Russian controlling the Oil Options

[ABLAT Staff]

Russian arms arrive in Venezuela
By Greg Morsbach
BBC News, Caracas

Venezuela has received its first delivery of tens of thousands of Russian assault rifles.
It is the first batch out of a total of 100,000 Kalashnikov rifles which Venezuelan President Hugo Chavez has ordered from Moscow.

Venezuela's military is undergoing a profound transformation, with a major recruitment drive and new technology.

The move is likely to worry the US, which regards Mr Chavez as a destabilising influence in the region.

Most defence experts agree that President Chavez needs to overhaul his outdated military hardware.

But the United States and Venezuela's neighbour Colombia regard the arrival of 33,000 Kalashnikov rifles as further proof that Mr Chavez is seeking to throw his weight around in the region.

The Russian-built AK103 rifles come complete with more than half a million rounds of ammunition, state-of-the-art night vision scopes and bayonets.

Another 70,000 rifles are expected to arrive before the end of the year.

But what worries Washington more are Venezuela's plans to build a factory here to assemble and export these Kalashnikov rifles along with bullets.

Mr Chavez's administration is now in talks with the Russian manufacturer which holds the licence to make the guns.

The US, which recently ordered a complete ban on arms sales to Venezuela, has accused of President Chavez of trying to destabilise Latin America.

But Venezuela insists it has a right to buy arms for defensive purposes.

President Chavez has repeatedly warned that the Bush administration was planning to invade Venezuela to get its hands on the country's oil resources.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/americas/5045208.stm

Published: 2006/06/03 20:25:40 GMT

[ABLAT Staff]

Chavez shows off fighter jets, defying US

8.20am Thursday July 6, 2006


CARACAS, Venezuela - President Hugo Chavez marked Venezuela's independence day by showing off Russian fighter jets his government is planning to buy and new helicopters and rifles it purchased, after Washington blocked US arms sales to Caracas.

Two Sukhoi SU-30MK fighters sent from Russia roared overhead on Wednesday local time as troops, tanks and vehicles filed past Chavez and his counterparts from Argentina, Bolivia and Paraguay who were visiting for a summit of the Mercosur trade bloc.

Relations between Washington and Caracas are tense after the United States banned arms sales, citing Chavez's close ties to Iran and Cuba. US officials say the populist Chavez is destabilizing the region, a charge he rejects as propaganda.

Chavez, a former army officer, is seeking to buy 24 of the high-performance Sukhoi fighters to replace his government's F-16 jets in a deal analysts estimate would cost nearly US$1 billion ($1.6bn). He has already bought Kalashnikov rifles and attack helicopters from Russia.

"The US government has sabotaged us, failing to meet contracts and agreements, delaying or not sending parts for US-made aircraft," Chavez said. "See now how our air force is recovering operations, especially with these Sukhoi, the most powerful combat jets in the world."

Joining Chavez at the ceremony was Mikhail Kalashnikov, the Russian who designed the original weapon to bear his name, the AK-47. Venezuela has purchased 100,000 new AK-103 rifles to replace its military's aging FAL weapons.

- REUTERS
http://www.nzherald.co.nz/section/story.cf...jectID=10389999

[ABLAT Staff]

Russia Signs Large Arms Deal With Venezuela

Thursday , July 27, 2006

MOSCOW — The head of Russia's state arms-trading agency said Thursday that Russia has signed contracts with Venezuela for 24 military planes and 53 helicopters, the Interfax news agency reported.

The comments by Sergei Chemezov, director-general of Rosoboronexport, were reported as being made on the sidelines of a Kremlin meeting between President Vladimir Putin and Venezuela's anti-U.S. president Hugo Chavez.

The report did not specify what model planes or helicopters had been sold, but cited Chemezov as saying arms deals worth more than $3 billion had been signed with Venezuela over the past 18 months.

The United States has sharply objected to Russian arms deals with Venezuela; Washington imposed an arms embargo on Venezuela this year.

Defense Minister Sergei Ivanov said last week that Chavez was expected to sign an agreement to purchase Su-30 fighter jets from Russia during his visit. It was not immediately clear whether the contracts Chemezov was cited as reporting included that contract.

Neither Putin nor Chavez made any statements about arms contract to journalists at their meeting.

http://www.foxnews.com/printer_friendly_st...,205882,00.html

[ABLAT Staff]

Teheran: Chavez, Ahmedinejad pledge mutual support


--------------------------------------------------------------------------------
Associated Press, THE JERUSALEM POST Jul. 30, 2006

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Anti-US leaders Hugo Chavez of Venezuela and Iranian President Mahmoud Ahmedinejad met in Teheran on Saturday, pledging mutual support to one another, state media reported.

Chavez' two-day visit came as Iran faces renewed international criticism for its nuclear program and for backing Hizbullah guerrillas, engaged in fighting with Israel since they kidnapped two Israeli soldiers and killed eight others on July 12.

Following talks, Chavez pledged that his country would "stay by Iran at any time and under any condition," state television reported.

Ahmedinejad said he saw in Chavez a kindred spirit.

http://www.jpost.com/servlet/Satellite?cid...Article/Printer

[ABLAT Staff]

Hugo Chavez Receives Iran's Highest Honor
Jul 30 11:55 PM US/Eastern

By NASSER KARIMI
Associated Press Writer

TEHRAN, Iran

Iran awarded Venezuelan President Hugo Chavez its highest state medal on Sunday for supporting Tehran in its nuclear standoff with the international community, while Chavez urged the world to rise up and defeat the U.S., state-run media in both countries reported.

The leftist Venezuelan leader also condemned Israel for what he called the "terrorism" and "madness" of its attacks in Lebanon, Venezuelan state television reported.

"Let's save the human race, let's finish off the U.S. empire," Chavez said. "This (task) must be assumed with strength by the majority of the peoples of the world."

Iranian President Mahmoud Ahmadinejad presented Chavez with the Islamic Republic Medal in a ceremony at Tehran University. The award was to show Iran's gratitude for his "support for Iran's stance on the international scene, especially its opposition to a resolution by the International Atomic Energy Agency," Iranian state-run television said.

"He is the one who has resisted imperialism for years and has defended the interests of his and other Latin American countries," Ahmadinejad was quoted as saying.

In February, Venezuela opposed an IAEA decision to report Iran to the U.N. Security Council over its disputed nuclear program.

A draft proposal Friday by permanent members of the U.N. Security Council gives Iran until the end of August to suspend uranium enrichment or face the threat of economic and diplomatic sanctions.

The U.S. accuses Iran of seeking nuclear weapons. Tehran maintains its program is purely peaceful and aimed at generating electricity.

http://www.breitbart.com/news/2006/07/30/D8J6NURG0.html

[ABLAT Staff]

$20bn gas project seized by Russia

Terry Macalister, Tom Parfitt in Moscow
Tuesday December 12, 2006

Guardian

Shell is being forced by the Russian government to hand over its controlling stake in the world's biggest liquefied gas project, provoking fresh fears about the Kremlin's willingness to use the country's growing strength in natural resources as a political weapon.
After months of relentless pressure from Moscow, the Anglo-Dutch company has to cut its stake in the $20bn Sakhalin-2 scheme in the far east of Russia in favour of the state-owned energy group Gazprom.

The Russian authorities are also threatening BP over alleged environmental violations on a Siberian field in what is seen as a wider attempt to seize back assets handed over to foreign companies when energy prices were low.

The moves will alarm many investors in the City of London as Shell and other share prices are hit, but the news will also increase ministers' concerns about Britain's energy security.

Russia is becoming a key source of natural gas to the UK and Gazprom has already made clear it would like to buy a company such as Centrica, which owns British Gas. One third of western Europe's natural gas is supplied by Russia - a figure expected to rise over the next decade. The security of energy supply is now the main political issue between the EU and the Kremlin. Nervousness about the Russians was heightened last winter when the gas supply to Ukraine was cut off in the middle of a political dispute.

Shell confirmed last night that its chief executive, Jeroen van der Veer, met Gazprom's chairman, Alexei Miller, in Moscow last Friday but would say only that the talks on Sakhalin-2 were "constructive". The Russian company said that "Shell did indeed make several proposals concerning Sakhalin-2" at the meeting which came after Shell was threatened with having its operating licence withdrawn.

The energy minister, Viktor Khristenko, is expected to give details today of a deal under which Shell and its Japanese partners are likely to get a cash payment in return for giving Gazprom a stake in the project.

Dmitry Peskov, the official spokesman of Russia's president, Vladimir Putin, hit out yesterday at critics in the western media who implicated the Russian government in manipulating oil projects and the poisoning of dissidents. He said there was too much "anti-Russian hysteria".With reference to BP's oil spills in Alaska, he added: "If it's an environmental problem in Alaska it's environmental. If it's in Russia you call it politics."

