Sunday, April 23, 2006

Imperialsim: The Russian Way

The Washington Post has finally picked up on what is happening with Gazprom. The editorial can be found here.

The headlines......................................................................................

Imperialist Gas

The money quote:

Lacking Soviet military might or a large economy, Mr. Putin now describes Russia as an "energy superpower." He offered a taste of what this might mean in January, when he personally ordered a cutoff of gas to Ukraine -- which had the temerity to reject his candidate in a presidential election -- even though this also meant a shortage of gas in Vienna, Rome and Berlin. Given Mr. Putin's consolidation of power at home and stated regret over the collapse of the Soviet empire, there is good reason for disquiet over Gazprom's acquisition strategy.

Here is something to think about as negotiations continue with Governor Murkowski and B.P. and Conoco Phillips on the gasline. And the Legislature wrangles with the tax plan.

The headlines...................................................

Russia’s Gazprom Enters Booming LNG Markets with Giant Arctic Gas Field

The money quote:

With gas reservoirs equivalent to Exxon’s oil reserves, Shtokman poses an alluring but technically daunting challenge for the five firms shortlisted as possible partners: U.S. majors ChevronConocoPhillips, France’s Total and Norway’s Statoil and Norsk Hydro.

Gazprom wants help producing gas in the iceberg-strewn seas around Shtokman, pumping it 550 km to shore, liquefying it and shipping it to the United States for re-gasification and sale.

Most analysts polled by Reuters were reluctant to make a definite call, but several said the Norwegians’ offshore experience stood them in good stead, with Statoil ahead of Hydro because of its size and access to a U.S. re-gas terminal.
Total is least favored to be named, with the two U.S. firms well-placed by virtue of their presence in the target market.

If Shtokman’s size —- 3.7 trillion cubic meters of gas, equivalent to 23.3 billion barrels of oil —- makes oilmen gawp in wonder, its risks are almost equally unfathomable, with cost estimates ranging from $12 billion to beyond $34 billion.

Deutsche Bank says a 10 percent stake would be worth around $600 million, while Citigroup sees $1.9 billion nearer the mark.

Whoever Gazprom picks, it will retain control of Shtokman and use it as a battering ram to enter the U.S. market. It aims to pump 70 billion cubic meters of gas a year at Shtokman, providing 15 million tons of LNG in early years, and to grab a tenth of the U.S. market by 2010 and 20 percent later.

“To my mind, that’s extraordinarily ambitious,” said Patrick Nevins, a lawyer specializing in energy regulation at Hogan & Hartson in Washington DC. But U.S. gas players are bracing for Gazprom’s entry. “If you go into any LNG conference in America, Gazprom is the looming presence in the room.

{emphasis added}

You know the confidentiality laws that Senator Hollis French filed his legal motion on?

Gazprom was supposed to have made a decision on April 15th on who gets the nod. That has been postponed.

Food for thought for those who want to see the cards laid out. I bet Gazprom would give anything to see what Conoco and B.P. have set up on the gasline.

As the lawyer said for Hogan and Hartson, Gazprom is the talk on LNG conference in America.

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