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GET IT OFF YOUR CHEST - Is Russia doing enough to secure energy supplies to Europe?

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Predrag August 27, 2008, 07:45: Russia should use its Oil and Gas to blackmail the West and former Soviet states which are anti-Russian to do whatever – like, maybe dance kazachok or cross themselves the right way and not like with the showel. Even better, Russia should, impose sanctions on NATO countries and sell oil to other states. Actually, I really wouldn't mind seeing NATO countries freezing to death over the next million of years. But hey, I am a Serb - forgive my slight dislike towards NATO - I hope they all go to hell...
tonyw August 21, 2008, 15:43: The key thing that Russia should do is to reduce its own dependence on oil and gas. Fossil Fuels are finite and the peak production of oil has probably already been reached with gas to follow in a few years.

As internal comsumption is increasing and production is declining there will be less and less for export.

Russia should increase fuel costs over say 4 years to European levels to improve efficiency. The last thing it needs is to try and emulate the failed US with lots of inefficient SUVs driving huge miles.
David August 21, 2008, 00:20: After the exposure of Bush's activities in Georgia by giving the Georgians licence to slaughter innocent people and Peace Keepers (mandated by the UN, by the way), Russia needs to show Bush's cattle who is supplying who with gas and oil.
Russia must demand payment in advance - no payment, no gas/oil.
Russia needs to limit supplies to all of Europe but especially the old Soviet countries broken away from Russia. In particular Georgia.......
gerps August 18, 2008, 19:20: It's only a question of time before the west departs from high oil based economy. Once the west departs, from oil they'll also begin to depart form natural gas. The weakness of European countries to to take long term approach to solving their dependency on gas supply from other countries will continue to politically and economically hirt them for years to come. France has taken a step with nuclear power station. The UK should be next!
Vijay August 5, 2008, 14:13: Someone comments -
Compared to US, Japan, Australia and other European states, we use our power like it was 19th century. There is no balance of power, there is just Russia, Iran, Sudan, Zimbabwe, Belarus, Venezuela and less and less China, which oppose the ever larger free world. Nice allies...!!

Is this guy for real?
Or is it a fake Russian?
Or is this the 'other' Russia?

What he means is that all that Russia holds dear should be surrendered for the sake of a few countries' approval?
Whose?Why? Are these countries 'THAT IMPORTANT"...?

Why...?
Because they have inflated budgets, based on Trillion dollar budget financing?
Because of their massive natural resorces, which are basically 'non-existent'!!

Mr. Mikhail, see the world, not its mirror image...
See the future and anticipate it, not fear and abhor it...!
Mikhail July 31, 2008, 22:32: Dear 'gas',

Russia has nothing, totally nothing to bargain with the capitalist-democratic world. When it comes to rising energy dependency, the free world will easily be able to supply its citizens with economic, political and social freedoms no matter Russian 'embargoes'. Riots just show that they have freedom of expression . Embargo-threats just show how far from reality the leaders in mother Russia live. Will our next generation of leaders use their brain and soul instead of their fallos?

Oil and gas embargoes would harm only the dependent countries in Russian neighbourhood, which will turn against Russia in short and in long term. Neighbouring countries dislike us, for evident reasons. In short term they are eager to get as far from us as they can ever get. While France, Italy and Germany remain friendly (with difficulty due to our stupid little 'Cold War' political games with disgusting regimes like Iran, and supporting ethnic cleaners like Karadcic), the small countries will turn their head in the long run. We are more and more a threat to them and to the world peace. Compared to US, Japan, Australia and other European states, we use our power like it was 19th century. There is no balance of power, there is just Russia, Iran, Sudan, Zimbabwe, Belarus, Venezuela and less and less China, which oppose the ever larger free world. Nice allies, with Chino's and Muslims being the only growing populations on our homeland. WE are moving out, because WE are too corrupted and WE are unwilling to live in our country.

When it comes to military, we have only one thing, which is Nukes. Our military is poorly even capable of even securing our borders. Even then, we were likely to be paid too little and some even willing to become as corrupted as possible as soon as possible. The combined military budgets of the US and Europe overweight ours 17 to 1. And it is because they keep up the world peace, carry the weight and responsibility against the poorly governed and warhungry regimes. And what are we doing? Encouraging them? You really think that capitalism with liberal democratic checks and balances is that bad? Before 2003 I thought that ideology has already died. Then it seemed that finally we were united and back in what we should be. The leadership just didn't realize when its time to stop. We have gone too far.

