RusEnergy

WASHINGTON, October 12 (RIA Novosti) - The U.S. secretary of commerce has highlighted disturbing trends in the economy and press freedom in Russia, which he said can affect economic growth and the investment climate in the country. Speaking at the U.S.-Russia Business Council, which represents over 300 American companies working in Russia, in New York Wednesday, Carlos M. Gutierrez also emphasized Washington's commitment to resolving issues hampering Russia's accession to the World Trade Organization. Gutierrez said American companies have complained of a "soft nationalization" taking place in some sectors of Russia's economy, which challenges the economic and political successes Russia has made since the collapse of Communism. "American companies are anxious to invest in Russia, but many remain hesitant to do so," Guitierrez said. "Some have invested tens of millions in a production facility only to be faced with a competitor backed with preferences in the form of government ownership or capital," he said without elaborating further. This stifles competition and hurts Russia's reputation, and could ultimately thwart efforts to create a dynamic economy, he said. The Russian government has moved to regain control of crucial hydrocarbon assets privatized in murky deals in the 1990s. The controversial affair involving Yukos, once Russia's largest independent oil company but now in bankruptcy proceedings, has been particularly criticized in the West. The company's core production unit, Yuganskneftergaz, was acquired by state-controlled Rosneft. Russian authorities are now mounting pressure on the vast hydrocarbon projects led by foreign companies in Russia's Far East, citing major environmental and other violations. And Russia's energy giant Gazprom made a surprise announcement this week that it will develop the giant Shtokman gas deposit in the Barents Sea on its own, leaving behind the U.S.' Chevron and ConocoPhillips, as well as other companies earlier on a shortlist of contenders for the project. State-owned Gazprom also said it will redirect main gas deliveries from the deposit, earlier destined for the United States, to Europe. The moves are widely believed in the West to have affected Russia's investment climate. Among further challenges to the country's progress, Guitierrez pointed to the murder of a senior Russian Central Bank official, who contributed to improving the Russian financial system, and of an outspoken journalist in Moscow. Journalist Anna Politkovskaya, 48, known for her staunch criticism of the Kremlin, its military campaign in Chechnya, and current Kremlin-backed Chechen authorities, was gunned down in Moscow last Saturday. Gutierrez said the killings of journalists should concern the Russian government if it recognizes the value of transparency for Russia's economic future. Russian Ambassador to the United States Yury Ushakov told the Council that Russia's top prosecutor has taken the investigation into Politkovskaya's murder under his control, and has promised to spare no effort to find and punish those behind the killing. Andrei Kozlov, 41, who oversaw bank licensing and led the Central Bank's efforts to close down dozens of banks for violations of banking legislation, particularly on money laundering, died September 14 after being shot the day before. "He was a Russian patriot, and he was a reliable, respected and honest public servant," Gutierrez said, adding that Russia must stem violence against public officials. Another banker - the director of a Moscow branch of Russia's state-owned foreign trade bank, Vneshtorgbank - was shot dead in Moscow late Tuesday in an alleged contract killing. Addressing the sensitive WTO issue, which is believed to have influenced Russia's Shtokman-related decisions, Gutierrez said Washington was seeking a bilateral agreement that is commercially sound. "Agricultural safety and the protection of intellectual property rights are two areas we are working hardest to resolve," Gutierrez said, pointing to the world's highest-volume online seller of pirated music, allofmp3.com Web site, which continues to operate in Russia. Veterinary control of agricultural products and violations of intellectual property rights have been major stumbling blocks during Russia's bilateral WTO talks with the U.S. Talks broke down in July over a U.S. demand that Russian authorities issue certificates for American meat imports without prior safety checks. But Russia's Ushakov shifted part of the blame for the failure to achieve brisker economic cooperation on Washington, saying Congress and the media have been carried away with criticism of some of Moscow's policies and have not noticed the positive aspects in bilateral relations. The diplomat also said the Jackson-Vanik amendment, which restricted trade with the former Soviet Union, remains in force for Russia. He echoed President Vladimir Putin's earlier remarks that Russia is still subject to prejudice experienced by the former Soviet Union.

10-10-2006

Deutschland uber Alles

01/02/2006 Kommersant by Natalia Grib, Dmitry Butrin; Vladimir Vodo, Vilnius - Gazprom will supply Angela Merkel, not George W. Bush

