Robert Bryce 0:04
Hi, everyone. Welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And this is another episode looking at the effect of the Russia invasion of Ukraine on energy markets. And I’m proud to welcome my friend, my longtime friend, and also Haji. He is the editor of taka, which is the the only Arabic language energy media outlet. Ignace. Welcome, Dr. Dr. Thank you. Welcome to the podcast. Now announced I gave your title. We’ve known each other for a long time now. But if you don’t mind, just briefly introduce yourself, assuming no one who’s listening here knows who you are, if you don’t mind, give us 30 or 40 seconds.

Anas Alhajji 0:48
Well, all they got to do just go to anisul, Haji and SLH agi.com and my bio, my short bio there, they can just check it out.

Robert Bryce 0:59
Okay, great. So let me ask the very basic and very broad question what is happening in oil and natural gas markets now today? What is going on? And it’s been very volatile lately. What’s What’s the latest? Well,

Anas Alhajji 1:13
yesterday, we had prices going all prices going below $100. And there were multiple factors that contributed to that. One of them is related to China, three related to Russia, two related to the United States. The one related to China basically is the latest part of it is the lockdown of a major city in China. But even before that demand in China was going down after the Olympics. And definitely when we look at prices, China does not like high oil prices. We know since May 2021. They were trying to use the their strategic petroleum reserves to lower oil prices. So I am not surprised as part of the decision to do the lockdown is to lower prices. And I’m not talking about conspiracy theory here because we’ve seen it with coal. We’ve seen it with LNG, when they literally cut off electricity to town to major cities, some of the largest in Asia. So why this one is different. It’s not I think it’s the same.

Robert Bryce 2:25
So just so everyone who’s listening knows we’re, we’re talking today is Wednesday, March 16. So now we’re, what about 20? Some odd days, 24 days since the invasion since Russia invaded Ukraine on February 24. You recently did a webinar on was titled oil, Iran, Russia and OPEC. What’s next? So what’s next?

Anas Alhajji 2:51
Okay, this is going to be tomorrow at 7pm is going to be on Twitter spaces.

Robert Bryce 2:57
Oh, okay. I started it already. So that’s on Thursday evening. 7pm. Eastern.

Anas Alhajji 3:02
Tomorrow. Correct. Seven 7pm. Central time.

Robert Bryce 3:05
Okay. Got it. Thank you. So tomorrow, march 17. Yeah, okay. Correct.

Anas Alhajji 3:09
That was the last one we did was on. Why doesn’t OPEC order? Why does OPEC crisis oil in dollars? Why they haven’t changed that? Especially in light of the news yesterday, of Saudi Arabia, basically, considering the use of the UN as a payment that was published in The Wall Street Journal. We know now, this is not correct. I know it got out of coverage. But I am not surprised if they use it. If they used it. And they use the Wall Street Journal to test the water.

Robert Bryce 3:47
I see. So but I guess the question, and I want to come back to Iran, because I know you have. If I’m not mistaken, you still have family in Saudi Arabia, and have the Saudis view any rapprochement between the US and Iran. But let me ask the broader question here. And us. What’s the long term impact of this isolation of Russia? And, and and I guess, what is the long term impact? And can the world live without without Russia’s Russian hydrocarbons?

Anas Alhajji 4:19
No, not at all. As a general statement, there is no replacement for Russian oil. If we lose all of it, there is no replacement for Russian gas. If we lose all of it. All we can do is replace some of it, but not all of it. And at the same time, the idea that we are going to lose all of it, even under the worst scenarios or under the most severe sanctions is not correct. And the reason why because Russia produces oil in the eastern parts of Russia, which is connected to China via pipeline, so they will continue at least exporting that we already know from the history of Iran. From the history of Venezuela, that they continue to explore, despite all the sanctions. So the idea that we are going to lose all the Russian oil is not even feasible.

Robert Bryce 5:13
May I interrupt there just for a second, because you mentioned the eastern part of the country. This is also where the Russians are exporting gas now to China as well through the power of Siberia pipeline. So this is the other big, I think, potentially tectonic issue with with the US and Russia is and China is that Russia and China have become very close trading partners over the last few years with power of Siberia pipeline, which is a 5000 mile pipeline, the 400 billion through 30,000,004 100,000,000,030 year long gas supply contract. I mean, this is a enormous commitment between the two countries for for for hydrocarbons. So you’re saying that that certainly the Russia, China trade is not going to be impeded by any of this. But But is that the major part? Or is that what? I know? I interrupted here, but is that is that the most significant part of Russia’s exports? Or what about the rest of

Anas Alhajji 6:08
the world the most significant, but the idea here is that those scenarios where we talk about no Russian oil at all, or no Russian gas at all, they are not, they should not be even considered, because Russia can export to the east on one side, and they can smuggle just like what Iran did and what Venezuela did. So this scenario, I mean, we don’t need to waste time on it. But the issue is, and that’s what I think we should consider here at this, I think we should consider the other side where the war ends. And we end up with Russia coming back, but a weaker Russia, but no control at all, of fresh income of Western oil companies inside Russia, which means that the West just lost, its whatever it has inside Russia, in terms of influence, and the issue.

