Russian Energy Imperialism, Again

If Russia was supposed to shut off the natural gas supply to Ukraine in a pricing dispute that is a repeat of what happened three-years ago, why is it that gas was also turned off in Bulgaria, Romania, Turkey, Austria, the Czech Republic and Greece? It does not really matter that gas will start flowing again soon. Europe’s dependence on a country that is willing and -- especially, is able -- to push it into freezing cold and darkness, is the crux of the issue. Russia relishes that role. And, the ongoing gas dispute with Ukraine and last summer’s invasion of Georgia are the modern-day manifestations of Russian hegemony in what can be called energy imperialism.

Ukraine, as a transit country for Russian natural gas pipelines transporting gas through its territory to Europe, has been getting gas at a discount price -- about $180 per 1,000 cubic meters ($4.90 per million Btu). But Russia wants to increase the price to $250 per 1,000 cubic meters. Ukraine rejected that price and Russia threatened to charge the full rate it charges Europe -- $418 per 1,000 cubic meters ($13.08 per million Btu). By comparison US prices are less than $6 per million Btu.

A giant looms to the east of Europe – occasionally in the shape of a country, other times in the shape of a company, the two often indistinguishable. Russia and Gazprom are poised to dominate the whole of Europe and its Asian neighbors.

Gazprom’s influence has been underestimated and astonishingly not discussed enough. Gazprom has been the flagship of former president Vladimir Putin’s strategy, and the battering ram to break down foreign defenses. The Russian state owns 50.01 percent of the company, and almost all top company executives are Kremlin loyalists. President Dmitri Medvedev was Gazprom’s chairman. He replaced Putin, who became prime minister, thereby replacing Victor Zubkov, who became Gazprom’s chairman. You get the story.

In early 2006, Gazprom cut off gas supplies to Ukraine after it balked at seeing its gas prices rise by a factor of four. Of course, then and today, the issue is not what is happening to Ukraine, which draws a tiny portion of the flowing gas. Cutting Ukraine’s gas flow means massive gas deficits in a freezing Europe.

The Ukrainian affair three years ago was the trumpet heralding the sovereign. Hints of a new Russian empire, this time riding on oil and gas, projecting dominance over its neighbors, from East Asia to Europe. Putin was the new tsar, and most Russians, starved for power after the Soviet collapse, loved him.

Gazprom clearly has a strategy, and it’s to lock up as much gas as possible. In July 2008, Gazprom offered to buy all of Libya’s exportable gas supplies. Russia’s brash move to further control the European energy markets is hard to disguise. Libya is its only credible and neighboring competitor.

Furthermore, Russia has been leading the pack to create a new gas cartel, mirroring OPEC for oil. This group includes gas giant Qatar, a western ally, but also Iran, perhaps the most energy militant nation, other than Russia.

The situation is now transparent and reminiscent of the Khrushchev era: world beware – the energy-invigorated Russian bear is at bay. After the Soviet Union’s collapse and its resulting economic calamity, it was up to Putin, through Gazprom, to redefine Russia’s position in the world. Its abundant oil and gas resources are now being put to work to accomplish what nuclear weapons and 50 years of the Cold War were unable to.

Europeans act like helpless sitting ducks. With no energy alternatives to speak of, an assertive Russia breathing on them and flaccid domestic policies influenced greatly by Green parties, European countries may become the victims of the old dictum: be careful what you wish for you might just get it. And this is the lessening of a muscular America leading an assertive western alliance.

Ukraine wishes to join Arab Gas Pipeline construction Novosti http://article.wn.com/view/2008/10/09/Ukraine_wishes_to_join_Arab_Gas_Pipeline_construction/

KIEV, October 9 (RIA Novosti) - Ukraine hopes to play a role in the completion of the Arab Gas Pipeline intended for natural gas deliveries from Egypt to Europe via Syria and Turkey, Ukraine’s UNIAN news agency reported Thursday.

“We hope to take part in the modernization of Syrian enterprises, including in the construction of the Arab Gas Pipeline. We are ready to provide the necessary construction materials and pipes,” Ukraine’s first deputy prime minister, Oleksandr Turchynov, said Thursday at the meeting with Syrian Prime Minister Mohammed Naji Otri.

The Arab Gas Pipeline is viewed as an alternative to Russia’s natural gas supplies to Europe. Once completed it will be 1,200 km (750 miles) long and, according to experts, capable of transporting 10 billion cubic meters of natural gas annually.

Ukraine first mentioned its wish to join the international consortium on the construction of the pipeline in 2005.

Kiev’s bitter gas price row with Russia’s energy giant Gazprom in 2005 led to shortfalls in gas supplies to Ukraine amid Arctic temperatures in January of 2006, prompting fears that a similar situation could develop again.

Ukraine primarily receives Turkmen gas pumped across Russia. Producers in former Soviet Central Asia have announced plans to bring prices in line with EU levels, and Gazprom has said recently said prices for Ukraine could rise to $400 from next year. In 2008, Ukraine has paid $179.5 per 1,000 cu m for Russian supplies.

For more information in Russian

http://en.wikipedia.org/wiki/Arab_Gas_Pipeline

“......Syria-Turkey connection
In March 2006, Egypt, Syria, Jordan, Turkey, Lebanon and Romania reached an agreement to build the pipeline’s extension through Syria to the Turkish border. From there, the pipeline will be connected to the planned Nabucco Pipeline for the delivery of gas to Europe. Turkey expects to buy 2-4 bcm of gas annually by the Arab Gas Pipeline.[9] On 4 January 2008, Turkey and Syria signed an agreement to construct a 63 kilometres (39 mi) pipeline between Aleppo and Kilis connecting Arab Gas pipeline with the Turkish grid.[10][11] On 14 October 2008, Stroytransgaz signed a US$71 million worth contract for the construction of this section.[12] The connection is expected to be ready by 2011.

[edit] Syria-Lebanon connection
It has been planned to extend Arab Gas Pipeline from Syria to Tripoli in Lebanon and probably further from Baniyas in Syria to Cyprus.[13] The pipeline between Syria and Lebanon would be ready by the mid-2008.[14]

[edit] Connection with Iraq
In September 2004, Egypt, Jordan, Syria and Lebanon agreed to connect the Arab Gas Pipeline with Iraqis gas grid to allow Iraqis gas export to Europe. This project planned to be completed by 2010.[4]...”

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