the probable sources of hydrocarbons are located. “The constitution contains many obstacles and restrictions to attract foreign companies with the capacity for exploration,” said Laserna.

The rewritten constitution, approved in February 2009, forces companies interested in exploration and exploitation to obtain authorization from the Plurinational Legislative Assembly, with the threat that any permit will be declared null and void if this requirement is not met.

Foreign companies, according to the constitution, are “subject to the sovereignty of the State,” which rules out arbitration and diplomatic demands as a way of solving conflicts.

A photo of the 15-story building of the headquarters of Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), located in La Paz, where the executive and organizational offices of the government-owned oil company have been operating since 2018. CREDIT: Franz Chavez/IPS

Environment and development

In terms of energy production, the constitution prohibits transnational corporations from exclusively managing concessions.

In addition, it places the environment above interests in economic uses of land and gives the local population the right to participate in environmental management, “to be previously consulted and informed about decisions that could affect the quality of the environment.”

These powers granted to indigenous peoples and local communities are protecting the Tariquía National Flora and Fauna Reserve, in the municipality of Padcaya in the department of Tarija, which covers 246,870 hectares, part of which is close to the border with Argentina.

Since 2017, Lurdes Zutara has been a local organizer fighting the entry of oil companies into the area, warning that since the first roads were opened to give access to exploration equipment and teams, the water from the local source that gives rise to rivers and streams has decreased in flow.

Speaking with IPS from her town in Tariquía, the activist said that some families in the communities accepted the entry of heavy machinery, and noted that municipal authorities belonging to the governing Movement to Socialism (MAS) party were facilitating the preparatory operations for oil exploration.

“The immediate risk is drought because the road affects the water intakes,” Zutara said.

She added that things will never be the same, that the relationship among local inhabitants will change because inequalities will emerge between those who obtain development with the support of the company and others who will be left out.

Bolivia is officially a multinational country located in the center of South America, where 41 percent of the population of 12.2 million consider themselves indigenous, according to the last census.

The United Nations Development Program (UNDP), based on data from the National Statistics Institute (INE), described in its latest report on human development the persistence of significant inequalities by geographic area, ethnicity, gender, and socioeconomic status.

In 2018, 54 percent of the inhabitants of rural areas suffered from moderate poverty and 33.4 percent from extreme poverty, compared to 26 and 7.2 percent, respectively, in urban areas.

Against this backdrop, Chávez the economist lamented that Bolivia went from being a major gas reserve in the South American region “to an importer” of fuels, with the subsequent impact on social development.

Laserna concurred, stating that “the outlook for the country is very discouraging” with respect to gas and the expected socioeconomic boost that was to come from fossil fuels.

A gas flare at installations of the state-owned Pemex oil company in the town of Reforma Escolín, Papantla municipality in the southeastern Mexican state of Veracruz, on Jan. 11, 2023. More than 100 gas wells operate in the area, several of which release gas without controls and put the local population and their property at risk. CREDIT: Emilio Godoy/IPS

By Emilio Godoy
PAPANTLA, Mexico, Jan 23 2023 (IPS)

A dark mole dots the brown earth, among the green scrub at this spot in southeastern Mexico. A repetitive “glug, glug,” a noise sounding like a thirsty animal, and an intense stench lead to this site, hidden in the undergrowth, where a broken pipe has created a pool of dense oil.

The smell of fuel overpowers the usual aroma of the surrounding vegetation.

The oil and natural gas leak runs freely in a well belonging to the state-run oil giant Petróleos Mexicanos (Pemex) in Reforma Escolín, part of Papantla, a municipality in the southeastern state of Veracruz, in the vicinity of a natural gas flare that illuminates the semi-cloudy environment and warms the already high temperature.“The infrastructure is old, they do not maintain it. When there are leaks, you hear a ‘ssssss’ and the smell is unbearable, you can’t stay in your house.” -- Omar Lázaro

Far from the gaze of Mexico’s Agency for Security, Energy and Environment (ASEA), responsible for monitoring the fossil fuel industry in the country, and Pemex, the gas flares in an area dotted with oil and gas wells.

“The infrastructure is old, they don’t maintain it. When there are leaks, you hear a ‘ssssss’ and the smell is unbearable, you can’t stay in your house,” Omar Lázaro, a delegate to the municipality of the non-governmental National Indigenous Congress, which brings together native peoples and organizations, told IPS.

The local community all too vividly recalls the Jun. 4, 2022 explosion of a Pemex gas pipeline that put residents on edge and confirmed, for the umpteenth time, the potentially catastrophic impacts of fossil fuels.

Lázaro, a local musician, recalled that the leak flowed for two days, there were four fires in the affected area and the fire lasted two weeks, some 300 kilometers from Mexico City, in Papantla, (which means “place of abundant papán” – a local bird – in the Nahuatl language), home to just under 160,000 inhabitants in its extensive rural and semi-urban territory.

“In some places there was a smell of gas before the explosion. The problem was that the scrubland began to burn and there was no water to put it out. Pemex threatened that it would not take responsibility if people went in to put out the fire and something happened to them,” said Lázaro, who is also a member of the Assembly for the Defense of the Territory, which represents some 20 communities and five municipal organizations.

In essence, the gas is methane, 86 times more powerful at trapping heat than carbon dioxide (CO2) over 20 years, even though it spends less time in the atmosphere.

That means it is important to control it to curb the rise in the planet’s temperature to no more than 1.5 degrees C, according to the commitments made by the international community.

In the municipality of Papantla, in the southeastern Mexican state of Veracruz, oil and gas wells abound, emiting polluting gases, such as methane, a major contributor to global warming. The photo shows the “Escolín 238” well in operation. CREDIT: Emilio Godoy/IPS

Massive

The incident in the town of Reforma Escolín is part of a pattern of gas leaks from the extraction and transportation of oil and gas by Pemex and private companies in Mexico, without enforcement by the environmental authorities of the existing regulations.

IPS reviewed Pemex databases on leaks and its prevention plans, obtained through public information requests, which point to underreporting of gas emissions – composed mainly of methane – and confirmed the evidence that leaks devastate an area where gas wells abound.

Historically, Pemex has been the biggest culprit in the gas leaks, due to the size of its infrastructure in Mexico.

After a drop between 2017 and 2019, gas explosions have been on the rise since 2020. Most of the incidents occur at hydrocarbon facilities in the states of Campeche, Tabasco and Veracruz in southeastern Mexico.

In 2020, 78 gas leaks by Pemex and its subsidiaries were registered, 85 by private companies, and 32 by the National Center for Natural Gas Control (CENAGAS), which manages the gas pipelines that belonged to the state oil company, without estimates of the resulting methane emissions, according to ASEA figures.

A year later, Pemex reported 91 leaks, private companies 74, and CENAGAS 28.

These leaks come from gas pipelines, compressor stations and other facilities that transport, store and distribute gas, infrastructure that adds up to some 30,000 facilities and 50,000 kilometers of gas pipelines.

The face of Pastora García, one of the 11 members of the Municipal Council of Papantla, reflects concern about the leaks.

“Things are bad here, there are a lot of risks. This is how Pemex works and we’re screwed. It is worrisome, because people live here,” she told IPS while she was working in Reforma Escolín, a town of some 1,000 people.

García was a municipal councillor in the small town and submitted three requests for pipeline repairs in 2011 and 2020, obtaining no response, and the leaks continued.

In and around the town, local residents grow citrus fruit, beans and corn, and raise cattle, and the pollution harms their activities. In the area, the ground looks like Swiss cheese from which gas frequently emanates, as during the great leak of 2013.

Although ASEA does not record the volumes of leaks, Mexico ranked tenth in the world in methane emissions in 2021, a list led by China, India and the United States, and which also includes Brazil, according to data from the International Energy Agency (IEA), an intergovernmental grouping of large oil consumers.

In addition, since 2019 oil and gas infrastructure has released methane into the atmosphere in Mexico, according to satellite images.

In June 2022, a group of European scientists revealed that Pemex released 40,000 tons of methane in December 2021 from an offshore platform in the Gulf of Mexico.

In the case of Pemex, one of the aggravating factors is the deliberate venting or release and flaring of gas, which has been on the rise since 2017 due to the lack of capture technology and economic incentives for its use, since it is more convenient for the oil company to simply release and burn it off.

This practice grew from 3,800 cubic meters (m3) of gas in 2017 to 6,600 in 2021, according to the World Bank’s Global Gas Flaring Reduction Initiative (GGFR), made up of 20 governments, 12 oil companies and three multilateral organizations. Mexico forms part of the alliance, but Pemex does not.

The IEA measured Mexico’s emissions at 6.33 million tons of methane in 2021, equivalent to 1.8 percent of the world total, to which agriculture contributed 2.53 million, waste 2.28 million, and production and energy consumption 1.47 million. In this segment, venting and flaring represent the main factors, and in gas pipelines, leaks.

Itziar Irakulis, a researcher at the Polytechnic University of Valencia, told IPS from that Spanish city that “from the satellite we see that every time the gas flaring stops (the torch goes out), about 100 tons of methane per hour are vented. This turns the oil platform into what in the literature we call an ultra-emitter.”

The expert, co-author of a study on the release of gas from Pemex platforms, stressed that, in the face of the climate crisis, “the last thing we need is more ultra-emission events of this type.”

In November 2022, Pemex, which ranks 20th in the world in proven crude oil reserves and 41st in gas, produced 1.7 million barrels of oil per day and 4.7 billion cubic feet of gas per day (Bcf/d). Because domestic production is insufficient, it imported 555 million Bcf/d, mainly from the United States.

Pemex resorts to the practice of flaring gas due to the lack of technology for its retention and economic incentives for its use. The photo shows a pipeline in Reforma Escolín, Papantla municipality in the southeastern Mexican state of Veracruz, on Jan. 11, 2023. CREDIT: Emilio Godoy/IPS

Anaid Velasco, research coordinator at the non-governmental Mexican Center for Environmental Law (CEMDA), described the “important challenges” in accounting for and curbing methane emissions.

“There is more talk about methane, but there is still no public policy. This disconnect between what is said and what is done has to do with not creating more responsibilities that could be binding, in order to apply an energy policy based on fossil fuel sources. They don’t want to generate a greater regulatory burden” for the oil industry, especially Pemex, she told IPS.

ASEA partially applies the regulation to control methane emissions, which is why Mexico faces hurdles to meet its Nationally determined contributions (NDCs) to reduce greenhouse gas emissions.

The regulation was supposed to enter into force in December 2019, after it was drafted in 2018. But in July 2020, under the pretext of the COVID-19 pandemic, ASEA postponed its application for 19 months, until the end of January 2022.

As of August 2022, 18 companies, including the subsidiaries Pemex Exploración y Producción (PEP) and Pemex Logística, had presented to ASEA their program for the prevention and comprehensive control of methane emissions from the hydrocarbons sector, the fundamental component of the regulation.

The state Federal Electricity Commission (CFE) had not delivered its plan.

Between 2017 and October 2022, ASEA imposed 26 fines on state-run and private companies totaling 3.83 million dollars, of which they have paid 3.29 million, without specifying the reason, which means it is not clear if the fines targeted methane emissions.

From 2017 to 2021, it fined Pemex Transformación Industrial three times for undisclosed reasons, which the company appealed.

But ASEA did not investigate the two fires on the surface of the ocean in the Gulf of Mexico, caused by methane leaks in July and August 2021, according to its own records. After the explosion in Reforma Escolín, a group of residents filed a complaint with ASEA, to no avail.

Pemex abandoned its plan to reduce gas flaring in its fields and the ministry of energy blocked the application of regulations in this regard, as reported by the British news agency Reuters throughout 2022.

In August, the state-run National Hydrocarbons Commission, the regulator of the oil industry, fined Pemex about two million dollars for excessive gas flaring at the Ixachi oil and gas field in Veracruz.

Gas deals

In 2021 Mexico signed the Global Methane Pledge, aimed at cutting emissions by 30 percent in 2030, from 2020 levels. But the country has not yet set a specific goal.

Along these lines, President Andrés Manuel López Obrador, who supports fossil fuel energy over renewables and promotes Pemex, announced in June 2022 that the oil giant would invest two billion dollars, with international aid, to cut methane emissions by 98 percent.

But there is no detailed plan to reach that target, beyond Pemex’s previous program to curb them.

In its methane control plan, obtained by IPS through Mexico’s freedom of information act, the oil company set an annual reduction goal in the Cantarell field, the country’s biggest, in the Gulf of Mexico, of four percent between 2017 and 2022. and calculated that emissions totaled 27,175 tons per year. But it is not known how much progress has been made towards this target.

However, the oil company uses an emission factor – the average amount of a pollutant coming from a specific process, fuel, equipment or source – instead of a measurement at the source site.

For the Ku Maloob Zaap field, the country’s second-largest, there are no measurements. The highest estimate comes from the Macuspana-Muspac deposit, located between the states of Chiapas and Tabasco, which emit 199,222 tons, followed by the Poza Rica Altamira Reynosa deposit – between Veracruz and Tamaulipas – with 73,352 tons; the Nejo Olmos field in Tamaulipas (53,395 tons); and Samaria-Luna in Tabasco (52,669 tons).

These emissions come from equipment, gas pipelines, compressors, leaks and venting. Pemex, which did not include infrastructure in other areas of the country, estimates decreases between four percent and 25 percent over a period of six years.

Throughout 2023, public and private companies must submit their annual reports to ASEA.

For the Cantarell deposit, the oil company ordered a halt to the flaring of 80 million Bcf/d, equivalent to 72.74 tons of methane. In addition, PEP applied measures to reduce flaring by 291 billion Bcf/d.

