by Jerome a Paris
Wed Apr 19th, 2006 at 05:18:21 PM EST
yes, my title is provocative. But "they" deserve it.
Gazprom has reacted badly to the revelation by the Financial Times that the UK government had gone through all sorts of contorsions to be ready to block, against the law, the mooted take-over of Centrica by Gazprom (discussed in this earlier story), and is now threatening to stop supplying gas to Europe in the future:
Gazprom issues threat over EU gas supply
Gazprom, Russia’s state-controlled gas monopoly, on Wednesday told European Union countries not to block its international ambitions, warning that it could redirect supplies to other markets.
In a statement after a meeting between Alexei Miller, Gazprom’s chief executive, and EU ambassadors, the company said: “It is necessary to note that attempts to limit Gazprom’s activities in the European market and politicise questions of gas supply, which in fact are of an entirely economic nature, will not lead to good results.”
The warning follows the revelation earlier this week in the Financial Times that the UK government had considered changing merger rules to block a potential takeover of Centrica, Britain’s biggest gas supplier, by Gazprom.
“It should not be forgotten that we are actively familiarising ourselves with new markets, such as North America and China. Gas producers in central Asia are also paying attention to the Chinese market. This is not by chance: competition for energy resources is growing,” it said.
Gazprom said that, while it would fulfil its current contracts with European clients, the future relationship with these countries should take into account the Russian company’s ambitions to move into the downstream markets.
Sergei Kupriyanov, a spokesman for Gazprom, told the FT: “We just want European countries to understand that we have other alternatives in terms of gas sales. We have a fast-growing Chinese market, and a market for liquefied natural gas in the US. If the European Union wants our gas, it has to consider our interests as well.”
Gazprom’s statement appears to be a riposte to the UK’s consideration of changing its merger control regime.
Gazprom’s threats follow an outline agreement between Russia and China to supply the Chinese market with gas from western Siberia, which is also the main source of gas for Europe. Given that Gazprom’s reserves have been static for the past five years, the supply of gas to China will decrease the volume of gas available to European countries.
Hahahahaha. The UK should stick to liberalisation, it sucks at being protectionist... it takes real experience to be one competently...
Now, as I have repeatedly written, I think that this whole notion that Gazprom's reserves and production are flat and that any supplies to China would decrease supplies to Europe is totally stupid. Gazprom is not increasing production because it has not market at "real" prices (it would always deliver more domestically, but that's at low regulated prices). Once the markets open, the production will be there, and that threat is thus mostly moot.
What is true is that they can only concentrate on so many mega-projects at a time, and each new pipeline/gas export infrastructure is a multi-billion multi-year endeavor which needs to be negotiated, financed and managed and few company can do several of these at the same time. So they could choose to focus on their LNG projects rather than on a new pipeline to Europe - but f the market is there in Europe, they'll take it.
But I find it irresistible to see Blair's mindless panic at suddenly finding the country dependent on imports (as if nobody could have predicted it), and his profound hypocrisy exposed.