But other senior politicians in Moscow had no doubt Shell was being harassed into reducing its 55% stake in Sakhalin-2 to something close to 25% through relentless pressure from ministries.

"In the current situation Shell will not be able to defend its economic interests in a civilised process with the Russian authorities, so they will be obliged to give up control if they want to save at least some adequate part of the project," said Vladimir Milov, Russia's former deputy energy minister.

Bob Amsterdam, the lawyer of the jailed oil oligarch Mikhail Khodorkovsky, said the Kremlin was "once again" using legal pretexts to cover what was essentially an expropriation of private resources in the energy sector. "The Kremlin ought to cease this behaviour," he said.

The Sakhalin-2 project is scheduled to start operations in 2008 and involves finding and producing oil and gas near Sakhalin island, formerly known only as a penal colony during the tsarist and Soviet eras.

The two fields that make up Sakhalin-2 have an estimated 1.2bn barrels of oil and 500bn cubic metres of natural gas. The gas is to be brought ashore, liquefied and frozen before being shipped to customers in Japan and elsewhere.

The scheme created almost immediate controversy with western conservation groups because it involves putting equipment close to breeding grounds of endangered western grey whales. There has also been criticism that sensitive salmon fishing areas are being hit by dumping of dredging spoil waste amid worries about oil spills from platforms in the Okhotsk and Japanese seas.

But even non-governmental organisations have expressed surprise at the way the Russian authorities have taken up environmental issues since the summer after taking little interest before.

Mr Peskov said it was a coincidence of timing and that it was "a process that is natural for every country" to come to eventually. Mr Putin's spokesman said Russia wanted to encourage western investment and wanted closer links with west European countries to foster mutual "interdependence".

http://www.guardian.co.uk/print/0,,329660156-103610,00.html

[ABLAT Staff]

The Washington Times
www.washingtontimes.com

--------------------------------------------------------------------------------

Russia rises on global oil demand
By Patrice Hill
THE WASHINGTON TIMES
Published December 18, 2006

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Second of two parts

Russia has emerged as an unrivaled energy superpower in a world thirsty for oil and gas, but the country's recent moves to seize control of strategic parts of the energy industry have slowed growth in production and raised questions about the legal rights of investors and speed of future development.
The 10 percent annual growth in oil production that vaulted Russia into the top rank among suppliers in 2003 and 2004 slowed sharply to about 2.5 percent in the past two years in the wake of Russia's breakup of its leading oil company, Yukos, and the jailing of its chief executive, Mikhail Khodorkovsky.
The slowdown in Russian production helped spur world oil prices to record highs by keeping a tight rein on global supplies.
Russia this year raised environmental and legal roadblocks to Royal Dutch Shell's $22 billion project to develop huge oil and gas fields on Sakhalin Island in Russia's Far East. Analysts believe it to be a bid to increase the state's revenue and control in the largest foreign investment in Russia by insisting Shell include the state gas monopoly Gazprom as a partner. As a result, new investment by Western companies has dwindled.
Gazprom also shut Chevron, ConocoPhillips and other potential Western partners out of a major project to develop the gigantic Shtokman gas field in the Barents Sea, saying it will finance and manage the entire project on its own.
Yet despite Russia's sitting on the world's largest reserves of natural gas, a lack of timely investment in new drilling projects caused Gazprom to run short of fuel last winter to meet fast-growing demand for electricity in Russia.
Russian officials dismiss talk of energy shortages and say they are resolved to meeting their future commitments and are gearing up to do so. They point to the nation's long history of being a reliable energy supplier to Europe, even during the Cold War, and note that other countries such as Venezuela also have been increasing control over their oil sectors.
Western investors showed little concern about their legal rights as they enthusiastically snapped up offerings of Russian energy stocks this year, Russian officials say. The first public stock offering of minority shares in the state oil company Rosneft in the summer was heartily received when it opened on the London Stock Exchange, despite questions about whether state control would impinge on earnings for investors. Russian electric utilities offerings last month also were oversubscribed by global investors.
But even as the world looks increasingly to Russia to satisfy its energy needs, the International Energy Agency is raising questions about whether growth in Russian oil and gas exports will be fast enough to keep up with rising demand in Europe and commitments Russia has made to deliver oil and gas to both Europe and Asia.
"Will the investments take place? Will they come on time?" asked William C. Ramsey, deputy executive director of the international agency. "These are costly projects. ... We're concerned that the investment climate now is not conducive to bringing those resources online."
Russia in particular needs to start developing potentially immense deposits of oil in eastern Siberia that remain largely unexplored, he said. The country has just started work on a 2,500-mile pipeline from central Siberia to the Pacific coast that must be in place before the oil can be tapped.
"We need to devote money aggressively to the East Siberian fields," Mr. Ramsey said. Because of the long time it takes to build transport and drilling structures, "we're talking about 2017 before we see substantial resources coming out of East Siberia."
Keeping prices high
Vladimir Milov, president of the Institute of Energy Policy in Moscow and a Russian deputy energy minister until 2002, said President Vladimir Putin's goal in taking increasing control of the oil and gas industry since dismantling Yukos is to keep prices high, to feed the gusher of earnings from oil and gas exports that has lifted Russia's economy and revived its international status.
Through the Yukos divestiture and other maneuvers, the government has exerted control over one-third of the oil sector and may be on course to gain control over another third within the next year, he said. The state retains near-complete control over the gas sector through Gazprom after Mr. Putin killed a plan to privatize the gas giant Mr. Milov said he had drafted before he left government.
While Mr. Putin has enjoyed public support in Russia for the re-nationalizations, "it was the private sector which caused our recent economic successes," Mr. Milov said, including the fast growth in oil production that underpinned the country's robust economic growth and surging incomes in recent years.
Despite increasing obstacles laid down by the government, the private sector continues to outperform state-controlled companies, he said, contrasting Gazprom's anemic 0.1 percent output growth from 2000 to 2005 with the 12.5 percent growth from small independent gas producers and 8.4 percent growth from private oil producers.
Gazprom, at the state's behest, has spent $18 billion recently acquiring the Sibneft oil company and other, unrelated entities and has announced intentions to pursue other acquisitions, while spending only $12.5 billion on the drilling and pipeline infrastructure needed to maintain and increase gas production to meet its future commitments, he said.
Gazprom has been relying increasingly on independent gas producers in Russia and producers in Central Asia to meet its commitments to European customers.
Faced with severe declines in Russia's gigantic but aging gas fields in western Siberia, Gazprom needs to develop the huge fields to the north on the Arctic Yamal Peninsula -- which alone would cost $70 billion to exploit, Mr. Milov said.
Private energy companies are eager to invest the tens of billions of dollars needed in new drilling and pipeline projects to tap into the energy riches in remote areas of the Arctic and Siberia. But the government's stripping of corporate rights and assets has stultified such investment and instead funneled a flood of energy earnings into bubbles in the booming Russian stock and real estate markets, Mr. Milov said.
The lack of investment by Gazprom is hurting Russian consumers, he added. Gazprom had to cut off supplies to power stations in central and northwestern Russia for two weeks last winter when temperatures plummeted.
Promoting 'national champions'
Mr. Putin also wants to increase the power and presence of Gazprom and Rosneft, the state oil company that obtained Yukos' most prized oil-producing asset at a bargain-basement price under a sale arranged by the government in 2004.
They are the "national champions" through which the state now exercises strategic control. The state's regulatory and legal apparatus have been galvanized to support the companies at every turn, Mr. Milov said.
The machinations over Shell's Sakhalin II project illustrate the trend. While the government revoked Shell's permit for the project, citing environmental problems and objections to cost overruns, the real reason for its action is it wants to alter the production-sharing agreement negotiated in the 1990s to include Gazprom as a partner, he said. The Shell project is a joint venture with Japanese companies and is the only foreign venture in Russia that does not include a Russian shareholder.
"This a selective case" showing an arbitrary use of the state's regulatory powers to advance Gazprom's interests, Mr. Milov said, contending that the devastation of forests and water quality cited by the state were potential problems from the beginning and did not prevent the project from going forward in the '90s.
A top Russian oil executive, who requested anonymity, said Shell opened itself up to the government's attack by announcing a year ago that its costs on the project had doubled. The announcement angered the government because it ate into the tax revenue Russia receives from the project and put Shell in violation of its contract. That gave the government an opening to renegotiate the terms.
"Russia is now a price-setter, not a price-taker," the executive said.
The state also has threatened to revoke the license of TNK-BP's joint venture to develop the giant central Siberian gas field of Kovykta in what analysts believe is a bid to ensure that Gazprom gains control over potentially lucrative gas exports to China.
ExxonMobil's massive Sakhalin I project is being investigated for environmental violations, and questions have been raised about Gazprom's role in controlling the project's gas exports.
Russian Deputy Energy Minister Andrei Dementyev said complying with environmental laws is not negotiable. But he made no bones about the state's intent to stand up for Gazprom in negotiations with Shell, Exxon and BP over gas projects.
"Our right and the right of Gazprom is to develop a single gas distribution system in the Far East and East Siberia," he said.
He acknowledged that Gazprom has had trouble providing the gas needed by Russia's electric utilities because of the country's rapid growth of power use. But he insisted that Gazprom is prepared to meet its commitments.
"In the last 30 years, we have never given anyone a reason to doubt our competence," he said. "Despite all attempts by the mass media to report problems, I honestly do not know of any gas contract that has not been honored, be it outside the Russian Federation, or inside the country."
Gazprom recently said it is nearing an agreement with Shell to join the Sakhalin II project. If it ends up taking the lead from Shell, it would be the first time Russia has ousted a foreign player in its push to control the energy sector.
"This is a big mistake," Mr. Milov said. The full participation of Western oil companies with sophisticated technologies and expertise will be needed if Russia is to exploit the energy wealth that lies in remote and inaccessible parts of Siberia and the Arctic.
Costly work ahead
Standard & Poor's CreditWeek analyst Alison Dunn said the double-digit growth in Russian oil production early in the decade was due to a rebound from the depressed output levels of the 1990s and could not have been sustained.
But even to maintain slower growth, Russia will have to make more costly investments in remote fields and transportation networks, as all the "cheap" opportunities for increasing production have been used.
Russia is no longer dependent on Western companies to finance needed investments, she said. "As the Russian government has been able to collect most windfalls from high oil prices in recent years, it has accumulated massive liquidity reserves," she said. "Russian oil companies generate substantial cash flows and, since 2002-2003, have adequate access to international capital markets."
As foreign investment in Russia is "politically sensitive," Ms. Dunn expects that it will be limited to minority stakes and shares and will need approval from the government. Nevertheless, because Russia possesses much of the world's unexplored energy riches, interest in investment there remains robust in the West, despite the risks of state intervention and, in rare cases, confiscation of assets, she said.
Investors in Russian companies such as Gazprom, Rosneft and Transneft, the state oil pipeline monopoly, will have to keep in mind that there is a risk that powerful individuals and interests within the government will use the companies in political or economic power plays, according to Standard & Poor's. But in the long run, the government realizes it is in its interests to be a reliable and steady supplier of fuel to its customers in Europe and Asia.
A study by Cambridge Energy Research Associates said the revival of oil production in Russia's massive aging oil fields in western Siberia after the 1990s collapse was due largely to the application of oil-recovery technologies introduced by Western oil services firms such as Schlumberger and Halliburton. It expects the future of oil production in western Siberia -- still the largest-producing region -- to continue to depend on the work of those companies.
Some analysts and business executives charge that the state's reassertion of control is aimed at enriching key government insiders who the Kremlin has placed at the helm of the companies it controls.
Perceptions of such insider dealing gave Russia a low ranking of 121 out of 163 countries in the 2006 Corruption Perceptions Index published by Transparency International. That ranking is below China and India and only slightly above Venezuela.
However, the World Bank's measure of legal and institutional ease of access in 155 countries rates Russia higher at 79, ahead of China and India.
"By putting energy companies in the hands of rival bureaucratic factions in the Kremlin, profit is suppressed, investment is suppressed," said Robert Amsterdam, attorney for jailed Yukos executive Mikhail Khodorkovsky. The biggest loss has been the rule of law, he said.
"The attack on the rule of law in Russia leaves casualties. Men are imprisoned. Journalists are killed," and now Western oil companies are coming under attack, he said. The West deserves much blame for not forcefully condemning and trying to stop the state's expropriation in 2004 of Yukos' key assets, he said.
"The attack on Yukos was an attack on property rights," he said. "That attack has left us reeling, has left BP reeling in Kovytka, Shell reeling in Sakhalin, and left Exxon under the gun."
Andrei Illarionov, a former Putin economic adviser who declared that Russia was no longer free and who left the government after Yukos was dismantled, said the company was targeted because it was committed to openness and free markets in a way that was antithetical to powerful officials in the Kremlin.
It is symptomatic of the loss of freedom and transparency in Russia that foreign investors and observers have become confused by frequently changing rules and positions, he said.
As many as 15 theories emerged as to why Yukos was destroyed, he noted, and legions of analysts continue to scrutinize the Kremlin's words and actions to try to guess its intent and to find clues about what is coming next.
"It requires a new kind of Kremlinology to figure out what's going on -- a science for understanding a nonfree country," he said.