As natural gas for consumption in Mexico continues to be imported via pipelines and burned in combined-cycle power plants that also use steam, methane emissions will also continue, as occurred in the United States.

In places like Reforma Escolín, people have not gotten used to living among time bombs and are only asking that the leaks be repaired, although opposition by the local community is waning.

Lázaro lamented that “After the accident, some community assemblies were held, but the social mobilization dwindled, undermined by the local authorities.”

Without fighting methane emissions, Mexico will have a hard time reaching its Nationally determined contributions, presented to comply with the Paris Agreement on climate change, signed in 2015.

Velasco the environmentalist doubts that Mexico will meet its commitments. “They set goals because there is a lot of international interest. It is good that they make commitments, because it gives us tools to monitor the situation and demand compliance. If Pemex receives financing, we don’t know how it will execute it. Transparency and traceability are needed,” she said.

Spanish researcher Irakulis said maintenance and continuous flaring prevent ultra-emissions.

“It is true that the flares already have other types of emissions associated with them, and there are more environmentally friendly ways than flaring to treat the excess gas obtained from oil extraction. A significant reduction in emissions can be realistic as long as they invest in improving the maintenance of the facilities,” she stated.

In Reforma Escolín, the only option seems to be the dismantling of the gas infrastructure, which is impossible. “Pemex says there is no money. We have not seen machinery to replace the pipeline, they are not doing anything. Where are we going to go? We live here, and we’re staying here,” said García the town councillor.

Electricity generation in the city of La Paz in the northwestern state of Baja California Sur depends primarily on a thermoelectric plant that burns fuel oil, a highly polluting fuel. The Mexican government plans to replace it with gas. CREDIT: Cerca

By Emilio Godoy
MEXICO CITY, Jun 30 2022 (IPS)

Liquefied gas does not occupy a prominent position in Mexico’s energy mix, but the government wants to change that scenario, to take advantage of the crisis unleashed by Russia’s invasion of Ukraine and the need for new sources of the fuel due to the sanctions against Russia.

The war modified the global outlook for gas by accentuating Europe’s dependence on natural gas and forcing it to look for other suppliers due to the sanctions against Russia. If prior to the war that began on Feb. 24 there was an oversupply and a lack of interest in financing gas projects, now the equation has changed radically.

ln addition to promoting the installation of private plants, Mexican President Andrés Manuel López Obrador announced on Jun. 11 the construction of a three billion dollar natural gas liquefaction plant in the southern state of Oaxaca, to be run by the state-owned Federal Electricity Commission (CFE).

A new gas pipeline to be laid between Oaxaca and Coatzacoalcos, in the southeastern state of Tabasco, will help feed the liquefied natural gas (LNG) processing plant using gas from the United States.

In July 2021, the Mexican government created the state-owned company Gas Bienestar, to sell the fuel at subsidized prices and thus cushion the impact of the international rise in fuel prices, driven by the increase in demand after the peak of the COVID-19 pandemic, which has doubled since the invasion of Ukraine.

Mexico depends on U.S. gas for residential and industrial consumption, transported mostly by pipelines belonging to U.S. companies, which are now looking for ways to sell it in third party markets, re-exporting it from Mexico after liquefying it in processing plants built here.

But this model is criticized for chaining Mexico to gas in the long term and reinforcing dependence on fossil fuels, thus breaking with the commitment to an energy transition to decarbonize domestic consumption.

“This dependence is not sustainable,” Jaqueline Valenzuela, director of the non-governmental Center for Renewable Energy and Environmental Quality, told IPS from the northwestern city of La Paz. “What we are seeing is that we are receiving gas from fracking after the government promised to stop supporting that technology. It is incoherent.”

In La Paz, the capital of the state of Baja California Sur, most of the power generation depends on fuel oil, a highly polluting petroleum derivative that is also harmful to human health.

Since the 2013 energy reform, which opened the sector to private foreign and local capital, Mexico has become a recipient of gas from the United States, obtained through hydraulic fracturing (fracking), a technique that requires large amounts of polluting chemicals and water, and transported through pipelines.

A network of gas pipelines has been created in this country of 131 million people, with 27 state and private pipelines, for distribution over a territory of almost two million square kilometers.

The recipients of the gas are some 50 thermoelectric combined cycle plants – which burn gas to generate steam for electricity – and turbogas units, both state-owned and private.

Increasingly, however, the LNG processed in Mexico will also be destined for markets in other continents, which are now eager for suppliers that are not facing Western sanctions.

Opportunism

Among the beneficiaries of the new world gas scenario are Mexican facilities that receive the fuel, liquefy it and re-export it by ship, to take advantage of the rising cost of the material.

Four private plants supply LNG in the northeast and northwest of the country, mainly for thermoelectric plants and industrial consumption.

Since 2008, the private Energía Costa Azul (ECA), located in the municipality of Ensenada, Baja California, has been operating with a capacity of one billion cubic feet (bcf) of gas per day, owned by Infraestructura Energética Nova (IEnova), a Mexican subsidiary of the US company Sempra Energy, which invested some 1.2 billion dollars in the facility.

In the Port of Pichilingue, also in Baja California Sur, the terminal of the same name, with the capacity to process three million tons of LNG per year and owned by the U.S. company New Fortress, has been operating since July 2021. The processing plant supplies the derivative to a local thermoelectric plant.

In Manzanillo, in the western state of Colima, the KMS Terminal, owned by Korean and Japanese corporations, has been operating since 2012 with a capacity of 3.8 million tons per year.

On the other side of the country, in Altamira, in the northeastern state of Tamaulipas, the terminal of the same name, co-owned by the Dutch company Vopak and Enagás from Spain, has been operating since 2006 with a capacity of 5.7 million tons per year.

Mexico as a producer

Mexico is the 12th largest oil producer in the world and the 17th largest gas producer. In terms of proven crude oil reserves, it ranks 20th, and 41st in natural gas, but its hydrocarbon industry is declining due to the scarcity of easily extractable deposits.

In Mexico, Latin America’s second largest economy, between 2019 and May this year natural gas production ranged between 4.6 and 4.8 bcf per day, according to official data.

Extraction is lower than domestic demand and to balance the deficit Mexico imports gas, especially from the United States, from which it imported a maximum of 935 million and a minimum of 640 million cubic feet per day (MMcf/d) over the last three years, according to figures from state-owned oil giant Petróleos Mexicanos (Pemex).

In addition, LNG processing has been falling. In 2019, the country refined 100,000 barrels per day (bpd) equivalent, which fell to 84,000 in 2021. And in April 2022, the total dropped to 43,000 bpd.

Imports of LNG vary widely: Mexico imported almost 54 billion bpd in 2019, a total that fell by one billion in 2020 and rose to 67 billion bpd in 2021, dropping again to 27 billion bpd last April. In addition, it has not exported LNG since July 2020, due to the demand of the domestic market.

Meanwhile, U.S. pipeline exports to Mexico have quadrupled in recent years, according to data from the U.S. government’s Energy Information Administration.

“While the U.S. must help its allies in need, the ability of U.S. gas to provide reliable and affordable energy to the world is quite limited,” Tyson Slocum, director of the Energy Program at the nonprofit consumer advocacy organization Public Citizen, told IPS from Washington.

Slocum said that “our concern is that U.S. exports to Mexico will simply feed Mexican exports of liquefied gas.”

Addiction

The greed for gas attracts private and public companies alike. The U.S. Department of Energy (DOE) has issued at least five permits to export LNG and to re-export it via Mexico since 2016. In addition, one project is under construction and three others are planned on Mexico’s Pacific coast.

IEnova and France’s TotalEnergies are building phase one of ECA, a plant with a capacity of 3.25 million tons of LNG per year with an investment of two billion dollars, scheduled to start operating in 2024. Meanwhile, phase two is under design, to produce an additional 12 million tons per year.

Mexico Pacific Limited LLC (MPL), owned by three U.S. private investment funds, is building another regasification plant in Puerto Libertad in the northwestern state of Sonora, with an investment of 2.5 billion dollars, which is projected to export 14 million tons of LNG annually to Asia.

The first stage is to begin in 2025, with 4.7 million tons, President López Obrador said at one of his morning press conferences.

In December 2018, the DOE authorized MPL to export up to 1.7 bcf per day from the future facility, an endorsement required to export the fuel from the U.S.

In addition, the Vista Pacifico LNG project planned by Sempra in Topolobampo, in the northwestern state of Sinaloa, is to transport fuel from the Permian Basin oil-and-gas-producing area in West Texas for re-export to Asia and Europe, in addition to several destinations in South America.

In April 2021 Vista Pacifico received permission from the DOE to export 40 bcf per year – 110 mcf per day – to Mexico. Of that total, 200 bcf of gas per year – 550 mcf per day – would be for liquefaction and re-export.

Last January, Mexico’s state-owned CFE and U.S.-based Sempra signed a voluntary memorandum of understanding for the probable construction of a plant for this purpose.

Also in Sinaloa, the private LNG Alliance of Singapore is building the Amigo LNG plant, which will begin operations in 2027 with the capacity to process 3.9 million tons per year.

“The country continues to bet on the fossil fuel extractivist model. We do not see another energy alternative being built in the face of the climate emergency,” complained Edmundo del Pozo, coordinator of the Territory, Rights and Development area of the non-governmental Fundar Center for Research and Analysis.

The expert told IPS that the modernization of hydroelectric plants and the strengthening of Pemex promoted by López Obrador since he took office in December 2018 have favored gas consumption.

“Continuing with fossil fuels is not an option. We are fighting for the inputs used to generate electricity to be local,” such as sunlight, said Valenzuela, the head of the non-governmental Center for Renewable Energy and Environmental Quality.

The Yucatán peninsula in southeastern Mexico has abundant solar and wind resources, but relies on fossil fuels for electricity generation. The photo shows a wind turbine belonging to the state-owned CFE next to a section of the power grid between Cancún and Puerto Morelos, in the state of Quintana Roo. CREDIT: Emilio Godoy/IPS

By Emilio Godoy
MÉRIDA, Mexico , Apr 18 2022 (IPS)

At home, Isabel Bracamontes uses gas only for cooking. “We try to prepare food that doesn’t need cooking, like salads,” she says in the southeastern Mexican city of Mérida.

The 20-kilogram cooking gas cylinder lasts her between three and four months, and by using it less she saves money, since the price has increased in recent months. The electricity in her home comes from plants fired by gas that is essentially methane, which has 86 times more capacity to absorb heat than carbon dioxide over a period of 20 years, hence the danger it poses to the climate.

An environmental activist and mother of one, Bracamontes lives in a middle-class neighborhood where other families face a similar situation to hers with regard to gas.

The southeastern Yucatán peninsula, home to 5.1 million people, contributes almost five percent of Mexico’s gross domestic product (GDP), thanks to agriculture, tourism and services.

Comprised of the states of Campeche, Quintana Roo and Yucatán, of which Mérida is the capital, Yucatán receives enormous amounts of sun and wind but depends on gas to meet its electricity needs.

Tied to gas

Quietly, this fuel is spreading throughout the peninsula, which is particularly vulnerable to droughts, intense storms and rising sea levels – symptoms of the climate crisis, one of the main causes of which is the burning of fossil fuels.

The peninsula receives gas through the Mayakán pipeline, a 780-kilometer pipeline owned by the Italian company Engie. The gas is injected from Ciudad Pemex, in the state of Tabasco, adjacent to the west of the peninsula, and the pipeline has been in operation since 1999.

In 2020, the Cuxtal I expansion also came into operation, with a 16-kilometer pipeline which connects to the Cactus Gas Processing Complex in the state of Chiapas, to the south of the peninsula.

The government’s Comisión Federal de Electricidad (CFE) purchases gas from the state-owned oil giant Petróleos Mexicanos (Pemex) to deliver it to its thermoelectric plants Lerma in Campeche, Valladolid and Mérida II in Yucatán, as well as to the private combined cycle plants Mérida III and Valladolid III, which operate with gas and steam.“The big problem is the direction the energy sector is headed. It's not what the transition needs. Climate action is full of false solutions, like trying to fight climate change with gas." -- Pablo Ramírez

The peninsula has a generation capacity of 2455 megawatts (MW), of which combined cycle thermoelectricity contributes 1463, turbogas 368, conventional thermal 314, wind 244, solar 50, and internal combustion 14, according to the U.S. government’s National Renewable Energy Laboratory (NREL).

According to official Mexican data, five solar and wind farms are operating in the state of Yucatán alone. But communities opposed to renewable initiatives have managed to block at least six other projects of this type, due to their environmental impact and the failure to carry out consultations with local indigenous residents.

In December, the state of Yucatán was the sixth of the 32 Mexican states with the highest number of contracts for the installation of residential solar panels of less than 0.5 MW, with 12,458 producing a total of 89 MW. Quintana Roo had 3969 that produced 27 MW, while Campeche was the state with the fewest, with 1515 producing 11 MW, according to figures from the official Energy Regulatory Commission.

The national total amounted to 270,506 producing 2,031 MW.

In the entire peninsula, the CFE requires about 340 million cubic feet of gas per day for its plants in this region, while total demand is about 500 million, including 160 million for industry and commerce, according to the Confederation of National Chambers of Commerce, Services and Tourism.

A map of the Yucatán peninsula on the Caribbean Sea in southeastern Mexico shows the route of the 780-kilometer Mayakán pipeline, which carries natural gas from the state of Tabasco to the three states of that region. CREDIT: Sener

Running against the current on fossil fuels

Pablo Ramírez, Energy and Climate Change specialist with environmental watchdog Greenpeace Mexico, questioned the expansion of gas in Yucatán and the rest of the country.

“The big problem is the direction the energy sector is headed. It’s not what the transition needs. Climate action is full of false solutions, like trying to fight climate change with gas,” he told IPS from Mexico City.