Robert Bryce 7:09
And so to be specific, there, you’re talking about Exxon and their their investment at saline. And then shell and I mean, who were the other big Western investors

Anas Alhajji 7:18
at this because I think the audience should know this. Okay. It’s kind of really important. Sure. Tell tells where we are going. We have shell we have PP, we have Exxon, we have any ni, and we have to tell. And we have equinor. And all of them basically announced that they are angry at the Russians, they want to help the Ukrainians, every company, and now some way to help the Ukrainians, etc. But if you look at the details of what they did, it’s really embarrassing. I mean, for those who are pro Ukraine, they should be ashamed of what those oil companies announced. First of all, for Shell, if you look at their announcement, and I’m reading their their transcripts, so this is not like some news from some news outlet, or they get to do just go to their websites and read what they issued. Shell said they are not going to buy Russian oil. But if you read the statement in the spot market, because they have the contracts, and they can continue buying the contracts. So and the spot market, the announcements from here, and then the second day, the head of the head of shell. Sorry, we’re talking about shell here, right? The head of Shell basically apologized because shell bought a whole ship full of oil in the spot market because it was $22 it cheaper than Brent.

Robert Bryce 8:49
Oh, I’m looking at there, I’m looking at their statement here immediately stopped buying Russian crude on the spot market, renew term contracts. Okay, we’re changing our supply chain to remove

Anas Alhajji 9:01
the word the gradually, gradually, it could mean a month could mean 10 years. And then in the second paragraph, they start talking about energy security and how they’re going to balance the Russian supplies with Iran with energy security, which means that we need the Russian oil for a while to enhance energy security. Right? Then you go to other companies, and that’s where it gets really passionate. The three companies, the three European companies, the French, the Italian, and the Norwegian. I mean, people think they stopped their operations or Russia, what they announced was they stop their future investment. Right. Okay, in Russia, right future investments are going to affect operations. It’s not going to affect both in Gotcha. And those three companies. What’s common among them is all of them are partially owned by their own governments. Right? So they are standing for their own government. Their governments are worried about it. And they’re just security?

Robert Bryce 10:01
Well, let me, let me let me let me follow up on that. Because it seems to me that that’s really well is that I’ll ask the question this way. Because, as I’ve thought about this, and you know, I’ve done several lectures since since February 24. Is, is this invasion is the February 24 invasion? Is this hit an inflection point? I mean, is this one of these dates that’s going to, you know, remain in in energy market history like October 1973. With the oil embargo? Is this one of these pivotal moments? That’s going to be I don’t think so. I don’t think so. But you don’t think this is a blip blip in in his in energy history terms?

Anas Alhajji 10:40
I it just kind of an event. That’s what I’m going to mark on the chart. That’s it. But let me tell you about PP, because this is kind of fascinating. This show. Yeah, BP. BP entered Russia. And they created a company called TNK BP. Right. And the moment they are there, and it was a very successful company, the Putin cronies started attacking the company. And the situation got so bad that the CEO of the company fled Russia, right. In 2008. Who is that CEO? Mark Dudley, the current head of the BP Okay, yeah. Okay. Now, they force BP basically to cut the shares, they forced it to sell. And then a part of the deal is to become part of russneft. Were they on 20 20%, right. But the situation for BP was always bad in a sense, they really wanted to get out all the time, because it was a bad deal, and they’ve been harassed all the time. So now that was a perfect time for it to announce an exit. The second story basically is related to shell, shell had all those gas developments and LNG etc, as Hollein. And after they brought in all the technology to Russia, and all the expertise, and they are done with everything, they built everything. Once they are done in 2006, Putin cronies came in again, and they forced them to sell 50%. Here is the piece of information that everyone should know, the total investment of all the oil majors in Russia is only a fraction of their own investment and LNG. And Australia.

Robert Bryce 12:36
Hmm, we’ve sold over a so you’re just saying overall, the majors investment in Russia in it, when you look at it in terms of their overall capex is still very small.

Anas Alhajji 12:47
It’s very small, which means that even if they need what the heck, who cares?

Robert Bryce 12:50
Gotcha. But your but your broader point, it will. So let me go back to this. So you think that this is a minor issue in terms of, because it seems to me it should be an inflection point in terms of the US thinking about energy security, you know, compared to what what happened to Europe, as I said, many times, Europe, over invested in renewables under invested in hydrocarbons, they shut their baseload plants, and they relied too much on imports. I mean, this seems to me, you know, obvious, right. But but you’re you’re saying, I mean, what what I hear you saying, is that this, we’re making too much of this or am I am I misreading what you’re saying?

Anas Alhajji 13:23
We are making too much of this. Let me finish the story of those companies. Because I think once we have the complete picture, we understand what the point I’m trying to make. Okay. Justin Trudeau, the Prime Minister of Canada, and now declared that the they stopped imports of crude oil from Russia, but Canada does not import any crude from Russia. Right. Boris Johnson, the Prime Minister of England, said that they are going to stop oil imports from Russia, but he said by the end of 2022. And then he tried to promote the investments in the North Sea that he was trying to convince the House of Commons and the British people to agree to agree to right Biden said we are stopping Russian imports. We already know right now as we speak, we have ships full of toys coming from Russia to the United States to what he meant, or the the new contracts. He said that he impose sanctions on banks and kick them out of Swift. It turns out there are only small local banks have no impact. So this is coming from politicians coming from companies. So why

Robert Bryce 14:33
and they’re still banks that are still that they’re there. One of our previous guest, John Harbaugh said that they’re the the the banks that are doing most of the business for paying for Russian gas, they’re still in business, they haven’t stopped,

Anas Alhajji 14:46
right. So the idea here is you look at politicians, you look at the companies, what is the pressure on Russia? Okay, you look at Procter and Gamble, for example, they said we are not going to make any new investment. Look at McDonald Oh, we closed our stores 62,000, Russia and 62,000 Russians lost their jobs. But our closure is only temporary. So what why Putin has to yield to any of this pressure. I mean, what the idea here. So you look at all those announcements, and you can see how weak the reaction is, if you want to talk about the inflection point, it’s really it’s on the other side, and I will tell you where the other side is, if you want to consider an inflection point, sure. Hooton hit the carbon neutrality policies of Europe, really hard, right, and delayed them by few years. And that’s a major achievement. So if you want to consider that an inflection point, yes, it is. But it’s on the other side.

