Gazprom's corporate headquarters in Moscow
Gazprom Deputy Chairman Alexander Medvedev wants everyone to relax about the state-owned natural gas giant's growing clout in world energy markets. While visiting the U.S. last week for a public relations tour, he told Business Week, "I can assure you that we have enough reserves to meet both local demand and export obligations, including potential sales in new markets: in China, Korea, and the U.S. and Canada for (liquefied natural gas) sales. This is fully supported by investment programs." Medvedev's remarks came in response to recent media reports claiming that Russia could run short on gas and be forced to cut exports in the near future.
Gazprom Deputy Chairman Alexander Medvedev
In the same Business Week interview, Medvedev dismissed the European Union's proposed Energy Charter as "communism" and "selling a car without wheels". Medvedev warned Americans already smarting from the EU's aggressive antitrust litigation against Microsoft that "In Europe the ghost of communism is back with all the attempts to take ownership of infrastructure and divide it...I hope at least the US will not go this way." He declared that Russia could not be required to open up its domestic pipeline network without receiving similar assets in return. Medvedev's remarks comparing the EU approach to communism were an indirect slap at the Polish government, one of America's closest allies in Europe, which has urged Russia to ratify the E.U. Energy Charter and threatened to hold up unrelated trade deals until Moscow agrees.
Speaking to the Washington Post, Medvedev hit back at Gazprom's critics who accuse the company of simply being a tool of Kremlin coercion. Medvedev said that Gazprom's recent moves to increase rates on the former Soviet republics were purely business decisions. Medvedev claimed that subsidies to Ukraine, mostly consisting of subsidized gas, have amounted to $45 billion since the collapse of the Soviet Union, and that a move towards market prices was long overdue. Medvedev added that Russians are also going to be paying more for gas in the next few years and that Gazprom expects these price increases to curb surging demand from Russia's expanding economy.
Gazprom's hockey team poses with former Boston Bruins players
(Source: Dan Aurelio's Digital Photography)
In addition to giving interviews to The Washington Post, Business Week, Forbes, and other American media outlets, Medvedev delivered several speeches as part of a multi-city U.S. tour on the East Coast. Medvedev addressed a luncheon in Washington, D.C. hosted by the U.S.-Russia Business Council. The Boston leg of Medvedev's tour included a speech at Harvard Business School and attending a charity hockey game between former Boston Bruins and a Gazprom-sponsored team.
As we have previously reported here at Russia Blog, Gazprom, like many other Russian companies, is looking to add foreign shareholders in order to finance new infrastructure in Russia. This year Gazprom sponsored several major energy conferences and opened an office in Houston, Texas to develop its liquefied natural gas (LNG) business in the U.S.
Houston is the 4th largest city in the United States and has long been a hub for the global energy industry. Medvedev is scheduled to speak in Houston this February at a conference put on by Daniel Yergin's Cambridge Energy Research Associates group.
Gazprom made its first LNG delivery to the U.S. this past September, at Maryland's Cove Point LNG terminal. According to RIA Novosti, Gazprom plans to make deliveries on short and medium-term contracts in the next three years while seeking long term deals. Many industry analysts agree that with billions of dollars required to build major facilities on both ends of the supply chain, the LNG market lends itself to such long term contracts. The Federal Energy Regulatory Commission (FERC) has already approved six onshore LNG projects on the Texas coast, making greater Houston a likely epicenter for future LNG imports in the Gulf of Mexico.