Russia's Quest For Global Energy Domination
Western civilization has been dealt another major blow. Everything I talked about in the past few months has been unraveling. If you do not listen now, you might miss out on some big opportunities for profit.
Last week, I talked about the global currency war and how dramatically it affects the world. But there is something even more powerful and influential than money - something that has sparked wars and cost the lives of many all around the world. Without it societies would crumble. This something is energy.
Aside from food and shelter, nothing else is more important to a nation's survival. Every nation knows this. However, not all nations are equal in their strategies to control world power energy. The countries that control energy will remain - or become - super powers.
And there is one nation that has been making the boldest moves to secure its energy position and gain worldwide political control. This country has been influencing nations all over the world, gaining control of major energy supplies from oil and gas to major uranium assets.
But that is not all. Not only is this country acquiring energy assets, but it is making it mandatory for nations all around the world to buy energy from it.
And, like it or not, it is not America.
Russia: A Rising Power
If there is anything I want you to take from this letter, it is that energy is much more valuable than a nation's fiat currency.
America's strength is its dollar. Russia's strength is its energy.
While the dollar is fast losing value because of the ease of its creation, energy continues to be the Achilles' heel of every nation. If you do not follow Russia's moves on the world stage, you better start.
As I mentioned in my Letter, "Why Obama Will Soon Make a Very Bold Move," Russian President Vladimir Putin has been on an aggressive mission to gain global power. While Russia is already a world energy powerhouse, its strive for energy dominance is just beginning.
A while ago, during the Syrian chemical gas conflict, I discussed how pipeline control was the real reason for war in Syria:
"Russia is already the dominant energy powerhouse in Europe, supplying and controlling nearly 40% of total gas imports to Europe. Russia's energy dominance in the Eastern Hemisphere has allowed the nation to amass fortunes; fortunes used to continue its energy dominance through resource acquisitions and the buying of support from resource-rich allies.
Russia wants this dominance to continue. That's why it needs to maintain control over Syria...
...Syria's location puts it smack in the middle of Qatar and Turkey; a perfect crossroads for a natural gas pipeline that could make Qatar, the world's largest exporter of liquid natural gas (LNG), a strong supplier of gas to Europe.
A gas pipeline from Qatar to Turkey means will Russia lose its dominance and control over energy supplied to Europe; thus Russia will lose lots of money and power."
If you missed that issue, I STRONGLY encourage you to go back and read it by CLICKING HERE.
While we no longer hear much about the Syrian civil war, its conflict is still very much alive. So is Putin's move towards gaining pipeline control of the entire area. There is still no clear winner in Syria. Putin knows this, but he is not going down without a fight. Or a backup plan. While America focuses on Syria, Putin is busy putting in safeguards everywhere.
Turkey: Vladimir Putin's Back-Up
Under the guise of the upcoming Olympic security discussions, Putin is busy strengthening his relationship with Turkish Prime Minister Recep Tayyip Erdogan, in a closed-door environment. In addition to a growing military-technological cooperation, the two countries are busy successfully implementing and expanding investment cooperation. According to Putin himself, Russian investments in the Turkish economy total $1.57 billion, while Turkish investments in Russia total $740 million.
Putin and Erdogan are also busy developing industrial, financial, and innovative technological connections between the two nations, further miring Turkey into Russian control:
"A major breakthrough is seen in the sphere of energy; great progress is achieved in the sphere of tourism...the trade volume between our countries has reached $35 billion, and we shall apply every effort to bring it to the level of $100 billion. - Turkish Prime Minister Recep Tayyip Erdogan
But by far the most significant development is happening on the energy front, where it seems Putin is gaining significant support from Erdogan:
"In this sphere (energy), we have made a breakthrough - we have been constructing a nuclear power plant at the Accueil site jointly with Russia. The construction is underway; the project has been active for three years now ... we pay great attention to it, and the very fact we have made our first step in this sphere jointly with Russia speaks for itself".
It is clear that the Russian-Turkish relationship is growing stronger every day. Russia's involvement in Turkey's nuclear ambition means Turkey will likely end up buying fuel for the reactor from Russia.
But Turkey isn't the only one falling under Putin's energy control.
