Russia to direct gas to Europe to spite US

Moscow, September 25:

A plan to give Europe access to a substantial amount of natural gas from a huge new field originally earmarked for the US market is a direct consequence of US policy toward Russia on WTO membership and sanctions on Russian defense exports, newspapers said on Monday.

The apparent change of thinking on the Shtokman field in the Barents Sea is linked specifically to recently introduced US sanctions on arms export agency Rosoboronexport and on aircraft maker Sukhoi, as well as US refusal to support Russia’s entry into the World Trade Organisation, the daily Vedomosti said.

“The States could not have expected that Moscow would not notice the Rosob-oronexport and Sukhoi issues,” the paper quoted an unnamed source close to the administration of President Vladimir Putin as saying, referring to discussion of reorienting future gas exports.

The United States announced in early August that it was targeting Rosoboron-export and Sukhoi for sanction, alleging that the two Russian firms had been involved in sale to Iran of equipment that could be used to make weapons of mass destruction. Russia, which has been helping Iran build its first nuclear power station, has angrily denied this assertion and has war-ned that the sanctions were a threat to Russian cooperation with US companies.

“Now it can be said that delivery to Europe and the United States from this source will probably occur on a basis of parity,” Vedomosti quoted another source in the Kremlin administration as saying.

The paper said top Gazprom managers had been taken by surprise by Putin’s announcement and quoted one as saying planned use of the Shtokman gas reserves was now in the realm of “big politics”.

Speaking at a press conference after talks Saturday with French President Jacques Chirac and German Chancellor Angela Merkel, Putin said that the proposal to ship some of the gas from the Shtokman field to Europe had originated with the German leader. “At present, Gazprom is reviewing this possibility,” Putin said, referring to Russia’s state-run gas monopoly Gazprom.

“Such a decision might be made in the very near future,” Putin said.

If confirmed, it would be a dramatic shift in orientation of future exports from the Shtokman field, one of the most coveted energy sources in the world with estimated reserves of around 3.2 trillion cubic meters of gas.

Gazprom said on September 6 that it had informed each of the five short-listed foreign companies who are in fierce competition for rights to help develop the Shtokman field that their proposals were still under consideration. Those firms are: France’s Total, Statoil and Hydro of Norway, and ConocoPhillips and ChevronTexaco of the United States.

The daily Kommersant also said that the “reorientation” of the Shtokman project floated by Putin was directly linked to worsening relations between Moscow and Washington.

The 40-year Shtokman project is scheduled to come onstream in 2010 and Kommersant said the plan to divide exports from the field between Europe and the United States “will be the main topic in world energy policy for the next six months, and a point of political conflict with the US.” Kommersant stressed however that it was the German leader who first proposed that Europe receive a share of Shtokman gas exports and that the initiative was “not purely Russian” in origin.