http://www.washtimes.com/specialreport/200...21350-1511r.htm

[ABLAT Staff]

Russia Belarus Gas Pricing Row Sparks Jitters in Europe

Großansicht des Bildes mit der Bildunterschrift: The row could affect Russian gas supplies to Europe
Russia and Belarus are meeting to try and defuse a gas war that could threaten supplies to the EU. The spat raises new concerns about EU energy dependence on Russia.

Russia and Belarus are holding fresh talks Friday to defuse a row over natural gas that threatens to halt imports to Belarus and disrupt energy supplies to the European Union beginning Monday, Jan 1.

With less than 100 hours to go before Belarus must agree to a more than doubling of gas prices or see supplies cut, both sides expressed guarded hope.

"We are as interested as the Russian side in a result," Andrei Zhukov, an aide to Belarus' energy minister, Alexander Ozerets, told AFP in Minsk.

'Grotesque blackmail'

Currently, Belarus pays Gazprom $46.68 (35 euros) per 1,000 cubic metres of gas. Gazprom originally demanded an increase to $200, which is closer to western European prices, unless Belarus agreed to sell 50 percent of its domestic pipeline operator Beltransgaz.

Gazprom has since reduced that demand to $105 per 1,000 cubic metres -- $75 per 1,000 cubic metres in cash payments, plus the equivalent of another $30 in shares of Beltransgaz.

Gazprom says it will end supplies to Belarus at early New Year's Day, if the ex-Soviet republic fails to agree to the price hike.

Belarus, which lies sandwiched between Russia and the European Union, threatens to retaliate by refusing to allow transit of Russian gas to Europe, potentially hitting supplies in Germany, Lithuania and Poland.

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: The EU is concerned about its energy dependence

Gazprom vice-president Alexander Medvedev told France's Le Figaro on Friday that Belarus was engaging in "grotesque blackmail" and that European clients could face shortfalls.

Meetings in Moscow and negotiations by telephone have taken place daily, ending each time without sign of a deal, raising the likelihood of a New Year's crisis similar to the cut-off of Russian gas 12 months ago to Ukraine, with knock-on effects through western Europe.

The cuts, during an exceptionally cold winter, exposed a lack of any real European Union energy policy and awakened the bloc to the political power of natural resources.

Damaging Moscow's image

Gazprom insists that its price increases -- already imposed on Ukraine, Georgia, and Moldova -- are part of a legitimate move to end Soviet-era subsidies and charge accepted international rates.

However the Kremlin-connected gas giant's rough tactics against Russia's smaller neighbours has damaged Moscow's image abroad and caused alarm in Europe about what the European Union sees as over-reliance on Russian energy supplies.

The EU Commission says it is following the situation "very closely" and has called for a rapid settlement.

"I call on the two parties to reach as soon as possible a satisfactory agreement that does not put in question gas transits to the EU," said EU Energy Commissioner Andris Piebalgs. "The Commission is following the situation very closely since it may affect gas supplies to the European Union."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Belarusians are preparing for the gas cut-off

Piebalgs also said that the EU's gas coordination group, which supervises the security of natural gas supplies, would meet in Brussels to discuss the problem on January 4. The commission will also unveil its strategic energy review on January 10 aimed at providing a vision for the EU's policies and a step-by-step map on how to achieve it.

The bloc also wants to start negotiating a new partnership agreement with Russia, more politically assertive recently under President Vladimir Putin, and make energy a central plank of it.

"Our energy needs may well limit our ability to push wider foreign policy objectives, not least in the area of conflict resolution, human rights and good governance," EU foreign policy chief Javier Solana warned. "We may have to deal increasingly with governments whose interests are different from our own and who do not necessarily share our values."

Playing down fears

Russia supplied 24 percent of the EU's total gas needs in 2005, according to data from European gas federation Eurogas, representing 40 percent of all gas imports to the bloc. Belarus serves as the transit point for roughly 20 percent of Russian gas flowing to Europe, amounting to about five percent of Europe's total gas needs. The other 80 percent of westward Russian exports are piped via Ukraine, which has offered to increase the transit of Russian gas.

That is why German Economy Minister Michael Glos, whose country takes over the EU presidency on Monday, played down fears of a growing crisis.

