The Colder War E-Book

Marin Katusa

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 398

Veröffentlichungsjahr: 2014

Beschreibung

How the massive power shift in Russia threatens the political dominance of the United States There is a new cold war underway, driven by a massive geopolitical power shift to Russia that went almost unnoticed across the globe. In The Colder War: How the Global Energy Trade Slipped from America's Grasp, energy expert Marin Katusa takes a look at the ways the western world is losing control of the energy market, and what can be done about it. Russia is in the midst of a rapid economic and geopolitical renaissance under the rule of Vladimir Putin, a tenacious KGB officer turned modern-day tsar. Understanding his rise to power provides the keys to understanding the shift in the energy trade from Saudi Arabia to Russia. This powerful new position threatens to unravel the political dominance of the United States once and for all. * Discover how political coups, hostile takeovers, and assassinations have brought Russia to the center of the world's energy market * Follow Putin's rise to power and how it has led to an upsetting of the global balance of trade * Learn how Russia toppled a generation of robber barons and positioned itself as the most powerful force in the energy market * Study Putin's long-range plans and their potential impact on the United States and the U.S. dollar If Putin's plans are successful, not only will Russia be able to starve other countries of power, but the BRIC countries (Brazil, Russia, India, and China) will replace the G7 in wealth and clout. The Colder War takes a hard look at what is to come in a new global energy market that is certain to cause unprecedented impact on the U.S. dollar and the American way of life.

Leseprobe

THE COLDER WAR

How the Global Energy Trade Slipped from America’s Grasp

Marin Katusa

Cover design: Jan Linke Cover Images: Obama/Putin: © Evan Vucci/Associated Press; clouds/oil field © Mick Roessler/Corbis

Copyright © 2015 by Marin Katusa. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey, and Casey Research, LLC, Stowe, Vermont. Published simultaneously in Canada.

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ISBN 9781118799949 (Hardcover) ISBN 9781118800058 (ePDF) ISBN 9781118800072 (ePub)

To my wife, Marina. Your support and undying love carry me in all I do.

Contents

Foreword

Energy

… and the Man

Acknowledgments

Chapter 1 The End of the Lost Decade

The Lost Decade

Move to Moscow

The Bombings

Second Chechen War

Putin Installed

Notes

Chapter 2 Humbling the Oligarchs

Land of Opportunity

Nailing Khodorkovsky

Vouchers

The Yukos Way

Putin's Best Offer

Dropping the Hammer

A Trail of Bodies

Daring to Notice

Survive and Thrive

Vision and Principle

Chapter 3 The Great Game and the End of the Cold War

The First Drop

The Pioneer

Go Big

Oil, War, and Peace

The First Nickel

Everyone's Dollar

Thank You, Mr. Nixon

Notes

Chapter 4 The Slavic Warrior

Little Boy Putin

Big Boy Putin

Putin at Work

Hands off Georgia

Hands on Georgia

Chapter 5 Ukraine

What Putin Wants in Ukraine

After the USSR

Don't Forget to Vote

Maidan Up Close

Crimea Comes Home

Notes

Chapter 6 Putin the Statesman

Beyond the Common Economic Space

Here We Go Again

Chapter 7 The Putinization of Oil

Arctic Oil

European Market

Rosneft

Winking at OPEC

Oil Pipelines

Notes

Chapter 8 The Putinization of Gas

Better Pipes

Liquefied Natural Gas

European Burners

Gazprom

Beyond Europe and Back

Notes

Chapter 9 The Putinization of Uranium

Long-Term Shortage

Science Lesson

Short-Term Fixes

Putin's Uranium Superstore

The Ultimate Source

Going to School in Mongolia

Toward the Endgame

The Transient Surplus

Chapter 10 The Middle East: Oil, Wars, and the Great Game

Iran: Sanctions, Coups, and Revolutions

Iraq: The Quagmire

Iraq's Oil History

Kurdistan—The Would-Be Country

Afghanistan: The Bear Trap

Syria: Why Do We Care?

