MOSCOW. March 14 (Igor Tomberg for RIA Novosti)
The visit by Russian President Vladimir Putin to
Algeria in the first half of March 2006 was brief but very productive. The media
front-paged Russia’s readiness to write off Algerian debts in exchange for the
purchase of arms. But the main success of the visit was achieved in energy
First, the talks produced additional
preferences – a monopoly right of Russian companies to oil production in the
Sahara Desert. Algeria is Africa’s third nation in oil reserves after Libya
Specific agreements on energy cooperation will be
reflected in the documents some time later. They include a memo of mutual
understanding between LUKoil and the Algerian Sonatrak petrochemical company.
Gasprom will also sigh a similar document with the latter.
The second, and most important point is that the
results of the gas negotiations are very promising for Russia. Gazprom CEO
Alexey Miller said that his company and Sonatrak would jointly produce gas and
develop deposits in the north of Africa.
“We will help Algeria upgrade its production systems.
They will share with us their priceless experience in gas liquefaction. In the
1960s Algeria became a pioneer in this field. Now Moscow is going to produce
liquefied gas as well”, stressed Miller. Algeria has already promised to take
part in building infrastructure for the production of liquefied natural gas
(LNG) in Russia, he added. Importantly, Russia and Algeria are going to work
together in the European market. In theory, Algerians may receive a portion of
Russian contracts for the supply of Europe with gas. But the sides prefer not to
reveal the details of their agreements.
Algeria ranks seventh in the world in
natural gas reserves and fourth in its exports – 60 billion cu m a year –
after Russia, Canada, and Norway. Algeria exports its natural gas via pipelines
to Italy, Spain, Portugal, Tunisia, and Slovenia. Its LNG goes to France, Spain,
the U.S., Turkey, Belgium, Italy, Greece and South Korea.
The Russian President’s visit has sealed last
January’s agreements, which give Gazprom access to deposits in Sahara. The
Russian monopoly will fulfill some of its commitments by delivering Algerian gas
The results of the President’s blitz-visit to Algeria
should be viewed in the context of Moscow’s strategic goal to turn Russia into
a global energy leader. The situation in the developing gas market is very
important in this respect. The formation of the market inevitably generates a
package of new mutual dependencies and geopolitical groups, production and
cooperation chains and price cartels, which may be regional or even global. By
entering world trade, natural gas is turning into a decisive factor of
An international forum of natural gas exporters, set up
in 2001, is so far playing an advisory role, but it is becoming increasingly
important in the world gas market. Russia is gaining more and more weight in it.
It is possible that natural gas exporters will soon turn into a kind of gas
OPEC, which will be indisputably led by Russia.
Experts have come up with this idea when Russia started
coordinating different aspects of its gas policy (pricing, above all) with
Kazakhstan and Turkmenistan. Gazprom is suspected of a striving to fulfill its
external contractual commitments by using resources of neighbors. This maneuver
will enable Russia to become a gas integrator on the entire post-Soviet space.
Russia will set prices at the future integrated market,
concludes the report compiled by joint efforts of Stanford and Huston
Universities in 2005. Its authors played several scenarios before arriving at
this conclusion. It looks like these scenarios start materializing. In
mid-November 2005, Kazakhstan and Russia signed an agreement on gas transit from
Turkmenistan and Uzbekistan. De facto Gazprom has taken control over the gas
resources of these three republics.
Russia, Kazakhstan, Turkmenistan, Uzbekistan, and Iran
have tremendous reserves of gas and are actively developing its production and
transportation infrastructure. Their cooperation and common political interests
are a prerequisite for the formation of a major regional gas alliance. The
absence of gas markets in India, Pakistan and China makes this idea even more
appealing. Moreover, gas is expected to account for up to 70% of the increase in
the demand for energy.
Growing tensions between Western gas consumers and
Muslim gas producers in the Middle East will further encourage gas producers to
set up the alliance. Today, we are witnessing the exacerbation of the conflict
between the West and Iran. Or take another scenario – a riot of ethnic North
Africans in France. In these conditions both Iran and Algeria would like to
strengthen their positions as energy suppliers.
The Russian-Algerian gas agreement is a major step for
this North African country towards joining the future cartel of gas exporters.
Since Europe views it as Russia’s major rival in its gas market, this step
will make the future gas alliance supra-regional, and will consolidate the
positions of all producers at the talks with consumers. Russia’s G8 Presidency
makes it an obvious leader in this still informal international forum. Analysts
will see the Algerian visit of President Putin and its oil and gas results in
the context of a would be gas OPEC under Russia’s strong influence.
(The author has a doctorate degree in economics, and is
a leading expert at the Institute of Economics of the Russian Academy of