Russia » Economics
Author`s name Michael Simpson

Bargaining Resumes

Does Russia hope to advantageously sell the fuel and energy complex stronger as never before?
The Russian-American energy summit in Houston didn't bring any effective results, even though Russian liberals in the government and the fuel and energy complex hoped it would. This can hardly be called a result that US's Eximbank appropriated moderate loans to three of Russia's oil companies. Within the period since the summit the USA has managed to overthrow the regime of Saddam Hussein in Iraq; Russia has demonstrated its support to France and Germany concerning the Iraqi problem; the oil prices reduced even more than expected. The period since the summit has brought a crisis to EU countries; the US is still balancing in the verge of a crisis, and economists postpone favorable forecasts. Meanwhile, China and Japan have joined a serious fighting for Siberian oil. Saudi Arabia is eager to cooperate with Russia in extraction of natural resources. This is quite understandable that the US cannot remain aside under such conditions.

On the eve of the Russian-American energy summit, several important statements had been made in Russia's St.Petersburg which gave hope that Russia might become one of the leading suppliers of hydrocarbon stuff in the USA. In particular, US Energy Secretary Spencer Abraham said it was advantageous for the USA to supply Russian liquefied gas to the USA from the Russian northern city of Murmansk.

Spencer Abraham said on Sunday during Russia President Vladimir Putin’s meeting with the co-chairmen of the Russian-American business energy summit that supplies from Murmansk would be much closer than from the Persian Gulf. This would allow suppliers and customers save much money, Abraham Spencer said.

This is quite natural that before an official meeting of the leaders of Russia and America officials of both countries make lots of compliments and promises. But Russia treats the opportunity of crowding Saudi Arabia on the US oil market still with trepidation. It hopes to convert the manoeuvres of the government into important international issues into agreements, contracts and American investment. Before the previous summit, Spencer Abraham had made similar statements concerning Russian oil; but later he rejected them. Meanwhile, some of Russia's high-ranking officials complain that unfortunately Russia cannot become US's monopoly supplier of natural gas.

Before the summit, Russian official clearly outlined all expectations cherished by the country. According to Russia's Energy Minister Igor Yusufov, about $500 billion of investment will require for development of the fuel and energy complex within the nearest 20 years. He stated the same figure today, at the opening of the Second Russian-American energy summit in St.Petersburg. He added that $200 billion more would be necessary to develop machinery construction and adjoining industries. Thus, the sum of Russia's demands is very close to one trillion of dollars.

For he time being, Igor Yusufov says, Russia's top-priority objective is retention of the leading position of an energy resources supplier to the world market. In this connection, Gazprom and other Russian companies are negotiating with US producers of modern technologies for oil and gas production with a view to attract US technologies to the Russian market. It should be mentioned here that neither Saudi Arabia, nor OPEC members or USA and the EU are in fact interested in Russia's leadership in the sphere. This is quite understandable as none of them wants to be energetically dependant upon this country that still holds a considerable nuclear potential.

The sums of the Russian claims haven't changed since the last energy summit in Houston. Even at that summit, US banks and corporations said they refused to invest those huge sums in the outdated Russian fuel and energy complex. The position of the USA was as follows: want to export to the USA? Find loans, upgrade the facilities, the ports and the tanker fleet and go ahead!

No, Americans by no means reject the highly attractive potential of the Russian natural resources. According to US Secretary of Commerce Donald Evans, Russia is world's first country regarding the potential of gas, liquefied gas and oil production. He emphasized that the American energetic sphere sees particular prospects of the gas sphere and understand Russia's high potential on the gas market.

Judging by his words, it may be assumed that within the nearest future Russia will become the key player on the energy market, and no economic development will be possible without reserves of raw stuff. So, within the last fifteen years the US elite has been openly speaking that since the breakup of the USSR it has been seriously relying upon Russia's resources. At that, this potential may become even more attractive after breakup of the Russian Federation. This is may be the reason why the American press is so much confronted against the idea of "reviving of the USSR" before the meeting of the Russian and American presidents.

As it has become known at the energy summit in St.Petersburg, the Russian side intends to persistently recommend American companies to actively participate in the project for construction of an oil pipeline in the city of Murmansk and in the Sakhalin-3 project. First Deputy Minister for Economic Development Andrey Sharonov said it in an interview with Echo Moskvy radio. That was said at the time when British-American companies are actively selling their assets in Sakhalin to Japanese companies. The Sakhalin-1 and Sakhalin-2 projects became really very effective only when Japanese bought the controlling interest of the projects. The Russian government is somehow sure that Americans will like the proposition.

Andrey Sharonov stresses that in the framework of the Stockman project US companies may become not only investors but also users of gas that would be supplied in tankers to the USA after liquation. At the forum, Americans will be offered to participate in reforming of Russia's energy sector (in division of RAO UES of Russia) which means that results of the forum may differ from those achieved in Houston. In any case, the situation will be more or less clear after the meeting of Vladimir Putin with George W. Bush. It is not ruled out that the situation in the world may seriously change as soon as the joint press-conference of both presidents begins.