Sara Nunnally, Senior Research Director, Taipan Publishing Group
If you’ve been following my blog, you’ll know that I’ve been knee-deep in researching the energy ties in Central Asia. This area has become a hot bed for investment and news is swirling around just how much natural gas is in this region.
Let me spell it out for you: Russia ships nearly two-thirds of all its natural gas production to Europe, and one Central Asian country, Turkmenistan, helps fulfill its contracts.
But if Central Asia countries start making deals with Europe over Russia, Russia will be left out in the cold.
I don’t think that’ll happen though. You see, Russia’s got a contingency plan. It just met with Iran and Qatar to firm up an energy deal.
First let me explain the tug of war…
The Caspian Sea energy nations met last Friday in Azerbaijan. At the top of the list for discussion was the signing of a declaration to limit Russia’s monopoly over export routes to Western Europe. Now, results showed that there are some countries unwilling to sign the declaration, but the fact that a declaration was even up for discussion is promising for some.
This is big news particularly for the European Union.
For years now, the EU has imported 40% of its natural gas from Russia.
These imports make up 25% of the EU’s total natural gas consumption. Those are extremely high numbers and the European Commission wants to do something about it.
“This is a problem we must address. We must shield European citizens from the risk that external suppliers cannot honor their commitments,” EU Commission President Jose Manuel Barosso told reporters from RussiaToday.
We all know that Russia is more than willing to turn of the tap. With Russia as the single largest supplier of imported gas, the EU is seeking diversity in its energy imports. RussiaToday notes that this will be accomplished a number of ways, from opening up a new North Sea offshore grid to new projects in the Mediterranean.
So where does that leave Russia?
Russia’s also a big player in the Caspian region. In fact, a deputy energy minister from Russia recently announced it will buy Oman’s 7% stake in the Caspian Pipeline Consortium, a pipeline that will ship crude oil from Kazakhstan and Russia to the Black Sea.
(It’s no surprise that Turkmenistan and Kazakhstand did not sign that final declaration… Both do a lot of business with Russia. But with new gas finds and a hungry, and desperate EU, these guys are not totally in Russia’s pocket.)
Remember that Turkmen field with the 14 trillion cubic meters of natural gas?
Russia’s Gazprom (GAZP:Russia) picked up a giant contract with Turkmenistan’s state-owned energy company, Turkmengaz. The contract, signed on July 25 earlier this year, meant Turkmenistan would export 50 billion cubic meters a year to Russia through 2009.
But that July 25 deal didn’t include the Yoloten-Osman field.
And means Russia is widening the net. As I said earlier, Russia just met with Iran and Qatar to firm up an energy deal.
The three will form a joint venture to develop Iran’s South Pars gas field, liquefy it in Qatar and Russia will build a pipeline between the two. Russia is calling this cooperation a “big gas troika.”
Though they are quick to say that they will not be a cartel like OPEC, who turns the taps on an off at will. Rather, they will let market forces dictate prices. (We’ll see about that…)
Of course, there’s still a lot of talking and posturing. Some people are wary of how much either Russia or Qatar would want to invest in Iran, given the current political climate.
The fact remains: Iran has massive un- and underdeveloped gas reserves and Russia would dearly like a chunk of those resources, particularly if it wants to maintain its natural gas monopoly on Western Europe.
It goes with out saying that the U.S. and Europe is opposed to this “natural gas troika.” But who has the power really to stop it?
One potential way of doing just that is for the U.S. and Europe to invest in Iran’s gas fields themselves, but that’s political suicide, and not likely to happen anytime soon. That leaves “red” countries like Russia and China, and both are nibbling away at Iran’s vast resources.
Makes you think, doesn’t it?
If you’ve been following my blog, you’ll know that I’ve been knee-deep in researching the energy ties in Central Asia. This area has become a hot bed for investment and news is swirling around just how much natural gas is in this region.
Let me spell it out for you: Russia ships nearly two-thirds of all its natural gas production to Europe, and one Central Asian country, Turkmenistan, helps fulfill its contracts.
But if Central Asia countries start making deals with Europe over Russia, Russia will be left out in the cold.
I don’t think that’ll happen though. You see, Russia’s got a contingency plan. It just met with Iran and Qatar to firm up an energy deal.
First let me explain the tug of war…
The Caspian Sea energy nations met last Friday in Azerbaijan. At the top of the list for discussion was the signing of a declaration to limit Russia’s monopoly over export routes to Western Europe. Now, results showed that there are some countries unwilling to sign the declaration, but the fact that a declaration was even up for discussion is promising for some.
This is big news particularly for the European Union.
For years now, the EU has imported 40% of its natural gas from Russia.
These imports make up 25% of the EU’s total natural gas consumption. Those are extremely high numbers and the European Commission wants to do something about it.
“This is a problem we must address. We must shield European citizens from the risk that external suppliers cannot honor their commitments,” EU Commission President Jose Manuel Barosso told reporters from RussiaToday.
We all know that Russia is more than willing to turn of the tap. With Russia as the single largest supplier of imported gas, the EU is seeking diversity in its energy imports. RussiaToday notes that this will be accomplished a number of ways, from opening up a new North Sea offshore grid to new projects in the Mediterranean.
So where does that leave Russia?
Russia’s also a big player in the Caspian region. In fact, a deputy energy minister from Russia recently announced it will buy Oman’s 7% stake in the Caspian Pipeline Consortium, a pipeline that will ship crude oil from Kazakhstan and Russia to the Black Sea.
(It’s no surprise that Turkmenistan and Kazakhstand did not sign that final declaration… Both do a lot of business with Russia. But with new gas finds and a hungry, and desperate EU, these guys are not totally in Russia’s pocket.)
Remember that Turkmen field with the 14 trillion cubic meters of natural gas?
Russia’s Gazprom (GAZP:Russia) picked up a giant contract with Turkmenistan’s state-owned energy company, Turkmengaz. The contract, signed on July 25 earlier this year, meant Turkmenistan would export 50 billion cubic meters a year to Russia through 2009.
But that July 25 deal didn’t include the Yoloten-Osman field.
And means Russia is widening the net. As I said earlier, Russia just met with Iran and Qatar to firm up an energy deal.
The three will form a joint venture to develop Iran’s South Pars gas field, liquefy it in Qatar and Russia will build a pipeline between the two. Russia is calling this cooperation a “big gas troika.”
Though they are quick to say that they will not be a cartel like OPEC, who turns the taps on an off at will. Rather, they will let market forces dictate prices. (We’ll see about that…)
Of course, there’s still a lot of talking and posturing. Some people are wary of how much either Russia or Qatar would want to invest in Iran, given the current political climate.
The fact remains: Iran has massive un- and underdeveloped gas reserves and Russia would dearly like a chunk of those resources, particularly if it wants to maintain its natural gas monopoly on Western Europe.
It goes with out saying that the U.S. and Europe is opposed to this “natural gas troika.” But who has the power really to stop it?
One potential way of doing just that is for the U.S. and Europe to invest in Iran’s gas fields themselves, but that’s political suicide, and not likely to happen anytime soon. That leaves “red” countries like Russia and China, and both are nibbling away at Iran’s vast resources.
Makes you think, doesn’t it?