Geopolitics or Geobusiness?
Gazprom and Belarus came to a last-minute deal this week, (WaPost, 1/3/07, page D3) enabling Belarus to avoid a natural gas shutoff -- a nationwide, natural gas shutoff. The Russian-owned monopoly will continue supplying natural gas to the former Soviet nation, at twice the previous price. Belarus bargained Gazprom down somewhat, but agreed to sell Gazprom 50% ownership in its national gas pipeline network.
There is international concern about whether these are commercial arrangements or if Gazprom has become a powerful tool of Russian government policy. The answer appears to be: "Yes. Both." Gazprom has squeezed other former Soviet republics with similar deals -- but Ukraine, Georgia and Belarus were all subsidizing natural gas prices to their citizens by paying Gazprom far less than the commercial rates. That seemed to Gazprom to be Sovietism that was one-sided, when the company is in business to make profits.
Of course, Russia will continue to subsidize Russians with Gazprom gas; but it will not put up with such behavior from its customers, if it can find adequate leverage. For now, European worries about natural gas interruptions are eased, Gazprom (and thus Russia) has much more to say about the Central European pipeline infrastructure) and Gazprom will become more profitable.
Just keep your eye on Gazprom and its other relationships. Royal Dutch Shell and its Japanese partners were "convinced" by Russian environmental concerns, to include Gazprom in a huge oil and gas exploration and development project on Sakhalin Island. So the Russian Government is "reclaiming" assets and participation that it had apparently given up with the breakup of the USSR. Geopolitics? Enterprise? Commerce? Yes -- and all with continuing gas subsidies for Russians.
There is international concern about whether these are commercial arrangements or if Gazprom has become a powerful tool of Russian government policy. The answer appears to be: "Yes. Both." Gazprom has squeezed other former Soviet republics with similar deals -- but Ukraine, Georgia and Belarus were all subsidizing natural gas prices to their citizens by paying Gazprom far less than the commercial rates. That seemed to Gazprom to be Sovietism that was one-sided, when the company is in business to make profits.
Of course, Russia will continue to subsidize Russians with Gazprom gas; but it will not put up with such behavior from its customers, if it can find adequate leverage. For now, European worries about natural gas interruptions are eased, Gazprom (and thus Russia) has much more to say about the Central European pipeline infrastructure) and Gazprom will become more profitable.
Just keep your eye on Gazprom and its other relationships. Royal Dutch Shell and its Japanese partners were "convinced" by Russian environmental concerns, to include Gazprom in a huge oil and gas exploration and development project on Sakhalin Island. So the Russian Government is "reclaiming" assets and participation that it had apparently given up with the breakup of the USSR. Geopolitics? Enterprise? Commerce? Yes -- and all with continuing gas subsidies for Russians.
posted by Jack Rafuse at
12:40 PM
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