Robert Bryce 15:53
And so just to be clear, so just to be clear, you’re saying that the, so I’m just gonna play this back. So what you’re saying is that all of this talk about sanctions in the talk about isolating Russia, when in when it comes to hydrocarbons is not going to be very effective. But what the, what the big result is, is the change in Europe in terms of their climate goals?

Anas Alhajji 16:13
Absolutely, they are going back to coal, they’re like going back to oil. And here’s the other point that people do not pay attention to. Because of the war, we’ve seen a major increase in fuel prices worldwide. And we’ve seen major increase in food prices worldwide, right? We’ve seen demonstrations in several poor countries. And we’ve seen people complaining in the industrial countries, we’ve seen governments literally announcing subsidies to the population to lower fuel prices, right, we’ve seen countries lowering taxes on fuel to help the populations, what the result of that, that means we have lowering taxes means less money, less revenues. At the same time, they are shifting the subsidies from the green energy, and from electric vehicles to fuel on foot. Which means that less money is available for green energy and electric vehicles. So Putin has already done the damage and delayed them by several years anyway. And that’s going to increase the demand for oil that’s going to increase the demand for natural gas, above all forecasts.

Robert Bryce 17:29
Hmm. Well, I want to recall, so this is your second time on the power hungry podcast. So I’m glad to have you on. And I remember, I think we spoke in late November, or November of 2020. And you were predicting an energy crisis then. And you were saying this is going to happen, and you were talking about underinvestment in hydrocarbons. And it was clear we had this crisis in terms of pricing and massive price increases, even before Russia’s invasion of Ukraine will so play this out for me where you know, Where where are we going to be in six or nine months? Or do you think that this? Or will these high this price spike then lead to a recession? Because recessions are very closely correlated with higher oil prices? Where does this go from here?

Anas Alhajji 18:15
First of all, let me start with the last point, because I think this is very important. The the conventional wisdom we have in the Western world, that there is this correlation between high oil prices and recessions. I, I can really prove to any academic who wrote papers showing that I can prove to them that they are wrong. There is no theory in economics to explain what the impact of high oil prices on economic growth, there is not all they did. Basically, they have data and they did some macro, macro economic or econometric analysis, and they come up with those results. The fact is, if you go to the same modules, you take all prices out, you put taxes, you put interest rate you with government expenditures, you get the same results. We have theories to explain government expenditures, interest rate and taxes. But we have no theories to explain oil. So the bottom line of all of this is look at 2008. All prices went up from 2004 to 2008. In like four or five fold, and economic growth continued to go up. How do they explain that? Well, that was the only period in history where we have higher economic growth, higher government expenditures, higher military expenditures, higher expenditure on security, because for that airport, things that have these scanners and all the stuff that they spent worldwide. It was the only period where interest rate was going down, and the dollar was going down. That combination never happened in history. So looking forward right now, because you asked me that question about what what was going to happen. Here’s the problem. I was predicting a major energy crisis. Now that energy crisis is going to happen earlier and bigger.

Robert Bryce 20:05
How do you mean? How do you mean earlier? What? Isn’t it already here? And that’s what

Anas Alhajji 20:12
the coming energy, what we are in right now is nothing relative to the to the coming one, because in the coming one, you and I will stay home because there will be no gasoline. Come on now. Really? Yes, yes. Let me explain. Let me explain what’s going to happen. The problem we are talking about here in the following. Now we have a major inflation worldwide, we have demonstrations in several countries, we might end up with a turmoil, and probably some governments changing in those countries. And if they are all producing countries, we are even in a bigger trouble, because their own production might go offline. That’s on one side. The other side is if we end up with a recession, a global recession, because of everything going on right now, then, that investment we’re predicting that will come to the oil industry and gas industry is going to be delayed one more time.

Robert Bryce 21:09
So so that the recession would act like another COVID, in terms of in terms of oil, in terms of hydrocarbon investment. Yes. Yeah. So that we would have to then close cycles with under investment in hydrocarbon and in the upstream part of the hydrocarbon business.

Anas Alhajji 21:26
Absolutely, absolutely. And on the other side, we have another problem that people are not paying attention to. Now, oil producing countries have the money. That’s $100 oil, they made tons of money. And what will those oil producing countries do? First, they’ve been pushed by the European leaders and divided the Biden administration to meet the glow to meet climate change goals,

Robert Bryce 21:54
to do is to reduce production, to reduce,

Anas Alhajji 21:57
basically, to mitigate the impact of climate change, what that means is, they’re going to take some of the money that’s supposed to go to increase oil production and increase capacity and invest to increase capacity to meet future demand, they are going to take it and invest it somewhere else. At the same time, those countries got burned really hard in recent years because of low prices. So they want to diversify their economy. So they are going to take this money and spend it somewhere else. Don’t expect, for example, in a country like Saudi Arabia, to in the past, we’ve seen all the revenues being spent on major projects, or mega projects, etc, this is not going to happen again, what we are going to see is we’re going to see some of it, some increase in government expenditures, the others will be saved. So we are not going to see that massive increase on spending in the oil producing countries because of the diversification process. So you have the the the global push for climate change. And you have the push for economic diversification between the two. But

Robert Bryce 23:06
let me let me interrupt you, because I’m a little confused. Because you said that this, this push for climate effort now has been all been delayed, right that in

Anas Alhajji 23:16
Europe, in Europe, I’m talking about the oil producing countries. Right. But

Robert Bryce 23:20
if that if that you’re saying the OPEC member countries are taking climate change seriously and under investing in hydrocarbons? Yes, yes. Okay, so then, so let me just play this forward, because I want to make sure I understand what you’re saying. So you’re predicting then that in two years, three years, we’re going to see even higher oil prices over 100 or sustained over 100 Or two, I’m not asking you to name a number, but you’re saying that we’re going to have sustained cycles of under investment in hydrocarbons in drilling, in drilling specifically that that is going to lead to longer term, higher oil and natural gas prices globally.

