Transportmonopolstellung

Transport monopoly.

ProPublica.org puzzled out more information on how a company named Chesapeake Energy managed to reduce its payments to rural landowners from whom it was leasing fracking rights. One Pennsylvanian farmer saw his monthly check go down from ~$5000 to ~$500 for the same volume of gas, for example.

While there are federal laws to prevent gouging on interstate gas pipelines, this did not apply to the small feed lines Chesapeake built in rural areas which were the only ways for many landowners’ fracked gas to get to market.

In 2011, when Chesapeake Energy needed cash, they essentially created a pipeline company with those rural gas pipelines and sold it to a competitor oil firm for ~$5 billion, with the promise that Chesapeake would continue to hire its old pipelines to transport a lot of gas for the next decade and would pay the new company, Access Midstream, enough in fees to cover the ~$5 billion sale price plus 15% for their pains.

“That much profit was possible only if Access charged Chesapeake significantly more for its services,” said ProPublica. The extra costs were billed to the landowners as expenses.

“An executive at a rival company who reviewed the deal at ProPublica’s request said it looked like Chesapeake had found a way to make the landowners pay the principal and interest on what amounts to a multi-billion loan to the company from Access Midstream.”

(Tronz POAH t mon oh POLE shtell oong.)

Wasser|Wasser-Wärmepumpe

Water/water heat pump, which can be used e.g. for heating a residential home via groundwater according to one German manufacturer.

The U.K. government announced that to reduce its dependence on natural gas it will incentivize development of carbon-neutral water-based networks that bring heat to multiple buildings. From any body of water, such as rivers or lakes, that is exposed to sunshine the networks will take water, filter it twice, remove the extra heat via heat exchangers, concentrate that heat to 45°C via “reverse refrigeration” and pipe it to nearby buildings.

If the water is taken from a river, the current can be used to generate the electricity running the system.

England’s first such network will serve ~150 homes and a hotel|conference center in South London, said Energy Secretary Ed Davey (LibDem). He has asked the U.K.’s Department of Energy and Climate Change to draw up a map of England showing where such water-energy networks can be built.

(VOSS ah   VOSS ah   VAIR ma POOMP ah.)

Vorteil nehmen von rechtsstaatlicher Abwesenheit daheim und rechtsstaatlicher Anwesenheit in London

Benefitting from the absence of rule-of-law in Russia and from the presence of rule-of-law in London.

An argument that Russia’s economic elites’ use of the relative safety of western countries’ financial and legal systems should depend on whether in Russia those people have participated in what would be considered lawbreaking in the western systems.

An interesting pundit said on Australian radio, for example, that money from selling exported Russian oil and gas is often moved through western financial leveraging instruments before being imported into Russia, to make it harder for that cash to be arbitrarily seized there. Even well-connected Russians are just as hostage to Vladimir Putin as the Crimean Tatars.

He said a counterargument holds that oligarchs will learn from living and working in rule-of-law countries and import some of that back to their homeland. Yet with the west’s inadequate oversight members of these groups might likewise grow corruption in their partner countries and firms. It does look as if German power utility companies who worked with post-Soviet Russian partners who demanded bribes in Russia might have started using extralegal shortcuts to achieve their goals at home; at the very least, their German competitor utilities would have had to compete with them while they were using such methods. Corruption really does seem to breed more corruption: apparently after the multinational Siemens developed streamlined procedures for paying bribes in corrupt countries it began offering them in relatively clean countries.

In a worst-case outcome, it would be interesting to see how western jurists would determine culpability in a country without an independent judiciary.

(FORE tile   nay men   fun   rect SHTOTT lichh ah   OB vaze en height   da HIME   oont   rect SHTOTT lichh ah   ON vaze en height   inn   LAWN dawn.)

“Verhandlungen alle zwei Monaten”

“Negotiations recurring every two months.”

“What Putin is offering is to renegotiate the [price] every two months, to exert new pressure, and that’s the case for energy prices. The first billion Russia delivered, they fulfilled maybe 750 million of that, to pay old Ukrainian debts. That means, and Janukovytsch knows this, that if he continues to go with Russia based on prior experience he’ll get more and more knotted up in it, and that’s when he’ll really lose his power. To Moscow this time.”
—Elmar Brok (C.D.U.), chair of the European Parliament Committee on Foreign Affairs, speaking briskly but interestingly in an interview from Kiev.

(Fair HOND loong en   oll ah   tsvy   moan AH ten.)

