Royal Dutch Shell Group .com Rotating Header Image

New York Times Editorial: Another Bad Idea From the Kremlin

Published: February 9, 2007

The Russian energy minister, Viktor Khristenko, piously declared on Tuesday that Russia’s meetings with other gas producers were intended only to improve energy security, and that any talk of a cartel was the product of a “sick imagination.” A curious insistence since the idea of a cartel has been discussed by President Vladimir Putin, who recently called OPEC-like cooperation with Iran for gas “an interesting idea” — though, of course, its goal would be to better serve customers, not fix prices.

The Kremlin is full of disturbing and counterproductive ideas these days on how it can wield its energy resources, not to mention shield its economic client Iran from international pressure. And if it looks as if a cartel might serve Mr. Putin’s ambitions, the world should pay close attention.

There are reasons why a gas cartel could not work like an oil cartel. Gas is generally delivered over pipelines and is expensive to store, leaving sellers as well as buyers dependant on long-term contracts. Moscow has also stayed out of OPEC.

What arouses anxiety over the new cartel talk — especially in Europe, which relies on Russia for more than a quarter of its natural gas — is the fact that Mr. Putin has already managed to get most of Russia’s energy production and distribution under the Kremlin’s control.

Even as Mr. Putin and the state gas monopoly, Gazprom, insist that they are reliable suppliers, their record is far different. They destroyed a defiant domestic oil company, Yukos, tried to muscle Ukraine and Belarus into turning over their portions of the old Soviet pipeline network, and leaned on Shell to gain control over the Sakhalin gas project.

Mr. Putin needs to understand that Russia’s long-term economic and strategic interests depend on its playing by the international rules, rather than breaking them. Russia is still not capable of developing its oil and gas by itself, and the expertise it needs lies almost entirely in the West. So yes, Mr. Khristenko, number us among those who mistrust the Kremlin — and prove us wrong.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Comments are closed.

%d bloggers like this: