Posted on 07/18/2007 5:28:14 AM PDT by JohnA
A top adviser on foreign economic policy to U.S. Secretary of State Condoleezza Rice encouraged Russia on Wednesday to give foreign companies a bigger role in developing its vast but remote oil and gas reserves in the Arctic and Eastern Siberia.
Reuben Jeffery III called Russia a "key player in the global energy equation," noting that Russian supplies were "critical to global energy security."
He was speaking on his first official trip overseas since taking up the post of U.S. undersecretary of state for economic, energy and agricultural affairs in June.
Russia, the biggest producer and exporter of gas in the world and the second-largest oil exporter after Saudi Arabia, has been reasserting its control over the sector and limiting the role of foreign investors.
Technologically challenging fields in Eastern Siberia and the Arctic that industry experts say will require tens of billions of dollars to develop are crucial to meeting increased demand in the future, Jeffery said. He suggested that a bigger role for foreign investors would accelerate the process of bringing them online.
Under the Kremlin's unwritten industrial policy, foreign companies are allowed no more than a minority role in major deposits of oil, gas and minerals. Earlier in the summer, state gas monopoly JSC Gazprom bought BP PLC's Russian joint venture out of a major Siberian gas field and acquired control of a formerly Royal Dutch Shell PLC-run venture off the Pacific Coast in December.
France's Total SA, which once held an option for a controlling stake in the Vankor field in East Siberia, lost that toehold after state-controlled OAO Rosneft bought the company that originally sold Total the option and declared that it did not want to work with the French company. Total challenged the move in an international arbitration court in Brussels, but lost the case.
"There have been some limitations on foreign partnerships, however, so it's not altogether clear how this challenge will be met," Jeffery told an audience of businessmen. "Russia could benefit greatly by facilitating partnerships with large multinational oil and gas companies on mutually advantageous, competitive economic terms. That is a win-win prospect for all parties involved," he said.
At the same time Jeffery welcomed a decision last week by Gazprom to partner with Total at the Arctic offshore field Shtokman, which could become a future source of liquefied natural gas for North America.
U.S.-based ConocoPhillips has also been in talks on joining Shtokman, as well as Norway's Statoil ASA and Norsk Hydro ASA.
Separately, he expressed hope that a bill currently in the works defining the role of foreigners in strategic sectors of Russia's economy would be "shaped in a way that keeps Russia's economy open and competitive."
He noted that equivalent legislation on foreign investment had never been used to block Russian acquisitions or deals in the United States.
Addressing claims that Russia has used its energy resources as a political tool, Jeffery urged Russian companies to avoid politically charged price disputes.
"We urge that moves toward market prices be gradual so as not to upset the economies of Russia's friends and neighbors. In our interconnected global economy it is vital that major companies managing important resources are seen to be acting for valid commercial purposes and not as instruments of politics."
Russia's decisions in recent years to raise the price of gas for Ukraine and duties levied on oil exports to Belarus led to temporary supply disruptions to Europe.
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They need serious help...they lose a lot before getting the product to market.
You’re absolutely right.
There is altogether too much waste in the Russian minerals development business.
In jeakage from pipeline alone, I’ve heard stories of 25% getting away, due to lack of leak detection, etc.
There’s a dollar to be made there. Who snoozes, loses.
Putin’s answer to this: “NYET!!!!”
I read recently how China and Russia are involved in a scheme called “Mercantalism” which is what they are replacing communism with in respect to how they will project power this century and fund their militaries.
Putin has been pushing this for a long time and believes its how Russia will regain superpower status.
Where they are buying up energy and mineral reserves around the world to bypass the open free-market oil and commodities trading system. More to the point, they are trying to destroy it so they can control the worlds oil, NG, and mineral supply so they can wield it as a weapon.
Both countries have been quietly buying up huge energy and mineral reserves from 3rd world countries. They overpay on the price per barrel (Example: saying they will pay $60 dollars per barrel for 10 years, etc...) and promise the majority of the development costs, in return, the countries allow Russia or China to do whatever they want with the oil and keep it off the open market.
As this continues, supply on the open market will decrease, causing prices to stay high. They can then turn around and sell it at will for what they want.
You take your ideological dollar and put it into publications and defence, where it belongs.
The only business supporting defence right now is the publications business as they both thrive on conflict.
It’s not just waste. The Russians’ insistence on placing a lid on joint-ventures means that they are not getting the oil they have to market. They are leaving a tremendous amount of money on the table.
We had a dumb law in Canada on foreign investment. Eventually, it proved unworkable and we got rid of it. After Sweden, we are the top foreign-invested nation in the world last time I looked.
Part of this merchantialism is also to support local thugs like Hugo Chavez and Raul Castro in developing their oil fields and propping up their regimes.
and then china and russia sells them all the weapons to keep these regimes in control and kill any opposition.
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