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3 RUSSIA'S ENERGY DRIVE, Part
1 Global axis of oil and
gas By
W Joseph Stroupe
prospect that a supply
disruption, whether unintentional or intentional
(via embargo), can harm consumer nations.
Understandably, the West is fearful of
such supply rigidity in both oil and gas systems.
However, it is pointedly favored by the emerging
economies in the East that want to lock up supply
for themselves. Beyond such considerations for
oil, the emerging
global
gas order is well suited to such rigidity since
gas is still mostly delivered via pipelines under
long-term private bilateral contracts.
Informal grouping suits Russia's agenda
This article refers to Russia's emerging
global confederation of oil and gas as largely
undeclared and unofficial, in contrast to the OPEC
cartel. This is because Moscow wants to act off
the radar screens of the West so that it can have
freedom of action. It refuses membership in OPEC
while simultaneously courting key OPEC producers
and inducting them into its confederation.
When asked recently about the prospects
for deeper cooperation between Russia and other
gas producers such as Iran and Algeria, Putin
leaned away from the idea of a formal and official
"gas OPEC" and instead said the following:
We are already trying to coordinate
our activities on the markets of third
countries. We plan to continue doing so in the
future. We have no plans to create some kind of
a cartel, but I think it would be a good idea to
coordinate our activities, especially in the
context of achieving our main aim of ensuring a
certain and reliable supply of energy resources
for our main consumers.
The April 9
meeting of the GECF nations in Doha has only
furthered the goal of deepening such coordination
between gas producers and their main consumers.
In each agreement negotiated by members of
this emerging confederation, producers and
consumers are provided a meaningful stake in the
exploration, production, transit and pricing of
the oil and/or gas product. In other cases,
markets are simply divided among producers, but
producer cooperation and stake-sharing remains in
place where needed to ensure reliable production
and transit to consumers.
As an example,
gas producers Russia, Algeria and potential
producer Iran seek to coordinate their efforts and
to cooperate rather than directly compete with
each other in providing products to Europe and
Asia. These markets are agreeably divided, with
Russia and Algeria taking separate sections of the
European market, while provisions are mutually
agreed on for Iran's possible entry into the
European and Asian markets.
Additionally,
exploration and transit provide opportunities for
the producers to enter joint ventures with key
consumer states, thereby giving all concerned
parties a genuine stake. An example is the
emerging agreement over the new
Iran-Pakistan-India gas pipeline, in which
Russia's Gazprom will undoubtedly have a stake
with the three major entities.
The new
energy model is built on the principle of
encouraging deeply interconnected economic and
political ties among producers and between
producers and key consumers (those in the East and
those leaning toward the East). This includes
cross-investment and shared ownership stakes in
energy and other key industrial assets. This has
enormous political and geopolitical implications,
and the members want a multipolar world order at
the expense of US-led unipolarity. The deepening
complex of economic, political and security ties
within this new grouping is incrementally, yet
rapidly, working to spawn a de facto geopolitical
bloc of the East. Not by chance, the United States
and its closest allies are being left outside the
new circle.
Russian leadership the
key Throughout Eurasia, Russian
pre-eminence and leadership in the energy sphere
are pragmatically recognized on both sides of the
producer-consumer equation. This is aided by the
nature of Russia's leadership. Though assertive in
protecting its legitimate interests, it is also
characterized by its pursuit of the principles
embodied in the concept of complementary symmetry
in its dealings with its partners, and this paves
the way for mutually beneficial relations and
agreements that all its partners increasingly
desire. That paves the way also for the kind of
rapidly deepening cooperation and coordination
among producers and consumers Putin alluded to
above.
Significantly, what was agreed on
in the April 9 GECF meeting was a unanimous
designation of Russia as the leader in the
establishment of a new top-level group to study
policies and strategies related to deeper
cooperation and coordination and for it (Russia)
to present formal proposals for consideration and
adoption at the next GECF meeting in Russia early
next year.
The Shanghai Cooperation
Organization (SCO) , which has Russia and China as
key members, comes into play as a pragmatic forum
for the advancement of a new regional "energy
club" integrating producers and consumers in
tight-knit cooperation.
But the
Russian-led energy confederation far transcends
the political, geographic, security and economic
confines of the official SCO, although the SCO can
certainly be used where appropriate.
The
Russian-led oil-and-gas order constitutes a de
facto "axis" of oil and gas, since it rivals the
very foundations of the US-led energy order and
its members share such a profound degree of
political affinity and a common geopolitical
vision - the early end of US-led unipolarity in
favor of multipolarity.
The implications
of this are vast.
Next: All
power to Russia
W Joseph
Stroupe is author of the books Russian
Rubicon: Impending Checkmate of the West
and Grand Reversal: Russian Global
Ascendancy, and is editor of Global Events
Magazine online at www.GlobalEventsMagazine.com.
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