In my opinion Russia should do a lot more to quarantee stability by lowering the possibility of conflict on energy. People will make profit out of the energy anyway. It is just stupid if it has to lead our Russia to conflicts which we cannot take. Joining some of the European treaties would finally convince the western brothers of our good intensions and we would have power to manouver the whole continent together with them.
Enrique July 31, 2008, 11:01: Really Gazprom as a company is not very big, just a three or four times smaller than Exxon or BP...

As the Fortune 500 ranking demonstrates Gazprom, like most Russian companies, is relatively small.

In fact, in the oil field more consolidation is needed.

I don´t think political interference is important as the pipeline to Germany by the USSR during the Cold War and both sides have the same interest in the success of supply.

And if Russians want a fair price for their gas it is something logical because Ukrainians are not paying according to the international market price of gas.

The Ukrainian Government could ask the USA for subsidied gas, haha, because what they are doing is really ridiculous. Ukraine should pay the market price, not less and not more.

Just the market price.
SrpskiCrnogorac July 31, 2008, 02:50: "Fear in the other parts of Europe is that the monopoly position of the Gazprom will lead to continuing exploitation of energy as a political weapon."

You hypocrites. Fear in other parts of the world is to be punished with economic embargos by the USA and EU, if they are not ready to be their lackeys. I hope Russia will soon impose such an embargo against the USA, as some Russian officials already hinted to.
Mikhail July 30, 2008, 22:37: Russian deliveries to the current EU region have been cut for 57 times after the collapse of Soviet Union. According to a Swedish survey on baltic sea pipeline, around 40 of these have had political connotations. These incidents have accumulated and were expressed strongly after Ukraine 2006. The change in European Council and Commission papers from a positive attitude towards Russia in 2003, to seeing Gazprom as a security threat is clear through their papers reliesed in 2006 and 2007.

Fear in the other parts of Europe is that the monopoly position of the Gazprom will lead to continuing exploitation of energy as a political weapon. The use of energy as such is well described by the honorable prime minister putin in his master thesis, where he reveals how Russia would be able to use the energy as an international bargaining tool.

There is a way to ease the fear and secure continued peace and predictability on the continent. It is signing contracts, treaties and aggreements, which can then be regarded as binding.

The best way for Russia to convince the energy importers on the continent for predictability of their energy supply is the ratification of the Energy Charter Treaty. It is a tool to lower political risks related to energy trade. Russia has signed the Treaty, but has been incapable to pass it in the Duma.

The European countries have answered to the threat presented by current monopolistic behaviour of Gazprom (which seems to be overly appreciated even on this page) by reaching other sources of energy. However, the reform in the European energy market structure goes even further, as mentioned by 'lobbyist'. The reciprocity clause, introduced by the Commission on 'third package' in 2007 is genial and will do its job, because it is in interest of EVERY company, EVERY citizen and EVERY goverment in the region, except Gazprom and other monopolies in Europe.

Russia should get rid of Gazprom, liberalize its markets, ratify the Energy Charter Treaty and start taking reasonable tariffs for Central Asian gas and oil deliveries to Europe. It would ease the political tensions and make profit for everyone: Producers, transit countries and consumers.

There would be great benefits in following the 'Norwegian way', especially for economic situation of normal people outside St.Petersburg and Moscow.
Lobbyist July 11, 2008, 05:47: Yes, Enrique. The "third energy package" of the EU, coming out later this year clearly states that if a company wants to operate on EU markets, it has to comply on EU energy directives and competition legislation. This means simply that if Gazprom wants to operate in EU markets it has to choose one of these: the operation of gas pipelines, the business of providing gas or generating power. Not only inside the European markets, but also where it comes from. If Gazprom desides not to operate inside EU and sell its products on EU borders (which will happen, because of domestic politics of subsidizing energy and getting votes), they can continue as vertically integrated firm, but stay in Russia.

There is no 'hypocrisy' in it. As capitalism (the EU aims on gas market liberalisation) doesn't work if there is only one supplier, it is necessary to first have multiple suppliers and only then do the liberalisation. this is the problem of the third package. No competition on supply side, no free market.

Gazproducers everywhere in the world have to unbundle too if they wish to start operating inside the EU borders. normally they don't operate, however. That will be the law, otherwise liberalisation would be pointless. It is not an exception that big firms trying to control whole value chain are kept in check through legislation, like seen in the case of microsoft.