Mexico is the 12th largest oil producer in the world and the 17th largest gas producer. In terms of proven reserves, it ranks 20th for crude oil and 41st for natural gas, but its hydrocarbon industry is declining due to the scarcity of easily extractable deposits.

In February, 75 percent of electricity generation was based on fossil fuels, followed by wind energy (7.5 percent), hydroelectric (7.0 percent), solar (4.94 percent), nuclear energy (4.23 percent), geothermal (1.56 percent) and biomass (0.07 percent), according to data from the non-governmental Energy Transition Observatory in Mexico.

In decline

Gas production has been declining in Latin America’s second largest economy. In February 2020, according to official data, extraction totaled 4.93 billion cubic feet per day, and had dropped to 4.83 billion 12 months later, and to 4.67 billion in February 2022.

The shortfall forces the country to import gas, especially from the United States, from which it has imported a maximum of 904.6 million and a minimum of 640 million cubic feet every February over the last three years.

For its distribution over a territory of almost two million square kilometers, a network of gas pipelines has been laid in this country of 131 million inhabitants, with 27 state and private pipelines. In addition, the construction of three others has been halted due to opposition from the communities through which they would run.

The recipients of the gas are 50 thermoelectric, combined cycle and turbogas plants, both state-owned and private. In addition, six more combined cycle plants, using two thermal sources, gas and steam, are under construction.

This shows how Mexico has tied itself to gas, despite its climatic effects, and the difficulties of abandoning it in the future, since this infrastructure has a useful life of decades. It also raises questions regarding the increase in international gas prices, due to the Russian invasion of Ukraine.

The use of solar energy is still limited on the Yucatán peninsula, despite the high levels of solar radiation. The photo shows a hotel with solar panels on its roof in the city of Playa del Carmen, in Quintana Roo, one of the three states of Mexico’s southeastern region. CREDIT: Emilio Godoy/IPS

Transition halted

In Mexico, the energy transition has been paralyzed since 2019 due to the policies of the government of President Andrés Manuel López Obrador, which have favored fossil fuels and hydroelectric power plants, to the detriment of new clean energies.

In September 2021, López Obrador presented a legal proposal to annul the 2013 reforms that opened the power industry up to domestic and foreign private participation, so that the public sector would resume the direction of strategic planning in the industry.

The projected changes favor the CFE and prop up gas as the preeminent source of electricity.

At the national level, in January, the CFE directly awarded the construction of six combined cycle plants that would come into operation in 2024, to provide a total of 4,000 MW, with an investment of 3.4 billion dollars.

In the case of the Yucatán peninsula, the CFE would need 200 million cubic feet of gas per day for two new combined cycle plants in Mérida and Valladolid, with a capacity of 1519 MW, considering the projected annual growth in demand of between 3.2 and 3.5 percent.

Meanwhile, the peninsula is wasting its available renewable resources.

The US-based NREL reports that Campeche has a solar potential of 727,502 MW and wind power of 1599 MW; Yucatán, 757,820 and 6125, respectively; and Quintana Roo, 168,029 and 2035.

For the peninsula, the NREL suggested organizing regional clean energy auctions based on competitive renewable energy zones, introducing energy efficiency programs for government buildings and small businesses, designing energy procurement mechanisms for government buildings, and encouraging the deployment of renewable energy in local communities.

Bracamontes, the Mérida environmentalist and representative of the global youth movement Fridays for Future Mexico in Yucatán, criticized the waste of renewable energy potential.

“There are many alternatives to take advantage of the sun and wind and solid waste, the disposal of which the state has not solved,” she said. “We ignore all that potential. We must analyze what is best for us and what has the least impact. If we are still married to the idea that fossil fuels are the only way, we are wrong. Sunshine is free.”

The local population also faces energy instability under the current energy scheme. For example, the neighborhood where Bracamontes lives, in western Mérida, suffered three short blackouts in one week.

Like other cities on the peninsula, Mérida also has high electricity rates, even with public subsidies, and unstable electricity generation.

Greenpeace’s Ramírez said the winners of the electricity counter-reform are Pemex and the gas companies.

“The possibility of making a transition to renewable sources and distributed generation is erased,” he said. “We are talking about a model that has serious implications for health, air, soil and water pollution, and climate externalities, which are not in the equation.”

"I use gas", announces a minibus driving along a street in Mexico City. Natural gas is becoming increasingly widely used as fuel for public transportation in Mexico, coming mainly from the United States where it is extracted through hydraulic fracturing or fracking, a technique that requires high volumes of water and toxic chemicals. CREDIT: Emilio Godoy/IPS

By Emilio Godoy
Mexico City, Dec 7 2020 (IPS)

In his community of small farmers and ranchers in northern Mexico, Aristeo Benavides has witnessed the damage caused by the natural gas industry, which has penetrated collectively owned landholdings, altering local communities’ way of life and forms of production.

“They leave us nothing,” the farmer told IPS over the phone. “They tell us it’s for progress, but it’s their progress. We always lose out. When they drilled gas wells, they didn’t fence in the areas, they didn’t provide maintenance, the wells aren’t well cared for. There is a lot of underground water here that can be contaminated.”

Benavides lives 500 metres from the Los Ramones II Norte gas pipeline, which runs through five states and was sold in 2017 by the state oil company Pemex to two private entities: Infraestructura Energética Nova, a subsidiary of the U.S.-based Sempra Energy, and BlackRock, a U.S. investment fund.

The community of Benavides Grande and Benavides Olivares, with an area of 65,000 hectares and some 6,000 inhabitants, covers five municipalities in the state of Nuevo León, about 750 km northeast of Mexico City.

The members of the community, whose spokesman is Benavides, have been fighting for years against what they consider harassment and invasion of their collectively owned land by the oil and gas industry, and have achieved some victories in the courts.

In the vicinity of their land, Pemex drilled two gas wells in 2013 using hydraulic fracturing or fracking, a drilling technique that requires large volumes of chemicals and water to extract natural gas embedded in deep shale.

Academics and environmental organisations opposed to fracking argue that it pollutes water tables, induces earthquakes and emits greenhouse gases responsible for global warming.

In 2019, both wells experienced gas leaks, and the community demanded that Pemex seal them. “We talked to them several times, it took them a week to repair the leaks. And they haven’t come back to examine them. Besides, people steal gas from the pipeline, and a tragic accident could happen,” Benavides said.

Despite the social conflicts and environmental consequences, Mexico has stepped up the pace of the gasification of the country, laying pipelines and building power plants, supported by cheap imports from the United States and encouraged by the energy reform of 2013 that opened the industry to private national and international capital.

This gas well drilled by means of fracking near the Benavides Grande and Benavides Olivares community in the state of Nuevo León in northeastern Mexico suffered a leak in 2019. CREDIT: Courtesy of Aristeo Benavides

In the northern state of Sonora, the Yaqui people, one of the 67 indigenous groups living in Mexico, managed to block the construction of the private El Oro-Guaymas gas pipeline since 2017, in a campaign that generated friction among native communities and left people wounded and dead, as well as causing material damage.

The construction project “was analyzed, a consultation for public input was held, the damage was assessed and work was done to repair and mitigate the effects,” Tomás Rojo, a Yaqui spokesman, told IPS by telephone from the community of Vícam. “Seven towns gave their approval, but one did not. They felt it was a risk, and I don’t think the company wants to commit violence against the people.”

In 2017, residents of the village of Loma de Bácum dug up pipes and prevented the completion of the 330-km-long mega-project, 18 of which run through that community.

In August, President Andrés Manuel López Obrador signed an agreement with the Yaquis to divert the route of the pipeline to skirt that area, making it possible to finish laying the pipeline.

Still an oil-producing country, but on the decline

Mexico is the world’s 12th largest oil producer and 17th largest natural gas producer. It ranks 20th in terms of proven oil reserves and 37th in proven natural gas deposits. But its position in the oil industry is declining due to the scarcity of easily extractable hydrocarbons.

An ad for household gas at a bus stop in Mexico City. The Mexican government promotes the exploitation, distribution and consumption of natural gas, despite the social conflicts and environmental impacts that the industry causes. CREDIT: Emilio Godoy/IPS

Since he took office in December 2018, left-leaning President López Obrador has been promoting fossil fuels. But domestic gas production is on the decline, from 6,401 million cubic feet per day (mpcd) in 2015 to 4,853 in September, as the emphasis has been on crude oil.

Exports fell from 2,700 mpcd in 2015 to 1,000 in September, and imports from 1,415 mpcd in 2015 to 843 in September, because the state-owned Federal Electricity Commission (CFE) is burning fuel oil again.

A network of gas pipelines, with 27 state-owned and private lines covering 18,889 km, has been deployed for distribution throughout the vast territory of this country of 130 million people.

In addition, the CFE is building a section in the southeastern state of Yucatan, and three others are planned to carry the fuel to the south and southeast, while another three have been blocked by opposition from local communities.

The gas is received by 48 thermoelectric, combined-cycle plants – which burn gas to generate steam for electricity – and turbogas units, both state-owned and private. And another 10 combined-cycle plants are under construction.

Another indication of the emphasis on natural gas is the number of permits for transporting gas granted by the government’s Energy Regulatory Commission. There are 276 gas transport permits, of which 230 are already operational, 263 for transfer by pipeline (218 active) and 13 for semi-trailers (12 in operation).

All this is reflected in the public budget for the sector. In 2020, the CFE allocated more than 2.0 billion dollars to transport gas, and for 2021 it projects a total of 2.65 billion.

The construction of gas pipelines has generated conflicts with communities opposed to these mega-projects, as well as generating methane. The image is a screenshot taken by IPS from a video of the construction of the Los Ramones gas pipeline in Tamaulipas, in northeast Mexico. CREDIT: Video by the government of Tamaulipas

Natural gas consists primarily of methane, which is 86 times more powerful as an agent of global warming over a 20-year period than carbon dioxide (CO2). The National Institute of Ecology and Climate Change calculated a natural gas emission factor for six areas of Mexico of 2.27 kg of CO2/m3, although it is lower than the emission factors for coal and fuel oil.

Atmospheric problem

With more gas being sourced and flared, the country faces a growing problem with methane. In 2019, the country vented 4.48 billion m3, the ninth largest amount in the world.

In terms of intensity, the proportion reached 7.21 m3 per barrel of oil produced, higher than the previous record of 5.39 set in 2014, according to figures from the Global Gas Flaring Reduction Partnership, promoted by the World Bank with the goal of eradicating routine flaring by 2030 and made up of 17 countries, 12 oil companies, the European Union and two financial institutions.

Fossil fuels are behind methane emissions. The International Energy Agency, an intergovernmental organisation of the world’s largest consumers, estimated a total of 724,000 tons of methane from hydrocarbons – including 155,000 tons from gas – in 2019.

In addition, the López Obrador administration has kept fracking on its agenda, despite constant claims that it is not using the technique.

Sergio Sañudo, a professor in the biological and earth sciences departments at the private University of Southern California, told IPS that “there has been a setback under this government. Mexico continues to do the same old thing. It generates complete dependence on the United States, and when the U.S. closes the valve, what will Mexico do? Mexico ties itself to hydrocarbons and that serves as an outlet for the gas.”

The solution, he continued, lies in the United States abandoning fracking so that Mexico would not import more fuel and would promote renewable energy sources.

Benavides says his community is very aware of the climate crisis, because it has seen the changes. “There have been hailstorms, temperature changes, there is little rain,” he said. “These are things we haven’t seen before. For everything that happens, the earth will get back at us. For how many months did that gas go into the atmosphere, because of the leaks?”

Sañudo urged Mexico to distance itself from natural gas. “It is not a fuel for the energy transition to cleaner sources. It is not the panacea it was thought to be. It can no longer compete with renewables,” he argued.

Engineers working on a 512 km pipeline to scale up the amount of gas transported to Dar es Salaam plants for electricity generation and other industrial supplies. Allegations of corruption in Tanzania’s energy sector are holding up foreign aid disbursement. Credit: Juma Mtanda

By Kizito Makoye
DAR ES SALAAM, Jan 18 2015 (IPS)

As foreign donors drag their feet on injecting badly needed cash into the government’s coffers, local analysts are increasingly worried that this will affect implementation of key development projects that require donor funding.

Donors – including the United Kingdom, Germany and the World Bank – are withholding 449 million out of 558 million dollars pledged for the 2014/15 budget, pending a satisfactory outcome to investigations over corruption in the energy sector.

Senior government officials have been accused by the Parliament of authorising controversial payments of 122 million dollars to Pan Africa Power Solutions Tanzania Limited (PAP), which claims to have bought a 70 percent share of the Independent Power Tanzania Limited (IPTL) – a private energy company contracted by the government to produce electricity.The government’s inability to wipe out corruption in the energy sector is setting a bad precedent because the country is poised to prosper economically in the wake of massive discoveries of natural gas resources.

“Many infrastructure development projects that require donor funding will probably stall due to this problem,” Benson Bana, a political analyst at Dar es Salaam University, told IPS. “Donors are keen to see their money is spent on intended objectives and government must learn a lesson to ensure that public funds are managed well.”

East Africa’s second largest economy after Kenya  is currently implementing a myriad of projects that require donor funding in the energy and  infrastructure sectors, such as construction of ports, roads and power plants  under a  25.2 billion dollar five-year development plan.

But the government said last year that the impending delay in the disbursement of aid funds may prompt it to shelve some critical projects until the next financial year.

The international Monetary Fund (IMF) has added its voice to the ongoing standoff between Tanzania and foreign donors, saying that further delay in disbursement of aid would certainly affect the country’s economic performance.

