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Russia's hydrocarbon
geopolitics
By Sergei Blagov
MOSCOW - Russia is moving towards building
new geopolitical muscle based on its huge oil and
gas riches: this week Moscow conceded that its
policy, notably in the Middle East, has been
strongly connected with energy considerations.
"The situation in the Middle East
influences the world economy, notably one sector
in which Russia holds a special position, the
energy sector. This and many other things
determine our proactive approach in the Middle
East," Russian President Vladimir Putin said after
talks with visiting Palestinian leader Mahmud
Abbas on January 31. In response, Abbas told Putin
that Russia has a key role to play in the Middle
East.
Russia, the world's No 2 oil
producer, sits on some of the biggest untapped oil
and gas fields in the world. No big wonder that
Moscow closely monitors developments in the Middle
East, which accounts for roughly two thirds of the
world's crude reserves, as any kind of
transformation there could change the global oil
business landscape.
In its recent Middle
East dealings, Russia's emerging hydrocarbon-based
geopolitical muscle featured prominently. For
instance, Russia and Syria are considering signing
agreements allowing Russian companies to join oil
and gas projects, including development of known
reserves and constructing several pipelines,
including the Syrian portion of a Pan-Arab
pipeline project.
As the new rush for
crude gains momentum, Moscow is keen to play a
role in the Middle East. Former prime minister
Yevgeny Primakov, now head of Russia's Chamber of
Commerce and Trade, is to visit Lebanon, Syria,
Jordan and Iran February 6-13. The current
political situation could not be more favorable
for the development of economic cooperation
between Russia and the Middle East, Primakov said
last week. With the backdrop of Chinese
competition for world oil supplies, notably deals
in Iran and elsewhere, Moscow will keep a keen eye
on the region.
In East Asia, Moscow's
policies have been increasingly connected with the
oil and gas game. Notably, the long saga of
Russia's Pacific oil pipeline came as an example
that there was a lot more at play than a mere
commercial transaction.
Chinese banks
provided a US$6 billion loan to support
state-owned Rosneft's $9.3 billion acquisition of
Yukos unit Yuganskneftegaz, Finance Minister
Alexei Kudrin said on February 1. Kudrin told a
news conference that state-owned Vneshekonombank
was borrowing "$6 billion from Chinese banks to
lend to Rosneft". The Chinese bank loan is seen as
aimed at securing long-term oil supplies from
Rosneft.
Yuganskneftegaz was put up for
auction in December to recoup some of Yukos' $27.5
billion back-tax bill. The sale was the
culmination of a Kremlin campaign to regain
control over the strategic oil sector it lost in
the chaotic privatization's of the mid-1990s.
Federal Energy Agency chief Sergei
Oganesyan, who was a vice president at Rosneft
until his appointment to the Federal Energy Agency
last March, confirmed on February 1 that Rosneft
had secured $6 billion in financing from China
National Petroleum Corp (CNPC) backed by future
oil supplies until 2010. "The two companies have
agreed on the prepayment for long-term oil
deliveries," he said.
Last December,
Russia's Industry and Energy Minister Viktor
Khristenko publicly offered CNPC to take a 20%
stake in Yuganskneftegaz.
Furthermore, on
January 26, Russia's Transneft pipeline monopoly
said it had started to plan the construction of a
pipeline from the Siberian oil fields to the Sea
of Japan, with another branch leading to China.
Transneft head Simon Vainshtock told Putin that
the first branch of the pipeline would run from
Taishet in Siberia's Irkutsk region to the town of
Skovorodino, only 70 kilometers north of the
Chinese border. Transneft has until May to present
a feasibility study for the pipeline.
Russia now has only a vague commitment to
build a branch from the Japanese pipeline to China
by 2020. Moscow officials have hinted that Beijing
would have to come up with the financing if it
wanted the oil, hence an option for a Chinese
branch still remains.
It's hardly a
coincidence that Chinese state councilor Tang
Jiaxuan is visiting Russia for four days this
week, officially for "consultations on bilateral
relations and major issues of common concern".
Future long-term oil supplies from Russia
definitely constitute a major matter of bilateral
concern.
Currently, China receives all its
Russian oil by rail, although it's more expensive
than piping it. On February 1, state-run Rosneft
reportedly started delivering oil to China by
rail, up to 200,000 tons this month. This year,
crude deliveries by rail are expected to reach an
overall figure of 4 million tonnes, and 15 million
tonnes in 2006.
Last December, despite
pledges of "strategic energy partnership" with
China, Moscow approved the Japan-bound East
Siberia-Pacific oil pipeline. The December 31
announcement mentioned no China-bound branches of
the future pipeline.
Tokyo has been
lobbying for an oil pipeline route to the Pacific.
To back up its lobbying, Japan reportedly promised
billions of dollars in funding of the pipeline.
Japan is understood to have offered to fund the
construction of the pipeline, giving Russia full
control. Hence fewer strings seem to be attached
and Russia would not be forced to sell its crude
to Japan only.
Compared to this, China has
just promised to provide funds for constructing
part of the pipeline that is connected directly to
the Chinese city of Daqing. Furthermore, China
would own the pipeline in its territory and was
supposed to become an exclusive buyer of the oil
from the pipeline.
Financing for the
Japanese branch also remains unclear. In
mid-January, the Russian government announced it
would not guarantee any loans for the project and
would seek cheap domestic and foreign loans to
build the pipeline.
The Japan-bound route
is seen as a strategic asset for Russia, allowing
it to funnel crude not only to Japan, but to
Korea, Indonesia, Australia and the US West Coast
as well. Yet despite Japan's tactical victory in
the Siberian pipeline game, Russia will not
surrender its core geopolitical interests in
exchange for long-term access to Japanese markets.
For instance, on February 1, Prime
Minister Junichiro Koizumi said Japan would reject
any offer by Russia to return only two of four
disputed Kuril islands. "Japan has never agreed to
accept a partial return and we will not accept it
in the future,"' Koizumi said.
Moscow lost no
time to snub Japan's insistence on the return of
all islands. Also on February 1, Russia's Natural
Resources Ministry happened to release a statement
on developing Russian territories of "special
geopolitical importance". "The Southern Kuril
Islands are among these territories," the
ministry's statement said. According to the
ministry's estimates, there could be up to 360
million tonnes of oil reserves beneath and around
the disputed islands. "The ministry views
exploration and mining in the Southern Kuril
Islands as fully corresponding with Russia's
geopolitical interests," the statement said.
In other words, Moscow would rather pump
and sell its oil rather then surrender potentially
oil-rich areas.
Sergei Blagov
covers Russia and post-Soviet states, with special
attention to Asia-related issues. He has
contributed to Asia Times Online since1996.
Between 1983 and 1997, he was based in Southeast
Asia. In 2001 and 2002, Nova Science Publishers,
NY, published two of his books on Vietnamese
history.
(Copyright 2005 Asia Times
Online Ltd. All rights reserved. Please contact us
for information on sales, syndication and republishing.) |
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