Gazprom still on the march

Der Spiegel has a report on how Gazprom never rests in its quest to dominate, at minimum, the natural gas market.

The Russian gas giant Gazprom on Tuesday issued a sharp warning to Europe not to interfere in its efforts to expand on the continent. "Attempts to limit Gazprom's activities in the European market and to politicize questions of gas supplies, which are in fact entirely within the economic sphere, will not produce good results," Alexi Miller, the head of Gazprom, announced ominously when he met with European ambassadors. "It should not be forgotten that we are actively seeking new markets such as North America and China," he added. "It's no coincidence that competition for energy resources is growing."

Miller's comments were in response to British objections to Gazprom's possible bid for the UK largest energy supplier Centrica. Not content with being the world's biggest producer of natural gas, not to mention the supplier of a quarter of all gas to the European Union, Gazprom clearly is aiming high. As a result of the furor his comments stirred up, Miller has since tried to allay fears that the tap would be turned off on Europe, by saying that existing contracts would be honored. But for many German commentators, those assurances aren't enough to allay fears.

The reference above to North America probably refers to Gazprom's deal with Canada, and the reference to China certainly refers to the deal reached last month.

Just to reinforce Gazprom's global ambitions, the huge Russian gas company is pursuing deals in South America.

Russia and South American energy companies are interested in developing closer ties and could cooperate in building a possible $15 billion-$23 billion natural gas pipeline connecting Venezuela, Argentina and Brazil, Russian Prime Minister Mikhail Fradkov said April 6 after meeting with officials from Brazilian energy companies. Although the project has not been officially proposed, Russian state natural gas monopoly Gazprom and machinery manufacturer Silovye Machiny could become involved and supply energy equipment to Brazil.

And if that isn't enough, no corner on Earth is overlooked by Gazprom. They have their sights on the United States.

Giant Russian gas firm Gazprom will kick-start a late entry in the booming liquefied natural gas market within days, launching a huge Arctic project that it hopes will one day make it the dominant U.S. supplier.

After 15 years of delays, Gazprom —- a former Soviet ministry now worth over $240 billion —- is poised to start down the road to LNG by naming foreign partners whose know-how and capital is key to unlocking the vast Shtokman project.

Entering LNG will free Gazprom from its static pipeline network and allow it to ship gas globally for the first time, giving the export monopoly more bargaining power as it seeks to expand downstream into European markets.

With gas reservoirs equivalent to Exxon’s oil reserves, Shtokman poses an alluring but technically daunting challenge for the five firms shortlisted as possible partners: U.S. majors Chevron< and ConocoPhillips, France’s Total and Norway’s Statoil and Norsk Hydro.

Gazprom wants help producing gas in the iceberg-strewn seas around Shtokman, pumping it 550 km to shore, liquefying it and shipping it to the United States for re-gasification and sale.

When Gazprom interrupted Ukraine's gas supply at the beginning of the year, it was a warning, not just to Ukraine, but to Europe and any country with a dependency on Russian gas. The warning was a simple illustration of the power Russia has over them. The effects of the shutdown were felt across Europe, as far away as France.

Europe is leery about pushing Russia to the wall on issues like Iran's nuclear program because of the growing leverage Russia has over them.

Russia is pursuing a clear strategy of using natural resources to put itself in a position of power. However, as I've written about here before, Russia is in a race with its own demographics. The great country is facing a dire future as birth rates job, and health declines.

On my trips to Russia, I was constantly amazed at how many jobs were held by women. Jobs from the professional ranks like judges and attorneys, to shopkeepers. Where were the men, I wondered.

Power Line today linked to a Washington Times story sounding yet another klaxon over this impending crisis.

Russia's population is declining rapidly, with almost half of Russian families childless, a senior member of Russia's lower house of parliament has said.

Yekaterina Lakhova, chairwoman of the parliamentary committee on women's affairs, said Thursday, "Today, almost half of the country's 41 million families have no children at all," RIA Novosti reported.

Addressing parliamentary hearings on family policy, Lakhova said that 34 percent of Russian families have only one child, 15 percent have two children, and less than 3 percent have more than two children.

She added that the Russian birthrate is 1.34 children per woman, which is below the replacement rate of 2.14, causing a steady decline in the population growth rate.

U.N. statistics say that at this rate Russia's population will be 101.5 million by 2050, shrinking by almost half from the over 143 million population of today.

Imagine that, the population may shrink by as much as half. Imagine the impact that will have on Russia's economy, way of life, social safety nets, and so on. Where will Gazprom find workers to drive their ambitious deals?

Will an imploding Russia lash out at its neighbor and threaten their gas supplies, holding them hostage to Russian demands to help stave off their internal problems?