Total, Shell Sign Agreements
President Putin with the Rosneft CEO Sergei Bogdanichikov
Over at his blog, Thomas P.M. Barnett has a few comments on these moves, contrasting Russia's openness to foreign investment in energy to the off-limits approach taken until very recently by Mexico (although the new government led by Felipe Calderon is trying to modify the Mexican Constitution to permit foreign investment in this sector). While Mexican oil and gas production continues to decline, Russian oil production has increased since reaching a post-Soviet low in the mid-Nineties. In spite of government-mandated limits on what Gazprom can charge domestic industries, Russia's gas industry has also managed to keep up with increasing demand both Europe and from a booming economy at home.
Russia's natural gas reserves compared to the rest of the world
TCF stands for trillion cubic feet - to put these numbers in perspective,
the U.S. is expected to consume about 23 tcf of natural gas this year
Source: Energy Tribune
In an attempt to head off any future supply crunch, the Russian government is now allowing Gazprom to raise rates across the board, while encouraging the development of coal and nuclear power plants to diversify fuel sources for the power grid.
In spite of the scary headlines about Moscow aggressively wielding its newfound energy clout, foreign energy companies are still eager to partner with Gazprom to develop major new fields in northern Russia and the Far East. This is good news for Russia and for a global economy which cannot get enough energy.
To read more on this topic, click on the energy section of Russia Blog or type in www.russiablog.org/energy