The Washington Times has a story today on how Gazprom is buying gas from Central Asian suppliers - principally, Turkmenistan - then selling the gas to Europe for a five-fold profit, with most of the money being siphoned off by mysterious middlemen. "Gazprom, the Russian natural gas monopoly, buys gas from Central Asia for less than $50 per 1,000 cubic meters and then sells it to European countries at prices as high as $260."
The larger geopolitical argument being made in Washington now is that the Kremlin is exploiting an empire of pipelines as leverage to control former Soviet republics.
The reality of course, as we've documented by many posts on energy issues here at RussiaBlog, is not some grand reassertion of Russia as an energy superpower, but chaos. For example, until the new pipeline is completed to Germany under the Baltic Sea or through Poland, Gazprom is helpless to prevent corrupt Ukraine officials from stealing gas sold to western Europe. The agreement that nominally resolved the New Year's dispute between Kiev and Moscow over gas prices was being violated before the ink was dry, because the Ukrainian government cannot prevent corrupt officials from siphoning off the gas and selling it to their friends.
As for Turkmenistan, it is an impoverished country under the one-man rule of a megalomaniac, whose only pipeline routes to the rest of the world (besides Kazahkstan and Russia) would be an expensive pipeline under the Caspian Sea to Azerbaijan, or through Iran to the Persian Gulf. Washington should consider these alternatives before complaining about Russia exploiting Turkmen gas.
Given these Hobbesian realities, should the West be upset that the Kremlin wants to re-assert at least some control over how Russia's richest natural resource gets delivered to the rest of the world? The last decade has been defined by every oligarch for himself in Russia's energy trade. Nonetheless the question remains, without real transparency in the energy sector, how will the Kremlin attract enough investment to keep the aging infrastructure of pipelines functioning, much less build the new pipelines needed to reach Asian and (potentially via LNG) North American markets?
