Sunday, April 23, 2006

Gazprom's Huff and Puff

Richard Wachman of The Guardian's Unlimited "Observer" wrote a brief opinion piece today that might summarize it best:
Gazprom huffs and puffs, but it's all hot air

Gazprom , Russia's state-controlled gas monopoly, has shot itself in the foot for the second time in three months. Its jaw-dropping ineptitude means it is now extremely doubtful that it will ever be able to acquire European energy companies such as Centrica, owner of British Gas.

First, we had the Ukrainian fiasco, when Gazprom, which supplies a quarter of Europe's energy needs, threatened to cut off supplies if the Ukrainians didn't agree to steep price increases - punitive action that would also have affected most of Europe. Then last week, chief executive Alexei Miller warned the European Union that if it thwarted Gazprom's international ambitions, it would divert supplies elsewhere: China, central Asia and the US.

Miller's latest broadside comes after it emerged that the British government considered amending merger rules to allow it to block a takeover of Centrica. After last week, UK ministers will surely be dusting down those plans.

Gazprom has only itself to blame: running around Europe and telling people to expect a smack over the head if they don't give it what it wants is hardly a way to win friends and influence people. And Gazprom's threats are silly from a different perspective. How will it pump gas into the Far East? There are precious few pipelines into the region. It will have to spend billions on new infrastructure that will take years to build.

For all Gazprom's huffing and puffing, it needs Europe as much as Europe needs it.
Subtlety would appear not to be one of Alexei Miller's strong suits.

Vilhelm Konnander has more on the topic, citing a Washington Post editorial "Imperialist Gas". From Mr. Konnander's post:
An editorial in Sunday's Washington Post - "Imperialist Gas" - claims that 'Russia doesn't want to "politicize" energy sales. It just wants to use them to bully its neighbors.' Expectations that Russia would restrain itself in its imperial ambitions during the country's 2006 G8 presidency thus seem to have been falsified. Instead, Moscow continues its increasingly aggressive energy policy towards not only its "near abroad" but also European and global markets.

According to the editorial, Alexei Miller, Gazprom chairman, last week threatened EU governments that 'his company will sell its products in other markets unless they give way to its "international ambitions".' The background was reactions against Gazprom plans to buy Britain's largest gas company. Thus, Miller denounced 'supposed Western attempts to "politicize questions of gas supply"' despite the fact that it is now becoming increasingly apparent that Russia is using the "energy weapon" to 'restore Moscow's dominion over neighbours' such as, on the one hand, Russia-defiant Ukraine and Georgia, and on the other hand, Russia-friendly Armenia and Belarus, and in the process affecting energy supplies to EU-countries.
It would appear sometimes that the strong-arming success of the Russian mafia in business dealings within Russia, has taught Russian businessmen to follow comparable tactics on the international markets. Continued tactical mistakes of this nature will certainly encourage European nations to develop renewable and alternative energy resources. Perhaps Mr. Miller and Mr. Putin are secretly members of Greenpeace, and they seek to scare the world off of Russian gas and oil.

If so, they are really off to a great start. Only they could make buying an almost necessary product with little competition outside of Russia seem like a bad deal.

1 comment:

ChinaLawBlog said...

Those running Russia and its largest companies were at one time all staunch communists. In communist Russia, calling someone a "biznizman" was the supreme insult. It is going to take some time to change the business menality there.

china law