Ukraine: Sovereign State or Russian Province?
Russia provides approximately a quarter of the natural gas consumed in the European Union (EU); approximately 80% of those exports travel through pipelines across Ukrainian soil prior to arriving in the EU. This is the primary reason why Russian wants to maintain control over Ukraine. On numerous occasions, Russia has exerted its power over Ukraine; with it, power over the EU.
In 2009, Russia cut off all gas supplies passing through the Ukrainian territory to prove a political point. But over the last few years, the EU has been aggressively steering Ukraine away from Russian control.
Russia was not pleased. So, over the summer, Russia threatened Ukraine with custom slowdowns at the border, blocked shipments of goods, and even sanitation-related sanctions on chocolates and other major imports. In less than three months, the oppressor tactics by Russia pushed Ukraine to the brink of financial collapse.
It is clear that Russia has control over Ukraine's livelihood. But perhaps with help from the EU, Russia's control over Ukraine could change. This week, Ukraine was set to sign a key trade and preaccession agreement with the EU to strengthen the ties between Kyiv (capital of Ukraine) and Brussels (de facto capital of the EU), while moving away from Russian influence. EU foreign ministers told Ukrainian President Viktor Yanukovych that he has to decide if his country would move toward Europe or Russia. Over the past few weeks, Yanukovych met with Putin several times.
The end result? Putin wins...again. Under serious pressure from Russia, Ukrainian leaders have decided to walk away from the EU, putting off talks on the Association Agreement indefinitely. This was a huge blow to the EU and a big win for Russia. However, that was just the beginning.
Not only did Ukraine announce that it will walk away from negotiations with the EU, but it will now only discuss trade negotiations with the EU if Russia is included in those talks. Despite being a sovereign state for 20 years, its clear that Ukraine acts more like a Russian province. Putin has made it very clear to the EU: If you want to talk about trade with Ukraine, you better talk to me first.
A Global Energy Provider
It is clear Russia is beginning to slowly take control of the European area. But if you think Putin's energy ambitions are only focused there, think again.
For years I have been talking about Russia's growing international intentions. From strategic agreements with China, Brazil, and India, to military and nuclear discussions with Iran; Russia is winning political battles all over the world.
Africa: Major Growth Opportunities
Africa is smeared in conflict. This will not change any time soon. However, the country is rich in all kinds of natural resources - from diamonds and gold, to uranium and oil. Which is why Africa has been the exploit of many nations - including the United States, Canada, France, and the United Kingdom. China also has strong ties to Africa, already controlling 40% of Sudan oil production.
Meanwhile, Russia and Namibia also plan to launch joint development of uranium deposits, while Niger has already granted Gazprom (another Russian-owned entity and the largest extractor of natural gas in the world) uranium-exploration licenses in return for guaranteed investments.
Around 16% of U.S. uranium imports come from Africa. We will get back to this in a bit, but this is a very important piece of information. That is why we will continue to see more foreign troops move into Africa; claiming to help Africa in return for access to the nation's natural resources. Russia is most certainly one of them.
This Friday, Russia's state arms export monopoly said that it will deliver 12 Su-30K fighter jets to a nation in southern Africa. There are no free handouts in politics, especially when it comes to supplying another country with military aircrafts. So where's the connection?
Over the past months, Russia has been increasingly integrating itself with South Africa, as South Africa pursues ambitious plans to fulfill more of its energy needs with nuclear power. A few months ago, Rosatom, Moscow's state-owned nuclear power corporation, signed a memorandum of understanding with South Africa's North-West University that will see Rosatom-linked professionals share their expertise with North-West students and professors.
The plans are moving quickly. This past week, according to the Voice of Russia:
"Russia's Atomstroy export contractors are to build 8 nuclear electricity units in South Africa. Each will be built around a pressurized water reactor and have a generating capacity of 1.2 gigawatts.
Formal agreements about this are to be signed by the Russian and the South African nuclear energy chiefs, Sergey Kiriyenko and Benedict Martins, at a meeting on the fringes of the next ATOMEX Africa forum to be held in Johannesburg next Monday."
Russia's ambition for global energy domination is clear, and it is making moves every day to achieve this goal*.