"There is no reason to fear a threat to supply security in Germany thanks to existing storage capacity and the small amount of the supply actually sent via Belarusian gas pipelines," he said.


http://www.dw-world.de/dw/article/0,2144,2293767,00.html

[ABLAT Staff]

Belarus blocks transit of Russian oil

By YURAS KARMANAU, Associated Press Writer

MINSK, Belarus - Belarus has blocked the transit of Russian oil through its territory to European countries including Germany and Poland, news reports said Monday, raising the stakes in a bitter energy dispute between Russia and the neighboring former Soviet nation.

EU energy chief Andris Piebalgs said Monday the cuts pose "no immediate risk" to energy supplies in the EU, but that he was seeking an "urgent and detailed explanation" of the cuts from authorities in Belarus and Russia.

The head of the Russian state pipeline operator Transneft, Simon Vainshtok, accused Belarus of siphoning off Russian oil through the Druzhba, or Friendship, pipeline that was destined for Europe since the weekend.

"On Jan. 6 the Belarusian side, without warning anyone, unilaterally started illegally siphoning off oil from the Druzhba pipeline designed solely for the transportation of oil to consumers in Western Europe," Vainshtok was quoted as saying by Russian news agencies.

The impact of a short-term stoppage in Poland and Germany is likely to be minimal, as refineries maintain strategic oil stocks.

But the disruption to Russian oil supplies to Europe once again highlights concerns about European energy reliance on Russia a year after its pricing dispute with Ukraine briefly affected EU imports of Russian natural gas.

The Transneft chief said that Belarus, which is furious that Russia is demanding it pay economically damaging oil duties, had diverted 79,000 tons of oil so far.

He called on Minsk to ensure the uninterrupted transit of oil but added that Russia was doing everything it could to boost oil exports to Europe via other routes.

The 2,500-mile-long pipeline has the capacity to ship over 1.2 million barrels a day to eastern and central Europe and generally works at or close to its full capacity.

Belneftekhim, a large state Belarusian industrial and energy holding company, ordered the suspension of transit of oil through Druzhba to Germany, Poland and Ukraine, the Interfax and ITAR-Tass news agencies quoted unidentified officials from the pipeline's Belarusian section as saying.

Contacted by The Associated Press, officials from Belneftekhim declined to comment.

The Belarusian Foreign Ministry denied blocking the transit of Russian oil, saying that Belarus was not responsible for a decrease of pressure in the pipeline.

But ministry spokesman Andrei Popov said ambiguously that Minsk had been "obliged to take measures to counter the economic damage to the Republic of Belarus from a shortage of important energy resources." He declined to elaborate.

In Warsaw, the Economics Ministry said Monday that Poland was suffering disruptions in oil deliveries from the pipeline that crosses Belarus, the result of the dispute between Moscow and Minsk.

"This shows us once again that arguments among various countries of the former Soviet Union, between suppliers and transit countries, mean that these deliveries are unreliable from our perspective," Poland's deputy economy minister, Piotr Naimski, told TVN24 television.

The German government confirmed that the pipeline, which supplied two refineries in Germany, had been shut down. Russia is Germany's top supplier of oil, supplying roughly a third of its imports. It was not clear how much of that came through the Druzhba pipeline.

Cuts in Russian oil shipments to the European Union through the pipeline in Belarus pose "no immediate risk" to energy supplies in the EU, the bloc's energy commissioner said Monday.

In a statement read by his spokesman, Piebalgs said he was trying to find out if Slovakia and countries in southeastern Europe were also affected. He said he was considering calling a special meeting of energy experts from the 27 EU nations to discuss the situation, in case they had to draw on oil stocks.

Piebalgs spokesman Ferran Tarradellas Espuny said Poland had 70 days of reserves and Germany 130 days.

The suspension of oil deliveries comes just days after Belarus and Russia reached a last-ditch agreement on gas prices that avoided a New Year's cutoff of natural gas for Belarusian consumers that threatened a repeat of last year's energy dispute between Moscow and Kiev.

Belarus grudgingly accepted a doubling of the price it pays for imports of Russian natural gas, on which it depends for industry and home heating.

But the two countries are now locked in a dispute over oil duties, with Russia determined to stop Belarus from re-exporting petroleum products made from processing Russian oil bought cheaply.

Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina, who covers the oil and gas industry, said that if the dispute is not contained soon, it could cause overall oil prices to rise as sellers from other markets could take the opportunity to raise their own prices.

"If this situation is not resolved with relative expediency, the market may interpret it as a repeat of the Ukraine situation from last year, which would have bullish energy price implications," Schenker told the AP. "The magnitude of the reaction of energy markets will be directly dependent on how protracted this situation becomes or appears likely to become."

Several countries in the European Union, which depends on Russia for 25 percent of its gas consumption, suffered a brief disruption in early 2006 after Moscow suspended gas deliveries to Ukraine because of a pricing dispute. Ukraine and Belarus are the transit route for Russian gas to Europe.

The inefficient, Soviet-style state-dominated economy in Belarus and authoritarian leader Alexander Lukashenko's popularity has depended heavily on subsidized Russian energy — but analysts say the Kremlin has grown impatient at supporting his regime while receiving little in return.

Last week, Belarus announced it would charge an import duty of $45 per metric ton of Russian oil shipped to Western Europe in pipelines that cross Belarus. The move followed Russia's imposition of an export duty of $180 a ton on oil sold to Belarus.

http://news.yahoo.com/s/ap/20070108/ap_on_...arus_russia_oil

[ABLAT Staff]

Oil market gets the jitters after Russians close Belarus pipeline
By Michael Harrison, Business Editor
Published: 09 January 2007

Oil markets reacted nervously yesterday to Russia's shock move to halt supplies to Belarus in what appeared to be a carbon copy of its dispute with Ukraine exactly a year ago.

Crude prices initially rose by more than a dollar to nearly $57 before falling back later in the day to close slightly lower at $55.47 as dealers gained comfort from the abnormally mild weather in the US which has reduced domestic American demand and pressure on US inventories.

The price of oil has fallen by more than $5 since the start of the year despite an announcement from Opec that it intends to cut production from the start of next month. But the latest flare-up between Russia and one of its near neighbours will raise fears once again over market instability and the security of supplies to western Europe.

The 2,500-mile Druzhba pipeline, which was shut down yesterday because of the pricing dispute between its Russian operator Transneft and Belarus, carries about one-fifth of Russia's oil exports to Europe and is a major source of supply to countries such as Germany, Poland, Slovakia and the Czech Republic.

The EU Energy Commissioner Andris Piebags said there was no immediate risk to Europe's energy supplies. Nevertheless, Russia's action will intensify pressure on the European Commission to take steps to bolster the security of Europe's energy supply when it unveils its EU energy review tomorrow.

The review, carried out by the EU Competition Commissioner Neelie Kroes, has principally been about opening up Europe's energy market by tackling the monopolies that continue to exist in many member states. However, Brussels is facing calls for the remit of the review to be widened to take account of Russia's actions.

Robert Amsterdam, defence lawyer for Mikhail Khodorkovsky, the jailed Russian oligarch and former head of oil giant Yukos, said: "The dispute between Belarus and Russia should act as a wake-up call to the EU Commission. It cannot allow Russia to retain its stranglehold over Europe's energy supplies without any transparent agreement to legal principles. The European Commission must use its Strategic Energy Review to address concern over EU energy security. This will be the most important policy statement on energy in the Commission's history."

Mr Amsterdam added that the relationship between the EU and Russia had become "seriously unbalanced" in Moscow's favour and said the Commission needed to negotiate a restructuring of the state-owned Russian energy giant Gazprom and market entry into Russia by European energy companies.

The EU energy review is expected to point to evidence of collusion and market failure in a number of member states and hasten efforts to break up vertically integrated monopolies in countries such as Germany.

http://news.independent.co.uk/business/new...icle2137733.ece

[ABLAT Staff]

Anger as Russia digs in over oil
By George Parker, Arkady Ostrovsky, Ed Crooks and Chris Flood

Published: January 9 2007 14:29 | Last updated: January 9 2007 20:28

Vladimir Putin on Tuesday faced an angry European backlash about his decision to halt oil supplies through the pipelines crossing Belarus.

As the Russian president made clear his determination not to back down in his dispute with Belarus, Angela Merkel, the German chancellor, denounced his actions as “not acceptable”, noting that even during the height of the cold war, Russia had been a reliable energy supplier to Europe.

Ms Merkel, speaking as the new president of the EU, said Russia’s latest display of energy muscle “hurts trust and it makes it difficult to build a co-operative relationship.”

Mr Putin, speaking in a televised meeting with ministers in Moscow, stressed he wanted to do all he could to ensure that oil supplies to western Europe were not affected. But he escalated the dispute by telling his government to tell Russian companies to cut output because of the transit dispute.

