Gazprom’s Businesss with Iran

The USG Open Source Center summarizes Russian press comment on the Gazprom deals with Libya and Iran. The deal with Iran is extremely important because if it goes forward, it would require Russia to tangle with US economic sanctions.

OSC Report: Russian Media View Implcations of Gazprom Deals With Libya, Iran
Russia — OSC Report . . .
Friday, July 18, 2008

Russian Media View Implications of Gazprom Deals With Libya, Iran The Russian gas monopoly Gazprom held substantive talks with Libya and signed a memorandum of understanding with Iran, adding two more participants to its policy of geographical diversification of gas and oil sources. Many Russian media harked back to the idea of a “gas OPEC” and also pointed out that Gazprom’s cooperation with the two countries made Europe’s search for alternative energy suppliers much more difficult. While some media saw a chance for Russia to fill the void left by Western oil companies’ decisions to pullout of Iran, others commented that the agreements were more political than economic and might not be carried out. . .

On 13 July, Gazprom signed a memorandum of understanding with the National Iranian Oil Company, with some provisions similar to the agreement reached with Libya. The two companies proposed a joint venture for exploration and development of gas and oil fields in Iran, and to build refining and transport facilities in Russia, Iran, and “third countries.”

Some media hypothesized that the new cooperation agreement smight resurrect the idea of an international gas cartel similar to OPEC.

. Elite-oriented Gazeta opined that Russian-Iraniancooperation in producing gas “could lead to creation of a gas analog to OPEC” (14 July) . .

Many media opined that Gazprom’s control over Libyan and possibly Iranian gas and oil exports would make Europe even more dependent onthe Russian company.

. Independent daily Nezavisimaya Gazeta stated that Gazprom had Europe “in a vise,” expanding into areas like Africa, whichE urope had traditionally regarded as an alternative to Russian supplies.”Europe risks being completely dependent on Gazprom,” the paper predicted (15 July).

. Business Internet publication RBCdaily cited Kapitalcompany analyst Vitaliy Kryukov, who noted that Gazprom’s strengthened positioncaused “a negative reaction in the world community” (10 July). . .

Government daily Rossiyskaya Gazeta recalled that the EU had viewed Libyan resources as an alternative to Russian supplies, butdue to Gazprom’s deal with Libya, EU companies “trading with Libya willstill have to deal with Gazprom as a middleman” (11 July). . .

. Gazeta cited experts’ opinions that Gazprom “had every chance to occupy the freed-up spot” formerly held by the French companyTotal (11 July).

. The oil and gas industry Internet site Novosti TEK, commenting on the Western companies leaving Iran, noted that Gazprom was “the only company which doesn’t fear political instability in Iran” (16 July).

Some media and commentatorsexpressed doubt that the deal with Iran would be successful.

. Influential daily Kommersant cited Mikhail Korchemkin,director of East European Gas Analysis, who called the Gazprom-Iranian OilCompany memorandum a “political document” that would remain “onpaper” until the situation in Iran “changes profoundly” (15 July).

. quoted Troyka Dialog analyst Valeriy Nesterov,who pointed out that “concrete actions do not always follow memoranda ofcooperation,” recalling many such memoranda Gazprom had signed with Westerncompanies that “were not fully carried out or not carried out at all”(15 July).

Vitaliy Portnikov, writing in the independent Internet site,likened the situation in Iran to that in Iraq, where Russia’s Lukoil had signedcontracts with Saadam Husayn only to lose out to Western companies when hisregime toppled. He suggested that if the situation in Iran stabilized, theleadership would again invite Western investors and Gazprom would be the loser (15 July). ‘

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