Bahrain's Importance

Israel

Rattling around the Shaky House of Saud

Notes

Chapter 11 Twilight of the Petrodollar

Darts at the Dollar

The Dollar Shoots Itself

The Tide of Commerce

Back to Riyadh

Notes

Chapter 12 Post-Petrodollar America

Softening Up

The Process

On the Fast Tracks

Last Exit

What You Can Do

Bringing Modern Technology to Old Fields

Afterword

References

About the Author

Index

Advert

End User License Agreement

List of Illustrations

Chapter 1

Figure 1.1

Commonwealth of Independent States (CIS)

Figure 1.2

Russian Gross Domestic Product (Producer Price Parity) since the Fall of the Soviet Union

Chapter 3

Figure 3.1

Nominal versus Real Price of Oil

Chapter 5

Figure 5.1

Percentage of Ukrainians Who Speak Russian Natively

Chapter 6

Figure 6.1

How Much Europe Depends on Russian Energy

Chapter 7

Figure 7.1

Worldwide Oil Production

Figure 7.2

Russia's Crude Oil and Condensate Main Export Destinations, 2012

Chapter 8

Figure 8.1

Largest Proven Holders of Natural Gas Reserves

Figure 8.2

Reliance on Gazprom as a Percentage of Consumption

Figure 8.3

China's Energy Consumption

Chapter 9

Figure 9.1

Spot Uranium Price

Figure 9.2

Nuclear Reactors Worldwide

Figure 9.3

EU-27 Sources of Uranium, 2010

Figure 9.4

Current Uranium Enrichment Capacity

Figure 9.5

Uranium Conversion Capacity

Chapter 10

Figure 10.1

Predominant Religious Sects of Inhabitants Near Oil Fields

Figure 10.2

Israel's Natural Gas Reserves

Chapter 11

Figure 11.1

Saudi Crude Oil Exports by Destination, 2012

Guide

Cover

Table of Contents

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Foreword

Let me be candid. I really like this book because it's original, it's well reasoned, and its conclusions are correct. It's important that you read it.

Let me take a couple of pages to explain why the subject of energy is even more important than most people imagine, and why Marin is not only the right man to explain it but a winning player in the rough-and-tumble energy arena.

Marin wasn't planning to write a book until I twisted his arm. Although he's a competent writer, as you'll see, he's first and foremost a deal maker. But what has brought him so much success in that career is being a preternaturally shrewd analyst and an independent big-picture thinker. His take on many things—not least the Putinization of energy and the incipient Colder War—is likely to give you a new view on what is going on in the world. He won't be echoing the conventional wisdom you're likely to hear on network TV or read in the New York Times.

Energy

It's a commonplace that “the world runs on energy,” but few appreciate the mercilessness of that truth for an industrialized world. Putting it quite simply, energy is the sine qua non of civilization itself. Without large quantities of it, most of us would literally starve and would do so while freezing in the dark.

Your food requires large quantities of fossil fuel to be grown, packaged, transported, refrigerated, and later cooked. That dependence may not be ideal, but it's reality for at least another generation of mankind. For your car to run, for planes to fly, and for trucks and trains to deliver goods, it's going to take a lot of fossil fuel for many years to come. Fossil fuels are the raw material for many of the things we use, from plastics to clothing. Without a river of energy, you can forget about communications, TV, computers, and the Internet. Without oil, natural gas, coal, and nuclear power, modern civilization would wither in a matter of days.

But that's only a description of how things are now. Despite greenism and the widespread enthusiasm for the idea of conservation, energy isn't going to become less important; it's going to become vastly more important. The Second Law of Thermodynamics states, in essence, that without continual inputs of energy, all systems wind down. Entropy, like gravity, conquers all. Only inputs of energy can hold the process at bay.

