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All gas, no vodka, for Putin in Yamal

Russian Prime Minister Vladimir Putin’s call for Western-assisted development of Yamal gas reserves for export as liquefied natural gas (LNG) holds potential global ramifications. Top managers of no fewer than 10 leading international companies attended a session with Putin in Salekhard on Yamal.
The peninsula in northern Russia and surrounding area is said officially to hold some 70% of Russia’s total known gas reserves. With limited and selective reporting on the event in Russia (while Western media barely noticed it) and seemingly inflated – as well as mutually inconsistent – reserve estimates by various Russian officials, a preliminary assessment of the proposal’s implications can only be fragmentary at this point. Yet a number of its implications already stand out.

Russia is embarking on an active search for Western technology

and capital with a view to breaking into the global LNG trade. Through LNG, it seeks to duplicate at the global level the primacy it enjoys in Europe for pipeline-delivered gas. During the Salekhard session, Gazprom chief executive Aleksei Miller and government ministers stated that Russia aims for a share of 20% to 25% of globally traded LNG from 2020 onward – a share similar to that achieved by Gazprom in Europe’s consumption (at pre-crisis levels). Thus, Western-assisted LNG production and export could turn Russia and Gazprom from a continental into a global power.

Lacking the technology for extraction, liquefaction, and transportation of Yamal gas, and with Gazprom heavily indebted, Russia is proposing in effect a package deal to leading international companies. These would receive “access” to Yamal gas resources and would in return provide their advanced technologies for the first phase of development, then transfer their technologies outright to Russia for the follow-up phases. They are also expected to earn their entrance to Yamal by swapping European downstream assets for Russian upstream assets.

Thus, the Russian proposal is more onerous than the usual, ostensibly symmetric “cross-investment” proposals. In this case it additionally involves Western technology transfers to Russia as a starting premise in negotiations.

Asia Times

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