“Performance … was satisfactory through June, but has deteriorated since and risks have risen, stemming from delays in disbursements of donor assistance and external non-concessional borrowing, and shortfalls in domestic revenues,” the IMF said in a statement posted on its website in January 2015.

Tanzania is one of the biggest aid recipients in sub-Saharan Africa, with an annual aid inflow in grants and concessional loans ranging from 20 to 30 percent of its budget.

The move by donors to freeze aid over corruption concerns, said the IMF, is a stunning blow to the country’s economy.

“It will be critical to the business environment to address the governance issues raised by the IPTL case, which would also unlock donor assistance,” the IMF said.

The Ministry of Finance has unveiled a 19.6 trillion shilling (11.6 billion dollar) budget with plans to borrow 2.96 trillion shillings from domestic sources and about 800 million dollars from external sources to finance key projects.

“Achieving our revenue target is a matter of life or death; we are very serious in our quest to reduce reliance on foreign aid and we are refining our business environment to attract investments that can yield revenues,” said Finance Minister Saada Mkuya.

Critics told IPS that it is not wise for Tanzania to cling to unpredictable foreign aid to finance its budget after more than 50 years of political independence.

“For a country like ours to keep depending on donors to finance our development is not healthy, there’s no doubt many project will fail to take off because of this standoff,” Humphrey Moshi, an economist and professor at the University of Dar es Salaam, told IPS.

Political observers say that the government’s inability to wipe out corruption in the energy sector is setting a bad precedent because the country is poised to prosper economically in the wake of massive discoveries of natural gas resources.

“Corruption in the energy sector can be reduced by introducing strong accountability systems in the sector,” Zitto Kabwe, the chairman of a parliamentary oversight committee on public accounts, told IPS, adding that “legislations that subject contracts to parliamentary vetting and transparency would really help.”

Latest data from the Tanzania Petroleum Development Corporation show that Tanzania has estimated reserves of 53.2 trillion cubic feet of natural gas off its southern coast.  According to local analysts, these resources are more than enough to put the country on a path of economic development while ending its dependence on aid.

As the government grappled to bridge gaps in its budget, donors last week said  that they would only release the rest of the aid money pledged after seeing appropriate action taken against officials implicated in the so-called “escrow scandal”.

“Budget support development partners in Tanzania take the emerging IPTL case with the utmost seriousness and are carefully monitoring its development  as the case involves  large amounts of public funds,” Sinikka Antila, Finland’s ambassador to Tanzania and chairperson of Tanzania’s donor group, was quoted as saying.

In November last year, parliament called on government to sack senior officials, including the country’s Attorney General and  energy minister who, it said, had played an instrumental role to facilitate the dubious IPTL-PAP deal. The Attorney General, Frederick Werema, has since resigned.

In December, in a desperate bid to win back donor confidence, President Jakaya Kikwete sacked Anna Tibaijuka – a senior cabinet minister holding the land and human settlement development portfolio – for allegedly having received a1.6 billion shilling gift from one of the IPTL’s shareholders contrary to the government’s public leadership code of ethics.

In what appears to be a show of strength, the United States, through its Millennium Challenge Corporation (MCC), has expressed serious concern about the country’s sluggish pace in controlling corruption and has urged the government to take firm concrete steps to combat corruption as a condition for the approval of future aid.

“Progress in combating corruption is essential to a new MCC compact, as well to an overall improved business climate in Tanzania,” Mark Childress, U.S. Ambassador to Tanzania said in December 2014.

“We are encouraged by the State House’s announcement of December 9 that it will soon address the parliamentary resolutions linked to IPTL, and we urge quick government action, given the impact on several key development issues.”

Tanzania was one of 10 countries discussed by the MCC Board, which met in December to determine the eligibility of countries to begin or continue the compact development process.

If finalised, this would be Tanzania’s second MCC compact. Between 2008 and 2013, the MCC funded a 698 million dollar compact for investment projects in water, roads and electric power throughout Tanzania.

Edited by Phil Harris    

Pear trees in bloom on a farm in Allen, in the Argentine province of Río Negro, across from a “tight gas” deposit. Pear growers are worried about their future, now that the production of unconventional fossil fuels is expanding in the area. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
AÑELO, Argentina, Oct 8 2014 (IPS)

Unconventional oil and gas reserves in Vaca Muerta in southwest Argentina hold out the promise of energy self-sufficiency and development for the country. But the fracking technique used to extract this treasure from underground rocks could be used at a huge cost.

The landscape begins to change when you get about 100 km from Neuquén, the capital of the province of the same name, in southwest Argentina. In this area, dubbed “the Saudi Arabia of Patagonia”, fruit trees are in bloom and vineyards stretch out green towards the horizon, in the early southern hemisphere springtime.

But along the roads, where there is intense traffic of trucks hauling water, sand, chemicals and metallic structures, oil derricks and pump stations have begun to replace the neat rows of poplars which form windbreaks protecting crops in the southern region of Patagonia.

“Now there’s money, there’s work – we’re better off,” truck driver Jorge Maldonado told Tierramérica. On a daily basis he transports drill pipes to Loma Campana, the shale oil and gas field that has become the second-largest producer in Argentina in just three years.“That water is not left in the same condition as it was when it was removed from the rivers; the hydrologic cycle is changed. They are minimising a problem that requires a more in-depth analysis.” -- Carolina García

It is located in Vaca Muerta, a geological formation in the Neuquén basin which is spread out over the provinces of Neuquén, Río Negro and Mendoza. Of the 30,000 sq km area, the state-run YPF oil company has been assigned 12,000 sq km in concession, including some 300 sq km operated together with U.S. oil giant Chevron.

Vaca Muerta has some of the world’s biggest reserves of shale oil and gas, found at depths of up to 3,000 metres.

A new well is drilled here every three days, and the demand for labour power, equipment, inputs, transportation and services is growing fast, changing life in the surrounding towns, the closest of which is Añelo, eight km away.

“Now I can provide better for my children, and pay for my wife’s studies,” said forklift operator Walter Troncoso.

According to YPF, Vaca Muerta increased Argentina’s oil reserves ten-fold and its gas reserves forty-fold, which means this country will become a net exporter of fossil fuels.

But tapping into unconventional shale oil and gas deposits requires the use of a technique known as hydraulic fracturing or “fracking” – which YPF prefers to refer to as “hydraulic stimulation”.

According to the company, the technique involves the high-pressure injection of a mix of water, sand and “a small quantity of additives” into the parent-rock formations at a depth of over 2,000 metres, in order to release the trapped oil and gas which flows up to the surface through pipes.

The extraction of unconventional fossil fuels at the YPF deposit in Loma Campana has already begun to irrevocably affect life in the surrounding areas. Credit: Fabiana Frayssinet/IPS

Víctor Bravo, an engineer, says in a study published by the Third Millennium Patagonia Foundation, that some 15 fractures are made in each well, with 20,000 cubic metres of water and some 400 tons of diluted chemicals.

The formula is a trade secret, but the estimate is that it involves “some 500 chemical substances, 17 of which are toxic to aquatic organisms, 38 of which have acute toxic effects, and eight of which are proven to be carcinogenic,” he writes. He adds that fracking fluids and the gas itself can contaminate aquifers.

Neuquén province lawmaker Raúl Dobrusin of the opposition Popular Union bloc told Tierrámerica: “The effect of this contamination won’t be seen now, but in 15 or 20 years.”

During Tierramérica’s visit to Loma Campana, Pablo Bizzotto, YPF’s regional manager of unconventional resources, played down these fears, saying the parent-rock formations are 3,000 metres below the surface while the groundwater is 200 to 300 metres down.

“The water would have to leak thousands of metres up. It can’t do that,” he said.

Besides, the “flowback water”, which is separated from the oil or gas, is reused in further “hydraulic stimulation” operations, while the rest is dumped into “perfectly isolated sink wells,” he argued. “The aquifers do not run any risk at all,” he said.

But Dobrusin asked “What will they do with the water once the well is full? No one mentions that.”

According to Bizzotto, the seismic intensity of the hydraulic stimulation does not compromise the aquifers either, because the fissures are produced deep down in the earth. Furthermore, he said, the wells are layered with several coatings of cement and steel.

“We want to draw investment, generate work, but while safeguarding nature at the same time,” Neuquén’s secretary of the environment, Ricardo Esquivel, told Tierramérica.

In his view, “there are many myths” surrounding fracking, such as the claim that so much water is needed that water levels in the rivers would go down.

Neuquén, he said, uses five percent of the water in its rivers for irrigation, human consumption and industry, while the rest flows to the sea. Even if 500 wells a year were drilled, only one percent more of the water would be used, he maintained.

But activist Carolina García with the Multisectorial contra el Fracking group told Tierrámerica: “That water is not left in the same condition as it was when it was removed from the rivers; the hydrologic cycle is changed. They are minimising a problem that requires a more in-depth analysis.”

She pointed out that fracking is questioned in the European Union and that in August Germany adopted an eight-year moratorium on fracking for shale gas while it studies the risks posed by the technique.

YPF argues that these concerns do not apply to Vaca Muerta because it is a relatively uninhabited area.

“The theory that this is a desert and can be sacrificed because no one’s here is false,” said Silvia Leanza with the Ecosur Foundation.

“There are people, the water runs, and there is air flowing here,” she commented to Tierramérica. “The emissions of gases and suspended dust particles can reach up to 200 km away.”

Nor does the “desert theory” ring true for Allen, a town of 25,000 people in the neighbouring province of Río Negro, which is suffering the effects of the extraction of another form of unconventional gas, tight gas sands, which refers to low permeability sandstone reservoirs that produce primarily dry natural gas.

In that fruit-growing area, 20 km from the provincial capital, the fruit harvest is shrinking as the number of gas wells grows, drilled by the U.S.-based oil company Apache, whose local operations in Argentina were acquired by YPF in March.

Apache leases farms to drill on, the Permanent Comahue Assembly for Water (APCA) complained.

“Going around the farms it’s easy to see how the wells are occupying what was fruit-growing land until just a few years ago. Allen is known as the ‘pear capital’, but now it is losing that status,” lamented Gabriela Sepúlveda, of APCA Allen-Neuquén.

A well exploded in March, shaking the nearby houses. It wasn’t the first time, and it’s not the only problem the locals have had, Rubén Ibáñez, who takes care of a greenhouse next to the well, told Tierramérica. “Since the wells were drilled, people started feeling dizzy and having sore throats, stomach aches, breathing problems, and nausea,” he said.

“They periodically drill wells, a process that lasts around a month, and then they do open-air flaring. I’m no expert, but I feel sick,” he said. “I wouldn’t drink this water even if I was dying of thirst….when I used it to water the plants in the greenhouse they would die.”

The provincial government says there are constant inspections of the gas and oil deposits.

“In 300 wells we did not find any environmental impact that had created a reason for sanctions,” environment secretary Esquivel said.

“We have a clear objective: for Loma Campana, as the first place that unconventional fossil fuels are being developed in Argentina, to be the model to imitate, not only in terms of cost, production and technique, but in environmental questions as well,” Bizzotto said.

“All technology has uncertain consequences,” Leanza said. “Why deny it? Let’s put it up for debate.”

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Typical agricultural landscape of Ukraine, Kherson Oblast. Credit: Dobrych (Flickr)/CC-BY-SA-2.0, via Wikimedia Commons

By Frederic Mousseau
OAKLAND, United States, Aug 12 2014 (IPS)

Mostly unreported as the Ukraine conflict captures headlines, international financing has played a significant role in the current conflict in Ukraine.

In late 2013, conflict between pro-European Union (EU) and pro-Russian Ukrainians escalated to violent levels, leading to the departure of President Viktor Yanukovych in February 2014 and prompting the greatest East-West confrontation since the Cold War.

Frédéric Mousseau

A major factor in the crisis that led to deadly protests and eventually Yanukovych’s removal from office was his rejection of an EU association agreement that would have further opened trade and integrated Ukraine with the European Union. The agreement was tied to a 17 billion dollars loan from the International Monetary Fund (IMF). Instead, Yanukovych chose a Russian aid package worth 15 billion dollars plus a 33 percent discount on Russian natural gas.

The relationship with international financial institutions changed swiftly under the pro-EU government put in place at the end of February 2014 which went for the multi-million dollar IMF package in May 2014.

Announcing a 3.5 billion dollars aid programme on May 22, World Bank president Jim Yong Kim lauded the Ukrainian authorities for developing a comprehensive programme of reforms, and their commitment to carry it out with support from the World Bank Group. He failed to mention the neo-liberal conditions imposed by the Bank to lend money, including that the government limit its own power by removing restrictions that hinder competition and limiting the role of state control in economic activities. “The stakes around Ukraine's vast agricultural sector, the world’s third largest exporter of corn and fifth largest exporter of wheat, constitute a critical factor that has been overlooked. With ample fields of fertile black soil that allow for high production volumes of grains, Ukraine is the breadbasket of Europe”

The rush to provide new aid packages to the country with the new government aligned with the neo-liberal agenda was a reward from both institutions.

The East-West competition over Ukraine, however, is about the control of natural resources, including uranium and other minerals, as well as geopolitical issues such as Ukraine’s membership in the North Atlantic Treaty Organization (NATO).

The stakes around Ukraine’s vast agricultural sector, the world’s third largest exporter of corn and fifth largest exporter of wheat, constitute a critical factor that has been overlooked. With ample fields of fertile black soil that allow for high production volumes of grains, Ukraine is the breadbasket of Europe.

In the last decade, the agricultural sector has been characterised by a growing concentration of production within very large agricultural holdings that use large-scale intensive farming systems. Not surprisingly, the presence of foreign corporations in the agricultural sector and the size of agro-holdings are both growing quickly, with more than 1.6 million hectares signed over to foreign companies for agricultural purposes in recent years.

