News / Economy

Putin Pushes Russian Agenda at Global Gas Summit

Russia's President Vladimir Putin speaks during a news conference, part of the Gas Exporting Countries Forum (GECF), at the Kremlin in Moscow, July 1, 2013.
Russia's President Vladimir Putin speaks during a news conference, part of the Gas Exporting Countries Forum (GECF), at the Kremlin in Moscow, July 1, 2013.
Reuters
President Vladimir Putin has defended the long-term supply deals under which Russia exports its gas and warned that abandoning them would undermine global energy security.
 
Putin won the backing of strategic allies at a summit of gas exporters in an ornate hall in the Kremlin on Monday, but the gathering exposed divisions over the challenge that flexible liquefied natural gas (LNG) poses to Russia's pipeline gas supplies.
 
The Russian leader has, since he first became president in 2000, deployed state gas export monopoly Gazprom to project geopolitical power and restore prestige lost with the Soviet Union's collapse.
 
But with a growing flotilla of tankers supplying LNG to world markets, the long-term export contracts that tie the price of Russian gas to oil, and set minimum purchase requirements for buyers, have come under threat.
 
Putin said that loosening the oil-price link or scrapping contractual 'take-or-pay' clauses would eventually lead to higher costs, not only for producers who need price security to justify long-term investments, but also for buyers.
 
“What we are talking about, above all, are attempts to dictate economic terms that are unacceptable to producers of gas delivered by pipeline,” Putin told leaders from the 13-member Gas Exporting Countries Forum (GECF).
 
“Unfortunately, the advocates of such a policy do not understand that abandoning the fundamental principles of long-term contracts would not only inflict a blow on gas producers but also bring with them significant costs,” he said.
 
Putin hit out at the European Union, where energy market reforms under the Third Energy Package threaten Gazprom's control over the gas supply chain from wellhead to consumer.
 
Gazprom's loss of pricing power in Europe, which accounts for more than half its gas revenues, has driven down its market value to $78 billion from $360 billion in 2008.
 
Analysts say that supply fundamentals - gas is abundant while oil is relatively scarce - will make it hard for Gazprom to uphold an export-pricing model that dates back to the Soviet era.
 
Gazprom's export monopoly is also under threat from reforms that would allow Russian rivals such as Novatek and Rosneft to export LNG. Energy Minister Alexander Novak said that the necessary legislation would be passed and take effect this year.

Conditional support
 
Putin, who began his third term as president in May 2012, has set out to defend Russian interests on the world stage as he tries to reassert his authority after the biggest protests since he first rose to power.
 
He won support on gas pricing from Venezuelan President Nicolas Maduro, Bolivia's Evo Morales and Abdelkader Bensalah, chairman of the Algerian Senate.
 
But the energy minister of top LNG exporter Qatar said that each member of the group has its own point of view on the development of the sector.
 
“We should remember that our pricing policy should also be derived from the interests of consumers, not only of producers,” Mohammed Saleh al-Sada told the summit, broadcast live on Russian television.
 
The GECF, holding its second summit, says that its members control 80 percent of world gas output and 70 percent of LNG production.
 
In reality, many of its members are net importers, leaving Russia and Qatar as the biggest players on international markets. They now face potential challenges from the United States, which has overtaken Russia to become the world's largest gas producer, and Australia, which is expanding into LNG.
 
Founded more than a decade ago, the GECF drew comparisons with the Organization of the Petroleum Exporting Countries but failed to show the type of cohesion that has made the oil export cartel capable of influencing global crude markets.
 
“We don't want to create a cartel,” Putin later told reporters. He said that Russia had won support from “all” GECF states for oil indexation, also expressed in a joint communique.

Yet Putin's remarks showed little appreciation for the positions of some other members, reinforcing the impression that the GECF - headed by Russia's Leonid Bokhanovsky - is a vehicle for Moscow to lobby its own agenda.
 
Also hindering cooperation are simmering tensions between Russia and some Gulf Arab gas producers over Putin's support for President Bashar Al-Assad in Syria's civil war. Qatar supports the Syrian opposition.
 
The GECF comprises Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Oman, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela. Iraq, Kazakhstan, the Netherlands and Norway are observers.

You May Like

Video Westgate Mall Attack Survivors Confront Painful Memories

On anniversary of terror attack, survivors discuss how they have coped with trauma they experienced that day More

Iraqi Kurdish Leader: Protect Syrian City

Islamic State fighters are besieging Kobani, also known as Ayn al-Arab, after seizing at least 21 surrounding villages in a major assault against city on Syria's northern border with Turkey More

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

Conservationists hail ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015 More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Migrants Caught in No-Man's Land Called Calaisi
X
Lisa Bryant
September 19, 2014 5:04 PM
The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video CERN Accelerator Back in Business

The long upgrade of the Large Hadron Collider is over. The scientific instrument responsible for the discovery of the Higgs boson -- the so-called "God particle" -- is being brought up to speed in time for this month's 60th anniversary of the European Organization for Nuclear Research, known by its French acronym CERN. Physicists hope the accelerator will help them uncover more secrets about the origins of the universe. VOA’s George Putic reports.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video Russian Economy Reeling After New Western Sanctions

A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Belgian Researchers Discover Way to Block Cancer Metastasis

Cancer remains one of the deadliest diseases, despite many new methods to combat it. Modern medicine has treatments to prevent the growth of primary tumor cells. But most cancer deaths are caused by metastasis, the stage when primary tumor cells change and move to other parts of the body. A team of Belgian scientists says it has found a way to prevent that process. Zlatica Hoke has more.
Video

Video Mogadishu's Flood of Foreign Workers Leaves Somalis Out of Work

Unemployment and conflict has forced many young Somalians out of the country in search of a better life. But a newfound stability in the once-lawless nation has created hope — and jobs — which, some say, are too often being filled by foreigners. Abdulaziz Billow reports from Mogadishu.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.