“Krysha”-Zahlungen

“‘Paving the way’ payments” in Russia. Rapprochement geld, smoothing-the-path-between-us money, also translated as “bribes” according to a Süddeutsche.de article about Germany’s third-largest power company, Energie Baden-Württemberg, saying some German prosecutors have thought for some years now the nuclear power provider used unworkable, improbable “fake contracts” [Scheinverträge] to move money into “shadow accounts” [schwarze Kassen] in Switzerland to form a pool of bribe money doled out to powerful Russian decision-makers, such as politicians or high-ranking military officers, for more access to the Russian nuclear energy and natural gas sectors. At the time, about half of EnBW was government-owned: by an association of county governments from the German state of Baden-Württemberg and by the French “energy giant” EdF, which itself was also “government-dominated.”

EnBW is said to have been aided in these endeavors by Moscow lobbyist Andrej Bykow, transferring ~280 million euros to Mr. Bykow’s Swiss companies over the course of several years.

Süddeutsche.de’s anthropological explanation of krysha said auditors from the accounting firm KPMG found that “questionable contracts with Mr. Bykow and his companies were being used to pay ‘initiation costs'” and that the auditing company’s confidential research had found that depending on the sector such expenses could run to 2% to 5% of the total cost of a project in Russia. That would make Russia one of the least corrupt countries in the world according to the experience of Siemens executives prosecuted for paying international bribes at about the same time: Siemens accountant Reinhard Siekaczek testified for example that, when he managed transfers of approx. $65 million dollars in illegal bribe money through offshore accounts from 2002 to 2006, his unit found that in the most corrupt countries bribes could be ~40% of a project’s budget, while 5% to 6% was about normal. A retired Greek official who was Greece’s defense department’s procurement director from 1992 to 2002 and recently spoke to Athens prosecutors about ~14 million euros found in his secret accounts around the world said from Russian arms deals his kickback was a “very generous” 3%, because 0.5% to 1% was his usual fee.

Germany has some rules against companies’ paying bribes in other countries, even where corruption is supposedly endemic, as can be seen from the billion-euro fines imposed on Siemens for bribery in 2008. Reporting on possible investigations into the corruption is confused by the use of tax investigations to obtain convictions or evidence in non-tax crimes and EnBW is apparently under investigation for a completely different type of tax fraud (the “carousel” sales tax scheme for avoiding value-added tax and/or collecting refunds of advance V.A.T. payments that were never made) now suspected to have become widespread in European electricity trading. Shortly after the utility’s “opaque business deals” with Mr. Bykow became known in 2011, several tax offices told S.Z., they quickly began looking for improprieties.

The passage of years since the start of these investigations, which state, federal and European offices of which types of investigators, and what pieces of this apparently large and sprawling puzzle they were examining, remains unclear to me.

Mannheim prosecutors are said to have been investigating six former EnBW managers and one current EnBW manager since 2012 for tax evasion and “breach of trust” [Untreue] though not for corruption. That could change now that the Karlsruhe tax office has started looking into the questionably documented filling and emptying of the company’s clandestine accounts in Switzerland.

Tax-wise, the power company has already offered to file adjusted German returns for the years 2000 to 2007 and has already transferred an additional 60 million euros to German tax authorities (about what the company saved in taxes by incorrectly labeling some payments to Mr. Bykow as “business expenses,” Mannheim prosecutors said). But new threads to pull keep getting teased out of EnBW’s data.

Süddeutsche.de described a strange nonprofit charity Mr. Bykow founded called “St. Nikolaus the Miracleworker”—whose board members included EnBW managers at times—which made donations to Russian churches, young Russian musicians and Russia’s Air Force, Navy, Border Patrol and “landing troops” [Landungstruppen; amphibious assault?].

“Thus, the Russian Pacific fleet’s submarine squadron Wilutschinsk Kamtschatskij Kraj named a boat after the Nikolaus charity. The charity, in its turn, gave the submarine personnel a minibus and donated a car to their commander, a vice-admiral. For the ‘maintenance of the fighter bomber SU 34, “Holy Nikolaus the Miracleworker,”‘ the foundation donated the construction of a heated airplane hanger. And every year the regiment’s top member received an automobile.”

Though it’s unclear how these arrangements were reached, with Mr. Bykow’s help EnBW ended up receiving military uranium taken e.g. from decommissioned Russian submarines. The utility was said to have used similar methods to increase its access to Siberian gas fields.

(Krysha   TSOLL oong en.)

Brutto nicht netto

“Gross not nett,” what rural U.S. landowners should try to take their ~12.5% royalty from if signing an agreement to let oil and gas companies frack their land. Previously, landowners had to worry about drillers’ resistance to the ethical challenges arising from the fact that it’s the driller who measures and reports the yields produced. Technology is also presenting drillers with ethical challenges: it’s now possible to drill sideways underground much farther than you’d think, for example.

Now ProPublica.org has reported drillers and/or pipeline owners have been using “creative accounting” in the office to reduce how much they say they owe farmers and other rural people whose land they are fracking, from Pennsylvania to North Dakota.

