Tuesday, January 17, 2006

Gazprom And Imperialism

The US reader will not have followed this story too closely, unless you're a foreign policy wonk, likely one trying to build support for a more aggressive foreign energy policy or a tougher stand on Russia's lurch back towards authoritarianism. The UK reader may have, in part because it's a European story, but also because it's likely to emerge as a reason for higher gas, oil and power prices there over the next few months.

Russia, or to be more exact, Gazprom, recently suspended gas deliveries to Ukraine, and thus much of Western Europe (which uses the same pipeline), after Ukraine refused to pay higher prices for its gas. The move, coming so close to Ukraine's election of a non-friendly to Russia president, led some to suggest that this was part of a new phase in world history, of the producers in hydrocarbons seeking to dominate those without.

Some on the right in the US have exploited the row largely to chide Gerhard Shroeder for a separate involvement in a pipeline project. But it does present a very real problem for Gazprom in convincing the world that it is a sensible and transparent global corporate citizen. What's extremely funny is that cutting of gas to delinquent customers is exactly how energy producers usually convince investors that they are serious players.

At least one outfit, albeit Gazprom's roving consultants and PR agents Pace Global, recognise this. And have put out a "White Papers" (actually a huge and slow-loading pdf) to poinnt this out. The suspension of gas deliveries, it argues, was part of Gazprom's transformation into a modern-market-loving producer.

This is true. It's all entirely true. But the whole row has quite fairly highlighted Gazprom's continuing links to the Russian state. Does the fact that Gazprom keeps hoovering up these prime assets from less connected rivals with jailed CEOs demonstrate how awesomely well run it is, or how close it is to government? I'm guessing the latter. There's not a huge amount Gazprom can do about it either, so long as it's run by a strongman and based in a large country. The Chinese oil and gas producers suffer from much the same bad press.

See? This can be sppun liberally as well.


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