A Bad New Year’s Present For The Kremlin
December 17, 2009
Martin McCauley writes: It’s cold in Moscow. However, this winter will get even colder for the men in the Kremlin, who depend so much on the revenues from the sale of natural gas. The Chinese have stolen a march on them – again. On Monday, the first gas along the pipeline from Turkmenistan to Xinjiang in western China began to flow. There will be two pipelines. The second one is due to be built next year. To mark this momentous occasion Chinese President Hu Jintao (he dyes his hair jet black, by the way, just like all other members of the Chinese leadership), together with the presidents of Turkmenistan, Uzbekistan and Kazakhstan (all of whom allegendly dye their hair black as well), celebrated with Chinese and local delicacies. As well they might. They had pulled off quite a coup....
Is China’s Long Term Goal To Dominate Oil Markets?
July 27, 2009
Martin McCauley writes: China has many weaknesses in its economy. One of them is insufficient supplies of oil and gas. The more it imports, the greater the risk to supplies being interrupted by conflict or political pressure. China is now the world’s second largest consumer and importer of oil. As its economy expands it becomes more and more dependent on overseas supplies. In order to improve the reliability of supplies the Middle Kingdom has embarked on an ambitious plan to influence production in major oil producing countries.This year China’s National Oil Companies (NOCs) have struck deals with four major oil producing states. In February, a $25 billion soft loan was extended to Russia’s Rosneft and Transneft in return for a long term commitment to export oil to China....
Turkmen Gas For China Is Bad News For Russia. Very Bad News
July 2, 2009
Martin McCauley reports from the United States: An ostensible ‘accident’ damaged the main export gas pipeline from Turkmenistan to Russia last April. Gazprom, the Russian state-owned energy giant, has not imported any gas from Turkmenistan since then. The main reason is the fall in demand from EU countries for gas from Russia. During the first four months of this year, exports to the EU dropped by 40 per cent. This reduced Gazprom’s market share from 31 per cent to 16 per cent. Export revenues in 2009 are expected to plummet by 40 per cent. As a result Gazprom will cut its dividends by up to 85 per cent and its investment programme by 35 per cent. When EU demand was high, Gazprom relied on Turkmen gas to make up the shortfall in Russian produced gas. Now it does not need that...
Russia Tightens Its Grip On Uzbeki Gas. But Will It Hold?
January 28, 2009
Martin McCauley writes: January 23rd 2009 was a red letter day for the Russian energy giants, Gazprom and Lukoil. In Tashkent, President Islam Karimov of Uzbekistan and President Dmitry Medvedev of Russia signed a bilateral agreement on gas exports. It confirms Russia’s monopoly of the export of Uzbek gas. In return, Gazprom and Lukoil will now pay $305 per thousand cubic metres, almost double the present price. President Karimov stated that Uzbekistan was selling gas only to Russia. ‘It is of no concern whom Russia sells the gas on to,’ he said. ‘It is Russia’s prerogative’. The deal is very important to Gazprom. It can sell some of the Uzbek gas to Russian consumers and the rest can be sold to Europe as ‘Russian gas’. With Gazprom production...
The Gas Crisis In Europe Has Been Resolved. Guess Who Will Be Taking All The Credit For It?
January 19, 2009
The gas crisis in Europe, according to Russia and Ukraine, has been finally resolved. It was announced in the early hours of Sunday, after talks in Moscow between Russian Prime Minister, Vladimir Putin, and his Ukrainian counterpart, Julia Timoshenko, that the two countries have finally agreed the terms of transit of gas and level of prices. These two issues have initially caused the current row to erupt in the end of last year into a full blown gas war between the two countries, resulting in disrupting supplies of Russian gas to Europe. It is expected that these supplies would resume later this week. The most bizarre thing about the latest announcement was that both countries said that they would not need European Union observers to monitor the flow of gas through Ukraine. Even though they...
The Gas War In Europe Rages. Russia And Ukraine Emerge As The Biggest Losers
January 18, 2009
The gas war in Europe rages on. Russia and Ukraine, who both carry the blame for the current crisis erupting, being the main supplier and the main transit country respectively, are looking more and more like the biggest losers in all of this. Let me first very briefly remind you what has happened: in the end of last December a row between Russia and Ukraine erupted about the transit fees and prices for gas for this year, including some outstanding amounts that were owned by Kiev to Moscow. The dispute quickly turned ugly and, on January 1, Russia cut off all gas supplies to Ukraine. A week later, on January 7, Moscow accused Kiev of siphoning gas that was destined for other European countries and turned off all gas supplies. This immediately had a damaging impact on the whole of Europe. As...
The Gas Row In Europe: Vladimir Putin Seems To Have No Idea What He Is Doing
January 16, 2009
When Russian historians of the future would be looking back on this period they would probably conclude that it was the time when Prime Minister, Vladimir Putin, signed his own death sentence. In a political sense, that is. For from now on his popularity in the country, or what is left of it, would be sliding downwards. It takes gross incompetence and total lack of judgement to turn countries that depend on your gas deliveries into your worst enemies. And Putin has managed to achieve just that. The Russian Prime Minister, who is toying with the idea of returning to the Kremlin as President soon, has allowed the row between Russia and Ukraine about gas prices to get out of control completely, hitting supplies to 18 European countries and leaving several of them on the brink of introducing a...
StirringTrouble Gets On The Airwaves Again: To Talk About The Gas Row In Europe
January 10, 2009
Thomas Mathew writes: Our editor, Alexander Nekrassov, went on the radio yesterday to talk about Russia and the mess it has created with the gas supplies in Europe. If you have missed the story by any chnace, here is a short rundown: on January 1 Russia cut off gas supplies to Ukraine, its eastern neighbour, alleging that the Ukrainian state gas company, Naftagaz, has been illegally siphoning gas from the pipelines, which was intended for other European countries. Moscow also accused Kiev of missing two payments for gas deliveries in November and December of 2008 and of refusing to sign a new contract for this year with a higher price for gas included in it. Ukraine, in turn, said that Russia was behaving like an unreasonable bully and that it never siphoned any gas supplies illegally. As...
Russia Cuts Off Gas Supplies To Ukraine. But The West Is Told Not To Worry
January 2, 2009
The latest row between Moscow and Kiev over gas supplies, which has already resulted in deliveries of Russian natural gas to Ukraine being cut off as of yesterday morning, has now turned into a farce, with both countries assuring the West that the stand-off between them would not cause any disruption in the deliveries of gas to other European countries. Even though the gas flows to Western Europe through Ukraine, which has stopped receiving its quota yesterday. The crisis escalated on January 1, at 10 am Moscow time, when all gas deliveries to Ukraine had been cut off by Gazprom, the Russian state-owned energy corporation. The reason for this drastic measure was Ukraine’s failure to pay the bills for November and December and its reluctance to accept a new deal for this year with an...
Are Turkey And Iran Becoming Gas Partners?
November 24, 2008
Martin McCauley writes: Ankara and Tehran have just signed an agreement to develop gas deposits in Iran and transport some of the gas to Europe. The Turks acquire operational rights in three offshore gas fields in the South Pars region, off the southern port of Assiluyeh. Turkey is to produce 46 million cubic metres of gas daily, with half of this amount used for its own consumption. A 1,850 km pipeline is to be built to take the gas to Bazargan on the north-west border of Iran and Turkey. It can then be moved on to Europe. The whole project will cost at least $12 billion. Sean McCormack, US State Department spokesman, when asked to comment on the project, dismissed it by saying that Iran has signed many oil and gas deals with other countries but they never came to anything. Is he right? The...
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