Belarus wants Russia to pay an export duty of $45 per tonne of oil transported through Belarus. This is in retaliation for Russia slapping $180 export duty on crude oil it sells to Belarus.

In a sign of how seriously Germany now questions its reliance on Russia, Ms Merkel said the new dispute cast doubt on the wisdom of her country’s plan to phase out nuclear power by 2020.

Yet for all the political furore, oil markets on Tuesday shrugged off the latest geopolitical threat to supply, focusing instead on the warm US winter and strong inventories. At one point the price of oil hit an 18-month low point, dipping below $54 in New York, although it later recovered most of its losses.

The political row in Belarus – and Venezuela’s announcement of plans to take state control of its heavy oil projects – did little to deflect the downward trend in the price. The price of oil has fallen by more than 10 per cent since the start of the year and yesterday Mustafa Mohatarem, chief economist of General Motors, forecast it would fall below $50 this year. West Texas Intermediate crude for delivery in February fell to an intra-day low of $53.88 a barrel before recovering. Brent crude fell to an intra-day low of $53.64 a barrel before climbing back.

David Kirsch, manager of the markets intelligence service for PFC Energy, said the weak trend was likely to continue, with oil prices likely to test $50 a barrel. “I don’t see any positive news in the next week or so that is likely to lift prices,” he said.

The steep fall has caused concern among members of the Organisation of the Petroleum Exporting Countries, which last month agreed a supply cut of 500,000 barrels a day, with effect from February 1, to try to stabilise the market.

Some Opec members have a target of $60 a barrel for the basket of their output, which is typically about $5 a barrel below the benchmark prices in London and New York.

The US Energy Information Administration, a government agency, trimmed its forecast of world oil demand to 86.2m barrels a day for the first quarter of the year, down 300,000 b/d from its December forecast. The EIA forecasted US oil prices would average $64.42 a barrel in 2007 and $64.58 in 2008

The oil price fall has taken place against a sell-off in the commodities market: copper has fallen 11.3 per cent; zinc 16.2 per cent; and tin 13.1 per cent.

http://www.ft.com/cms/s/0a141ef0-9fec-11db...00779e2340.html

[ABLAT Staff]

New Cold War with Russia Over Oil and Gas

New America Media, News Analysis, Paolo Pontoniere, Posted: Feb 13, 2007

EDITOR'S NOTE: Pentagon chief Robert Gates might tell Vladimir Putin that "one Cold War is enough," but the new Cold War chilling relations between Russia and the West has less to do with nuclear weapons and much more about who will control energy resources. Paolo Pontoniere is a New America Media European commentator.


A new Cold War is under way, but unlike the conflict of the Reagan era it is not a fight for military supremacy but rather for gaining control, directly or through commercial proxy, of energy resources.

At the heart of this new conflict are Western attempts to diffuse Russian President Vladimir Putin's drive to transform his country into a new oil and gas superpower with vast bargaining power with the European Community. Russia is already the world's eighth largest producer of crude oil and the first of natural gas.

Most recently, UK authorities blamed Russian intelligence for the assassination of Alexander Litvinenko, a former KGB spy, who had accused Vladimir Putin of leading an autocratic, murderous and corrupt government. Litvinenko was a figure in the struggle between the Putin government and Russian oligarchs (whom Western powers favor) for the country's most prized possessions -- the oil and gas fields controlled by the Russian oil companies, the state-controlled Gazprom and the privately held Yukos.

Litvinenko's assassination nearly coincided with the signing of a commercial agreement between Gazprom and ENI-Italy's largest energy conglomerate -- for the distribution of natural gas to Western Europe. The first of its kind, the agreement would allow Gazprom to operate independently under the supervision of the Italian partner, which would be tantamount to the Russian giant selling its product directly to consumers in Western Europe, bypassing EU's regulatory constraints.

Western powers have come to despise what they see as Russia's heavy-handed form of capitalism, as in the case of mining rights to the Arctic sea floor, which is believed to hold vast oil reserves. According to Moscow, under the newly operating United Nations Convention on the Law of the Sea, more than 50 percent of those submerged resources belong to Russia. This assertion has compelled other powers -- such as Denmark, Norway, Canada and Iceland -- to stake their own claims to some of the same underwater territories. The controversy is leading to an increased militarization of the Arctic, with Russian battleships often confronting the vessels of oil developers and Western navies.

"Putin has decided to make a huge energy superpower out of Russia and there's almost nothing that can stop him," says Robert Hueber, an analyst at the Centre for Security and International Studies. "Unless something slows him down, there's no way for the West to prevent him from putting his hands on some of the most prized resources of the planet."

Although China's higher profile in Africa is providing cause for concern to the United States and its allies, it is Russia that generates their strongest reactions. They believe Russia is using its energy clout for geopolitical gains, especially in the regions that were once under the Soviet control but are now independent countries.

Western powers have been vehemently denouncing Russia for last year's rows with Ukraine and Belarus over the price of gas. Russia temporarily shut down its gas and oil shipments to these countries as a result of the quarrel. The action in turn caused great worry and anger in Western Europe, which imports respectively 30 percent of its oil and 40 percent of its gas from Russia.

In some countries like Poland, Finland and Slovakia, imports account for more than 70 percent of consumption, and in Hungary the percentage soars above 89 percent. Reacting to the shutdown, Germany's Chancellor Angela Merkel said Russia had lost its credibility as an energy partner.

Western analysts have also accused Moscow of conspiring to turn the Shanghai Cooperation Organization -- an intergovernmental body composed of China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan, with India, Pakistan and Iran as invited observers, meant to foster good neighborly relations and deal with issues of Central Asian security -- into a sort of "OPEC with nuclear weapons," as described by Simon Sweeney, director of the International Studies Programme of York St. John University College in the United Kingdom.

Not all analysts, however, are convinced that Russia wants to wage a New Cold War with the West and in particular with the United States.

"Someone is still fighting the Cold War, but it isn't Russia," Mark Almond, a professor of modern history at Oriel College, Oxford, wrote in The Guardian. "The chill is still coming from the West."

Thomas Friedman, a devout pro-West observer, agrees. Should Moscow, he writes, really decide to leverage its energy resources to subjugate the international community, it would have other, sharper arrows in its quiver.

Russia could, as many of its hardliners have suggested, ban products from Moldova and Georgia or block the transit of their unemployed jobseekers to Russia, thus causing these countries' economic collapse. Moscow could also destabilize Georgia, Ukraine, Moldova and Kazakhstan and then agree to annex -- as these populations have requested -- their pro-Russian minorities living near the borders of the old Motherland.

In the case of Georgia and Kazakhstan, destabilization could be extremely hard on the United States and its Western allies, as it would totally compromise direct access to the immense oil resources of the Caspian region -- on which the West is greatly reliant -- and their transfer to Western ports.

Thus, for now, and short of an all-out confrontation with the Old Bear, the Western powers can only lash out at the feared expansionism of the New Oil Czar by accusing Moscow of renewed charges of murderous plots and dark conspiracies.

http://news.ncmonline.com/news/view_articl...1f4ce7b6da8da55

[ABLAT Staff]

Natural-gas cartel could link big producers Russia, Qatar
By DONNA ABU-NASR and JIM KRANE

The Associated Press

RIYADH, Saudi Arabia — Russian President Vladimir Putin appeared to find quick success on a historic Mideast tour that saw the leader of energy-rich Russia forging oil diplomacy in Saudi Arabia and backing a natural-gas cartel Monday with neighboring Qatar.

Putin's Middle East tour comes as Washington's stature in the Gulf is slipping and Arab monarchies are busy boosting ties outside the region, particularly in Asia. Both Qatar and Saudi Arabia have welcomed Putin despite being traditional U.S. allies.

Putin and Qatari Emir Sheik Hamad bin Khalifa al-Thani announced they would explore the creation of a natural-gas cartel to represent the interests of producer countries to influence the global market.

"We do not reject the idea of creating a gas cartel," Putin said just hours after arriving in the tiny Gulf state after his two-day Saudi visit. "But this initiative requires more study."

Putin also said he planned to host a Mideast peace conference but gave no details.

European Union leaders have said they would stand against any effort by Russia to create a gas cartel, fearing energy prices — and Russia's political clout — could rise dramatically as a result.

Europe gets 44 percent of its natural-gas imports from Russia.

Putin said he would send a team of experts to a natural-gas conference being held in Doha, Qatar, in April, where they would discuss details of building a cartel resembling the Organization of Petroleum Exporting Countries. Qatar is an OPEC member, but Russia is not.

Russia and Qatar are two of the world's largest producers of natural gas, and tiny Qatar sits atop the world's largest gas field.