Now the goal is to set policies that will benefit Western corporations. Whereas Ukraine does not allow the use of genetically modified organisms (GMOs) in agriculture, Article 404 of the EU agreement, which relates to agriculture, includes a clause that has generally gone unnoticed: both parties will cooperate to extend the use of biotechnologies.

Given the struggle for resources in Ukraine and the influx of foreign investors in the agriculture sector, an important question is whether the results of the programme will benefit Ukraine and its farmers by securing their property rights or pave the way for corporations to more easily access property and land.

By encouraging reforms such as the deregulation of seed and fertiliser markets, the country’s agricultural sector is being forced open to foreign corporations such as Dupont and Monsanto.

The Bank’s activities and its loan and reform programmes in Ukraine seem to be working toward the expansion of large industrial holdings in Ukrainian agriculture owned by foreign entities.

Amid the current turmoil, the World Bank and the IMF are now pushing for more reforms to improve the business climate and increase private investment. In March 2014, the former prime minister ad interim, Arsenij Yatsenyuk, welcomed strict and painful structural reforms as part of the 17 billion dollars IMF loan package, dismissing the need to negotiate any terms.

The IMF austerity reforms will affect monetary and exchange rate policies, the financial sector, fiscal policies, the energy sector, governance, and the business climate.

The loan is also a precondition for the release of further financial support from the European Union and the United States. If fully adopted, the reforms may lead to significant price increases of essential consumer goods, a 47 to 66 percent increase in personal income tax rates, and a 50 percent increase in gas bills. These measures, it is feared, will have a devastating social impact, resulting in a collapse of the standard of living and dramatic increases in poverty.

Although Ukraine started implementing pro-business reforms under president Yanukovych through the Ukraine Investment Climate Advisory Services Project and by streamlining trade and property transfer procedures, his ambition to mould the country to the World Bank and IMFs standards was not reflected in other realms of policy and his allegiance to Russia eventually led to his removal from office.

Following the installation of a pro-West government, there has been an acceleration of structural adjustment led by the international institutions along with an increase in foreign investment, aimed at further expansion of large-scale acquisitions of agricultural land by foreign companies and further corporatisation of agriculture in the country.

The experience of structural adjustment programmes around the developing world foretells that it will increase foreign control of the Ukrainian economy as well as increase poverty and inequality. As Western powers get ready to impose sanctions on Russia for its transgressions in Ukraine, it remains unclear how programmes and conditionalities imposed by the World Bank will improve the lives of Ukrainians and build a sustainable economic future.

Excerpt:

Aerial view of the Mejillones Liquefied Natural Gas (GNLM) regasification terminal in northern Chile, the biggest of its kind in Latin America and one of the biggest in the world. Credit: Courtesy of GNLM

By Marianela Jarroud
MEJILLONES, Chile , Jun 16 2014 (IPS)

In April 2004, Argentina began to steadily cut natural gas exports to neighbouring Chile, triggering a major energy crisis and revealing structural problems in this vital sector.

Ten years later, a regasification plant which converts liquefied natural gas (LNG) back to natural gas in the port of Mejillones, 1,400 km north of Santiago, apparently goes a long way towards solving the energy problems in the north of the country, where water is scarce and where the mining industry is concentrated.

President Michelle Bachelet has expressed confidence that, along with renewable energies, natural gas will contribute to the diversification of Chile’s energy mix, and emphasised that “what we do or fail to do now will have consequences in the future.”

On May 14, Bachelet inaugurated an onshore storage tank at the Mejillones Liquefied Natural Gas (GNLM) regasification terminal, the biggest in Latin America and one of the biggest in the world.

French-Belgian power company GDF Suez holds a 63 percent share in the terminal and the rest is owned by the state-owned Corporación del Cobre de Chile (Codelco).

It was Bachelet , during her first term (2006-2010), who laid the first stone for the plant. And in February 2010 she was present to welcome the arrival of the first methane tanker.

Bachelet now inaugurated the huge storage tank with a gross capacity of 187,000 m3. It is a full containment tank with a nickel steel inner tank inside a pre-stressed concrete outer tank.

The CEO of GDF Suez, Gerard Mestrallet, said it was built to the highest safety standards, to withstand seismic activity and tsunamis.

The tank’s 501 elastomeric isolators enable it to withstand the stresses caused by a major earthquake, as well as sophisticated seismic monitoring and protection systems.

The expansion of GNLM involved an additional 200 million dollars, on top of the initial investment of 550 million dollars.

For four years, in the first stage of the project, the BW GDF Suez Brussels was moored on one side of the jetty in the bay and used as a floating storage unit when gas shipments came in.

The land tank’s capacity is equivalent to approximately 110 million m3 of standard natural gas after the regasification process. This is transported to clients, mainly mining companies, through the Nor Andino and GasAtacama pipelines.

It is the company’s clients that pay for importing the gas. The corporations that have signed contracts so far are the Anglo-Australian multinational BHP Billiton, Codelco and Generadora E-CL, a Chilean power company controlled by GDF Suez.

The natural gas storage tank inaugurated by President Michelle Bachelet May 14, to complete the natural gas terminal at Mejillones. Credit: Marianela Jarroud/IPS

On May 15, Bachelet – who took office in March – presented her government’s energy agenda, which focuses heavily on clean energy sources as well as the use of LNG to replace diesel fuel and for industrial and household use as well.

The agenda proposes short-term measures to maximise the use of the country’s current electric power generation infrastructure and LNG terminals.

It also includes medium to long-term initiatives aimed at boosting LNG capacity and installing new combined cycle plants fueled with natural gas, “as far as possible with new actors.”

Besides Mejillones, Chile has another LNG terminal, in Quintero bay 154 km north of Santiago, which is owned by London-based BG Group PLC and Chile’s state oil and gas company Empresa Nacional del Petroleo (ENAP).

But the head of the Latin American Observatory on Environmental Conflicts (OLCA), Lucia Cuenca, said the government’s proposal should be looked at with a critical eye.

The country is making the mistake, she told Tierramérica, of not thinking about the high quality natural gas that Bolivia or Argentina could provide, but only about unconventional sources of natural gas. She was referring, for example, to shale gas, which is extracted from underground rocks by hydraulic fracturing or fracking.

“ Chile is preparing to incorporate this kind of gas and that has to be evaluated in a much broader manner,” Cuenca said.

Chile currently imports gas mainly from Trinidad and Tobago and Qatar. But the government will reportedly negotiate supplies of shale gas from the United States.

Cuenca added that, even though LNG emits fewer greenhouse gas emissions, “it’s still a fossil fuel, which means it does produce emissions.”

“LNG is considered a transitional fuel; in other words, it is a little better than coal, but it is not exactly the best option from the standpoint of clean energy,” he added.

In Chile, thermoelectric plants are run on three kinds of fuel: diesel, the most expensive and dirtiest; coal, which is also highly polluting, but abundant and cheap; and gas, which is the least polluting, but costs around 30 percent more than coal.

In 1991, a year after this country returned to democracy after the 1973-1990 military dictatorship of General Augusto Pinochet, the governments of Argentina and Chile signed an economic agreement that established the foundations for gas interconnection between the two countries.

But the late Néstor Kirchner, when he took office as president of Argentina in 2003, prioritised domestic supplies in the face of internal shortages of natural gas, which at the time only covered national demand.

The cuts in exports had a tremendous economic impact on Chile, because power companies were forced to use oil instead, whose international market price had soared.

At the time Argentina cut its gas exports, nearly 90 percent of industries in Santiago were using natural gas from Argentina, which also supplied much of the country’s natural gas pipeline network that serves households.

“The decision reached by Kirchner (2003-2007) was in line with Argentina’s political approach, which will always favour national interests; regardless of who is governing, they are prepared to assume the costs from the standpoint of the international cooperation agenda,” political scientist Francisca Quiroga told Tierramérica.

She said that after Argentina reduced its gas exports to Chile, a debate broke out in which many argued that Chile should not trust Argentina because it was a country that did not live up to its promises. But the political dividends Kirchner reaped outweighed any criticism from abroad, she added.

Quiroga said the question of energy “is a very touchy ideological and strategic issue and is important in debates on domestic policy.”

And in the current regional context, she added, “is it one of the most important issues on the multilateral agenda to address in terms of the challenges of the 21st century.”

In the meantime, Chile is planning the construction of a third LNG terminal in the south-central part of the country, with the participation of the state energy company ENAP.

Cuenca said it is a strategy that serves the large mining corporations that need cheap, abundant energy, because the aim is to offer lower prices on the domestic market.

The deepening Ukrainian crisis is placing Turkey in a difficult diplomatic position. At stake for officials in Ankara are Turkey’s commitments to its Western allies and its cultural kin, Crimean Tatars, against its economic and political relationship with Moscow.

Turkey’s diplomatic dilemma intensified in early May amid a rapid escalation of tension between Crimean Tatars and Russian officials. The early May troubles were triggered by the banishment of Crimean Tatar leader Mustafa Jemilev.“The crucial question is ‘What does Putin want to do? Does he plan just to stay in eastern Ukraine, or does he have plans on [sic] the Caucasus?" -- Atilla Yeşilada

Tatar protesters conducted several rallies seeking to have the ban on Jemilev lifted. Local Russian officials responded with a threat to prosecute Tatar leaders and ban their civic organization, the Mejlis.

Prior to the protests, Jemilev lobbied Turkish officials directly for support. “I told the Turkish government that I was banned from entering Crimea under fictitious pretexts,” Jemilev said on May 3 when speaking to reporters in Kyiv.

Ankara did indeed speak up on Tatars’ behalf. But the Turkish statement was carefully worded, indicating that Ankara is wary of angering its powerful Russian neighbour. “We expect the legitimate body of the Crimean Tatars to get the respect they deserve,” said the May 5 Foreign Ministry statement. The statement also criticised Jemilev’s banishment.

“Turkey is taking a cautious approach,” observed Turkish foreign-policy specialist Sinan Ülgen, a visiting scholar at the Brussels-based Carnegie Europe think-tank.

“On the one hand, it attaches importance to territorial integrity of nation states; it has a kinship with the Crimean Tatars and it is a NATO member,” Ülgen continued.

“But on the other, there is a deep economic engagement with Russia and, on top of that, there is a personal relationship between [Russian President Vladimir] Putin and [Turkish Prime Minister Recep Tayyip] Erdoğan. That’s why it didn’t go as far as the U.S. in terms of imposing sanctions against Russia.”

The caution exhibited on Crimean Tatars is uncharacteristic for Erdoğan, who prides himself on a firebrand reputation – never more so when it comes to defending Muslims abroad. But the Turkish government claims its approach toward Russia is working.

Officials cite as an example President Putin’s Apr. 21 decree that rehabilitated Tatars repressed under Soviet dictator Joseph Stalin and promised a “national, cultural and spiritual renaissance” of Crimea’s minority groups.

In a move that was widely interpreted as a goodwill gesture to Moscow, the government-run national air carrier Turkish Airlines has announced that it will resume flights to Crimea in June.

An investigation into Crimean Tatars’ alleged “illegal mass activities” is also raising questions in Turkey over Ankara’s approach.

Jemilev “carries potential for political embarrassment for the [Turkish] government,” noted Semih Idiz, diplomatic columnist for the Turkish newspaper Taraf. “Erdoğan has said he has discussed the issue with Putin and he has been told that Moscow has said they will be more careful about it, but the leader of the Crimean Tatars is barred from Crimea and there is nothing really Ankara can do.”

A Turkish Foreign Ministry representative could not be reached for comment.

Moscow’s real leverage over Ankara is natural gas. In 2013, Turkey received roughly 60 percent of its natural-gas imports from Russia, according to the International Energy Agency.

“I am sure Turkey can’t start a new cold war,” said Umut Uzer, an assistant professor of international relations at Istanbul Technical University. “The fact that Turkey is so dependant on natural gas from Russia …. [means that] Turkey definitely has to take that into account.”

The dependency on Russia seems set to continue for the foreseeable future. “Given the fact that our hydro-electric dams have completely failed to produce electricity because of the drought, even in summer, any cut-off in supply [of gas] could have a drastic effect on the Turkish economy,” warned Atilla Yeşilada, a political consultant at Istanbul’s Global Source Partners, an investor consultancy.

Elsewhere, the Ukraine crisis is encouraging European Union states to lessen their energy dependency on Russia, thus presenting Ankara with opportunities to expand its role as a transit state. The recently launched Trans-Anatolian Natural Gas Pipeline project will cross Turkey to bring 16 billion cubic metres of Azerbaijani gas per year to Greece, Italy and Balkan customers. More projects would follow, if Turkey had its way.

“Turkey would like to become a regional energy hub in the region,” said Emre İşeri, an assistant professor of international relations at Izmir’s Yaşar University.

For Turkey, there are two significant obstacles standing in the way of realizing its pipeline ambitions – high costs and Russian interests. Moscow clearly would prefer to maintain its strong energy position in Turkey and the EU.

In April, for example, the deputy head of Russia’s state-run energy giant Gazprom, Alexander Medvedev, met with Turkish Energy Minister Taner Yıldız to explore the possibility of expanding the company’s exports to Turkey, which, at 26.61 billion cubic metres, currently ranks second only to Germany (40.18 bcm) as a GazProm market.

Ultimately, the Ankara’s hand could be forced by Russian leader Vladimir Putin. “The crucial question is ‘What does Putin want to do?’” said Yesilada, the political consultant. “Does he plan just to stay in eastern Ukraine, or does he have plans on [sic] the Caucasus? Does he want to integrate [Turkish ally] Azerbaijan back into Russia’s sphere of influence?”

At present, only Putin knows the answers to such questions. Depending on his choices, Turkey may feel compelled to harden its line on its relations with Russia.