(*Meanwhile, Obama is busy cleaning up the Obamacare mess)
World Energy Dominance
We already know of Russia's energy dominance in Europe. It is also aggressively moving other nations around the world into nuclear power - helping other nations construct and build these plants.
As I mentioned before, Russia is not only building nuclear plants all around the world, but it will likely be the one that supplies these plants with the power source needed to fuel them. That is why Russia has been aggressively snapping up uranium assets all over the world.
Those who continue to believe nuclear energy is fading really need to open their eyes. I am by no means pro nuclear; I am merely presenting worldwide events as they happen. The world continues to move aggressively toward nuclear - despite what every one thinks, or wants.
Just the other day, Pakistan announced plans to construct a civil nuclear power plant with China's help in the country's biggest city to meet growing demand for energy. China has already helped Pakistan build two atomic reactors at Chashma in Punjab province, and is assisting with two more under construction at the same site.
Controlling Energy Across the Globe
If you think that Russia only has control and influence over energy in the Eastern Hemisphere, think again. A few months ago, on August 11, I wrote a report on uranium where I said uranium prices WILL climb towards the end of the year - and much higher in the new year - as America's Megatons to Megawatts uranium contract ends with Russia.
If you haven't read that report, I STRONGLY suggest you read it now before it is too late (BW: see subsequent link). In short, over the last twenty years, one in 10 light bulbs in America has been powered by nuclear material from Russian nuclear warheads, as a result of the Megatons to Megawatts program. But this program is now officially over. Last Thursday, the M.V. Atlantic Navigator prepared to leave the dockyards carrying with it down-blended uranium worth around $2.5 million. This is the last time uranium from dismantled Russian nukes will set sail to America.
So what happens now that this contract has run out? The following is an excerpt from my report:
The Transitional Supply Contract
The Transitional Supply Contract is a multi-year contract that allows the U.S.A. to purchase about 21 million separative work units (SWU) through 2022 with a mutual option to purchase up to another 25 million SWU during that period.
However, according to the deal terms from USEC, the United States Enrichment Corporation:
"The low-enriched uranium supplied by TENEX (a state-owned Russian company which trades uranium fuel and fuel processing services abroad) will now come from Russia's commercial enrichment activities rather than from down-blending of excess Russian highly-enriched uranium."
I want to stress the word "commercial" within that paragraph. Commercial means doing something for profit. Furthermore, "The pricing terms for SWU under the contract are proprietary, but are based on a mix of market-related price points and other factors." In other words, the Russians will begin to sell uranium to the U.S.A. for profit.
And they get to set the price."
If you have not already noticed, the price of uranium spiked last week, rising from a low of $34.50 to over$36.
This is a big move, but it is the first real move upward in uranium prices this year.
Since Russia will begin to sell America uranium at market prices prices controlled by Russia, look for uranium prices to move much higher in the coming months and years.
I do not think we will see the uranium price this low again.
How to Play This Explosive Opportunity
Since uranium does not trade heavy volume on a futures exchange, the only viable way to play the uranium sector is to invest in companies that mine and explore for it.
Even then, that leaves us with not many choices. Which is why good uranium companies can easily skyrocket as the price of uranium moves up.
In my opinion, in this sector, there is one company that stands out.
Uranerz Energy Corporation (TSX: URZ) (NYSE MKT:URZ)
As I mentioned in my August report, 20% of America's total electric energy generation in 2011 came from nuclear energy. This required approximately 51M lbs. of uranium. Yet, America only produces 4.3M lbs. of uranium per year at home - meaning they have to rely heavily on imports.
As a matter of fact, the U.S.A. is more dependent on foreign uranium supplies than it is on oil. More than 40% of U.S. uranium imports come from Russia, or from locations under the influence of Russia, such as Africa. This is why America needs desperately to start producing more uranium immediately on its home turf.
Uranerz Energy Corporation is focused on near-term commercial ISR uranium production, and is currently constructing its first ISR mine in the Powder River Basin of Wyoming.
This past Friday (November 22), many uranium stocks climbed. However, none more so than Uranerz Energy, which climbed nearly 17%. This shows that Uranerz is one of the better leverage plays to uranium prices.
I own shares in Uranerz and I have yet to sell a single share to date.
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