Bron: Businessweek, 28/04/06
Who's Bluffing Whom Over Russian Gas?
Gazprom knows it has a seller's market in Europe. It has made a friendly deal with Germany, but energy jitters aren’t likely to go away, says BW's Jason Bush
If there's one thing that Russia and the West ought to be able to agree on, it's energy. Russia has it, the West needs it. What could be simpler? Just a few months ago, hopes were high that energy cooperation would provide a way forward for Russia's relations with Europe and the U.S. Advertisement
Russia's President Vladimir Putin must have reckoned so, as his country geared up to chair the Group of Eight (G-8) summit this year. That's why he put energy security at the very top of the agenda.
Yet listen to Putin now: "In spite of the great demand for energy resources, all sorts of excuses are being used to limit us to the north, to the south, and to the west," he fumed on Apr. 26, at a press conference during a visit by German Chancellor Angela Merkel to Tomsk. "When people come to us, it is investment and globalization, but if we plan to go somewhere, then it is already the expansion of Russian companies," he added.
That's a reference to possible acquisitions in Western Europe by Gazprom, Russia's huge gas concern and the major exporter of Russian energy to Europe. Putin hinted that if the ungrateful Europeans won't cooperate with Russia's energy ambitions, Russia will prioritize other energy export markets such as China. Or to put it another way: If you don't want to buy our gas, we'll sell it to someone who does.
IDLE THREATS? Putin's harsh words echoed similar remarks by Alexei Miller, Gazprom's CEO, a week earlier. Miller had Gazprom's European customers quaking in their boots when he warned: "Attempts to limit Gazprom's activities in the European market and politicize questions of gas supply...will not lead to good results." The European Commission hit back, saying that Gazprom's statement only reinforced the need for Europe to diversify its energy imports. Or to put it another way: If you don't want to sell us gas, we'll buy it from someone who does.
What to make of all this gas over gas? No doubt it involves large measures of bluff, rhetoric, and media hype. Take Russia's threats to send its gas to China rather than to Europe. That would be kind of difficult, seeing as Russia doesn't actually have any gas pipelines leading to China. True, on a recent visit to Beijing, Putin announced that Russia was planning to build some. But nothing in Russia ever happens in a hurry, least of all major investment projects.
Nor, despite their talk of diversification, have the Europeans exactly been falling over themselves to find alternative supply sources to Russia. That would mean cultivating relations with other gas producers such as Iran or Turkmenistan -- and figuring out ways to get their gas to Europe. Instead, Brussels has looked on benignly as individual members cozy up to Moscow.
GOOD TRADE. None has been more cooperative than Germany, which has had few qualms about partnering with Gazprom. Last September, Russia and Germany announced the launch of the North European Gas Pipeline, a multi-billion dollar project to pipe gas under the Baltic, which will provide a huge boost to Russia's gas exports to Germany, and ultimately to Western Europe as a whole.
The Russian-German energy partnership also took a huge step forward during Merkel's recent visit, when Gazprom and Germany's BASF (BF) announced a landmark deal to swap assets. Under the plan, Gazprom increases its stake in Wingas, a major German distribution company jointly owned with BASF, from 35% to 50% minus one share. In return, BASF gains a stake of 35% minus one share in a Siberian gas field called Yuzhno Russkoye.
True, few European countries are as friendly with Gazprom as Germany. In recent weeks the focus of attention has shifted to Britain, where Gazprom has made no secret of its ambitions to boost sales. That fueled frantic speculation that Gazprom ultimately plans to acquire Centrica, Britain's major distributor of gas. Reports that the British government was planning to block the rumored bid were apparently one of the main reasons for the recent Russian outbursts. But Britain isn't planning to do any such thing. Prime Minister Tony Blair has since reassured the Russians that there will be no legal changes aimed at keeping Gazprom out.
PUTIN'S POSITION. So it turns out that the Russians are not planning to switch off the gas pipes to Europe. Nor are the British planning to slam the door on Gazprom. So was the recent spat was little more than a tempest in a teacup? To some extent, yes. But the tensions between Russia and its Western customers have deeper roots. And they may well resurface, as both sides gear up for the key G-8 Summit in St. Petersburg in July, where "energy security" tops the agenda.
The snag is that Russia and the West seem to understand the concept of "energy security" very differently. President Putin laid out Russia's position at a meeting of G-8 energy ministers in Moscow in March. He emphasized "projects of strategic importance for genuinely strengthening the global energy security system," referring in particular to projects such as the North European Gas Pipeline, involving the export of even more gas from Russia to the West. He also stressed the importance of long-term supply contracts -- in other words, exactly the kinds of contracts that Gazprom has been using to export to Europe for the past 40 years.
In short, Russia seems to think that energy security means using long-term contracts which guarantee stable demand for Russian gas from the West. Of course, this vision of energy security takes it for granted that gas supplies from Russia are secure. But are they? That is the big question that Europeans have been asking themselves ever since January, when the Russians cut off their gas supplies to the Ukraine in order to force the Ukrainians to swallow a mammoth five-fold increase in gas prices.
RISING DEPENDENCE. Eventually a convoluted compromise was reached, but not before the Russian-Ukrainian gas dispute had affected markets further West. Europe was horrified at Russia's willingness to use turning off the taps as a negotiation tool.
It didn't help that just a couple of weeks later, some European customers complained of further shortfalls in gas supplies from Russia -- this time caused by the harsh Russian winter -- which Gazprom was struggling to cope with. Nor does it help that, in the decades ahead, the EU's dependence on Russian gas imports, already significant, is forecast to rise dramatically.
That explains why both Europe and the U.S. have been redoubling efforts to get Russia to sign up to the so-called Energy Charter -- a treaty, originally drawn up in 1994 but never ratified by Russia -- which would provide legal guarantees against unilateral suspensions of supplies. Another key European demand also enshrined in the Energy Charter is liberalization of Gazprom's export pipeline network. The Europeans want to ensure that Central Asian countries, as well as independent Russian gas producers, are guaranteed access to export pipelines on equal terms.
DETAILS, PLEASE. Russia's reaction to these demands can roughly be summed up as: Fat Chance. Gazprom's pipeline monopoly is one of Russia's major geopolitical trumps, which it is loath to surrender. And with unprecedented energ