Posted on 10/15/2004 4:54:28 PM PDT by DeaconBenjamin
"I believe that Russia is important for us, economically and politically," Chancellor Gerhard Schröder told the Frankfurter Allgemeine Zeitung last month. Schröder knows that economics and politics are two sides of the same coin. For Germany the two sides add up to 50,000 billion cubic meters of natural gas, or around one-third of the world's natural gas reserves, as well as yearly oil production approaching that of Saudi Arabia.
There are three suitors for Russia's energy reserves: the United States, China and the European Union. China seeks access to the Caspian Sea's crude oil reserves, estimated to be 206 billion barrels, or 16 percent of the world's reserves. Russia recently joined the Shanghai Cooperation Organization, which was launched to convince Caspian producers to gear their production and export policy toward the world's fastest-growing economy. Schröder sees his relationship to Moscow from the national and the EU perspective. Last year, Germany imported 31 percent of its oil and 38 percent of its natural gas from Russia. For German economic interests, it is crucial for German companies to participate in the exploration, refining and shipment of Russia's fossil fuels. For years, these joint ventures were limited to pipelines to help Russia get its natural gas to the European Union. In 1999 Wintershall, a subsidiary of BASF, received permission to conduct oil and natural gas exploration and production in Russia.
This year, Eon became the second German company to participate directly in exploration and production. The company said last July it would invest billions in production sites in Russia. In addition, it plans to form a joint venture with Gazprom to construct a 1,189-kilometer pipeline through the Baltic Sea to the German town of Greifswald, where Russia's natural gas will be hooked up to western Europe's network. These investments in 2002 prompted Schröder's government to give Eon permission to purchase Ruhrgas AG after the Federal Cartel Office had called off the deal.
Alfred Tacke, who followed Schröder from Lower Saxony to Berlin, is Schröder's energy man. Tacke will leave his government post early next year to take the helm of energy company Steag. His Russian counterpart, Alexei Müller is already the head of Gazprom, in which Ruhrgas has a 6.5 percent stake.
At home, Schröder's ambition is to create bigger energy companies by expanding cooperation with Russian energy giants. Schröder and several other EU politicians are also working behind the scenes to convince Russian President Vladimir Putin to denominate Russian crude oil and natural gas in euros. Currently, countries and companies can only buy oil if they have dollars. That means that non-oil producing countries first have to sell their goods to earn dollars with which they can purchase oil. In contrast, the United States must only print money. This creates a great demand for dollars outside of the United States. Around 68 percent of the world's currency reserves are currently in dollars, compared with 13 percent for the euro, according to the International Monetary Fund.
Last year, Putin told Schröder and French Prime Minister Jacques Chirac that he has considered switching to euros. Until now, Iraq has been the only company to denominate its oil exports in euros. After the U.S. invaded Iraq last year it put Iraq back on a dollar standard.
China has to do something with all those billions of dollars they take in every month. Might as well buy oil.
You know, I wonder if Putin didn't accept the Kyoto protocol as a way to control the flow of oil revenue. Limit Russian consumption of oil, sell all the oil that Russians aren't allowed to use to the outside world at a possibly higher price, and use as much of that money as possible for Putin pet projects like rebuilding Imperial Russia.
I'd be happier if I believed that Putin is seeking to rebuild Imperial Russia, rather than the USSR. From what I've seen, it looks like he is trying to learn from Lenin's mistakes.
One of Lenin's mistakes was wiping out all political opposition.
Hard to rebuild the USSR when you just sold Siberia to China. Russia will regret agreeing to that new pipeline. Once it's in place, Chinese immigration to the area will lead to annexation by China. Bloodless takeover.
Good information for those who want to know why oil producers get ticked off by a weak dollar (all those outside the US, that is). And I think they meant to say country, not company.
How? By coercion -- as used by Stalin and the Soviet communists? By financial incentive? Why, today, should tens of thousands, hundreds of thousands, or millions of Chinese move into Siberia?
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