Gazprom will develop the Stockman deposit without foreign partners. That sensational announcement was made yesterday by head of the monopoly Alexey Miller. Gazprom had announced its desire to exchange a share in the project for direct access to the domestic markets of Western countries. Under the new concept, Gazprom will develop the deposit independently and supply natural gas through the North European Gas Pipeline to Germany. This represents a change in Russian energy strategy. No one expected a decision on Stockman to be made so quickly. Gazprom was still planning to attract partners in February of this year. It was considered a commercial project at that time and it was assumed that several partners would be chosen from the shortlist announced in September 2005 to develop the deposit and build a liquefied natural gas plant. That list consisted of the American companies Chevron and ConocoPhillips, the Norwegian Statoil and Hydro and French Total. The total cost of the project was to be $18 billion. The selection of partners was postponed indefinitely on April 25, however, after a disagreement about gas supplies to the European Union and further information on the project was forthcoming only from foreign policy discussions between Russia and the West.
Those discussions were concluded yesterday. Gazprom head Alexey Miller announced a new decision by the Gazprom governance board on Russia Today television, which is broadcast in the United States and EU. Gazprom will have no partners at Stockman. Rather, Russia will develop it itself. Nor will there be a liquefied gas plant. The gas from Stockman will be pumped through the Nord Stream pipeline (formerly known as the North European Pipeline) with Germany receiving priority in supplies.
Thus Russian President Vladimir Putin has brought a surprise gift with him on his two-day visit to Germany, which started today. At the Russian-German-French summit at Compiegne on September 23, Putin told German Chancellor Angela Merkel and French President Jacques Chirac that Gazprom was preparing to decide on redirecting its gas supplies from the Stockman deposit to the EU. At the time, that was taken as a demand that the United States to decide faster what concessions U.S. President George W. Bush would make in exchange for access to the deposit. Otherwise, the gas could be sent through Nord Stream and the Norwegian and French companies could develop the deposit. Yesterday, it was declared that the French and Norwegians won't be let into the Barents Sea either.
Putin cannot offer Angela Merkel Stockman too. He will make her a proposal on a wider scale – to make Germany Russia's main energy partner and main representative in the EU.
According to Miller, “Development of Stockman will be carried out independently, without attracting foreign partners, since they could not present assets corresponding in volume or quality to the reserves of the Stockman deposit.” The announcement had the impact of a bomb. All the potential partners were waiting eagerly for a decision, but a decision of a different kind. Yesterday, all those companies were refusing to comment until the situation became clearer. Experts questioned by Kommersant say that Gazprom will miss all deadlines for gas supplies if it develops Stockman on its own. ING Barings analyst Igor Kurennoi commented that “The market may be disappointed by Gazprom's announcement. Independent development will require more time, and that means that the production project and gas export will be pushed back into the future.” A Gazprom indirectly confirmed the same thing to Kommersant when he said that the Nord Stream pipeline would probably be fed by the reserves of the Yuzhno-Russkoe and Bovanenkov deposits at its first stage and only later would Stockman be connected to the pipeline.
A source close to the Norwegian companies thinks that Russia offended all of international society with its decision, which was “so rude and bear-like” that Russia can now expect international obstruction of its efforts. The source said that the Norwegian companies worked for a long time with the certainty that they would be chosen for the project. And since the announcement was made at the same time as public pressure was being applied to the British-Dutch Shell company, investors will look on Russia as a country that does not meet its conditions. He added that Gazprom has never developed a deposit at sea and will not handle the task successfully by 2011 since “that equipment can't be bought, it has to be developed.” However, one of the heads of the project at Gazprom half jokingly told the potential partners a year ago that “You have given us all the technology, now we can do it ourselves.” Another source, close to Total, said that the possible technical risks are outweighed by the advantages that Gazprom will receive from preserving its resource base. And the European partners n Stockman can still participate as subcontractors. He noted that Total would be appropriate to build a liquefied natural gas plant and the Norwegian companies to lay pipes and drill underwater. That source thought that the Norwegians would agree to that model. Representatives of the Norwegian companies say that they will not be interested in participation in Stockman without access to its resources, however. Analysts note that Russia is using the same scheme that Iran is using at the Southern Pars deposit. Valery Nesterov from Troika Dialog thinks that dissatisfaction with product sharing in the Sakhalin 1 and 2 projects has led the state to reconsider the development of its resources base. Since it was originally proposed to develop Stockman on a product-sharing basis, and Gazprom wanted to sell the gas at a price that suited it, the project had to be brought onto the level of national taxation.
In any case, Stockman will not supply gas to Europe for quite a while. Nonetheless, Kommersant has learned, Putin will confirm today at a meeting with Merkel that Russia is guaranteeing Germany an additional annual delivery of 25-45 billion cubic meters of gas for 50-75 years. In return, Russia will suggest that Germany speed up the establishment of “a common energy territory,” that is, synchronize the German and Russian energy systems.
Kommersant has learned that Putin will propose attracting the Germany concerns Siemens, RWE and E.ON to develop the fuel and energy sector and implement (through large-scale German investment) the integration of Russia into the energy systems of the EU. Kommersant has learned that Siemens has already expressed its willingness to participate in the Russian project. In connection with German plans to stop coal production by 2018 and shut down a number of atomic generators, Russia is prepared to increase supplies if Russian coal to the German market significantly in exchange for supplying Russia with modern German mining equipment.
The energy alliance requires joint action, and Putin has things to ask of Merkel. Moscow is very annoyed by Polish support of a pan-European cooperation agreement on energy policy. The new Polish government is concerned with the sharp fall in income from transit that will take place if gas supplies to Europe through Poland are reduced. Therefore, Warsaw has politicized the issue, lobbying (with the backing of the U.S.) for an “energy NATO” for Eastern Europe. One of the main Russian proposals that will be made at the meeting is joint opposition to Poland's idea. Last week, Russian Foreign Ministry Sergey Lavrov tried to convince Polish President Lech Kaczynski and his twin brother Polish Prime Minister Jaroslaw Kaczynski to join instead of fight. However, Polish Foreign Minister Anna Fotyga repeated that she saw “no possibility to join Nord Stream” and considered the project “a threat to Poland's energy security.” Polish media reported that the RosUkrEnergo company would cut off supplies to Poland of gas that it had contracted for. RosUkrEnergo denies those reports.
It is still not known how Merkel will react to Putin's proposal to form a Moscow-Berlin energy axis. While it means guaranteed supplies of Russian gas to Germany for decades to come, it is also an alliance with a country that literally yesterday tore up all agreements on energy security made at the recent G8 summit and practically withdrew into energy isolationism. Putin has nowhere else to go. As of today, Merkel is the last major world politician that Russia and Gazprom have not had a falling out with. Alliances with the U.S., China, France, Norway or Italy seem unlikely.