In January, gas-rich Iran said it favored forming a cartel with Russia. But at the time, the head of Russia's Security Council, Igor Ivanov, said there were no plans for a cartel, only "interest in gas producers coordinating their policies in the gas sphere."

Hamad said he supported cartel talks but was unsure whether a gas cartel would be able to command OPEC-style control over gas contracts, which are typically arranged on terms as long as 25 years.

In Riyadh on Monday, Putin said he had found "common ground" between Russia and Saudi Arabia, where Saudi and Russian business leaders appeared to strengthen investment and political ties.

"Russia and Saudi Arabia are the world's leading energy producers and exporters and here it is easy for us to find common ground," Putin said in remarks in Saudi Arabia broadcast on Russian state television.

Russia, the world's second-largest oil exporter behind Saudi Arabia, represents a potential ally with considerable political strength as a member of the U.N. Security Council and the so-called Quartet of Middle East peace mediators.

Connecticut-size Qatar is home to two large U.S. military bases, one of which houses the U.S. command post for operations in Iraq and Afghanistan.

Putin said Russia's Lukoil was ready to invest $2 billion in developing Saudi gas fields.

Relations between Russia and Arab countries appear to be getting a boost from the souring of ties between Washington and much of the Arab world after the Sept. 11 attacks.

The friendship between Russia and the U.S. has also been stressed by disagreements.

Copyright © The Seattle Times Company

http://seattletimes.nwsource.com/html/nati...56_putin13.html

[ABLAT Staff]

The Washington Times
www.washingtontimes.com

Russians plan tunnel under Bering Strait
By Yuriy Humber and Bradley Cook
BLOOMBERG NEWS
Published April 19, 2007

MOSCOW -- Russia plans to build the world's longest tunnel under the Bering Strait to Alaska as part of a $65 billion project to supply the United States with oil, natural gas and electricity from Siberia.
The project, which Russia is coordinating with the United States and Canada, would take 10 to 15 years to complete, Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, told reporters at a briefing here yesterday.
A partnership of state organizations and private companies would build and control the route, known as TKM-World Link, he said.
A planned 3,700-mile transportation corridor from Siberia into the United States will feed into the tunnel, which at 64 miles will be more than twice as long as the underwater section of the Channel Tunnel between Britain and France, according to the plan. The tunnel would run in three sections to link the two islands in the Bering Strait between Russia and the United States.
"This will be a business project, not a political one," said Maxim Bystrov, deputy head of Russia's agency for special economic zones. Russian officials will formally present the plan to the U.S. and Canadian governments next week, Mr. Razbegin said.
The Bering Strait tunnel will cost an estimated $10 billion to $12 billion. The rest of the investment will be spent on the entire transportation corridor, according to the plan.
"The project is a monster," said Yevgeny Nadorshin, chief economist with Trust Investment Bank in Moscow. "The Chinese are crying out for our commodities and willing to finance the transport links, and we're sending oil to Alaska. What, Alaska doesn't have oil?"
Czar Nicholas II, Russia's last emperor, was the first Russian leader to approve a plan for a tunnel under the Bering Strait, in 1905, some 38 years after his grandfather sold Alaska to America for $7.2 million. World War I ended the project.
The planned undersea tunnel would contain a high-speed railway, highway and pipelines, as well as power lines and fiber-optic cables, according to TKM-World Link.
Investors in the public-private partnership include OAO Russian Railways, national utility OAO Unified Energy System and pipeline operator OAO Transneft, according to a statement that was handed out at yesterday's press briefing and bore the companies' logos.
Russia and the United States could each eventually take 25 percent stakes in the project, Mr. Razbegin said, adding that other shareholders could include private investors and international finance agencies.
"The governments will act as guarantors for private money," he said.
World Link will save North America and Russia $20 billion a year on electricity costs, said Vasily Zubakin, deputy chief executive officer of OAO Hydro OGK, Unified Energy's hydropower unit and a potential investor in the project.
"It's cheaper to transport electricity east, and with our unique tidal resources, the potential is real," Mr. Zubakin said. Hydro OGK plans by 2020 to build the Tugurskaya and Pendzhinskaya tidal-power plants, which would each produce as much as 10 gigawatts of electricity by capturing the energy of moving water in tides and currents in the Okhotsk Sea close to Sakhalin Island.
The project envisions building high-voltage power lines to supply the new rail links and also export electricity to North America.
Russian Railways is working on the rail route from Pravaya Lena, south of Yakutsk in the Sakha republic, to Uelen on the Bering Strait. The 2,170-mile link could carry commodities from eastern Siberia and Sakha to North American markets, said Artur Alexeyev, Sakha's vice president.
The two eastern regions hold most of Russia's metal and mineral reserves "and yet only 1.5 percent of it is developed due to lack of infrastructure and tough conditions," Mr. Alexeyev said.
Rail links in Russia and the United States, where a 1,200-mile stretch from Angora to Fort Nelson in Canada would continue the route, would cost up to $15 billion, Mr. Razbegin said. With projected cargo traffic of as much as 100 million tons a year, the investment in the rail section could be recouped in 20 years.
"The transit link is that string on which all our industrial cluster projects could hang," Mr. Zubakin said.
Japan, China and South Korea have expressed interest in the project, with Japanese companies offering to dig the tunnel under the Bering Strait for $60 million per kilometer -- half the projected price, Mr. Razbegin said.
Skeptics are wary, however.
"This will certainly help to develop Siberia and the Far East, but better port infrastructure would do that too and not cost $65 billion," said Mr. Nadorshin of Trust Investment Bank. "For all we know, the U.S. doesn't want to make Alaska a transport hub."

http://www.washtimes.com/functions/print.p...19-120549-2665r

[ABLAT Staff]

Russia Plans World's Longest Tunnel, a Link to Alaska (Update4)

By Yuriy Humber and Bradley Cook

April 18 (Bloomberg) -- Russia plans to build the world's longest tunnel, a transport and pipeline link under the Bering Strait to Alaska, as part of a $65 billion project to supply the U.S. with oil, natural gas and electricity from Siberia.

The project, which Russia is coordinating with the U.S. and Canada, would take 10 to 15 years to complete, Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, told reporters in Moscow today. State organizations and private companies in partnership would build and control the route, known as TKM-World Link, he said.

A 6,000-kilometer (3,700-mile) transport corridor from Siberia into the U.S. will feed into the tunnel, which at 64 miles will be more than twice as long as the underwater section of the Channel Tunnel between the U.K. and France, according to the plan. The tunnel would run in three sections to link the two islands in the Bering Strait between Russia and the U.S.

``This will be a business project, not a political one,'' Maxim Bystrov, deputy head of Russia's agency for special economic zones, said at the media briefing. Russian officials will formally present the plan to the U.S. and Canadian governments next week, Razbegin said.

The Bering Strait tunnel will cost $10 billion to $12 billion, and the rest of the investment will be spent on the entire transport corridor, the plan estimates.

``The project is a monster,'' Yevgeny Nadorshin, chief economist with Trust Investment Bank in Moscow, said in an interview. ``The Chinese are crying out for our commodities and willing to finance the transport links, and we're sending oil to Alaska.''

In Alaska, a supporter of the project is former Governor Walter Joseph Hickel, who plans to co-chair a conference on the subject in Moscow next week.

``Governor Hickel has long supported this concept, and he talks about it and writes about it,'' said Malcolm Roberts, a senior fellow at the Anchorage-based Institute of the North, a research policy group focused on Arctic issues. Hickel governed Alaska from 1966 to 1969 as a Republican and then from 1990 to 1994 as a member of the Independence Party.

Alaska's current officials, however, are preoccupied with other issues, including a plan to develop a pipeline to transport natural gas from the North Slope to the lower 48 U.S. states, Roberts said.

The U.S. government's Federal Railroad Administration isn't directly involved in talks about the link, agency spokesman Warren Flatau said today.

Finance Agencies

Tsar Nicholas II, Russia's last emperor, was the first Russian leader to approve a plan for a tunnel under the Bering Strait, in 1905, 38 years after his grandfather sold Alaska to America for $7.2 million. World War I ended the project.

The planned undersea tunnel would contain a high-speed railway, highway and pipelines, as well as power and fiber-optic cables, according to TKM-World Link. Investors in the so-called public-private partnership include OAO Russian Railways, national utility OAO Unified Energy System and pipeline operator OAO Transneft, according to a press release which was handed out at the media briefing and bore the companies' logos.

Russia and the U.S. may each eventually take 25 percent stakes, with private investors and international finance agencies as other shareholders, Razbegin said. ``The governments will act as guarantors for private money,'' he said.

The World Link will save North America and Far East Russia $20 billion a year on electricity costs, said Vasily Zubakin, deputy chief executive officer of OAO Hydro OGK, Unified Energy's hydropower unit and a potential investor.