The world's population will likely grow to 10 billion people by the end of the century, and their energy requirements will grow much, much faster. Today two-thirds of all people are still poor and consume little energy. As they approach a Western standard of living, they're going to want more—say, about 10 times more—than they have now of the things you and I take for granted. And all those things are made with energy inputs and run on more energy inputs.

Now, it's true that technology is making rapid improvements in the efficiency of renewable or sustainable energy, mainly solar and wind. They will likely become economical, at some point, for many applications. But in the foreseeable future, there is no remotely practical substitute for the high-density energy of fossil fuels.

There eventually will be such a substitute, I'm sure, if only because there are more scientists and engineers alive today than have lived in all of previous history. Vastly improved, much smaller, much cheaper, much safer uranium-fueled power plants are on the way. So are thorium reactors. Fusion may eventually obviate all energy problems. And in the meantime, we're always improving the efficiency of using fossil fuels. The Boeing 787, for instance, is more than three times more fuel efficient than a Boeing 707; a 2014 Corvette can cruise at 30 miles per gallon, whereas its 1960 predecessor would be pressed to make 12.

Solutions will be found and innovations will appear. In the meantime, the use of fossil fuels will continue to rise, albeit at higher costs per unit of energy. The commercialization of fracking, horizontal drilling, coal bed methane recovery, deep-sea drilling, and tar sands recovery are just a few new sources of oil and gas.

Mankind's sources of energy will continue to evolve. But for the next few decades, fossil fuel will be critical just for maintaining civilization as it is today, and the expected escape from poverty by billions of people will require even more of it. The Second Law is always there, grinding away. And over the coming generation, the companies and countries that control fossil fuels are going to have more influence on the rest of the world than they ever had before. It's going to be, at the nicest, the Colder War that Marin posits.

… and the Man

Marin is that rare person who is both academically smart and street smart. He was a university math professor and has a bent for science. And it didn't take him long to put theory into practice, analyzing the fundamentals of mining companies and oil companies—geology, mineralogy, engineering, permitting, management, and a score of other disciplines.

There are thousands of such companies, and they're represented by the most volatile class of stocks you can find. Over the course of a commodity cycle, many of the small ones are capable of moving 100 to 1 in price, or more. Most of them turn out to be just black holes for capital, however. Speculators in this area seldom appreciate how great the potential can be and the severity of the risk. Paradoxically, however, companies with the lowest risk can have the highest potential—if the speculator knows what to look for.

And this is an area where Marin really shines. He not only has a strong academic background in oil, gas, unconventional energy, uranium, and mining, he also has a proven hands-on, boots-on-the-ground record of building and running successful companies. In particular, he's largely responsible for putting Canada's third-largest copper mine into production—all the way from property acquisition to financing, construction, and profitable operation. That's a rare accomplishment and extraordinary for a 30-year-old (his age at the time).

He was one of the largest investors in the company early on. He's even now one of the most successful financiers in the resource exploration business and runs four hedge funds, where he and I are the largest investors. (He puts his money where his mouth is.) The funds have outperformed the TSX-V index by 600 percent over the past five years, despite holding large cash balances. In both relative and absolute terms, it's one of the most exceptional performances I've ever seen.

But it's not just knowledge and technical expertise that put Marin at the top. It's also his people skills. The son of Croatian immigrants, Marin had (what turned out to be) the good fortune to be born on the wrong side of the tracks. So he's not just book smart, but street smart. Whether it's with the president of a company or the president of a country, he knows how to relate to them over a bottle of something potent. Watching him ask questions and get answers as few people can, I'm forced to remark that he could have been the type of police detective they do TV shows about. And he's a world-class poker player.

With that background, he's now concentrating on finance. I've been in the resource finance business for about 40 years and have gotten to know most of the movers and shakers. Many of them—like Robert Friedland, Lukas Lundin, Frank Giustra, and Ross Beaty—are multibillionaires. Marin will join their ranks, quite possibly in this cycle—since, as I write, resource stocks are at a historic bottom. I saw him cut the deal that founded the largest shale gas company in Europe. And we were recently in Albania together to assess what may become Europe's largest onshore oil producer.

