Larry On State Department, And I--On Pipelines.

First, Larry, who himself is not just the veteran of CIA but of the State Department too, penned today an excellent rebuttal to State Department very own Mr. Van Buren who waxed "strategic" and immediately exposed his lack of understanding of Russia, modern warfare, modern economy--in other words, a whole bouquet of (lack) competencies US "diplomats" are known for the world over. Larry was reacting to my reaction to Van Buren's "strategic choices" for Russia. 

I worked alongside some of these folks for four years and can attest to the arrogance and air of self-importance that imbues the typical FSO as they parade around State Department headquarters aka Main State. While there are some exceptions (i.e., normal people you would enjoy sitting with as a dinner guest or bar mate), the FSOs are a weird lot produced through years of self-selection. One of my former colleagues, a gent named “Tony” was a devout Christian Scientist who had a permanent case of the sniffles. I found it hilarious. He was always sick. He did not appreciate the irony. Anyway, back to Mr. Van Buren. Peter appears to be a break with the stereotype. He is a big, beefy guy and does not appear to be deficient in testosterone. Testosterone is in short supply at Main State. It is metro sexual heaven. FSOs also are known for being fairly reticent personalities. They normally shy away from attracting attention unless there is a promotion on the line. Looks like Peter was not afraid to rock the boat and go to where the action was:

Read this excellent piece at Larry's blog.  

Now to this blog. Our very own SCM, when commenting on my post about Russia's oil for Asia and its price being way above "price cap" suicidal EU established today, reasonably noted:

ESPO is exempt I believe.  

This is great that he brought this point up, because it requires some serious strategic elaboration. Here is why. ESPO oil is just the oil provided THROUGH... ESPO, which is a Eastern Siberia Pacific Ocean pipeline which pumps the oil from Russian fields in Khanty-Mansi District (Okrug) and Tomsk Oblast. I don't think that ESPO deliveries are NOT-capped, I think they are:

As of Monday, the European Union will ban the import of crude oil produced in Russia and transported by sea. There is an exemption for Bulgaria, which can continue to import Russian crude by sea until the end of 2024, under contracts that were concluded before June 4, 2022. The UK and EU will also introduce a ban on maritime services for the transport of Russian oil, including to third countries. The list of banned services includes insurance, brokerage and crucially the EU-based tanker fleet including ships owned in Greece and Cyprus. These restrictions won’t apply if oil is bought at or below the capped price.

In other words, while Asia-bound oil is delivered by pipe, with the exception of the direct branch to China, it still terminates at the refinery and oil port of Kozmino near Nakhodka:

And that means it is still MUST be loaded on tankers to be delivered to customers in Asia. Oil terminal in Kozmino is designed and built for that.  

Well, my friends, here is the news, while our very own Rima excellently described the issue of "insurance":

The way this thing is supposed to work, through disrupting ability of shippers to obtain insurance, who transport Russia originating oil that was bought above $60, is one that occurs during the end phase of peak civilizational idiocracy. Eventually, of course, the whole shipping insurance business will be reorganized, as the entry barriers are not that high or difficult. Just capital, and a bunch of lawyers.

We have to go back to the ABC of applied geopolitics and this is always the issue of power--a euphemism for military might. While Vladimir Putin explicitly ordered an accelerated rerouting of all energy streams to Asia on April 15 this year (in Russian), we all can bet our asses on the fact that this whole thing was in plans and ongoing for a while now. Russians are really good at strategic planning, I mean it and it is not Russian rah, rah. But allow me to point your attention to the fact of Russia's Pacific Fleet being built up as if on steroids. Here is a brief review of Russian version of WiKi, because English version doesn't reflect the dynamics. 

Let's start from capital ships which are in campaign or are being built. 

As you can see yourself, apart from LHD in 2028 and modernized Varyag, a much more upgraded sister-ship of sunk Moskva, we have 7 ocean-going FFGs coming on-line by 2026--all of them carriers of 3M22 Zirkon, Admiral Vinogradov is undergoing upgrade as I type this. Then we go to the "corvettes", but still ocean-going, component and we get:

Four of pr. 20380 are already afloat. 6 of the Zircon carriers of pr. 20385 are being built, sadly "Gremyaschii" sustained a fire damage while at shipyard and undergoes restoration, which, naturally, delays this scary ship joining the fleet. I am not going to elaborate on a very numerous ASW and small missile ships' component, including latest state-of-the-art Karakurt class ships. But we also have to view Pacific Fleet's submarine component, which is massive and it has already 5 new pr. 955/955A Borei class SSBN, pr. 885 Yasen-class Novosibirsk is in line, Krasnoyarsk is undergoing acceptance trials, two other Yasens are being built. Once you add here good ol' pr. 971 and 949A, not to speak of SSKs, you have a massive firepower and... you guessed it, a necessary force to provide safe passage (under escort) of oil tankers--Russia bought more than 100 of them--but, of course, let's not forget that China has a massive surface fleet, as does India and that means only one thing--if the combined West decides to "enforce" their "price cap", they will have to deal with a very real possibility of NATO naval assets sunk.  

Hey, that is what escorts do--they escort formed convoys. I know, for some people in London or Paris escorts mean something else entirely, not naval operations related, but can we blame those people? Of course not, they are stupid and are in panic. Russia plays a very long game and do not forget, she has other fleets too. And those too are being saturated with new ships and capabilities. You all heard, Russia just a few days ago increased dramatically military spending. Using dollar measure is absolutely meaningless because it doesn't translate into any calculable capability per American way of spending (wasting) its military budget. I can only remind you what Mr. Novak stated yesterday and it doesn't get any clearer than that. 

We believe that this tool is non-market, inefficient, grossly interferes with market instruments, contrary to all the rules, like those of the WTO, for example. We are not going to use price cap instruments. We are now working on mechanisms to prohibit the use of the cap,” Russian Deputy Prime Minister Alexander Novak stated on Sunday. He added that Moscow will only sell its oil to countries “that work with us on market terms,” even if it means reducing output. 

And when Novak speaks, world listens. Some soil their pants, but it is their problem.