Anas Alhajji 23:58
It’s not only it’s not only oil and gas, basically, this is throughout the energy sector, because we’re not going to have enough money, even to invest in renewables and others, I mean, we are going to be really strained on all fronts. And if this issue that we are facing now, higher food prices, and higher fuel prices going to continue, then government space, especially, I mean, we talk about Europe and the United States, government, politicians are worried about elections, they’re going to worry about the short cycle. So they are going to do whatever to give subsidies to people for to compensate for fuel prices and food prices. And they are not going to worry about the long term when it comes to climate change and everything else. So what I’m saying here is we have to distinguish between the policies of the oil producing countries and the consuming countries. And those be pushing those for a long time to work on their global change agendas. And those guys are gonna take some of the money basically to achieve them because that’s the only way they can reduce the pressure. And if you look at the behavior of Saudi Arabia, For example, they really decided to take the lead on this, as we’ve seen in recent negotiations. So, they are focusing on hydrogen, for example, they are focusing on green hydrogen, they are focusing on this new city neon. So we are seeing changes in those countries. And the problem is those extra revenues in oil are going to go to subsidize food to subsidize fuel, and then some extra government spending, and the rest is going to go somewhere else. And therefore, we are going to have this another cycle of low investment, and abstract.

Robert Bryce 25:38
And because of that low investment, then higher oil and gas prices, higher oil and natural gas prices

Anas Alhajji 25:45
and other energy sources, because the problem is what we learned from the experience before the invasion of Ukraine, what we learned from what we saw in India and China in particular, and then in Europe, they had energy crisis that are self made, right. And if you look at that energy crisis, we learned something amazing. If you look at it, for example, in England, what happened is when the stops on September sixth, and then the snowball basically started getting larger and larger. After that, immediately they wanted gas, there is no gas, gas prices just went through the roof, they wanted to call coal prices went through the roof, and then the Debt Snowball started getting larger and larger. In terms of China and India, they use coal, the coal was not available. And then they resorted to natural gas. So natural gas prices went up. Then LNG prices went through the roof, they returned to oil and oil was at 75. At that time, right, and oil were the cheapest source of of energy, then they resorted to power outages to kind of manage power outages, then Chinese factories basically, who have orders for the next two, three years because of the supply chain problems, they resorted to private generation, which is the same story we talked about, like what 15 years ago, we wrote about if you and I were in the energy Tribune, right along when, when that was a life at that time. So we returned to that cycle, again, where we have private generation, private generation increase the demand for diesel, but no one was counting for it all of a sudden, it’s an extra demand. So that’s

Robert Bryce 27:26
right, extra extra call on on oil. But let me let me ask you about the coal market, because this is one of the things that I think is really interesting. And I’ve written about coal business now for gosh, a dozen years or more, talking about why it’s been so durable. And it was just in the last couple of days that the Chinese government announced an increase of 300 million tons of new production per year as their new plan. And to quit importing coal I presumably because of the price spike with Newcastle hitting 400 $400 a tonne. So what it seems to me that the coal market has been one of these other areas that’s had under investment and one of the reasons why is because of ESG, partly because of COVID. The rest of it, but is the IEA is projecting that coal demand will continue rising through the end of next year through 2023. What I mean, what, what what do you see in the coal market? And is this just rhyming with the other investment issues that you’re talking about? Because Chinese are clearly going to be investing more in coal? How do you how do you see the coal business?

Anas Alhajji 28:26
Generally speaking, you don’t have to go that far to China. Basically, we have the same problem in the United States, when natural gas prices increase substantially. And utilities basically switched back to coal, right. But again, we don’t have enough investment to meet the demand to switch back all the way. At the same time, look at what Italy and Germany did. Both of them, they went back to coal right now, we don’t have enough investment in that too. So that’s why I emphasize the idea of energy crisis rather than just oil and gas. It’s really throughout this, then add to it another problem because this is really where those who support renewables do not understand the point or probably they are ignoring it. Two parts. The first part is there is no substitution between renewable energy and oil in Europe, United States, India, and China. That is no substitution, which means that even if they double triple renewable energy, it has no impact on oil, its impact nuclear impact coal and natural gas. But no, that’s number one. Number two, and just

Robert Bryce 29:33
to be clear, that’s because the oil used for transportation that we can produce electricity, but it doesn’t affect the liquid fuel market, right? Different trend for heavy duty trucks, light duty vehicles, etc.

Anas Alhajji 29:44
The percentage of the or the percentage of oil from the oil demand used in a crisis, the demand in those countries is less than 2%. And in most of them less than 1%. Right, okay. And mostly because of either historical reasons, or geographic reasons which mean that you cannot even do the replacement. There’s some cities in the United States, by the way, people do not understand the legal impact on this. If you have a building, let’s say you’re an investor and you own a four storey building, that that is 150 years old, and one of the Northeast states. And you it, they’ve been using heating oil. And if you want to switch, you exceed the $10,000 limit that is allowed by the city. Otherwise, you have to make it handicap compliant.

