Total joins gamblers at Russian
roulette By Robert M Cutler
MONTREAL - During the Cold War, Soviet
experts on international relations would write
articles about the profit-driven race for hegemony
among various competing transnational corporations
based in different capitalist countries. They
would point to how inherently difficult and
conflictual situations were exacerbated by what
they called "inter-imperialist contradictions".
Lately, the differences between the United
States and the European Union over Libya, and also
within the EU among such members as Italy, Germany
and France, have seemed to suggest that there may
in fact something to such a way of looking at
things.
The recent increased involvement
of major Western energy
companies in Russia also
indicates the advantages of such a perspective. In
particular, the French company Total, already in
Russia since 1989, has now decided to follow the
American company ExxonMobil, Britain's BP and the
Anglo-Dutch firm Shell with increased investment
in the country.
As reported by the Moscow
Times last week, the head of Total's exploration
and production division in Russia told a
conference that his company has a target to
increase its output in Russia by no fewer than 30
times by the beginning of the next decade at the
latest.
Given that its current production
is only about 10,000 barrels of oil equivalent per
day, that is not so outrageous a goal as it might
otherwise seem, not is this a particularly
impulsive decision in as much as Total has been in
Russia for over two decades. What is new is that
Total is banking on new projects in the Russia's
Arctic region to make the difference.
Most
notably, last month it gained a 12% stake in the
Russian independent gas-producer Novatek at a
price of US$4 billion in the hope of acquiring a
20% share of a projected liquefied natural gas
(LNG) project in Yamal, where it already develops
the Termokarstovoye gas condensate deposit
together with Novatek.
More investment by
Total may, however, be required to overcome the
lack of funding for the Yamal LNG project, for
which the Russian government declines to provide
long-term financing.
Total also owns
one-quarter of SDAG, the consortium with Norway's
StatOilHydro, in which Gazprom owns a majority
share, seeking to develop the giant Shtokman gas
condensate field in the Barents Sea. SDAG's
shareholders did not initially seek tax breaks for
the projects but last week has put off a final
investment decision pending the Russian
government's response to its request for tax
breaks.
That will now be a joint decision
for or against both gas field development and an
LNG processing plant (even though there will also
be a pipeline component). Moreover, that decision
will now depend on Moscow's response to SDAG's new
tax-break request, which the consortium did not
originally anticipate requiring and which Moscow
has not welcomed receiving.
Total's new
investment plans in the Arctic, the relatively new
emphasis on LNG by Shtokman, and the continuing
significance of the Yamal project, all come in the
wake of Russian Prime Minister Vladimir Putin's
surprise declaration earlier this year that the
South Stream gas pipeline project, long touted by
his government under the Black Sea to either
Bulgaria or Romania, could be discarded altogether
in favor of LNG projects from Russia's Arctic
regions. (See South
Stream may disappear, Asia Times Online, March
28, 2001.)
That announcement reflects
Putin's near-obsession with finding yet another
route for Russian natural gas to Europe beyond the
Nord Stream pipeline under the Baltic Sea. At the
time, Putin even evoked piping the Arctic gas to
Russia's Black Sea coast and building a LNG
facility there for cross-Black Sea transit. It is
odd that few observers commented at the time that
this was an admission that Russia did not have the
gas available to fill South Stream if it were
built.
However, the unanticipated
dependence of the final investment decisions for
the Arctic mega-projects on direct and indirect
state support means that these plans are really
more "iffy" than are even normal projects in the
industry. These are gargantuan projects even by
Russian standards and the Yamal development, for
example, has consistently fallen behind schedule.
Putin wishes to increase Europe's
dependence on Russian gas despite the past
decade's repeated fiasco over his winter pipeline
cutoffs and despite the fact that Europe receives
one-quarter of its gas imports from Russia
already. (For a telling anecdote about Putin in
Brussels, see Emerging
triangles: Russia-Kazakhstan-China, Asia Times
Online, January 15, 2004.)
What emerges is
that to the collection of Western "imperialist"
powers that Moscow's international-affairs experts
used to catalogue during the Cold War, it is now
necessary to add Russia itself, which just as in
the Soviet era remains dependent on foreign
capital and advanced technologies for the
exploration and development of its largest
proposed projects.
The problem for its
foreign partners, as the Khodorkovsky and BP sagas
illustrate among others, is that the government in
Moscow is not so meticulous about respecting
agreements as it once was. Even at the height of
the late Cold War with Ronald Reagan at the White
House, for example, the Soviets never cut off gas
to Western Europe.
The Chinese, unlike
potential Western partners, seem to recognize
this. Although Chinese energy firms have been
making acquisitions and investments around the
world for almost a decade, spending what
nevertheless remains a small portion of its huge
US-dollar foreign reserves, Beijing have been
reticent about foreign direct investment in
Russian oil and gas. Beijing's preferred
instruments are long-term loans that are repaid in
Russian exports of natural resources. (See, for
example, China
on buying and lending spree, Asia Times
Online, March 5, 2009.)
That is why, when
Russian President Dmitry Medvedev was in China for
a summit with the leaders of Brazil, India, China
and South Africa this month, he insisted on China
becoming what Russian analyst Fyodor Lukyanov
called "a source of investment and technology, not
just a vacuum cleaner for Russian resources". The
degree of Medvedev's success in this regard is yet
unclear.
Dr Robert M Cutler
(http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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