Editor’s note:  Dorian Jones is a freelance reporter based in Istanbul. This story originally appeared on EurasiaNet.org.

A disruption of Ukraine's gas supplies would affect many other parts of Europe as well. Credit: Thierry Ehrmann/cc by 2.0

By Micah Luxen
UNITED NATIONS, May 8 2014 (IPS)

It’s springtime in Ukraine, but conflict and economic threats are bringing an early chill. During these months when the country normally stores up energy reserves for winter, access to natural gas may be Russia’s best weapon to influence Ukraine’s new government.

“Ukraine is heavily dependent on natural gas,” said Edward Chow, a senior fellow of the Energy and National Security Programme at the Centre for Strategic and International Studies (CSIS)."If you can’t get sufficient energy in, Ukraine collapses. Political scientists for years have been talking about failed states. You have one." -- Kent Moors

According to CSIS, 40 percent of the country’s energy consumption is natural gas, and 60 percent of that is supplied by Russia.

Under a system designed in the Soviet-era, Ukraine stores up natural gas reserves from Russia and then distributes them to Europe.

“So even though Ukraine’s natural gas needs are not very high in the summertime, if they’re not building stock in the summertime, then they will cause a winter supply crisis,” Chow told IPS. “We don’t have to wait until December to figure that out.”

In numerous disputes over debts and prices over the past decade, Russia has cut off the supply of natural gas through Ukraine – most recently for three days in January 2006 and 20 days in January 2009.

On Thursday, a spokesperson for Gazprom, the Russian state-controlled energy company, confirmed to IPS, “As of today the Ukraine has not paid its debt for the Russian gas. The April bill is overdue, no payment has been received. The outstanding gas debt of the Ukraine rose to 3.508 billion dollars.”

The company has said that unless the Ukrainian gas company Naftogaz pays its energy debt, Russia will require prepayment before distribution.

“People were pretty much freezing in 2009 in parts of Europe which are heavily dependent on Russia for gas imports,” said Chow, who predicts this crisis could last much longer.

“In terms of politics, Russia sets prices arbitrarily, but judiciously,” said Jan Svejnar, director of the Centre on Global Economic Governance at Columbia University.

“With an unwanted government in Ukraine, prices were high. With a pro-Russian government, significant discounts apply,” Svejnar told IPS.

In December 2013, Russian President Vladimir Putin offered to buy Ukrainian bonds from former president Viktor Yanukovych, which provided the funds to pay for Russian gas. When an interim government took over from Yanukovych, Putin withdrew support, cancelled the bond purchases and raised the price of gas by 80 percent.

Naftogaz hasn’t made payments demanded by Gazprom since January.

The rest of Europe, which depends on Russia for a third of its gas supply, would be affected by a supply disruption to Ukraine. The impact falls disproportionately on countries in Southeast Europe, which do not have alternative supplies. A limited supply of natural gas arrives to Western Europe through pipelines that bypass Ukraine, such as the newly constructed Nord Stream through the Baltic Sea.

Even so, experts say that Western Europe could not send a reverse-flow energy supply east. Russia’s Gazprom prohibits the resale or re-transport of natural gas from Russia.

“Gazprom has a number of ongoing agreements with the major utilities in Western Europe,” said Kent Moors, executive chair of the Global Energy Symposium, “so there are some vested interests in Western Europe that really wouldn’t like to see sanctions that would impact that ongoing trade.”

According to CSIS, if the European utilities not tied up in Russian contracts were to move natural gas from Europe in reverse mode to Ukraine, it would at best satisfy less than a third of what Ukraine needs this coming winter.

“The question is not one of leverage, it’s one of political will, and who’s willing to use it and who’s not,” said Chow, who has more than 30 years of oil industry experience, including work in Europe and the former Soviet Union.

Kent believes the countries that depend almost entirely on Russian oil, such as the Baltic states and Poland, would be more likely to take a hard line against Russia “because of the historical experience.”

Those countries that are less vulnerable, as a result of increased energy diversity, such as France, Italy and Germany, are more inclined to be soft on Russia. “So in my mind, it’s more a matter of political will than economic leverage,” he told IPS.

The CSIS’s Chow said that while Europe depends on Russia for 30 percent of its gas supply, Russia depends on Europe for 80 percent of its gas export market. “So who’s more dependent on whom?” As a result, Chow says that Russia won’t want to cut off supplies, and its own profits, through Ukraine for the long term.

Kent, who has a Ph.D. in political science, says the goal must be to get Ukraine through the next winter. “Because if you can’t get sufficient energy in, Ukraine collapses. Political scientists for years have been talking about failed states. You have one. It’s not going to be able to function. And there’s probably some elements in Russia who are simply waiting for this to happen. And then they can say, look, it’s not our fault that Kiev collapsed under its own inability to function.”

The ambassadors of Ukraine and Russia declined to comment for this article.

A tanker transports liquid natural gas (LNG) through the province of A Coruña, on Spain's Atlantic Coast. Credit: Robert/cc by 2.0

By Daniel Wagner, Giorgio Cafiero, and Sufyan bin Uzayr
WASHINGTON, Apr 25 2014 (IPS)

Throughout the Ukraine crisis, European Union (EU) leaders have become more vocal about their interest in reducing Europe’s consumption of Russian natural gas. As a result, Qatar — the world’s number-one provider of liquefied natural gas (LNG) — is well positioned to play a more influential role in Europe’s energy landscape.

Although unlikely to replace Russia as Europe’s top natural gas provider, Qatar could assist in significantly decreasing the EU’s reliance on Russian energy resources while at the same time obtaining greater diplomatic leverage over European governments.Doha may once again remind Russia that Qatar’s tiny size cannot stop it from undermining Russia’s strategic interests.

Ukraine’s impact on EU-Russia energy trade

Fortunately for the EU, Ukraine’s crisis did not erupt several years earlier. In 2006, 80 percent of Russia’s natural gas sales to the EU transited Ukraine. This was reduced to 50 percent by 2013 (two years after the Nord Stream pipeline came on line — connecting Vyborg, Russia to Sassnitz, Germany via the Baltic Sea).

In 2013, the EU and Russia began construction on the South Steam project, a planned gas pipeline connecting Russia to Bulgaria via the Black Sea, which would increase EU-Russia energy trade while bypassing Ukraine.

However, the chilling of EU-Russia relations may jeopardise the South Stream project’s future. European firms involved in the project have reacted differently. While the CEO of Italy’s ENI called the project’s future “gloomy,” some Bulgarian and German firms have remained optimistic, as have their Russian partners.

Naturally, each EU member faces unique geopolitical challenges and varying degrees of geographic proximity to alternative natural gas providers and corridors. National interest will therefore dictate how each participating European nation reacts to the project in the future.

Qatar’s most promising near-term opportunities in the EU exist in Central/Eastern Europe, where dependency on Russian gas is comparatively high and anti-Kremlin sentiment is widespread.

Although Poland relies on Russia for 60 percent of its natural gas imports, Warsaw has pursued bold measures to purchase gas from other providers (including Qatar) since the Russia-Ukraine price war of 2009, which highlighted the geopolitical risks of maintaining a reliance on Russian gas.

Poland’s LNG terminal in Świnoujście is expected to begin importing Qatari gas in 2015. As Eastern European countries, including Estonia and Lithuania, also invest heavily in LNG infrastructure, Qatar will likely gain new opportunities given Doha’s ownership of Qatargas, the world’s largest LNG shipping company.

Can Qatar make a difference?

Although Qatar is only a fraction of one percent the size of Russia, the Gulf emirate’s reserves amount to over half of Russia’s, making Qatar the world’s number-two gas exporter behind Russia itself.

However, Qatar understands that it cannot overtake Russia as Europe’s top gas seller, nor is it clear that Doha has any interest in pursuing such an ambition.

Due to Russia’s enormous market share in Europe, it can sell natural gas to the Europeans at a price 40-50 percent below what the Qataris offer. Nearly 70 percent of Qatar’s exports reach China, India, Japan, Singapore, and South Korea, making Qatar’s economy far less dependent on EU-bound exports.

Therefore, Russia will likely sign gas deals with Europe at rates below any level that the Qataris would find agreeable given their opportunities in Asian markets. While Polish officials are willing to pay a steep price to wean their country off Russian gas, other European governments will not have the ability or incentive to do so.

Russia’s preeminent role in the EU gas market cannot be threatened in the near-term. Even Poland — the EU member arguably most determined to reduce its reliance on Russian gas — still has a contract with Gazprom booked until 2022.

Alternatively, the possibility of Germany re-starting its nuclear power plants, advances in green technology, and increased consumption of coal could decrease the EU’s consumption of natural gas altogether.

Furthermore, the costly investments in LNG infrastructure that cash-strapped European governments would have to make in order to secure higher LNG imports from Qatar will limit Doha’s capacity to wedge itself between the EU and Russia.

Europe’s evolving energy landscape

If Qatar were to gradually wean the EU away from Russian natural gas, Russia’s economy could suffer. However, President Vladimir Putin seems unperturbed by such maneuverings, telling a reporter on Apr. 17, 2014 that it would be “impossible” for the EU to stop purchasing Russian gas.

When Putin visits Beijing in May 2014 the issue of energy trade will most likely be high on his agenda as China appears the only country that could offer Moscow an alternative destination for Russian gas exports significant enough to replace any decrease in EU consumption of Russian energy resources.

In the longer term, if Qatar can enable the EU to gradually diversify its sources of natural gas, the Kremlin would lose a degree of leverage over Brussels at the negotiating table. In turn, Doha may once again remind Russia that Qatar’s tiny size cannot stop it from undermining Russia’s strategic interests.

By hosting the United States Central Command and sponsoring rebellions against pro-Moscow regimes in Libya and Syria, Qatar has indeed demonstrated its capacity to check Russia’s agenda in the Arab world.

The question ultimately boils down to whether Europe will choose Qatari natural gas over other alternatives to Russian gas, and whether Doha will invest in a stronger energy partnership with the EU.

Given the different incentives that Russia and Qatar have with respect to selling their natural gas to Europe and the difference in terms of energy infrastructure linking the two countries to the EU, Qatar is unlikely to make a major dent in the EU’s reliance on Russia’s gas in the near-term.

Yet, the chill in Russia’s relations with the West may offer Qatar a strategic opportunity to gain influence in Europe in the years to come.

Daniel Wagner is CEO of Country Risk Solutions and Senior Advisor with Gnarus Advisors. Giorgio Cafiero is co-founder of Gulf State Analytics (GSA). Sufyan bin Uzayr is an analyst with GSA.

Coal mining in Suesca, Colombia. Credit: Gloria Umaña

By Carey L. Biron
WASHINGTON, Jun 28 2013 (IPS)

The World Bank is set to consider dramatically cutting down its funding for coal-related power projects, according to a draft strategy document leaked this week.

The bank’s continued focus on coal projects, particularly in poor countries, has been a key frustration for environmentalists and some development experts, who have warned that such a stance is at odds with the Washington-based multilateral lender’s attempts to strengthen its focus on climate change mitigation and adaptation.

While the new moves would be applauded if passed, many are now expressing concern about the strategy’s apparent increased focus on natural gas and hydroelectric production.

“The [World Bank Group] is committed to maximising synergies between economic development and climate change mitigation. The WBG will cease providing financial support for greenfield coal power generation projects, except in rare circumstances,” the paper, a copy of which was seen by IPS but which is not available online, states.

“Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases. Even in such cases, only a minimum level of WBG support would be deployed, with recourse to private-sector financing to the extent possible.”

The document, subtitled “Directions for the World Bank Group’s Energy Sector”, is slated to be discussed by the bank’s board on Jul. 19, according to a spokesperson, after which the strategy will be publicly released.

“The World Bank Group’s energy work is aligned with our twin goals of ending extreme poverty and promoting shared prosperity,” Frederick Jones, a World Bank spokesperson, told IPS in a statement.

“The WBG is committed to universal access to electricity and safe household fuels, double the share of renewable energy in the global energy mix, and double the rate of improvement of energy efficiency.”

He noted that the bank approved a record 44 percent of its annual energy lending for renewables last year, valued at some 3.6 billion dollars. In terms of power-generation projects, that figure rose even higher, with renewables comprising 84 percent of financing.

But the bank is also currently considering funding for a 600-megawatt power plant in Kosovo, which would burn a particularly dirty form of coal called lignite. That project has been disparaged by Kosovar and international environmentalists.

Climate bank

“The World Bank is right to say that energy has a crucial role to play in eradicating poverty,” Nicolas Mombrial, head of the Washington office of Oxfam International, a humanitarian agency, told IPS.

“We’re also pleased to see the bank acknowledge that failing to move away from fossils fuels will have enormous environmental costs that ultimately will be born by the poorest and most vulnerable,” Mombrial added.

“Going forward, the bank needs improved environmental and social assessments that are mandatory for all its energy projects, and to make sure that its energy lending benefits the poorest, most vulnerable people,” he said.

With the paper still up for discussion, its content could be altered or voted down entirely. Analysts point out that this has happened with previous attempts to roll back coal-related financing by the bank, actions that have been vociferously opposed by major coal users such as China.

Still, the new coal-related guidelines would constitute a major policy change if they go through and would be in line with a broader new institutional focus on climate change, as pushed by World Bank President Jim Kim.

“[L]eaders around the world must propose even more far-reaching solutions and deliver results … They know there’s no substitute for aggressive national targets to reduce emissions,” Kim wrote in an op-ed in the Washington Post published Friday.

“Today, the burden of emissions reductions lies with a few large economies, including the United States, China, India and the European Union. In particular, the moves by the United States and other big emitters to reduce emissions from coal-fired plants are an important step forward.”