I've been to more than 135 countries, but Marin is starting to close in on me. We've traveled through the Balkans, across Iraq, through Asia and South America, as well as all over North America together. Travel becomes an aggravation once you've done enough of it, but it's essential in this business. One reason is that you want to meet a company's management in their element and see how things are going with your own eyes. Another is to understand the local political situation, a theme that's central to this book. In today's world—much more so than in even the recent past—the world's 200+ governments are the biggest factor in resources. Their leaders and bureaucracies determine whether a resource can even be exploited, what workers are paid, and how much will be left over after the government extracts its royalties and taxes.

Hence, a good part of this book explains how international politics relate to energy and how the worldwide energy picture is likely to evolve over the next decade—especially with regard to Russia, and more particularly with regard to Vladimir Putin, who, at age 62 as I write, is likely to be on the scene for years to come. He's both a lot smarter and a lot tougher than any of his counterparts in the West, and he will be a big part of what will make the next decade among the most “interesting” (to use that word as the Chinese do) in world history.

You're going to be glad you read this book.

Doug Casey Author of The International Man, Strategic Investing,Crisis Investing, Totally Incorrect, and Right on the Money,Chairman, Casey Research

Acknowledgments

As I sit at my office desk, in midsummer 2014, going through the last chapter of the manuscript and responding to all of Terry Coxon's comments and edits, I wonder how many wrong turns I might have left uncorrected but for the attention Terry and other members of the Casey Research team have given the project.

When Doug Casey, the founder of Casey Research, broached the idea of writing about my theories of the Colder War, I was reluctant. I'm much more of an investment analyst than a writer, and I've never felt a yearning to see my work sitting on a bookshelf. But Doug persisted, and when I took up his idea of writing the book, he responded with advice that helped make it what its first reviewer termed “such a good read.”

The support and guidance I received from Doug's partner, Olivier Garret, the CEO of Casey Research, were critical to making The Colder War happen, and to making it happen well. Olivier believed in the concepts and ideas I've been sharing with Casey Research subscribers for most of the past 10 years, and he saw the value in assembling the core of those ideas into a book for a wider audience. Without Olivier, the group of funds I manage would never have happened, and together we have been able to deliver to our shareholders some of the best returns in the sector over the past five years, beating our comparable index by over 600 percent.

Doug Hornig and Terry Coxon both were prime movers in the evolution of The Colder War, and they deserve much credit for any success it enjoys. Doug Hornig worked tirelessly to organize my early jumble of notes and jottings, to identify and hunt down needed details, and, most important, to impose some literary discipline on the technical topics—material that for me is music, but for most readers just isn't. Terry Coxon, as you may notice as you read the book, is an exceptional editor; he did much to streamline the story and ease its flow from the first page to the last.

I've been fortunate to find a career I love and that has invited me to travel the world many times over—and doubly fortunate for the friends and colleagues who've greeted me along the way. Jim O'Rourke, a member of the Canadian Mining Hall of Fame, and Rick Rule of Sprott Global have been generous mentors who for many years have shared their knowledge and experience. David Galland, of Casey Research, gave me a platform to excel at what I most enjoy, which is finding the best resource investments around the world.

My parents came to Canada with nothing but a dream of a better life for their kids than they had experienced growing up under the communist regime of Yugoslavia. I can never thank you enough. My appetite for work came from watching the two of you work to live out that dream. And to my brothers, Jad and Karlo, who nurtured my competitive, never-give-up attitude in the uncompromising way only big brothers can, thank you.

It is my brilliant and beautiful wife, Marina, whom I must thank the most. Her support and undying love carry me in all I do.

Marin Katusa Vancouver, British Columbia, 2014