Recent Posts



Monday, 30 June 2008
A New and Very Different Crimean War

According to this article in the Kyiv Post a new battle is raging in the waters off the Crimea.

Ukraine's Prime Minister Yulia Tymoshenko insisted Wednesday that a US firm will lose the rights to explore for oil and gas on a deepwater shelf off the Crimean peninsula in the Black Sea as a dispute over the $13 million contract simmers.

The government unilaterally pulled out of a production-sharing agreement with the subsidiary of the Texas-based Vanco Energy Co. in April. It said the deal, signed under a previous government in 2006, amounted to "plundering Ukraine's mineral reserves."

That last is a familiar cry from underdeveloped countries whenever prices change to such an extent that they feel that they sold too cheaply in the first place. However, many international corporations are probably guilty of taking advantage of those less well versed in capitalist ways although it looks as if, in this case, poor old Vanco Energy is just being used as a pawn in local political infighting.

But [Prime Minister] Tymoshenko, who accuses [President] Yushchenko of lobbying on the firm's behalf, remained defiant Wednesday and said she would not change her mind.

At a time when what the oil market needs most is stability this sort of politicking with essential resources is much to be deprecated – especially as it comes at a time when the Ukraine is trying both to join NATO and the EU and demonstrate that it can function in a mature fashion.


            The US Embassy in Kiev had no immediate comment.

The deal was Ukraine's first production-sharing agreement - a type of agreement common in relatively poor countries looking to tap capital-intensive oil and gas.

This is very regrettable in another way, as well. Given the fact that most of the world’s oil is to be found under countries which could not be said to be well disposed to our Western democracies we could do without politically inspired bickering over contracts when deposits are found under a free country.

Posted on 06/30/2008 7:00 PM by John Joyce
30 Jun 2008
John M. J.
Hugh is quite correct, of course. However, wouldn't it be nice to cut these modern thuggees out of the system completely. The next time one of them threatens to withhold oil from the markets it would be nice if we could say 'OK. Do it. We don't give a monkey's ****.'

30 Jun 2008
Special Guest

But as Hugh has said whenever this or that MidEast thugocracy threatens to "shut down the pipeline" to the West, oil is fungible.  Once the oil goes on the market, it doesn't matter whether the buyer and seller are particularly fond of each other.  They need to sell, we need to buy, and the rest is inconsequential.

I'm sure it makes a huge difference to the CEO of Chevron whether Chevron gets the contract or Gazprom, but does it matter to the general public?

Or, do I oversimplify?