The World Bank document was leaked in the immediate aftermath of the first major climate change-focused policy speech given by President Barack Obama on Tuesday in which he laid out a policy vision in part strikingly similar to the World Bank’s new draft proposal.

“Today, I’m calling for an end of public financing for new coal plants overseas,” Obama stated, “unless they deploy carbon-capture technologies or there’s no other viable way for the poorest countries to generate electricity.”

This announcement too would constitute a major policy reversal, as the United States has directly offered billions of dollars in financing for coal-fired power plants in recent years, including in India and South Africa, and is considering a proposed project in Vietnam.

Locked in

The potential moves away from coal-related financing on the part of both the World Bank and the United States are being lauded by environment groups and development agencies.

Yet both of these new approaches would place significant emphasis on natural gas and, in the case of the bank, other contentious forms of electricity production such as hydroelectric dams.

The new World Bank policy noted, “In some cases, natural gas is likely to make an important contribution [to transitioning to sustainable energy] … providing flexible electricity supply where demand and supply fluctuate.”

“It is welcome news that the World Bank is moving away from coal, because we’ve known for some time that bank investments in coal have not helped meet the energy needs of the poorest, but rather have helped some of the richest corporations on the planet,” Daphne Wysham, co-director of the Sustainable Energy and Economy Network and the Institute for Policy Studies, a Washington think tank, told IPS.

“The bad news is that instead of leading the world towards a truly renewable green-energy future, the bank is once again locking developing countries into carbon-based infrastructure, this time with natural gas.”

While natural gas burns far cleaner than coal, producing natural gas tends to result in significant leakage of methane, a potent greenhouse gas. As a result, scientists say, natural gas can result in similar levels of climate change-causing emissions as coal.

Wysham pointed to a report released this week by the International Energy Agency (IEA), a Paris-based think tank backed by Western countries, that surprised many analysts by forecasting that the price of renewable energy will drop below that of natural gas as early as 2016.

“In our opinion, any significant focus by the bank on natural gas would make no sense,” Wysham said, “from either a climate or economic perspective”.

Satellite image of San Jorge Gulf, in the Patagonia region of Argentina, where there are huge reserves of shale gas. Credit: IPS/Photostock

By Marcela Valente
BUENOS AIRES, Apr 30 2013 (IPS)

The enthusiasm of the government and oil and gas companies over Argentina’s unconventional fuel potential has come up against fierce opposition from communities living near the country’s shale gas reserves and environmental organisations.

Indigenous communities, other nearby residents, academics and environmentalists are deeply concerned about the risks of disastrous environmental damage entailed by the hydraulic fracturing or “fracking” required to extract the country’s significant reserves of shale gas.

Unlike the gas and oil that can be obtained by merely extracting them from deposits where they are found in a more or less pure state, the gas and oil trapped in shale, slate and tar sands, among other formations, require more costly and contaminating techniques.

To extract the gas, the shale rock is fractured by injecting huge amounts of water and chemicals at extremely high pressure through horizontal perforations up to several kilometres in length.

Fracking is a highly controversial issue in the United States and Canada and has been banned in France and Bulgaria, but is moving forward in Argentina, which is believed to offer enormous shale gas potential.

Diego di Risio of the Oil Observatory of the South told Tierramérica* that “the environmental impact of unconventional technologies is far greater than that of traditional technologies,” for reasons that include the large areas affected and the massive volumes of water used.

Other organisations, such as the Ecosur Foundation and Plataforma 2012, warn of the danger of the expansion of this type of oil and gas drilling without serious debate regarding its risks.

Last year, the Oil Observatory published a study, “Fractura expuesta. Yacimientos no convencionales en Argentina” (Fracture Exposed: Unconventional deposits in Argentina), which describes the use of chemical products during the fracking process that could contaminate groundwater and aquifers.

Moreover, the exploitation of unconventional reserves contributes to further postponing debate on “the need for the diversification of the energy mix” in Argentina, which currently depends on oil and gas for almost 90 percent of its energy needs, and is expanding the hydrocarbon frontier into agricultural areas, the study warns.

The 2013-2017 Strategic Management Plan of YPF, the oil and gas company fully nationalised in 2012 by the government of President Cristina Fernández de Kirchner, states that Argentina is the country with the third greatest potential for unconventional gas, after China and the United States.

In fact, the first multi-fracture horizontal well in South America was drilled in 2008 in the territory of a Mapuche indigenous community in the southern Argentine province of Neuquén, without the consent of the local inhabitants.

The company heading up the operation is Apache, a U.S.-based corporation that has acquired huge tracts of land in the area. The community of Gelay Ko (“without water”, in the Mapuche language) is located over the Zapala aquifer and is made up of around 40 families. Their homes are surrounded by wells drilled by Apache for shale gas extraction.

In 2012, after filing a legal suit over the company’s failure to consult with the community and prepare an environmental impact assessment, a group of community members occupied Apache’s installations, but their protest was quashed and they were slapped with a countersuit.

The protest was headed up by 30-year-old lonko (traditional chief) Cristina Lincopán, who died a month ago from pulmonary hypertension, reported Leftraru Nawel of the Neuquén Mapuche Confederation.

“On top of the death of animals, which was already happening when there was only conventional drilling, now we are seeing impacts on the health of the population, because they burn gas there, very close to the people’s homes,” Nawel told Tierramérica.

In Gelay Ko as in other Mapuche communities in Neuquén, water is becoming increasingly scarce and saline, to the point where the authorities are now distributing bottled water, he explained. But Apache uses millions of litres of the vital resource for fracking.

“People are worried about the contamination of the Zapala aquifer, which has been declared a natural reserve by the municipality, because the possible extent of contamination is still not known,” said Nawel.

“The problem is not just the amount of water they use – and we don’t know where they get it from. They add chemical products and no one knows what they are because that information is protected under patent,” he said.

“No one knows what they do with the waste water, either. In the United States they re-inject it into inactive wells, without sealing them or anything. In Neuquén there is no technology for the treatment of this type of waste,” he added.

Apache’s operations are located in the vast shale field of Vaca Muerta, which covers two thirds of Neuquén and part of neighbouring provinces, and is considered to contain Argentina’s largest unconventional gas reserves.

In the last two years, fracking technology has also advanced in other regions of the country. In February, the president inaugurated new exploration activities in the southern province of Chubut.

In this province of scarce water resources, attorney Silvia de los Santos, on behalf of local indigenous communities, filed for an injunction against exploration in Aguada Bandera, located 200 kilometres from the city of Comodoro Rivadavia, and in D-129, on the coast of San Jorge Gulf.

De los Santos filed for the injunction on the eve of the initiation of these exploration activities, on the grounds of irregularities in the permit application and environmental impact assessment. But she did not succeed in stopping them.

YPF president Miguel Galuccio announced that San Jorge could represent the most important source of shale gas after Vaca Muerta. In both cases, these are conventional gas fields that also contain unconventional reserves.

In the meantime, areas where there has been no oil and gas industry activity until now are also being eyed as potential sites for exploration and extraction, such as Los Monos in the northwestern province of Salta and another field in the northeastern province of Entre Ríos.

Beneath the soil of Entre Ríos and other provinces on the Argentine coast, as well as part of Uruguay, Paraguay and southern Brazil, lies the Guaraní aquifer, an enormous freshwater reserve that supplies drinking water to a large number of cities in the region.

“Entre Ríos did not form part of Argentina’s oil and gas map, but with this new technology there has been a shift towards this area, and now environmental organisations are calling for some kind of moratorium or prohibition on fracking there,” said Di Risio.

In the southern province of Río Negro, environmentalists and local residents have been meeting to exchange information and take action against the expansion of fracking in the region of Allen, where Apache is also operating.

The drilling is being done very close to fruit tree orchards, say local farmers, who are concerned over the impacts and the lack of control over the disposal of the liquid waste generated by these operations.

In the Río Negro municipality of Cinco Saltos, an ordinance was passed to ban fracking, but this was vetoed a short time later by the municipal government, and the legislative assembly subsequently upheld the veto.

* This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Excerpt:

Environmentalists and others here are reacting with concern to a surprise announcement on Monday of a major deal that would see U.S. natural gas exported to the United Kingdom, marking the first time that such sales have been permitted.

The agreement, between the UK energy company Centrica and the U.S.-based Cheniere Energy Partners, would see more than 1.7 million metric tonnes of liquefied natural gas (LNG) per year shipped to the United Kingdom, starting in 2018. The U.K.’s gas supply has been extremely tight this winter, and the new sales would satisfy requirements for around 1.8 million British homes.Increasing demand via exports for a dirty, dangerous process is not something we think is a good idea.

The deal would mark the first time that the U.S. government has allowed any of the country’s booming natural gas production to be sold to state that does not have a free trade agreement with Washington. While 19 other permits have been allowed to countries with such agreements, only one, South Korea, has engaged in any significant U.S. gas imports.

Critics warn that the industry in the U.S. remains too unregulated and that exports will cause a spike in domestic gas prices. In recent months, the debate over exports has become highly divisive.

“We cannot guarantee that drilling occurs safely in the United States, because there is neither the science to justify nor do states enforce what regulations do exist,” Alan Septoff, the Washington-based director of communications for Earthworks, an advocacy group, told IPS. “Increasing demand via exports for a dirty, dangerous process is not something we think is a good idea.”

The Centrica deal comes after the U.S. Department of Energy published a commissioned study that found, among other things, that the negative economic impact of LNG exports on the United States would be negligible. Yet critics say the study failed to look at either environmental or health impacts, while downplaying the effect on poor and middle-class communities.

“We have problems with this study and have called on the Department of Energy to conduct another study that incorporates environmental and health assessments,” Jenny Chang, a campaigner with the Sierra Club, an advocacy group, told IPS.

She notes that some 200,000 people wrote the Department of Energy to criticise the report (the Sierra Club has published an exhaustive study here).

“But now that the department has finished its part of the bargain, there’s nothing stopping them from issuing more permits,” she continues, “even though doing so may not be in the public’s interest.”

Pressing decisions

Centrica is cautioning that the contract still hinges on Cheniere receiving “necessary regulatory approvals”. But according to a statement put out by the company on Monday, British Prime Minister David Cameron is already extending his “warm welcome” to the new deal, stating, “Future gas supplies from the U.S. will help diversify our energy mix and provide British consumers with a new long-term, secure and affordable source of fuel.”

Indeed, although the Centrica deal would be the largest agreement of its kind so far, it is also almost certainly only the beginning of a massive exports push. The Department of Energy reportedly has 21 pending LNG-export permit requests, constituting around 45 percent of the country’s gas production.

Of course, all of this is taking place in the context of a massively altered energy landscape in the United States, which is thought to have more extensive gas resources than any other country. Over the past five years, powered by new extraction techniques known as hydraulic fracturing (or “fracking”), U.S. engineers have been able to extricate previously unreachable natural gas, much of it trapped in shale and other geologic formations.

From 2007 to 2012, gas production in the U.S. increased by 25 percent, with dramatic domestic effects. The cost of energy in the country has fallen, with some experts suggesting this helped stabilise the country’s economy following the 2008 international economic crisis.

More controversially, natural gas – which burns cleaner than coal and other petroleum products – has been touted as a “greener” energy solution, helping in part to bring U.S. greenhouse gas emissions down to 1990s-era levels.

Yet critics point to mounting evidence of environmental and public health issues cropping up in local communities near the thousands of wells that have gone into production over the past half-decade. In addition, the methane that tends to seep out of these wells during production is particularly potent in causing climate change.

As the United States has thus far refused to allow any major sales of its new gas reserves, however, the international ramifications of this sea change are only now starting to be understood.

Opponents of the push for exports highlight two main concerns: economics and environmental impact. First, if significant U.S. gas reserves were to enter the international market, the domestic price would almost certainly increase in response.

Second, the hydraulic fracturing industry here remains unusually unregulated, largely because politicians have yet to agree on how to deal with what remains a new – but extremely lucrative – technology. Critics say that politicians still don’t have a handle on either the impact of hydraulic fracturing on groundwater or on the extent that the technique is resulting in increased methane emissions.

In an open letter sent in mid-March to President Barack Obama, Earthworks and the Sierra Club joined with other groups to call for an “open and informed national conversation to test whether [gas exports] are actually in the public interest.” They also stated that, “Deciding whether and how to move forward with LNG exports is among the most pressing environmental and energy policy decisions facing the nation.”

Regulatory progress

In recent days, both regulatory and political processes on this issue have progressed.

On Monday, the Environmental Protection Agency announced the formation of a new advisory council, made up of 31 external experts, that will now formally look into the effects of fracking on drinking water. And on Friday, Senator Ron Wyden announced he was starting work on a new legislative bill that would aim to find common ground on natural gas exports and hydraulic fracturing.

Finally, in a major but polarising new initiative, last week also saw the opening of a new institute that has brought together some environmental groups and some major oil producers, including Chevron and Shell.

The Center for Sustainable Shale Development says it has already established “15 initial performance standards designed to ensure safe and environmentally responsible development” of shale gas, which will be used to offer “independent, third-party certification” of gas wells, including ensuring the use of certain methane-trapping technologies and techniques.

The 19,000 inhabitants of the municipality of Caraparí, the area supplying a third of Bolivia’s gas exports, do not have access to gas or petrol, six years after the nationalisation of the mega deposit and almost a quarter century after its discovery.

The paradox goes almost unnoticed because that area of the department of Tarija, in the middle of the Bolivian Chaco, is 1,205 kilometres south of La Paz — far from the economic centre where state coffers are constantly replenished by revenue from natural gas exports to Argentina and Brazil.

President Evo Morales, in his Jan. 22 report to the Plurinational Legislative Assembly, noted that income for the hydrocarbon sector grew from 673 million dollars to 4.2 billion dollars between 2005 and 2012. He considered this augmentation a result of the nationalisation of the sector in May 2006.

