Gazprom adopts American tactics to accomplish EU ends

Implications: Amie Ferris-Rotman and Dmitry Zhannikov in Moscow with Reuters reported in the Saturday-Sunday issue of the International Herald Tribune that Gazprom wants its western partners to lobby in its behalf to benefit from down-stream assets in Europe. Companies with interests in Siberian natural gas fields may be glad to do this. Gazprom and BASF, the German chemical company recently began natural gas production in Siberia. Eni (Italy) will soon sell gas from Arctigas, its venture with Gazprom. The European Union (EU) has concerns over Gazprom’s ambitions. In July, Gazprom said it would soon begin supplying Ireland, increasing its supply network to 23 European countries. But EU efforts to diversify its energy supply has been set back as more countries joined Gazprom’s South Stream project to bring gas from Central Asia to Europe via the Black Sea. This pipeline Challenges Nabucco, the EU rival pipeline destined to run under the Caspian Sea.

Analysis:  Gazprom executives must be smiling at Centrica’s announcement yesterday that prices for natural gas in the United Kingdom are to be increased by 35%. In 2007, natural gas prices averaged $6.01/million Btu. The increase will get them up to at least $8.15, closer to the European price. Gazprom will not waste much time giving EU prices a jolt. This will please GDF-Suez and BASF as well as others natural gas marketers in Europe. So lobbying of the EU Energy Commision will soon be as routine as that of the American energy companies lobbying members of Congress. So many things are happening simultaneously in Russia that there is a temptation to think they are related. Russia’s announcement of their intention to rebuild the navy with new aircraft carriers and modern submarines does not at first seem to fit into the general mosaic of foreign policy. Still they have noted they might be required to patrol the Arctic regions to protect oil and gas interests. Similarly, the move by President Medvedev against corruption in business seems to be related to the TNK-BP contretemps. Should Medvedev indeed allow BP to get a fair shake (which seems increasingly likely), then it would bolster the confidence of all Western oil operators in Europe. Certainly more capital would be attracted. So it is a hopeful wait and see attitude for businessmen. With an avuncular Gazprom supplying European markets without interruption and a Russian government taking a truly impartial stance regarding oil and gas joint ventures, Medvedev’s reputation as a statesman would soar. Coupled with vigorous pursuit of corruption, it may be the making of a “new” western-friendly détente. With the rest of the world trying to cope with economic stress, Russia could gain ground in the petroleum wars that certainly lie ahead. The world has changed dramatically since the demise of the Soviet Union in 1990. Russia has introduced a new security plan to NATO ambassadors in Brussels which essentially condems the organization to chasing ghosts in Afghanistan and similar forsaken territiroes outside of Europe. The plan will no doubt be rejected but it shows that Vladimir Putin is still minding the store.With Gazprom moving ever closer to the European consumer, it is clear that a great change is taking place in both commercial and diplomatic relations between Russia and the West.