Transport Electricity

``It's cheaper to transport electricity east, and with our unique tidal resources, the potential is real,'' Zubakin said. Hydro OGK plans by 2020 to build the Tugurskaya and Pendzhinskaya tidal plants, each with capacity of as much as 10 gigawatts, in the Okhotsk Sea, close to Sakhalin Island.

The project envisions building high-voltage power lines with a capacity of up to 15 gigawatts to supply the new rail links and also export to North America.

Russian Railways is working on the rail route from Pravaya Lena, south of Yakutsk in the Sakha republic, to Uelen on the Bering Strait, a 3,500 kilometer stretch. The link could carry commodities from eastern Siberia and Sakha to North American export markets, said Artur Alexeyev, Sakha's vice president.

The two regions hold most of Russia's metal and mineral reserves ``and yet only 1.5 percent of it is developed due to lack of infrastructure and tough conditions,'' Alexeyev said.

Cluster Projects

Rail links in Russia and the U.S., where an almost 2,000- kilometer stretch from Angora to Fort Nelson in Canada would continue the route, would cost up to $15 billion, Razbegin said. With cargo traffic of as much as 100 million tons annually expected on the World Link, the investments in the rail section could be repaid in 20 years, he said.

``The transit link is that string on which all our industrial cluster projects could hang,'' Zubakin said.

Japan, China and Korea have expressed interest in the project, with Japanese companies offering to burrow the tunnel under the Bering Strait for $60 million a kilometer, half the price set down in the project, Razbegin said.

``This will certainly help to develop Siberia and the Far East, but better port infrastructure would do that too and not cost $65 billion,'' Trust's Nadorshin said. ``For all we know, the U.S. doesn't want to make Alaska a transport hub.''

The figures for the project come from a preliminary feasibility study. A full study could be funded from Russia's investment fund, set aside for large infrastructure projects, Bystrov said.

To contact the reporters on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net ; Bradley Cook in Moscow at bcook7@bloomberg.net .

Last Updated: April 18, 2007 16:38 EDT

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[ABLAT Staff]

Venezuela's Chavez to finalise Russian submarines deal

Jun 14 02:27 AM US/Eastern

Venezuelan President Hugo Chavez is expected to finalise a deal on buying up to nine Russian submarines during a visit here later this month, a Russian newspaper reported on Thursday.
Caracas has already ordered five 636-type diesel submarines and four of a new model of diesel submarine, the 677E Amur, the Kommersant broadsheet said, quoting unnamed sources in the ship-building and arms export sectors.

Chavez may have to settle for the older 636 submarines for the time being as the new 677E Amur has not yet been presented to Russia's own navy, a source at the arms export agency Rosoboronexport said.

"To start off with they were insisting on only the Amurs but were then persuaded to take the 636 vessels," the source told Kommersant.

The paper said Chavez planned to visit Russia on June 29, less than a year after a visit last July, the paper said.

If it goes ahead, the deal is likely to become a "new irritant in relations between Moscow and Washington," the paper commented.

Venezuela has become a major buyer of Russian arms in recent years, angering the United States, which worries about Chavez's anti-American tone.

Since 2005 Caracas has spent 3.4 billion dollars (2.6 billion euros) on arms from Russia, including 24 fighter planes, 35 military helicopters, air defence systems and 100,000 kalashnikov rifles, the paper said.

Venezuela wants the submarines in order to overcome a possible US naval blockade, the paper said.

The deal "could become a new irritant in relations between Moscow and Washington," Kommersant said.

Between 2004 and 2006 Russia supplied eight of the 636 submarines to China and is now building two such submarines for Algeria, Kommersant added.

http://www.breitbart.com/article.php?id=07...;show_article=1

[ABLAT Staff]

Chavez to head to Russia, Belarus, Iran

Tuesday, June 26, 2007 - ©2005 IranMania.com

LONDON, June 26 (IranMania) - Venezuelan leader Hugo Chavez travels this week to Iran, Russia and Belarus, all countries which have found themselves at loggerheads recently with the United States, his longtime nemesis, Agence France-Presse (AFP) reported.

Chavez departs Tuesday for his week-long tour, from June 26 to July 3, defiantly insisting that he will purchase Russian submarines and possibly an air defense system from Belarus, despite vocal objections from Washington.

Chavez, who views himself as Bush's arch-enemy, will be cultivating relations with each of the regimes, in an apparent bid to drive an even deeper wedge with between the United States and its adversaries.

"The war of resistance is the weapon with which we are defeating and will defeat the threat of imperial war," Chavez said Sunday presiding over a military parade, dressed in full military uniform.

"We've launched into a new type of global war in the wake of the Cold War, and especially after September 11, 2001," he said referring to the terrorist attacks on US soil that triggered a US-led military response in Iraq and Afganistan.

Each of the countries on Chavez's itinerary has locked horns with Washington in recent weeks over conflicts that have yet to be resolved.

Chavez has said he hopes to put the "finishing touches" on an agreement to purchase from Belarus an integrated air defense system with a 200-300-kilometer range (125-200 miles).

Earlier this month, US President George W. Bush renewed sanctions against hard-line Belarus President Alexander Lukashenko and nine others deemed obstacles to democracy in Belarus.

Bush accused the regime of human rights abuses, undermining democracy, illegally detaining and secretly holding dissidents and engaging in public corruption.

Relations between Russia and the United States, meanwhile, are at a post-Cold War low due to political and security differences.

Bush will welcome Russian President Vladimir Putin to his family's compound in Kennebunkport, Maine on July 1 and 2 -- on the heels of Chavez' visit to Moscow.

Flush with petrodollars, Chavez said last week he might purchase some Russian submarines when he meets with Putin -- a deal observers said could chill the planned Putin-Bush summit.

Media reports in Moscow this month said Chavez wanted to buy as many as nine submarines to protect shipping lanes for key oil exports.

In 2006 Venezuela signed more than three billion dollars in contracts with Russia to buy 53 Mi-24 armored helicopter gunships, Sukhoi 30 fighter planes and 100,000 Kalashnikov rifles.

Meanwhile Washington's already frosty relations with Tehran also hit a new low, as the international community campaigned to pressure Iran to dismantle its controversial nuclear program.

The United States, which broke diplomatic ties with Iran in 1979, also is demanding the safe return of four Iranian-American citizens whom Tehran has charged with spying.

It is not yet known what Chavez plans to do in Iran, which is a charter member of Bush's "axis of evil" troika of alleged global trouble-makers that included North Korea and Iraq under the late Saddam Hussein.

Tehran in recent weeks has implemented a crackdown on its nationals deemed too close to the West.

In an address to some 15,000 young members of his new party now being set up, the United Socialist Party of Venezuela, Chavez last week said some had the idea his trip to Russia would complicate US-Russian relations.

"In the United States, they say my trip to Moscow is a concern and that they don't look favorably on my meeting with the president, my friend Vladimir Putin," Chavez said Saturday, accusing Washington of meddling where it doesn't belong.

"These relations are highly strategic, and are tied up with our security, defense, and overall development," he said.

During Sunday's military parade, Chavez brandished a Russian-designed AK-47 assault rifle proclaiming: "If it weren't for Russia we'd be almost weaponless today.

"We must recognize the Russian government's bravery for not caving in to the pressures of the empire that intended to disarm us."

http://www.iranmania.com/News/ArticleView/...rrent%20Affairs

[ABLAT Staff]

Chavez seeks investment, submarines from Russia
June 30, 2007

By Mansur Mirovalev
ASSOCIATED PRESS - MOSCOW — Venezuelan President Hugo Chavez called on Russian business leaders yesterday to boost their investment in his country, criticizing U.S. companies as "vampires" and inviting Russians to help develop a massive oil deposit.

Mr. Chavez, a firebrand leader and vehement U.S. critic, also reportedly confirmed that his country would be negotiating with Russia about purchasing submarines. Russian media speculated that one of Mr. Chavez's key goals during his trip to Moscow was to arrange a major purchase of Russian weaponry.

At a meeting with Russian lawmakers, Mr. Chavez again suggested that the United States had threatened Venezuela and was categorically opposed to Venezuela's buying submarines, according to Russian news agencies.

Mr. Chavez arrived Wednesday amid widespread speculation that he wanted to sign a major arms deal, and President Vladimir Putin said the weapons trade was among the topics of their talks late Thursday when he met with Mr. Chavez.

Earlier yesterday, an official with the Russian arms sales monopoly Rosoboronexport said the sides were in talks on the possible purchase of five Project 636 Kilo-class diesel submarines, according to a news report.

"We are conducting these talks, and I hope that this agreement is possible," Innokenty Naletov was quoted as saying by RIA-Novosti. He said there was also discussion on supplies of military equipment for ground and air forces.