Robert Bryce 30:36
Right? Okay. Right. But your point about the oil, the electricity, we’re not using electricity for transportation. So that’s your point. That’s your point about the renewables not displacing any oil. But you were, I think you jumped here, you got on a tangent there. But what is the second point

Anas Alhajji 30:51
we the second point, the second point basically is we are coming to a period in the coming years in the in the next seven years, where several mega projects that in wind and solar are going to reach their end of life. Okay, and then they need to be replaced.

Robert Bryce 31:12
And so these are big, big offshore wind projects, is that what you’re

Anas Alhajji 31:16
basically those are mostly onshore, because these are old, old ones before the offshore. Okay. Okay. But the idea here is, now we need government assistance, for the growth and for the replacement. Okay. Okay, and we don’t have that. So they want to ignore this point for some reason. And the other thing is, companies are playing a game here, because based on the contract, they have to reclaim the land, which means that they have to remove all those wind turbines and bring the land the same way it was before they started this. Okay, so what we are seeing is basically companies creating some kind of subsidiaries completely independent subsidiaries, and then they go bankrupt in the last day of business. And then the taxpayer gets hit, cleaning up, right, the mess. So we That’s why if you look at the whole energy space, we are coming into all these issues at once in the next seven years.

Robert Bryce 32:19
Well, it’s not a cheery picture you’re painting.

Anas Alhajji 32:22
It’s not but I can’t tell you if you are an investor, it’s the crazy time for you.

Robert Bryce 32:29
Well, so does that mean? Well, I’m just gonna ask you this. So does that mean that the super majors are good investment? I mean, how do you see this playing out? Because there’s very, you’re pointing out the lack of substitutability for oil. I’ve been thinking about and writing a lot about and talking about a lot the issue of metals and minerals that are going to be needed for alternative energy portfolios. But it sounds to me like you’re, you’re, you’re correct me if I’m wrong, you’re long hydrocarbons, you’re saying that oil and gas are going to be the things that drive the global economy for decades to come. Is that what is that what you’re saying?

Anas Alhajji 33:02
Absolutely, absolutely. Not only that, let me explain to you something I think the audience will be excited about, okay, if you look at the behavior of companies and governments the same way, we looked at the behavior of companies and governments, towards Russia, and how they fooled people by their statements, the same thing, when it comes to carbon neutrality is exactly the same. What we are seeing as we are seeing companies, let’s say a company that has several assets, and one of them is an old refinery, and they sell it to someone else. And they say, Whoa, look at my carbon footprint, I cut it by 40%. And the board is really happy, because they cut their their carbon footprint by 40%. But someone else for the refinery, right. And the the world did not see that. This is not an actual decrease. We are seeing companies claiming the trees on their campuses, and their carbon neutrality plan. We’ve seen companies that cut the office space because of COVID. The claiming the last office space

Robert Bryce 34:07
is an improvement on their co2 emissions on footprint. We have similar so you’re just saying a lot of this is just I don’t know, kabuki theater is the right word. But it’s a lot of pretend then or this. How can we how do you describe it, then?

Anas Alhajji 34:22
I describe it in this way. For those who follow my presentations, basically, and in my speeches, I show some slides and I show that I expressed those behaviors in animal behavior. And one of them basically is the deer and the deer basically eats the low hanging fruit, he cannot climb up and eat up. So those who are really active, they will get only the low hanging fruit and that’s it. Everyone else basically there are scavengers in this case, and scavengers that are going to go and say, You know what, look at my last 40 years and see what I’ve done. That was not green, but now we consider the green. So a company like WalMart can claim all the skylights, right? That’s been there for 40 years. They can claim them in their carbon neutrality policy, what Mark has been a green for the last 20 years?

Robert Bryce 35:16
Fair enough. So let me let me jump back to Ukraine for a second big. So if I’m just remembering what you were talking about before, so is the net result of this war, Russia and China becoming more closely aligned? And then Europe and the US left behind him? How how does this play out geopolitically? And where did the Saudis fit into this? Because the Saudis are the biggest exporter in the world. And now their oil has become much more sought after, how do you see the longer longer term geopolitics playing out us

Anas Alhajji 35:47
LNG market share and Western Europe is now engraved in stone.

Robert Bryce 35:55
So that’s that US LNG and Europe is going to be the Kindle supply the seat, the key supplier for Europe, correct.

Anas Alhajji 36:01
Russia will come back and supply Europe. But their the the level of dependence basically will be lower. Okay. The biggest threat to Russia in the future is not the US. And it’s not Europe. It’s not China, the biggest threat is Iran. To Russia, you’re talking about? Yes. And the reason why? Because in 2008, there was a proposal where Qatar will build a pipeline from parts field. In Iran, which mean that in the pipeline will be filled by by Iranian guys. Yeah, that goes through Syria, to the Arab gas pipeline through Turkey to Europe, and compete with the Russian gas in Europe. And that project, basically was killed in 2008. Right. So if the US is really serious, and Europe, if the US and Europe are really serious about reducing the influence of Russia and Europe, then we can understand why the Biden administration is pushing for a deal with Iran?

Robert Bryce 37:13
Well, I’m glad you brought that up, because there are two things that I wanted to talk about, because I don’t claim to be a geopolitical expert. But I did have I was in Madrid, I think it was in 2008, at the World Petroleum Congress, and I talked to the Iranian delegation, and I saw their presentation, and they were very eager to move their gas into Europe. I mean, this has been a long term goal of the Iranians. And this is it well, so two questions. Is this the opportunity then, despite Hezbollah, despite the fact that the Iranians and their government have clearly been antagonistic to the United States? Is this their big opportunity then to get into the European market? Absolutely. And do you think and do you think it will happen?

