Russia Deprived of Leading Role in Gas Conflict

Russia Deprived of Leading Role in Gas Conflict


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Russia was defeated in gas game within its own territory. Major states exporting natural gas agreed on presented Russia’s propositions and measures to stabilize gas market. Nevertheless they refused to give the leading role to the Kremlin.

But let’s start from the very beginning. Ministers of Energy of 14 states, possessing 73% of world gas reserves and providing 42% of world “blue fuel” production, discussed and adopted a Charter of the Gas Exporting Countries Forum (GECF). This took place on Tuesday in Moscow “President-Hotel”. Speech of the Russian Federation Prime Minister Vladimir Putin was one of the key events.

Founded in 2001 GECF includes Iran, Algeria, Brunei, Indonesia, Libya, Malaysia, Russia, Nigeria, the United Arab Emirates, Qatar, Egypt, Trinidad and Tobago and Venezuela.  Norway obtained the status of an observer, as well as Kazakhstan. During the session on Tuesday a decision was made to admit Equatorial Guinea that previously was an observer (

The Prime Minister of Russian Federation Vladimir Putin declared that expansive growth gas industry development costs would lead to significant rise of world market prices on gas. “The geography of natural gas production changes: active gas fields are gradually depleting, and prospective gas resources lay mainly far from the leading consumption centers. Thus costs of exploration, production and transportation of gas increase inevitably”, - stated V. Putin.

«I can claim that Russian investments on explorations of the kind of regions as Yamal Peninsula, North Sea shelf and the creation of gas-transporting infrastructure worth dozens billion dollars. It means expansive growth of costs, urgent for industry development. And in its turn it means that in spite of the observed world financial crises and decrease of energy costs, the time of cheap energy, including cheap gas is close to its end”, - he summarized.

«Strengthening of the cooperation between gas producers illustrates their natural intention to make the market more predictable, to reduce present risks. This stance is pretty logic, moreover, within the terms of gas market globalization. As well as within the context of increasing uncertainty of regional markets development», - said V.Putin. In this case the system of energy  security will be viable, if it promotes required level of raw material production. Producer of gas, as well as its consumer should be aware of the day to come, to create long-term investments plans”, - assures V. Putin.

«Today, unfortunately, we lack of this awareness. It’s common knowledge that uncertainty in the market game rules is one of the main factors in Europe that impede infrastructure projects accomplishment», - noticed Prime Minister.

According to his words the problem of instability of regulatory system has really gained its force. «It’s obvious that joint efforts of all involved parties are urgent to make regulation process more stable. We need to adopt the rules of game that will not change in foreseeable future. Therefore the fact, that gas producers and exporters have recently given the priority to the development of partnership within global gas market should not be surprising. And don’t try to find any obscure objectives, - said V.Putin.

«We think that the Gas Exporting Countries Forum should become a standing organization with its charter and headquarters. The structure that would present interests of gas producers and exporters within international arena, express aligned views of its members on the most important issues of present situation and perspectives of gas market development», - he stated.

«I’m assured that the dialogue between producers should be promoted gradually. And the key role in this process should be given to the Gas Exporting Countries Forum. I would like to specify that the kind of activity absolutely complies with international regulations. Thus the right of producing states on association into organizations is declared in adopted by the UNO resolution Charter on the Economic Rights and Duties of States of 1974», - marked V.Putin (Interfax-ANI). Putin intentionally raised the issue of GECF headquarters in his speech, as Saint-Petersburg was one of the candidates for the residential city for the organization head office. Nevertheless, in spite of promises of the Kremlin to give the structure diplomatic status in Russia, “blue fuel” exporting states decided to choose more wormer climate for the headquarters. Instead of Saint-Petersburg the GECF head-office moved to the capital of Qatar – Doha city.

But Doha won only with one voice ahead, according to “Interfax” with reference to the Head of Foreign Economic Activity Department of “GazpromStanislav Cygankov. Doha got 6 voices, Petersburg – five. It was a secret ballot. And Prime Minister Valdimir Putin personally presented Saint-Petersburg.

«Without bias, we are satisfied», - stated Cygankov, stipulating, that Saint-Petersburg had everything to provide the allocation of such an organization, and that Russia itself plays a steady and important role within world gas industry.

Let’s note that Qatar is one of the states that closely cooperate with the USA: American military base is allocated within Qatar’s territory. Hardly had Russia expected the kind of “gratitude” in return for its initiatives on creation “Gas OPEC”.

By the way, in reply on Russian gas projects Western countries promoted the project on alternative gas supplies to Europe round about Russian Federation. Intergovernmental agreement between Turkey and other transit states, involved into construction of the gas pipeline “Nabucco” will be signed in the first quarter of 2009, according to the Monday statement of Nabucco Gas Pipeline International. «At the moment negotiations are held between Ministers on the matter of the agreement », - stated in the document («Trend»).

The project “Nabucco” comprises the following states: Austria (represented by the OMV company), Hungary (MOL), Bulgaria (Bulgargaz), Romania (Transgaz), Turkey (Botas) and Germany (RWE). Each member possesses an equal share - 16,67%. About 30 % of the total cost of the project will be invested by the shareholders of Nabucco Gas Pipeline International, remaining 70% will be covered by credits. Negotiations with financial institutions, as well as detailed engineering are planned to start in the year to come. According to the statement, the demand on gas in Europe will increase up to 700 billion cubic meters by 2020-2025 in comparison with 500 billion cubic meters in 2008.

It is planned to transit gas from Azerbaijan and Central Asia to EU countries with the help of gas pipeline “Nabucco”, that costs 7,9 billion Euros.  Maximum capacity of the pipe line will be 31 billion cubic meters a year. 50 % of its capacity will belong to the shareholders of Nabucco Gas Pipeline International, the remaining 50 % - to third parties. The first stage of gas pipeline “Nabucco” construction will start in 2010 and will comprise laying of the pipeline of 2 thousand kilometers between Turkey and Austria. During the following two years active pipelines within the boarders between Turkey and Georgia, Turkey and Iran will be enabled. The second stage of the pipeline construction is planned in the end of 2014. It includes construction of the section within Turkey-Georgia and Turkey-Iran boarders.

However, Russia still has another trump that can greatly change the situation by accomplishment of alternative line of “blue fuel” supplies to Europe. Russian company “Gazprom” intends to buy full export capacity within the second stage of the exploration of gas field “Shakhdeniz”, said a top-ranking representative of SOCAR (State Oil Company of Azerbaijan Republic). «The issue of interrelations with “Gazprom” is above all the issue of all Azerbaijan represented by SOCAR, and, naturally, this issue should be coordinated with the partners under the project “Shakhdeniz”, - informed the representative of the company. However, gas supplies from the filed “Shakhdeniz” are the matter of long-term perspective.

At present the issue of gas supply by SOCAR produced from their own field is been discussed. Particularly, the discussion comprises supplies of Azerbaijani gas to Dagestan. “I would specify that this is an initial stage of talks, because we don’t yet consider specific technical issues and capacities” – noted the representative. The next round of negotiations between SOCAR and “Gazprom” is planned on January of the year to come (“Trend”).


Translated from «Zerkalo»