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Sunday, 26.08.2007
Russia plans an energy bloc and energy holding
Moscow. Russia is planning an energy holding encompassing all the country’s energy companies. Internationally, a new bloc of energy-rich countries seems to be coming together. Will this benefit consumers?
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Following the recent visit of Venezuelan president Hugo Chavez, a working group chaired by the head of the Russian secret service FSB, Nikolai Patrushev, is to look into creating a new international bloc of oil and gas rich states.
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Such an energy bloc, which sources in the Kremlin say would have a largely informal nature, could include Russia, the ‘Stans, Venezuela and some other South American countries, Iran and some South-east Asian countries.
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This project would have little in common with the Iranian-Algerian idea of a natural gas OPEC that alarmed the US earlier this year. But it could still become an important new factor in international politics.
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Natural gas OPEC not technically feasible. Yet.
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Experts from German and Russian energy companies argued earlier this year that a natural gas OPEC was simply not feasible for a number of reasons. Technical reasons prevent producers of natural gas from simply cutting output. The same volume of gas must come out of the pipeline as goes in to it. Furthermore, gas suppliers such as Gazprom are committed to long-term contracts.
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Gas-OPEC is dead, long live the energy bloc
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Nevertheless, gas producers do have some room for manoeuvre. Algeria can decide not to supply Europe as much as it has been doing, Turkmenistan can give China preference over Europe. Contracts expire, production volumes can be raised or cut. And, as more and more liquid natural gas (LNG) and LNG tankers are deployed around the world, flexibility of supply will increase. Will Putin and Chavez sign an energy pact?
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It would doubtless be in both Venezuela’s and Russia’s national interest if both countries were to sign an agreement in the autumn on cooperation in gas and oil production and supply. Such an agreement might be signed during President Vladimir Putin’s visit to Caracas.
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In recent months, Hugo Chavez has been trying to coordinate energy policy with other Latin American countries – naturally in opposition to big brother in North America.
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The USA currently controls the Saudi oil reserves in addition to its own – and thus controls the world market. A new energy alliance, including Algeria and Iran, could fundamentally change the situation – even if it were not officially declared as such.
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There should not be any immediate negative consequences for Europe and German consumers – due to long-term contracts and the pipeline effect. In the medium term, however, such a bloc might even increase choice on the world energy market.
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Is Russia planning a holding company for all energy companies?
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The same working group at the Lublyanka under Nikolai Patrushev is also considering the country’s national energy strategy, It is focusing on creating a new energy holding, to control and direct all Russian companies in the energy sector.
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Such a holding could correct uncertainty such as that caused by private company Lukoil. More state can mean more security for customers.
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The working group was approved by the president at the start of August. Putin declared at his last press conference that he does not want to move to Gazprom following the end of his current and last term in office.
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That is entirely credible, since for all its size, the gas giant is nevertheless fully under the Kremlin’s thumb. An all-Russia energy holding, however, might more on Putin’s level.
Gisbert Mrozek (gim/.rufo/Moskau)
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