Anas Alhajji 37:53
I think if if they are able to solve the crisis in Syria and Iraq, because we are still in crisis, and we were talking about the the least stable countries in the world right now, Iraq and Syria, right, so we need to

Robert Bryce 38:06
know both of which are in an energy crisis have been for years, the Iraqis are still depending on the Iranians for, for electricity for natural gas, I mean, their economy is still in the in the solar,

Anas Alhajji 38:16
we need to stabilize those countries and civilization of at least a country like Syria probably needs a change in the political leadership. But if that’s resolved, then the Iranian guys would reach Europe in no time. Well, then I think that’s like line go ahead. building that pipeline is really cheap. And the distance is very small. The Arab, the Arab gas pipeline is already being it’s already been built, it’s there. And it reached the borders of Turkey. So all we need just the other extension within Turkey, to take it to Europe.

Robert Bryce 38:50
And then through J. Han, and then on to you.

Anas Alhajji 38:53
And since the Qatar is are investing in it, and cutters have really great relationship with Turkey, then Turkey have no no problem as long as they get a toll on it.

Robert Bryce 39:04
Well, so what are the what would the Saudis say about this? Because they’re not exactly friends with the Iranians. How did how did the Saudi see this triangulation?

Anas Alhajji 39:12
Basically, it is very clear that they want to end the war in Yemen to their advantage. And that’s really the number one thing they want. And

Robert Bryce 39:22
so they could put up with the Iranian or the thawing of relationships with Iran?

Anas Alhajji 39:28
Well, no, not really. I mean, at least they they really want to focus on their country. They want to build their country, they want to fulfill that 2030 vision, show, they want to end that war to their advantage so they can focus their resources on their country. But at the same time with with Iran, basically, we have to have some new Iran, if that’s the correct term, yeah, to be involved in those in those products.

Robert Bryce 39:54
But Is that realistic enough? I mean, you know, the Iranian, the government there has been intractable for a long time. And, again, I’m not claiming some special knowledge here but having been in Lebanon, you know, the Iranians use Hezbollah for a proxy proxy state in in, in Lebanon as leverage against the Israelis and I mean with the Israelis allow this to happen to the Iranians to get gas from

Anas Alhajji 40:19
it. Yes. If we want to do one plus one equals two, you are absolutely correct. But no one was expecting the Shah to be kicked out of Iraq. Okay, no one expected Hosni Mubarak to be forced out. No one expected Muammar Qaddafi to be forced out. No one who

Robert Bryce 40:40
was who is the who is the last guy I didn’t know who that what.

Anas Alhajji 40:44
The mumsy Muammar Qaddafi. What did he do Moammar

Robert Bryce 40:48
Qaddafi? I’m sorry, in Libya? Okay. Yes, I’m kidding me. Yeah. Okay. So

Anas Alhajji 40:51
no one was expecting that. So based on one, one plus one, equal to no one was expecting that at all, but it happened. Okay, I am not surprised if it happens. Because it fits with that history. The problem is, do we know the timing? No. Can we do one plus one equal to I know something? No.

Robert Bryce 41:11
Okay. So let me ask you. Sure. So let me ask you about a different pipeline. So as I think about the Biden administration, what they’re doing, and a lot of it just seems to defy any kind of explanation in terms of energy security, or long term strategy or anything else, excuse me, is why would they not support the trans med pipeline? I mean, this was the the Israelis were in favor of it, bringing Israeli gas and Chevron bought noble which noble had a big stake in the Leviathan and Tamar fields and offshore Israel, those incredibly valuable enormous gas resources that could have gone that the proposal was with the trans med pipeline to remove that gas from Israel into southern Europe. Why would the Biden administration not support that?

Anas Alhajji 41:56
Well, it’s really not about the Biden administration. I mean, there is auto propaganda involved in this, the guys is extremely expensive.

Robert Bryce 42:07
The offshore gas in Israel is expensive.

Anas Alhajji 42:09
It’s and the only way they were able to get deals, because they were political deals, they were not able to get commercial deals with their deal with Jordan is political. Their deal with Egypt is political. But no one for 15 years, we’re waiting for a deal, no commercial deals.

Robert Bryce 42:27
So the Israelis could afford to use the gas internally, but it wasn’t priced well enough for export. Is that what you’re saying? Correct? Correct. So these also will give me an idea on the price. I haven’t heard that before. That’s just news to me. I mean, I know, just because now,

Anas Alhajji 42:42
given the spot prices, you know, everything is profitable. But if we go back before the crisis, if you go back to the winter time, or earlier than that, the the guys in that area basically is very expensive. The Russian gas, the Egyptian gas is way cheaper, because the amount is way larger. So when you divided by the by the you get a lower average cost, but the Israeli guys, it’s very expensive, and all the deals they made was political deals, that’s the only way to market it. The other one that is kind of an issue that one of the main problems we are facing with this transmit is the the topography of the land, the geology of the land to build it is against it.

Robert Bryce 43:30
We have the subsea the subset, okay. So

Anas Alhajji 43:34
we have a serious problem even in terms of technology, and other issues, etc. So this is okay, on paper looks good, but nothing else. But if you really want to be serious about a pipeline going to Europe, we really need to we need to change in Algeria toward better investment laws that allows foreign companies to come in and bring in more gas. That is a lot of guys in Nigeria. And then you want to bring the Nigerian gas through the pipeline, to Algeria, to ticket to Europe. I think that’s really one of the best solutions in front of Europe. Right now. It’s Algeria and Nigeria, through Algeria.

