Gazprom CEO Alexei Miller - backed by President Putin
The BBC reported this week that Gazprom CEO Alexei Miller flexed his corporate muscles, warning British regulators not to rule out Gazprom's potential acquisition of Centrica, the largest natural gas supplier in the UK.
Attempts to limit Gazprom's activities in the European market and to politicise questions of gas supplies, which are in fact entirely within the economic sphere, will not produce good results," Mr Miller said. "It should not be forgotten that we are actively seeking new markets such as North America and China," he added. "It's no coincidence that competition for energy resources is growing."
Gazprom is the largest state-owned natural gas monopoly in the world, and after acquiring Sibneft in 2005, it also has oil reserves greater than those held by Irving, Texas-based Exxon, the world's largest private energy company.
Mr. Miller's remarks were intended to remind EU regulators who sits in the driver's seat of global energy markets, both from the point of view of suppliers and customers. North America and Asian demand for gas continues to grow rapidly, while European demand for gas grows at a much slower rate, resulting in less leverage for EU customers and regulators in the future. Gazprom was severely criticized by the EU and in the Western media last January, when the state-owned giant temporarily suspended gas shipments to Europe through Ukraine during a dispute over prices with Kiev. Gazprom restarted deliveries after reaching an agreement with the Ukrainian government, and also announced that it would start charging Belarus higher rates for natural gas starting in 2007.
Map of Barents Sea gas fields
The EU, like the U.S., has a vested interest in diversifying its energy sources, while Gazprom has a strong interest in quickly expanding into markets where its network of pipelines currenly do not or cannot reach - namely, the U.S., India and China. While Gazprom continues planning trans-Siberian and Central Asian pipelines, the only way Gazprom can currently supply the voracious North American market is to liquify natural gas and ship it via LNG tankers to U.S. terminals.
LNG tanker
With yields from North Sea oil and gas fields reportedly dwindling, Gazprom is now directing the most important energy project in Europe, the Shtokman development in the Barents Sea. The BBC reported in January that Gazprom has partnered with a France-based multinational bank, Calyon, to raise the initial capital needed to start tapping the field by 2010.
Gas platform in the Barents Sea
Reuters reports this week that the field is estimated to hold "3.7 trillion cubic metres of gas, equivalent to 23.3 billion barrels of oil". The Reuters writer adds that there is no consensus among financial analysts as to how much capital will be needed to fully exploit this bonanza, with estimates varying widely from $12 to $34 billion dollars.
Barents Sea drilling rigs
Russia Blog has written previously about Russia's tremendous potential to become a major non-Middle East supplier to the U.S. and the need for greater Russian transparency to attract foreign investment. Since supplies from Canada, Alaska and the U.S. Outer Continental Shelf (assuming environmentalists don't continue blocking further offshore drilling) may not be sufficient to meet demand someday, the alternative to buying more oil and gas from Russia could be greater dependency on politically unstable West African suppliers and Venezuela.
Very interesting comment. I wish I had read it before posting my comment (http://vilhelmkonnander.blogspot.com/2006/04/russia-uses-energy-to-bully-its.html) on the Post's (http://www.washingtonpost.com/wp-dyn/content/article/2006/04/22/AR2006042201026.html) editorial today on the same issue.
Yours,
Vilhelm Konnander
Looks like La Russophobe has found another website to hijack. His website is a joke.
Derek, see Yuri's first comment on the Russian media post re: Kim.
http://www.russiablog.org/2006/04/what_is_russian_media_ownershi.html#comment-1670
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