Does Trump want to create a new OPEC with Putin?

The decision by Donald Trump to hold peace talks with Russia on ending the Ukraine war — without Ukraine actually being present — is starting to look even more disgraceful. It transpires that the war was not the only item on the agenda in Saudi Arabia on Tuesday.

A significant part of the day’s business seems to have been discussing oil deals in the Arctic. According to Kirill Dmitriev, who heads the Russian Direct Investment Fund, the Russian and US delegations took the opportunity to talk about reviving joint exploratory operations such as that between Rosneft and Exxon Mobil, which was called off in 2018 following the imposition of sanctions against Putin. Trump was in his first presidency at the time.    

Putin himself also seems to see the talks over Ukraine as an opportunity to do business. The location of Saudi Arabia, it appears, may not have been accidental: Putin has proposed three-way negotiations between Russia, the US and Saudi Arabia over energy policy.    

Trump, then, was not mincing his words when he promised in his inauguration speech always to put the US first. Indeed, he might have said that the interests of the US were going to be his sole concern. And if advancing America’s business interests means trampling on Ukraine, calling Volodymyr Zelensky a “dictator” and making business deals with a regime which has not only invaded a sovereign country but also waged chemical warfare on Britain’s streets then so be it.

Trump’s treatment of Ukraine is losing him friends among Europeans who might otherwise be well-disposed towards him and his ambitions to expand America’s oil and gas industries. But if you can look beyond the amorality of that, does doing oil deals with Russia in the Arctic even make business sense?

There is unquestionably huge potential in the Arctic’s fossil fuel reserves. According to an estimate by the US Geological Survey a decade ago, 22 percent of the world’s undiscovered oil and gas reserves lie in the Arctic region. The trouble for Trump is that most of it — 58 percent — belongs to Russia, with only 18 percent to be found in Alaska and US waters. Geology seems to favor Russia, too, when it comes to reserves beyond the 200-mile territorial waters boundary. Under international rules, a country can claim reserves further offshore where the continental shelf extends beyond this distance.

Russia, though, has limited capacity for and skill in extracting oil and gas in the difficult environment. Meanwhile, the US has another problem in that the pipeline carrying oil from Alaska’s main onshore field at Prudhoe Bay requires a high throughput to keep it operational. If the quantity of oil flowing through it falls too low it could suffer ice damage. To keep it operational as Prudhoe Bay declines will require it to be fed with oil from other Arctic fields.

There are, then, good reasons why the US and Russia should want to cooperate over oil and gas in the Arctic. Indeed, they were cooperating before sanctions were imposed following the annexation of Crimea. There is also a case for saying that Trump is right to pursue a peace deal with Ukraine — given that the likely outcome of a continuing war of attrition is total defeat for Ukraine.

But the juxtaposition of these two things reeks of opportunism and lack of principle. Trump might not care about that, and may have calculated that Russia is of more value to the US than any other European country. He should remember, though, that there was a time when he rightly criticized Germany for building a reliance on cheap Russian gas, approving the Nord Stream 2 pipeline even after Russia’s annexation of Crimea. He has now descended to an even grubbier level himself.