Robert Bryce 44:19
So African gas into Europe then absolutely. African gas, which might be easier than Iranian gas, in the least in terms of politics in the near term, but, but that the triangulation against Russia would be African and Iranian gas, as opposed to Russian gas combined with us gas. So let me ask you something. We talked the other day on the phone when we are graciously allowed to come on the podcast again. Let’s talk about Britain for a minute. And then we’ll we’ll end up here pretty soon because we’ve already been talking about an hour. I asked you about the UK and I’ve had several guests from British guests on the podcast lately about talking about if the UK was to change course now and repeal their idiotic fracking ban and start drilling at Alaska the question if they started and they wanted to shoot do shale gas in the UK? How soon would it be able to come on stream in any kind of significant quantities?

Anas Alhajji 45:15
I don’t think they’ll repeal that. I don’t think they’ll produce gas from shale at all. This is a done deal. It’s over. I think they are going to invest in the North Sea, there will be major investments made in the North Sea that will bring a lot of gas, it will bring out void. And I think that’s where the focus is going to be. There’s going to be shade.

Robert Bryce 45:36
So why not? Why not onshore just too much, too much logistical, too many logistical hurdles with pipes and water and sand and Frack crews and sin drilling rigs, too. It’s too hard of a lift in terms of the the actual stuff of the business, you

Anas Alhajji 45:49
take that right now, whatever you described, and you show it to the environmentalists, and you lose the election. So they know you want something out of sight. Out of Sight far away from you. We learned this from Nigeria, we learned this from other countries that I mean, you wrote about when wind power in the ocean and sea and all the stuff. Why? Because they want to keep it away from everyone who’s complaining about

Robert Bryce 46:17
and doing that offshore solves that problem. Correct. So that’s what that’s a good. That’s a good point. Yeah,

Anas Alhajji 46:23
the cost, the cost, the cost here is very high anyway, they don’t have the capabilities that we have in the United States, because one of the main problems that all countries have, because as you know, shale exists in like probably about 15 countries in large quantities. But even in Nigeria, can a country like Nigeria, where we have massive amount of shale in this country. What’s the problem? We don’t have infrastructure? Right. And the United States the Permian was it has been there for 100 years. Right? Okay, the infrastructure is there, and the knowledge, the human resources, the universities, the training, the EP, that does not exist anywhere else.

Robert Bryce 47:04
Right. Yeah, I think that that’s a good point. And it’s been asking people in the oil and gas industry about this, you know, posing that question, well, how long would it take because you’re going to need a you know, latest model AC top drive rig, you need roundabouts roughnecks, to pushers, you need all that, that technical expertise, those are going to have to come from Texas, Oklahoma, Louisiana, Pennsylvania, they’re going to have to those crews have to come from somewhere. And already, they’re in high demand here in the US. And I hear over and over, they don’t have enough people here. So to train up those technicians, those technologists, those roundabouts will take time, and then you got to move the rigs over there. And then they still don’t have the sand. They don’t have the pipelines, they don’t have the pipe, you know, the other infrastructure truck drivers, you know, all the other stuff that the Permian has in spades that as you point out has been developed over decades. But that’s a good point. i It seems to ring true to me to think that will much easier to dry and do it offshore, where they can do that investment and where they already have a lot of installed infrastructure, right with

Anas Alhajji 48:09
offshore basically, a single Well, could get you 25,000 to 50,000 barrels a day if they really hit the jackpot. Right, which has the equivalent of like, you know, a large number of shale wells.

Robert Bryce 48:26
Sure. So we haven’t mentioned the word nuclear. And I know you, you’re you from what I’ve seen you don’t you don’t necessarily it’s not where you spend a lot of your time. But does this does this signal a potential opening then for nuclear over with Visa V renewables is this? I think we already

Anas Alhajji 48:41
started. We already started with the nuclear. We are seeing several countries developing that I think we have a change of heart towards nuclear in many places. And now we are seeing poorer countries looking at it. We’ve seen Middle Eastern countries looking at it. You’ve seen the UAE starting one. Saudi Arabia is building one.

Robert Bryce 49:05
The Saudis are building a reactor. Well, they haven’t

Anas Alhajji 49:07
started yet, but they already have the legal framework to start.

Robert Bryce 49:13
An Abu Dhabi has an Abu Dhabi started the first reactor albaraka and the Korean reactor there. Yeah,

Anas Alhajji 49:19
correct. Egypt has already started but now because of the war, because it’s a Russia reactor. So we don’t know what the future of this reactor is going to be in light of the crisis in Ukraine. But they already started building a double nuclear reactor. But other countries basically needs it. If you look at future energy demand, specifically Algeria and Morocco, Morocco in particular, I mean, despite all this push for renewable energy and all this push to find natural gas. Morocco needs nuclear power. They have no other choice. If you look at the population growth. You look at the economy after 2035 This country is going to be The population is going to boom. And it just got to be a very large country with major consumption, but no resources. Right. So those countries need the nuclear no matter what, any way you look at it, they need it.

Robert Bryce 50:12
So I guess you could say that about pretty much all of Africa, couldn’t you?