For example, “But some companies deduct expenses for transporting and processing natural gas, even when leases contain clauses explicitly prohibiting such deductions. In other cases, according to court files and documents obtained by ProPublica, they withhold money without explanation for other, unauthorized expenses, and without telling landowners that the money is being withheld. … In Oklahoma, Chesapeake deducted marketing fees from payments to a landowner – a joint owner in the well – even though the fees went to its own subsidiary[.]” The companies have also sold the product to subsidiaries at artificially low prices on which they paid farmers’ royalties, then resold at the higher market value.

Natural gas is apparently priced by volume, yet in pipelines it can be compressed and subjected to other processes the drillers and transporters call “proprietary” and won’t describe. Ownership of pipelines is not only becoming obscure, it’s a new field for innovative financial trading: Transport pipelines are being sold off to multiple third parties. Fracking rights purchased from farmers are being divided up and sold off to other companies in dribs, drabs and perhaps even tranches. One of the more “cutthroat” drillers has also been found to consistently report getting lower sale prices for its harvested gas on the market than e.g. the Norwegian partner firm Statoil selling similar products in the same markets at the same time.

A fierce debate is raging in Germany about whether to allow fracking to harvest its “Schiefergas,” shale gas or slate gas.

(BRUTE oh   nichh t   NET oh.)

Intransparente Preisgestaltung

“Intransparent pricing.”

The German supreme court in Karlsruhe [Bundesgerichtshof, BGH] found for the plaintiff in a case brought by the North Rhine-Westphalian consumer protection agency on behalf of natural gas customers against “intransparent price increase clauses in special contracts” of the utilities company R.W.E. Apparently “special contracts” [Sonderverträge, Sonderkundenverträge] in this case are contracts for customers who switched to their current utility from a prior utility. The court found insufficient reasons were cited for price increases on these customers’ utility bills. A ratepayer interviewed on tagesschau.de said when he asked about it R.W.E. fobbed him off by telling him their rates were raised for “responsible, suitable and well-grounded reasons” (“wir haben verantwortungsbewusst, angemessen und begründet kalkuliert”), still without citing them.

The BGH decision was based on a European Court of Justice ruling that the criteria for rate increases have to be notified to these customers when they sign their contract. It is not enough to merely notify European utility customers in advance of rate increases and give them a right to cancel their contract.

Clauses in “special gas contracts” must contain information about causes for, prerequisites for and scope of possible price increases, in a clear and understandable manner, the BGH judges said.

The German court’s decision applies retroactively for the past three years. Millions of German billpayers are now being encouraged to check their natural gas contracts’ price increase clauses for legality and apply for their money back if they don’t meet requirements. A press release about the decision from the North Rhine-Westphalian consumer protection agency said >70% of Germany’s 13.5 million gas customers are on these special contracts because they’ve switched utilities—encouraging market forces to rationalize prices for consumers!—and recommended the energy utilities provide “slender and consumer-friendly procedures” for the affected customers to ask for and receive their money back.

(Inn tronz par ENT eh   PRIZE geh SHTOLT oong.)

Erdgaspreis

Price of natural gas. A March 2013 article in Rupert Murdoch’s Wall Street Journal mentioned that the Commodity Futures Trading Commission said the Libor benchmarks manipulation scandal came to their attention after “firms and traders” were sanctioned for reporting false data to energy index compilers in attempts to manipulate natural gas prices between 2003 and 2005.

(ED gauze prize.)

Schwimmender Gashafen als Anlandepunkt für internationale Flüssiggastanker

“Floating gas harbor as a landing point for international liquid gas tankers.” Steve Coll wrote that the first liquid natural gas (L.N.G.) contract was signed between Britain and Algeria in 1961, with conversion plants and transport ships that used refrigeration. Figuring out how to engineer natural gas into liquid forms made it possible to ship it cheaply around the world and created an international gas market. Initially the big oil companies searched for and developed gas fields outside their home countries, liquefying and exporting Middle Eastern and African natural gas instead of the pre-shipping method of just burning or flaring it off at the wellhead because building, protecting and maintaining pipelines requires quantities of time, money and cooperation that companies and countries aren’t always prepared to invest. Later, fracked gas from doing… terrible things to domestic rock was sold in the new gas market created. Much initial L.N.G. tech investment was driven by South Korea and Japan’s need for power, Coll wrote.

South Korean shipyards are now building giant floating harbors where international L.N.G. tankers can dock and unload. These giant floating harbors—they must be interesting-looking!—can be sailed around the world. They will make it possible for countries that previously had no natural gas or were dependent on e.g. one pipeline to buy gas at relatively competitive international prices. Might also reduce the total number of lands willing to frack themselves to a few fracking “specialist” countries.

(SHVIM men dare   GAUZE haw fen   olz   ON lond ah POONKT   foor   internot SEE OWN ALL ah   FLOOSS ig gauze tonk ah.)

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