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Russia Signs Deal for Gas Pipeline Along Caspian Sea

Judy Dempsey, New York Times
Desperate to meet growing domestic and European demand, Russia signed a deal Thursday with the Central Asian republics of Kazakhstan and Turkmenistan to build a natural gas pipeline along the Caspian Sea, a move that analysts said could strengthen Russia’s monopoly on energy exports from the region.

… Russia supplies more than a quarter of Europe’s gas needs; several Eastern European countries are almost completely dependent on Russia for natural gas.

Gazprom, Russia’s state-owned energy monopoly, has had to seek new and expensive suppliers, mostly in Central Asia, to fulfill its export contracts in Europe while also supplying its domestic market, which has rapidly expanded because of the surge in consumer spending and economic growth.

“The reality is that Russia is not investing enough in its own gas infrastructure and has not enough of its own gas to supply Europe and its domestic market,” said Andrew Monaghan, director of the Russian Research Network at the Defense Academy of the United Kingdom.
(21 December 2007)

Russia’s Big Energy Secret

Owen Matthews, Newsweek
Putin wields gas as a weapon. But the reality is that Russia can barely meet its own growing demand.

Gazprom, the Russian natural-gas giant, is often portrayed as the 1,000-pound gorilla of the energy world. Over the past few years, the company has had huge success in locking in lucrative European markets. It has also been ruthless about making consumers in the former Soviet Union pay something close to world prices for their gas-cutting off supplies, if necessary, to force reluctant customers like Ukraine to pay up. But problems are brewing. Gazprom, it turns out, has too many customers, and too little gas.

The surprising Achilles’ heel of Gazprom is that it produces only about 550 billion cubic meters (bcm) of gas-just enough to supply its own domestic market. It relies on cheap imports from Central Asia to meet the majority of its other commitments to customers in Europe, amounting to nearly 80bcm. And since only Gazprom’s foreign customers pay full market value, it’s the company’s exports which make up the bulk of Gazprom’s revenues-$21 billion for the second quarter of 2007 alone. Now those nations on which Gazprom’s profits rely-including Turkmenistan, Uzbekistan and Kazakhstan-are beginning to cut their own deals with big new customers like China. The deals are in turn becoming an existential threat to Gazprom, one of Russia’s most valuable strategic levers of power.
(31 December 2007)

Russia, Kazakhstan, Turkmenistan sign Caspian pipeline accord

Nick Coleman, AFP
Russian President Vladimir Putin and Kazakh counterpart Nursultan Nazarbayev oversaw a major new deal on Thursday to build a natural gas pipeline from Turkmenistan to Russia via Kazakhstan.

The agreement “on cooperation in building the Caspian pipeline” was signed by ministers from Russia, Kazakhstan and Turkmenistan. It is aimed at ensuring Russian gas supplies to energy-hungry countries in the European Union.
(20 December 2007)

The Pipeline War: As the CondiBoys Bicker, Putin Laps The West Again

Steve LeVine, The Oil and the Glory
Vladimir Putin has advanced again in the principal current theater of battle between the West and Russia — the European pipeline war. His antagonists meanwhile are bickering over who will general their troops.

As wars go, this one is easy to figure out. It’s purely business driven — over who will dominate Europe’s energy market — and the spoils are political influence in Europe, where the votes are decisive on numerous issues vital to the West, in particular the U.S.

Russia, which currently controls about a third of Europe’s oil and natural gas market, is seeking to enhance its dominance further by building large, new natural gas pipelines into northern and southern Europe.

On the other side, the European Union and the U.S. are trying to lessen Russian influence by building a competing set of natural gas pipelines into Europe.

The improbable key for both sides is that little can happen unless a single state — Turkmenistan — goes along. It possesses the world’s fourth-largest reserves of natural gas, and it’s these supplies that would make either side’s pipeline strategy work.

So both the West and Russia have been assiduously courting this desert Central Asian nation, and its new president, Gurbangly Berdymukhamedov.
(20 December 2007)