Most of the monopolies in EU are state monopolies acting in specific countries. Now the Commission is breaking them apart, very much against the will of these monopolies. It will not lower the prices for customers, especially in the short term, but instead, create private firms which do not operate to get votes in the next presidential election. Subsidizing energy prices will finally come to an end in the EU countries. Higher prices bring more money to companies, more investments on infrastructure and consumers will have an option to choose between different producers.

Russians paying less than market price... there is no 'market price' in gas as there is no global market yet. More liquefied natural gas, more pipelines to the Algeria, Libya, Qatar and Turkmenistan will allow more competitive markets and lower the eastern European dependence on only one supplier, Gazprom...And for Russians, state monopoly doesn't mean only lower prices. It means incredible amounts of wasted energy through inefficient use, natural disasters, inflation, suffering of the industries, because of increased production costs and continued dependence on sales to the EU markets.

There is no combination of infrastructure and big markets anywhere else and why would a monopoly do something else than try to strengthen its position on its only customer?

Third package will keep the Gazprom outside the EU markets or force it to unbundle, but it has nothing to do with Russian customers. The more EU diversifies its sources for gas, the more is left for russians, which gazprom can then sell in lower prices if it wishes! Meanwhile, the Russian customers will suffer when the government takes extra tax through inflation caused by energy sales...

In the EU 'one supplier' problem remains. There can be no liberalisation of the markets until there is multiple sources and decent infrastructure for gas trade. Only true sources are Russia, Turkmenistan, Iran, Qatar and Mediterranean countries. While Iran keeps acting overly politically and Russia suffers from its mistake in Ukraine, the EU seeks alternative resources from the south, Central Asia and LNG markets.
Enrique July 9, 2008, 08:17: If we take into account the FORTUNE 500 it is obvious there is much room for consolidation of Russian companies.
Enrique July 9, 2008, 06:50: Apart from oil, gas and electricity in the future a main Russian export could be FRESH WATER to China and Western Europe as our reserves are being wiped out as much as other natural resources.

Foreign companies like Agbar (Barcelona Waters) could undertake joint ventures with Russian companies to develop water pipelines...
Enrique July 8, 2008, 15:44: The main cause of the present high price of energy is not demand of China and India but the permanent THREAT to attack Iran, as it would mean a supply crisis.

That´s the reason why "speculators" pay a price so high for the barrel of oil: they are sure there will be a supply crisis sooner or later as a consequence of an American or Israeli attack against Iran.

Iranian authorities will react not just in the Gulf but also in Iraq where they have guaranteed lately an stable situation.

At the same time, that threat to Mideast energy supply incrases the price of Russian Energy which is much more secure, much more reliable for Europe, no matter what the idiot anti-Europeans like Kazinsky and Klaus say.

For the European Union Russian supply is a guarantee that we will not reject as any Prime Minister of Germany understands.

Russia is much more secure and realiable than any Mideast supply so it is logical the market pays a higher price for this security.

The stupid Governments of Ukraine and the Czech Republic should understand that they cannot undermine European security and the European economy.
SrpskiCrnogorac July 4, 2008, 13:36: "By the way, the new EU legislation will force to break down the monopoly of Gazprom if it likes to operate in the European markets. Unbundle also in Russia. I don't know if it is fair, but it is a good example what has happened because we are in no way building trust with other European nations!!!"

No, the breaking down of Gazprom´s monopoly today would be typical western hypocrisy and Russia will never accept this. You have to understand, that the european energy market has a private oligopolitstic market structure and such steps would make sense in Europe. In Russia the situation is the opposite, there is a state monopoly which does not exploit the poeple but in the opposite, they are selling the products cheaper. Therefore, if Russia would allow more competition, then the prices would increase and not decrease. But I agree, when Russians are paying the world market price, then one should think about market liberalisation. Until then, it is simply a hypocritic western attempt to increase their profits on the back of russian consumers (as they are used to do in their western home markets).
Enrique July 4, 2008, 05:43: Nicoin,

If a companyis owned by the State as happens to Norway´s Statoil or to Algeria´s Sonatrach or to Saudi Arabia´s Aramco or to Venezuela´s PDVSA...the European Union just cannot do anything.

But if it is a private company intervention is possible as happened to Microsoft.

Anyway, the Russian Federation can follow a system similar to South Korea, with competition among national firms and with important conglomerates (chaebols) which led South Korea to the highest economic perfomance in all the World...