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Medvedev on Caspian tour to talk gas
President Dmitry Medvedev will visit Azerbaijan, Turkmenistan and Kazakhstan to rally support for a ‘regional gas OPEC’
Russian President Dmitry Medvedev is going on a tour of the Caspian region tomorrow, taking in Azerbaijan, Turkmenistan and Kazakhstan. The agenda will focus on the prices for oil and gas supplies and transportation. For the moment, Russia has a stronger position in the Central Asian region than its western rivals.
The first destination will be Baku, the capital of Azerbaijan, where Medvedev will spend two days, July 3 and 4. He is due to meet Azeri President Ilham Aliyev to discuss the construction of the North-South transport corridor from Russia to Iran, as well as the possibility for Gazprom to buy Azeri gas. From Baku Medvedev will then go to Turkmenistan to talk about the construction of the Caspian Gas Pipeline and the price for Turkmen gas. On July 6 he will arrive at the Kazakh capital of Astana to attend celebrations on the occasion of the capital city’s 10-year anniversary, and also to wish a happy birthday to the country’s President Nursultan. The event will be attended by other CIS leaders, too.
All the countries on Medvedev’s travel list are rich in oil and gas reserves, and it is so natural this issue in particular will dominate the agenda. Record high oil prices, at over $140 per barrel, have deepened a political and economic standoff between Russia and the West in the region. The stakes are high, and the President decided to handle the matter personally. As the former chairman of Gazprom’s Board of Directors, he is also an expert in oil and gas matters.
“The President’s visit highlights the important role the energy issue plays in Russia’s foreign policy,” Leonid Grigoryev, President of the Energy and Finance Institute, told RBC Daily. He expects Medvedev to focus on a discussion of long-term energy policy. Russia’s strategic goal is to earn profit from the transit of oil and gas through Russian territory and to ensure cooperation in the transportation of oil and gas resources to Europe, Grigoryev reckons. And so far things are not bad in this respect, he noted.
Experts are pinning their hopes on Medvedev’s Caspian tour being a success. “He should meet with all the heads of states because the issue of prices and further gas contracts are decided at the highest level,” says Igor Tomberg, chief researcher at the Center for Energy Studies at the Institute of World Economy and International Relations, of the Russian Academy of Sciences. He remarked that Gazprom’s CEO Alexei Miller, who also toured the Caspian region recently, had not been received at such a level in any of the countries he visited except Azerbaijan. In this way, Tomberg says, the region’s politicians make it clear that they would only discuss matters of such importance with the President.
Experts say Medvedev has a good chance to settle all disputes and discuss the construction of the Caspian Gas Pipeline, expanding the gas transportation system from Central Asia to Russia. If Moscow and its Caspian partners can agree on prices, then it will be a setback for rival gas pipeline projects sponsored by Europe, the US and China. “Russia already has pipes, and if we offer the same price, why build new ones?” asks Tomberg. Especially given that the construction of new pipelines is fraught with significant risks.
Tomberg expects Medvedev to continue the Putin line urging the creation of a “regional OPEC for gas” in the Caspian region. Any such alliance could be based on a similar format as is used for the Eurasian Cooperation Organization, he thinks. Iran, which is also a Caspian country, could join the project in the future. “I hope that Medvedev will complete the creation of the regional ‘OPEC for gas,’ and the documents could be signed later at the corporate level,” Tomberg told RBC Daily.
Despite the West’s desperate attempts to squeeze Russia out of the region and to get Caspian oil and gas under control, things are still in Russia’s favor there. Unlike its rivals, Russia already has a large pipeline system in the Caspian region. It also pursues a more flexible policy of cooperation with its Caspian partners. Analytical department of RIA RosBusinessConsulting
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