Gas: Gazprom makes offers no-one refuses
12 November 2009
Polska The Times
Current or former heads of government, European commissioners, national energy company chiefs — in Brussels, the Russian energy giant has fielded a formidable team of lobbyists to defend its interests and projects, which are not always compatible with European initiatives.
In Brussels, they call them the "Gazpromians" – the heavy hitting group of lobbyists who for diverse reasons ensure that the interests of the Russian gas monopoly Gazprom are well defended in the European Union. The line-up includes current and former political leaders – like Gemany's ex-chancellor Gerhard Schröder, and Italy's Prime Minister Silvio Berlusconi – whose countries have major contracts with Gazprom, EU bigwigs like Energy Commissioner Andris Piebalgs, and the influential CEOs of Italian, German, Dutch and French national energy companies – which already have multimillion dollar contracts with the Russians, or are planning to conclude deals soon.
The Gazprommers' influence on European politics extends to issues that have nothing to do with gas. Brussels' climate package is a case in point. Some of the ambitious proposals that feature in the package, which are supposed to make Europe a world leader in the campaign against climate change, are a gift for the Gazpromians. Among the technologies destined to replace coal power generation, natural gas, Gazprom's main product, appears to be the cheapest and the easiest to use.
Poland between a rock and a hard place
Countries like Poland, which were simultaneously involved in negotiations on the terms of the climate package and long-term Russian gas supply contracts, faced serious difficulties, because the position they adopted in one set of talks could be undermined by pressure at the other negotiating table. Before the EU finalized its plan to reduce CO2 emissions, the Poles were unable to determine the amount of gas they would need in future years. At the same time, demands from Brussels to replace their antiquated energy infrastructure, and the lobby for Gazprom, whose fuel generates 40% less CO2 than coal, and for which there is no feasible alternative in the short term, left them between a rock and a hard place. Naturally, you would suppose that the projects for the diversification of Europe's gas supply sources, which are supposed to provide EU countries including Poland with access to gas from Norway, Central Asia, or Qatar should be equally ambitious.
But the same Brussels administration, which adopts a hard line on the greenhouse gas effect to the point where it seriously undermines the budgets of poorer members of the EU, is in no rush to diversify its gas supply sources. It now appears that EU's leading gas supply diversification project, the Nabucco pipeline project (which proposes to link the Caspian Sea to the Mediterranean without passing through Russia) is less likely to be completed than the Russian South Stream pipeline. Gazpromians led by Andris Piebalgs are also proposing projects with an extremely novel definition of diversification for Northern Europe – chief among them the Russian/German Nord Stream gas pipeline, whose main effect will be to increase European dependence on Russian energy.
Lisbon treaty favours Gazprommers
As a Latvian, Energy Commissioner Piebalgs has his reasons for promoting Nord Stream, which has prompted opposition from both the Estonians and the Poles. Latvia, which is currently in the throes of a profound economic crisis, will provide the location for Gazprom's billion euro storage facility for gas from the pipeline. Nord Stream has recently secured the support of the Danish government, which not only withdrew its environmental objections to the gas pipeline, but also ordered two billion cubic meters of Russian gas to be supplied via Nord Stream. Likewise the Finns, who have set aside their opposition to the project, which they now see as a wholly positive development – though we should mention, that this change of tack was warmly encouraged by the Kremlin which has now postponed a duty hike it threatened to impose on its exports of timber to Finland.
The Gazpromians also stand to benefit from the provisions of the Lisbon Treaty, whose ratification confirmed a change in the statutes of the European Investment Bank (EBI), a necessary Nord Stream partner for Gazprom, which has been suffering from a shortage of cash in recent times. Before the treaty came into force, the EIB needed to obtain the consent of all of Europe's member states for major projects. From now on, it will only need the consent of 18 countries which own 68% of its capital. As it stands, the countries directly involved in Nord Stream – Germany, France, Italy, the Netherlands and Denmark – have a 55% stake in the bank's capital and it should be a piece of cake for the Gazpromians to garner the support from the owners of another 13%.