Friday, December 22, 2006

Russia Doubles Natural Gas Price for Georgia

In Russia, it's beginning to look a lot like Christmas. From the Daily Mail:

Fears that Russia is using energy supplies as a political weapon increased last night after Moscow forced Georgia to accept a doubling of gas prices.

The deal came within hours of a threat by Gazprom, Russia's statecontrolled energy giant, to cut off supplies to the former Soviet republic from January 1.

Georgia had called the price increase 'unacceptable' and 'politically motivated'.

Relations between the Kremlin and Georgia's pro-West leadership were already at their worst for a decade after a spy row in September.

The Georgia 'agreement' is another example of what alarmed EU officials see as the Kremlin's heavy-handed tactics in dealing with energy clients.

It came the day after Gazprom took control of a massive oil and gas project from Royal Dutch Shell, which had suffered a long campaign of bureaucratic harassment.
Don't forget, as Geoffrey Styles said earlier this week, Russia's long-term goal is to be able to exercise just this sort of market power over the U.S. Of course, if the U.S. builds more nuclear power plants and displaces natural gas-fired electrical production the same way it displaced oil-fired electric production in the 1970s, the nation won't be in the same bind that much of Europe will be in the near future.

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4 comments:

Rod Adams said...

As an unrepentant Cold Warrior, I have little trust in Russia's acceptance of the idea that the US is the world's sole remaining superpower.

Russia has a long history as a player in the world's power elite. Its leaders have used its natural resources and people power for at least two centuries to maintain their own lifestyles. They are excellent chess players and are as good at raw power plays as they are at subtle, long term moves.

I have no doubt at all that Russian leaders fully understand the importance of energy and the fact that nuclear power plants allow the owners a measure of independence from fuel supplier pressure that is not available for owners of fossil fuel burning generators.

I fully believe that some of the money that supports anti-nuclear pressure groups around the world comes from Russian oil and gas interests - aka the Russian government.

Stewart Peterson said...

>>Of course, if the U.S. builds more nuclear power plants and displaces natural gas-fired electrical production the same way it displaced oil-fired electric production in the 1970s, the nation won't be in the same bind that much of Europe will be in the near future.

Nuclear power can all of a sudden displace load-following generators--especially with increased wind capacity requiring more gas backup?

KenG said...

Many of the recent, larger gas units are combined cycle plants that were built for baseload use. New nuclear units will have more capability to load follow than older units but the more logical approach would be to load follow with coal units.

As to the impact of wind, we'll have to cross that bridge when we get there, but wind is a long way from being a significant part of the mix.

Farkas said...

For the Russians to "exercise this sort of market power over the U.S." someone will have to build a pipeline (or LNG terminal) that connects Russian gas fields with the American gas infrastructure. The gas market is relatively large in North America and the Russians would have to be more than a marginal player to have the kind of influence they have over their European customers. New American NPPs will offset demand for new American gas-fired baseload generators; however, the U.S. having the largest economy in the world growing at 3%/year, it seems that all generators will be important in the task of meeting demand.