A general strike in the last week of January in Caraparí, the second section of the Gran Chaco province in the far south of the country, sounded a warning that prompted a government pledge to install a fuel-distribution point in the area before October.

The closest place to buy a container of liquefied gas, or stock up on petrol and diesel, is 50 kilometres away in the town of Yacuiba, bordering Argentina, Mayor Ermas Pérez told IPS.

Merchants charge up to 7.2 dollars per 10-kilogramme container of gas, well above the official price of 3.2 dollars, resulting in an outcry from residents including food farmers, small livestock farmers and traders.

“We depend on Yacuiba, and at night they don’t let us bring gasoline because of police (restrictions on) controlled substances,” said Pérez, who has been mayor of Caraparí since 2005.

“It was a movement for dignity in the land of gas where there is no gas,” journalist Elton Lenz, a popular leader who is familiar with the reality of the municipality’s 49 oil-rich communities, told IPS. He was quick to clarify that this was “not a political act”.

In 2008, Morales victoriously stated that Caraparí had increased its income from 134,417 dollars to 1.4 million dollars; but the mayor cannot legally use some of that income to install a service station.

Pérez declared that his town was the first in the country to implement a free school breakfast and lunch programme, and that it fully meets demands for health and education. But he also wishes to invest in irrigation programmes, mechanised crop farming and livestock farming, activities that do not fall within the purview of the municipality.

“They say we have the largest per capita income of Bolivia, but there is poverty here. Several communities have to cook with wood-burning stoves, because the state company YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) does not distribute liquefied gas,” complained Lenz.

Natural gas arrived at homes in the municipality’s town center in May 2012, but only one group of 160 families is benefiting from the supply. Meanwhile, the community’s reservoirs act as a huge source of energy for neighbouring countries: Bolivia exports about 30 million cubic metres of natural gas to Brazil and another seven million to Argentina.

There is a high prevalence of indigenous populations in Caraparí’s rural areas, especially Guarani, as well as in the surrounding Gran Chaco province. Since becoming a centre of energy activity in the country, the Tarija department has witnessed recurring conflicts between the original inhabitants and the YPFB.

Carlos Arze, energy analyst at the Centro de Estudios para el Desarrollo Laboral y Agrario (Center for the Study of Labour and Agrarian Development), described Caraparí’s fortunate geographical position atop the oil fields of San Alberto and Itaú, and parts of other deposits, like Margarita-Huacaya and Sabalo.

“We can conclude the province of Gran Chaco contributes about 33 percent of all natural gas produced annually in Bolivia,” he said.

In January, YPFB reported that in 2012 the country reached its highest historical natural gas production, with 51 million cubic metres per day. Oil production also rose to an average of 51,000 barrels per day and at the end of the year stood at 60,000 barrels daily.

The economist Julio Alvarado complained that nationalisation has not brought significant changes in Bolivia’s politics on hydrocarbons. “We continue to export and let others industrialise gas,” he told IPS.

“We are worse than before,” he said, recalling that only former President Hernán Siles Zuazo, in his last term from 1982 to 1985, built a pipeline to distribute hydrocarbons from their fields to the largest domestic markets, located in western Bolivia.

“The poverty of the people, in whose territory (lie) the natural resources that finance the national budget, are in contrast to the prosperity of transnational corporations and the huge amount of resources spent by national and local governments,” said Arze.

Alvarado agrees, saying that last year’s five percent growth in gross domestic product (GDP) goes to paying salaries, travel expenses and sending numerous delegations overseas, instead of giving priority to development and productive activities.

On energy, Arze finds a “contradiction” in government policies “because they continue to favour foreign companies, which rapidly sell the production to obtain big profits”, while the government finances its spending “without caring about the development of areas where these resources come from”.

“There are no social policies.  The public projects are only roads, works of cement, while the social aspect is neglected,” lamented Lenz.

The journalist says that in this region a quartre–litre of carbonated soft drinks costs 1.20 dollars and a bowl of soup sells for two dollars, while in La Paz these prices are less than half.

The government and YPFB have promised to build a service station capable of supplying petrol, diesel and liquefied gas with an investment of 500,000 dollars by October.

The people of Caraparí warn that, this time, they will make sure that promise is fulfilled.

The total amount of gas estimated to have been flared last year, about five trillion cubic feet, is said to equal the amount of natural gas used in the United States over a full year. Credit: public domain

By Carey L. Biron
WASHINGTON, Oct 24 2012 (IPS)

An international coalition led by the World Bank is calling for state-backed and private oil producers to reduce “gas flaring” by an additional 30 percent over the next five years, saying that doing so would be equivalent to taking 60 million cars off of the roads.

Analysts widely characterised the goal as both ambitious and significant, though it follows on an apparent levelling out in flaring reductions in recent years.

Since a major new push began in 2005, the World Bank-led Global Gas Flaring Reduction (GGFR) partnership estimates that, through 2011, its actions have brought down gas flaring by 20 percent, eliminating around 274 million tonnes of carbon dioxide emissions.

But according to the GGFR – a coalition of 20 major oil companies and 19 countries – which started a two-day high-level meeting in London on Wednesday, both the economic and environmental impacts of gas flaring require far greater reductions.

“A 30 percent cut in five years is a realistic goal,” Rachel Kyte, the World Bank’s vice-president for sustainable development, said in a statement Wednesday. “Given the need for energy in so many countries – one in five people on the planet are without electricity – we need to raise our ambition. We simply cannot afford to waste this gas anymore.”

Oil producers resort to flaring when gas, a by-product of oil, is brought up to the surface but cannot easily be repurposed for consumers. Instead, producers simply burn off the product, the value of which the World Bank, based here in Washington, puts at some 50 billion dollars a year.

The total amount of gas estimated to have been flared last year, about five trillion cubic feet, is said to equal the amount of natural gas used in the United States over a full year.

Environmentalists have long called for the outright banning of the practice, though flaring does in fact release far lower levels of greenhouse gases than simply allowing the gas to evaporate. However, the process does not deal with one notorious pollutant, nitrogen oxide, and still releases significant carbon dioxide, and thus significant greenhouse gas-related worries remain.

Alternative uses for this gas range from producing power, refining it for use in local markets, or even putting it back into the ground. But analysts say the economic benefits for companies in doing so are low.

Nonetheless, the World Bank reports slow but steady success in reductions, particularly since 2005. According to data released Wednesday, Mexico has cut its flaring by two-thirds and Azerbaijan by half in just two years, while Kuwait gotten its flaring down to just one percent of previous levels.

In addition, Qatar and Congo have been singled out for using the gas to make electricity.

Significant improvements have also been seen in many of the world’s worst flaring offenders. “Huge investments” by GGFR partners have reportedly helped Nigeria to reduce its flaring by nearly a quarter through 2011, while Russia, the most significant culprit in this regard, has reduced flaring by around 40 percent, though those figures rose last year. (Data on the world’s top 10 gas flarers can be found here.)

Still, on Wednesday the bank warned that both of these countries, particularly Russia, in addition to Mexico, Iraq and Kazakhstan, need to make significant improvements.

U.S. tripling

Missing from this list, however, is one of the most significant outliers in the global push against gas flaring: the United States, which has increased its gas flaring by more than three times since 2007, more than any other country.

The U.S. is currently in the midst of a sea-changing boom in natural gas production, thanks almost entirely to new technologies (so-called hydraulic fracturing or “fracking”) that have allowed for the exploitation of previously off-limits gas deposits in shale and other geological formations.

Against the promising country-by-country numbers, total global gas flaring actually increased last year by around two billion cubic metres, which World Bank analysts have put down to output from Russia and, specifically, the U.S. state of North Dakota.

“The small increase underlines the importance for countries and companies to sustain and even accelerate efforts to reduce flaring of gas associated with oil production,” Bent Svensson, manager of the GGFR partnership, said when the 2011 figures became available in July. “It is a warning sign that major gains over the past few years could be lost if oil-producing countries and companies don’t step up their efforts.”

The U.S. is now the fifth-largest flarer, behind Russia, Nigeria, Iran and Iraq. While part of this is due to the multifold increase in production in recent years, it also appears to be due to a lag in implementing the necessary infrastructure.

“Due to insufficient natural gas pipeline capacity and processing facilities … over 35% of North Dakota’s natural gas production … has been flared or otherwise not marketed,” the U.S. government reported in late 2011. “The percentage of flared gas in North Dakota is considerably higher than the national average; in 2009, less than 1% of natural gas produced in the United States was vented or flared.”

The World Bank declined to comment specifically on the United States in this regard.

But potentially more significant is a new rule passed by the country’s Environment Protecion Agency (EPA) in April.

Aimed at trying to cut down specifically on the methane released during venting around gas production, the EPA’s ruling gave U.S. producers until 2015 to get required technologies in place that will eliminate the need to burn off gas. In the meantime, however, the EPA stated that it would begin requiring companies to flare excess gas, as the lesser of two pollution evils.

The new rules have been generally well received by both industry and activists.

“Based on the EPA rules, the U.S. is going to have 100 percent no-flaring by 2015, which will be pretty good in terms of the rest of the world,” Kyle Ash, a Washington-based legislative analyst with Greenpeace, an advocacy group, told IPS.

“At the time, EPA data showed that just half of the fracked wells had proper (gas-capture) venting technologies in place, so we understood why the EPA made this decision. And though this timeline isn’t horrible, it does appear that the EPA did somewhat bend to industry demands. After all, this technology is available right now.”

However, Ash warns that, with fracking increasing exponentially, “no one yet has a handle on the leakage of methane,” a compound known to be up to 25 times more harmful than carbon dioxide as a greenhouse gas.

If a series of “golden rules” can be followed, a new report from the International Energy Agency (IEA) suggests, global natural gas usage could grow by more than 50 percent by 2035.
The report, released on Tuesday, came under sharp criticism from environmental groups for charting a route to a “golden age” in the extraction and use of natural gas.

As governments around the world are barraged with new applications for exploiting gas deposits, the full implementation of these recommendations could indeed lead to far greater oversight and lessened environmental impact. 

However, only very late in the report does the IEA, a Paris-based intergovernmental organisation, note that such use could lead to a rise in world temperatures “of more than 3.5 degrees Celsius … well above the widely accepted 2 (degree Celsius) target” set by the United Nations.

Although the report does warn that the future of “unconventional” forms of natural gas would be significantly hindered if environmental concerns are not directly addressed, advocacy groups are warning that the IEA should not be focusing attention on increased fossil fuel consumption at this time.

“Drilling for shale and other unconventional gas would put the world on course for catastrophic climate change – incomprehensible when we have clean energy solutions at our fingertips like wind and solar power,” said Tony Bosworth, with Friends of the Earth.

“Our changing climate is already leaving millions hungry, destroying wildlife and costing our own economy billions – more fossil fuels will just make that worse.”

Much has been made of the unexpected boom in natural gas production in recent years, brought about by new technologies able to “liberate” gases trapped in geological formations, such as shale.

One of the most efficient but notorious of these technologies, hydrological fracturing or “fracking”, sees operators inject thousands of pounds of water and a slew of chemicals into the ground. Widespread reports have suggested that, depending on the rock formations in the area, those chemicals can poison underground aquifers, though the industry denies this.

These and other technologies have led to a glut of natural gas internationally, driven in particular by the United States. Since 2000, the production of “shale gas” has increased 12-fold in the United States, which has since begun exporting to the rest of the world.

Natural gas burns far cleaner than oil or coal, releasing about half the carbon of the latter. It is generally seen as one of the cleanest of available energy alternatives other than renewables.

Still, the extraction of shale gas does pose significant risks to local environments, while its burning and processing continues to contribute to global warming. While the IEA report outlines several “golden rules” aimed at mitigating local impacts, critics highlight that it has notably little to say about the broader ramifications of climate change.

“The entire theme of the report is to promote drilling, with more responsibility yielding higher returns in the end,” Kyle Ash, a Greenpeace campaigner, told IPS. “And yet it still acknowledges that we need to better understand the impacts, develop better oversight, and implement effective regulatory regimes – this is the opposite of the precautionary approach.”

Indeed, the two dozen rules outlined by the IEA place a significant emphasis on strict regulation, potentially placing too much responsibility on government action and industry compliance.

In the U.S. scenario, the report “presumes that federal regulatory loopholes can be closed”, Ash notes. “In fact, most of these loopholes originated in legislation in the first place.”

Still, some suggest that the IEA should be given credit for putting forward a list of regulations necessary if natural gas is to play a central role in overhauling the energy mix in countries around the world – including making renewables more feasible.

“We have an opportunity for natural gas to address the intermittency problems of renewable energy sources – it could become an ally of renewables,” Alexander Ochs, the director of the climate and energy programme at the Worldwatch Institute here in Washington, told IPS. Ochs also reviewed a draft of the IEA report.

Ochs says that there are a number of actors within the gas sector that will welcome the new IEA recommendations as a way of cutting down on the potential of a future environmental catastrophe that could lead to industry-damaging policy restrictions.

“The problem isn’t with this report. The problem is that if you don’t have good regulations in place, there go your opportunities,” he says. “And if you don’t have smart technologies in place, you lose this ally.”

Ochs does warn that the report underplays the potential use of renewables in the upcoming decades, however, by suggesting that green technologies other than hydro will only make up five percent of total energy demand in the next quarter century.

“I think the IEA could well be wrong in the numbers it’s using. Technically and economically, more than half of our electricity could come from renewables as early as 2030,” he says.

“But if gas sees a golden age and becomes cheap globally, it could get in the way of renewables. Then, rather than being an enabler, it becomes a deal breaker.”