Anas Alhajji 50:17
Yes, but we have to distinguish between the countries with smaller populations and the larger populations and the age structure. Right. You need to look at the age structure of those country demographic

Robert Bryce 50:27
growth. Yeah, correct. Yeah, right. Well, so now, my guest again, is my friend, Dr. Nasir Alhaji. He’s the editor, editor of a taka, which is the only Arabic language media outlet focused on the energy business. He is the editorial advisor there. I mean, I meant to say so I thought about your your, you know, you starting this new media outlet. How hard is it? You know, we’ve talked a lot a long time. And I know you have family in the Mideast and your, your wife Ghufron has has family in the Middle East. As it gotten easier over the last few years to kind of because I see you straddling the Arabic world in the kind of American world. Is it easier? Does it get harder? I mean, because you know, you’re straddling time zones, you’re straddling languages, cultures. Is it easier for you in terms of your business? Or is it? You’re just used to it? Now? Tell me about that.

Anas Alhajji 51:21
Okay, well, people should know, I live here in Texas, so yeah, right. They need to know that Dallas area. Yeah. All right, correct. Well, given the type of business I do, remember, since what we’ve been talking since year, 2000, I think, when I was in Ohio, yeah. The nature of my business, basically, from day one, was related to the rest of the world. So it’s become kind of a norm, to kind of to get up at 330 or four o’clock in the morning, to catch up with everything else. Etc, etc. So for me, it became just compulsive, the habit, part of life, etc. I don’t think my kids will like it or live it the way I’m doing it right now. But it is, it is very tough. But I am really amazed at one thing, that just kind of I mean, people do not pay attention to this, when people go to Twitter, and a lot of people are on Twitter. Okay, Twitter has a translation, but and whenever you see something in a foreign language that kind of attract your attention, press that translate button, because there are a lot of valuable information. And sometimes you breaking news that even the Wall Street Journal and others will not report until the second day. You get it from those languages. So for us, one of the most impressive things is the number of non Arabic speakers who are following up Taka is in 1000s. Really? Yes. Interesting. So this idea of technology, advanced technology to the fascination of the spot, enabled us to communicate through languages on the spot in an believable way.

Robert Bryce 53:01
Huh? That’s interesting. Well, I just noticed that today, in fact, because I was looking at your Twitter feed, and you know, sort of click here. And I was like, well, dumb dummy. Why didn’t I see this before? But? But, okay, well, so that’s great. So a nice, you know, I like to ask my guests. So what are you reading? I know, you’re busy all the time with, you know, looking at what’s going on? Are you reading for pleasure at all with any books on you’re

Anas Alhajji 53:23
going to the basics, basically, and I am reading several books on, because I think this has been to be very important for us when we talk about the future of the fossil fuel. I am reading a couple of books on asphalt,

Robert Bryce 53:40
asphalt and politics. Okay.

Anas Alhajji 53:42
Okay. And this is one of them. I think that there is another one somewhere. But the idea here is, a lot of people do not pay attention to the fact that those electric vehicles are extremely heavy, right. And that’s why President Biden cannot have an electric vehicle. And the reason why, because these are armored, armored vehicles, so they are already very heavy, right. And if you make them electric, then they are going to be extremely heavy, and they cannot maneuver or dry fast. So that there has to be like a special thing almost to do that. But one of the problems we have with electric vehicles and electric trucks, because of their heavy weight, the tear on the tires, and the tear of the roads is way higher than before. Like, therefore, tires come from what from oil and gas, right? That’s been ignored in the analysis. And roads. His fault comes from oil and gas. And that’s been ignored in the analysis too. So I’m trying to understand the asphalt and the so called politics and trying to kind of again, it’s a basic issue, but still kind of exciting.

Robert Bryce 54:55
Well, that’s interesting. And that, of course comes from the heaviest end of the of the barrel right? which would be in the one in the single digits in the API rating, right? In terms of right, the gasoline is in the what 50s, or 60s in terms of that something like that.

Unknown Speaker 55:09
Canada and visually, are the heavy oil or the heavy oil producers.

Robert Bryce 55:13
Right. So last question, then and now. So what gives you hope?

Anas Alhajji 55:18
A better basically, I think markets will always overrun politics in the long run. And I think that’s where politician gets hit really hard. Markets make people sin.

Robert Bryce 55:36
Markets say that, again, markets markets make people sick.

Anas Alhajji 55:39
Yes. And and and that’s the power of markets, which means that even believers send because of markets, whether you talk about various things, whether you talk about riba or interest rates or other things that are forbidden and the original attacks, but people send because there is an incentive there. Right. So if people send because of markets, markets are so powerful that make it they override politics in the long run. So that’s where what gives me hope that all this posturing of politicians basically is dead in the long run.

Robert Bryce 56:19
Well, William there then it’s always fun to talk on us. You know, it like you’re interesting takes on what’s happening. You know, I’ve been, like you, I’m sure have just been watching this Russia, Ukraine business in dismay at the needless death and destruction. But, you know, I hope it will end soon, but I sure appreciate you

Anas Alhajji 56:38
let me tell you, thank you. Let me tell you just one piece, one piece of information that people should know. Okay. oil was discovered in Baku, before the United States, probably by about 1015 years. And that city in Baku, basically it was under the control of Russia. It changed the world and change the politics and still shaped the politics of the world and today. And that’s where Stalin went and rallied the workers and brought in the communist revolution in Baku in from the oil industry, yes.

Robert Bryce 57:18
Yeah, well, no, if it if recalling Stalin at this point is such a cheery message, but we’ll, we’ll leave it

Anas Alhajji 57:26
there. What the idea is they still influence the market? Since like, 1870.

Robert Bryce 57:31
That’s fair. Fair enough. Okay. Well, listen again. My guess is has been a Nossal. Haji. He’s the editorial advisor at taka, which is the only Arabic language media outlets focused solely on the energy sector. And us many thanks for being on the power hungry podcast. Thank you. And to all of you in podcast land. Tune in for the next episode of the power hungry podcast. Until then, see you