Venezuela already purchased some $3 billion worth of arms from Russia, including 53 military helicopters, 100,000 Kalashnikov rifles, 24 SU-30 Sukhoi fighter jets and other weapons. The United States has voiced concern about Venezuela's military spending.

Mr. Chavez told Russian business leaders that he expects development of a "road map" that will boost and diversify Russian-Venezuelan business ties — especially in the energy sector, including construction of a natural-gas pipeline and oil refineries.

With Russia's help, Venezuela is ready to build four oil refineries and plans another 13, he said.

He also invited Russian oil companies to help develop the Orinoco River basin, recognized as the world's single-largest known oil deposit, potentially holding 1.2 trillion barrels of extra-heavy crude.

U.S. giants Exxon Mobil Corp. and ConocoPhillips refused to sign deals this week to keep pumping heavy oil under tougher terms in the basin, signaling their departure from the deposit as Mr. Chavez tightens state control on the oil industry.

http://www.washingtontimes.com/apps/pbcs.d...mplate=printart

[ABLAT Staff]

Iraqi oil minister: No special deals for Russia
Associated Press, THE JERUSALEM POST Aug. 9, 2007

Iraq's national oil company will develop the country's giant West Qurna field and decide which foreign companies to work with, the country's oil minister said Thursday, after meeting with the top executive from the Russian oil giant seeking to resume its work at the field.

Husayn al-Shahristani told reporters in Moscow that OAO Lukoil's previous experience in Iraq gives it a competitive advantage in gaining new contracts there, but the company will get no special treatment from the government.

Lukoil's experience "increases chances of this company winning at the free and open tenders that will be held," he said.

Lukoil had an agreement with Saddam Hussein's government to drill at West Qurna, and since Saddam's overthrow and the US-led invasion has been angling to get renewed access to the field.

http://www.jpost.com/servlet/Satellite?cid...Article/Printer

[ABLAT Staff]

Saudi-Russian Trade Relations Deepen
Dr. John Sfakianakis

RIYADH, 21 November 2007 — Saudi Arabia’s relations with Russia (and formerly, the Soviet Union) date back to 1924. Indeed, the Soviet Union was the first state to establish full diplomatic relations with the Kingdom, in 1932 — a year which also saw a visit to Moscow by the then Prince Faisal, who became King in 1964. But diplomatic ties between Riyadh and Moscow were maintained only until 1938.

Relations between the two countries were eventually restored in September 1990, at the height of tensions in the Gulf, following Iraq’s invasion of Kuwait in August of that year.

When then Crown Prince Abdullah went to Moscow in September 2003, he became the most senior Saudi official to visit Russia since 1932. And in February 2007, President Putin became the Russian first head of state to visit Saudi Arabia.

Prior to the 1990s, trade between Russia and the Kingdom was virtually non-existent. It was only from the mid-nineties onwards that we saw significant trade between the two countries take hold. Russia’s exports to Saudi Arabia in 1997 were valued at SR419 million ($112 million), which made it the 34th largest exporter to the Kingdom. By 2006, Russia was ranked at 24th — with total exports amounting to SR2.6 billion ($693 million), an increase of 533 percent.

Within that growth, the past two years (2005 and 2006) have been the best yet in the history of Saudi-Russian trade relations. Russian exports for 2004 had reached SR990 million ($237 million) — but jumped by 51 percent in 2005 to SR1.5 billion ($400 million), and by a further 77 percent in 2006 to the figure mentioned above. In 2007, we expect Saudi imports from Russia to achieve a record SR3.1 billion ($826 million).

Traditionally, the barley crop and a variety of metal products have been Russia’s major exports to Saudi Arabia. The Kingdom is one of the world’s largest barley users and imported a total of 7.5 million tons in 2006, equating to SR4.5 billion ($1.2 million). In fact, Ukraine is the largest exporter of barley to Saudi Arabia, with a 39 percent market share (2006), followed by Australia with 33 percent and Russia, providing 9.2 percent. Livestock operations account for 78 percent of all barley use — sheep being the largest consumers, followed by camels. Although barley and various iron products had been the principal Russian exports, 2006 saw pure copper rods and sticks — used in many electrical engineering applications — become the Kingdom’s single largest imported item from Russia.

The trade amounted to SR747 million ($199 million) worth of copper rods and sticks, in addition to other copper and semifinished iron products. In total, during 2006, the Kingdom imported SR1.1 billion ($293 million) in semifinished iron and steel — with Turkey and the Ukraine as the principal exporters of these products.

For Saudi Arabia — unlike other countries such as Syria, Egypt and Libya — Eastern Europe has not traditionally been a major source of imports. But since 2001, import volumes have increased not only in line with the Kingdom’s economic growth, but also as a result of quality improvements and cost advantages (mainly labor costs) in Eastern Europe. Imports from the region (including some member states of the EU-25) have risen by 94 percent in the two years ending 2006. As an example, around one-third of mobile phones imported into Saudi Arabia are manufactured in Hungary.

Saudi Arabia has historically exported very little to Russia, due largely to the lack of diplomatic ties during the Soviet Union years. Moreover, Saudi exports to Eastern Europe as a whole were never substantial, as those countries derived their oil from the Soviet Union and, since the nineties, have sourced oil and related products from Russia and the Central Asian Republics.

However, Saudi exports to Russia have witnessed a marked improvement since the late 1990s, albeit starting from a very low base of negligible trade. Only in 2002 did Saudi exports reach a meager SR25 million ($6.6 million) — increasing to SR46 million ($12.2 million) in 2005. Russia ranked as the 76th largest recipient of Saudi exports in 2006, up from 106th position in 1997. The Kingdom’s principal exports are currently surface paint, fresh grapes, and iron towers for use in the shipbuilding industry.

While it continues to procure arms and weapon systems from established suppliers in the West, the Kingdom is actively seeking out new sources of military hardware.

Helicopters are currently the focus of much attention. At the recent Dubai Air Show, Saudi Arabia’s interior ministry announced that it had reached an agreement to acquire 40 helicopters from United Technologies’ Sikorsky Aircraft Corporation. The deal comprises 16 of the S-92® model, 15 of the S-76® multi-mission version and nine Schweizer 434 training helicopters.

“On the face of it...it seems that we are rivals. But considering the world’s growing demand for energy, that is not so...Russia and Saudi Arabia are the world’s leading energy producers and exporters — and here, it is easy for us to find common ground,” said Russian President Vladimir Putin during his visit to the Kingdom.

Together, Russia and Saudi Arabia account for a quarter of the world’s oil production (including natural gas liquids).

Russia at times produces even more oil than Saudi Arabia, as happened on occasions during 2006. Also in that year, Saudi Arabia with SR357 billion ($95 billion) and Russia with SR360 billion ($96 billion) were among the top five current account surplus holders in the world.

According to the Energy Information Administration (EIA), Russia holds the world’s largest natural gas reserves, the second largest coal reserves and the eighth largest oil reserves.

In 2006, as the leading oil producer in Europe and Eurasia, Russia delivered 12.3 percent of the world’s total oil production.

In the Middle East region, Saudi Arabia is the largest producer, responsible for 13.1 percent of global oil output in 2006. In the same year, according to the IEA (International Energy Agency), Russia was the world leader in natural gas, with 21.8 percent of global production, and also the biggest natural gas exporter, with a 24 percent share of the international market.

As a result of the global oil price boom, Saudi Arabia and Russia have accumulated huge official foreign assets. As of October 2007, the combined foreign assets of Saudi and Russian central banks amounted to SR2.5 trillion ($691 billion). In 2004, unlike the Kingdom, Russia established a stabilization fund, which is invested abroad only to prevent high inflationary pressures.

In November 2007, the value of the fund was estimated at SR551 billion ($147 billion) — an increase of 80 percent since August 2006.

Over the past three years, Russian investments in Saudi Arabia have enjoyed considerable prominence. LUKoil was awarded a tender (LUKoil Saudi Arabia) to develop the 11,200- square-mile “Zone A” natural gas field in the Rub Al-Khali, signing a 40-year contract with Saudi Arabia to explore and develop the field.

LUKoil Overseas holds an 80 percent stake in LUKoil Saudi Arabia, with the remainder held by Saudi Aramco.

Meanwhile, Stroitransagaz, the engineering arm of Russia’s state-controlled gas monopoly Gazprom, has established a joint venture with construction company Saudi Oger to bid for contracts with Saudi Aramco.

Gazprom itself holds a quarter of the world’s known gas reserves, produces 16 percent of global output and supplies 25 percent of EU needs, via the Ukraine and Belarus.

Such joint initiatives bode well for the future of Saudi-Russian trade relations — and perhaps bear out Putin’s assertion that the way forward lies in collaboration, not competition.

(Dr. John Sfakianakis is chief economist, SABB. He is based in Riyadh)

http://www.arabnews.com/?page=6&sectio...m=11&y=2007