Why Putin tied the energy knot with Ankara To expand its natural gas exports, Russia needs a Turkish pass
Note: Caspian Sea oil is at a competitive disadvantage, it comes with a price tag that is four times higher than oil from the Persian Gulf, and getting it to the end users is difficult. Also, the oil has a high surphur content and is not of high quality. http://thunder1.cudenver.edu/inst_intl_bus/gef/issues/98july/caspian.html
Russia on the other hand has the natural gas Blue Stream pipeline and this is the fuel of the future.
-Am
For Turkey, a thaw in relations between the two countries translates into construction contracts, textile exports and tourist revenues
By Paul de Zardain Special to The Daily Star Wednesday, December 08, 2004
Analysis MOSCOW: Vladimir Putin's visit to Turkey this week deserves the label of historic. For centuries, Russia and the Ottoman Empire clashed along geographic fault lines. The Soviet breakup in 1991 reawakened old ghosts in the Caucasus and Balkans. Some argue that even Ukraine's "orange revolution," playing out in Kiev these days, is yet another moving piece.
Until this week, the distrust between Moscow and Ankara ran deep. The war in Chechnya has further frayed relations. But considering that bilateral trade is forecast to reach $10 billion in 2004, it no longer makes sense to ignore each other.
Turkey is a key piece in Putin's overall strategy to re-establish a sphere of influence. Behind the Kremlin's rhetoric against a unipolar world is not only veiled criticism of U.S. hegemony, but a reminder that Siberian fields hold the largest deposits of natural gas.
This is no idle talk. A global switchover at electricity plants from oil to natural gas has already begun. And Russia is by far the largest source of European gasoil imports (390,000 barrels per day in 2002, or 80 percent of West European imports). Gazprom, Russia's state-owned giant, is responsible for European energy security. But in order to stay competitive, Russian energy firms need full-scale pipeline infrastructure.
Blue Stream, a pipeline through the Black Sea, carried 1.3 billion cubic meters (bcm) of Russian natural gas to Turkey in 2003. Exports this year will likely reach 2 bcm. Gazprom's CEO Aleksei Miller is especially interested in Turkish distribution networks. Prior to Putin's visit, Miller met with Mehmed Gueler, Turkey's Energy Minister, to discuss investment opportunities.
For years, Russian investors have placed bids on Turkish electricity plants, oil refineries and LNG projects. But privatization in the 1990's was trumped by political instability in Ankara. As a bargaining tool, the Turkish side never tires of bringing up tanker traffic volume in the Bosphorus. Developing safer pipeline infrastructure is now in both parties' interest.
Russia, like Iran, cannot hide its distaste for the Baku-Tbilisi-Ceyhan (BTC) pipeline project. It bypasses both countries on its way from Caspian oilfields to the Mediterranean. BTC also places Anatolia, Turkey's sleepy inland, at the heart of world energy supply.
The Nabucco project, another pipeline route for natural gas deliveries, crosses Turkish territory on its way to Austria. If Nabucco gets the official go-ahead, a final feasibility report will be submitted by the end of this month and shipping contracts will be signed in early 2005.
Military weaponry, and not only Kalashnikovs, is an important aspect of Russian-Turkish trade. The Turkish air force has issued a $2.5 billion tender to acquire 145 attack helicopters. According to Moscow's business daily Kommersant, finalists included the "Ka-50-2 Erdogan," a Russian model produced specifically for the occasion. But Turkish authorities rejected it arguing it was partially manufactured in Israel.
In the meantime, another option surfaced as favorite: the "Pah-2 Tiger" proposed by EADS, a European consortium. Moscow has now made a counteroffer with the "Mi-28NE," or night hunter, a model produced in the industrial city of Rostov na Donu. Sales of amphibian planes for use in fire extinction were also part of the Agreement on Military-Technical Cooperation.
Putin has taken alight in Ankara ahead of a key summit on Dec. 17 that will decide the Turkey's future. Membership in the European Union is not definitive. Despite the recommendation by Guenther Verheugen, the EU Enlargement Commissioner, accession talks could go on for decades. This gives Russia additional leverage. Accustomed to going it alone, the Turks have learned how to play strategic partnerships against each other to maximize profits. Russian exports to Turkey, currently worth $5.4 billion, will jump in the likely event that EU countries decide to give Ankara a vague time frame.
This is also the year for a Russian-style sorpasso. Russian tourists, 1.7 million strong, will outnumber Germans in 2003 for the first time. Moscow billboards are plastered with holiday packages to places like Antalya or Istanbul. This is understandable with temperatures of 18 degrees Celsius below zero in the Russian capital.
But for Turkey, sociological changes in its northern neighbor translate into construction contracts, textile exports and tourist sector revenue. It is a sign that bilateral relations may have found a comfortable equilibrium level.
In 1998, Russia and Turkey signed an intergovernmental agreement for the sale of 565 billion cubic feet (bcf) per year of Russian natural gas. In order to implement the agreement, the Blue Stream Pipeline Company - an equal partnership between ENI and Gazprom - was formed to operate a pipeline between the two countries via the Black Sea.
The basic and detailed design phases of the pipeline were awarded to Saipem under an EPCI contract.
The pipeline cost US$3.4 billion. The pipeline will carry, at full capacity, 16 billion cubic metres of natural gas from Russia to Turkey.
Venezuela, the world's fifth-largest oil exporter and the biggest in the Western Hemisphere, has signed other deals with Caribbean countries to sell oil under preferential terms.
Preferential terms may include bartering the supposed reason why Bush attempted to overthrow Chavez.
Background:
2) More developing countries follow the lead of Venezuela and China in diversifying their currency reserves away from dollars and balanced with euros. Such a shift in dollar-euro holdings in Latin America and Asia could keep the dollar and euro close to parity.
7) Developing countries lacking dollars or "hard" currencies follow Venezuela's lead and begin bartering their undervalued commodities directly with each other in computerized swaps and counter trade deals. President Chavez has inked 13 such country barter deals on its oil, e.g., with Cuba in exchange for Cuban health paramedics who are setting up clinics in rural Venezuelan villages. #msg-2499236
As for the events currently taking place in Venezuela, items #2 and #7 on the above list may allude to why the Bush administration quickly endorsed the failed military-led coup of Hugo Chavez in April 2002. Although the coup collapsed after 2 days, various reports suggest the CIA and a rather embarrassed Bush administration approved and may have been actively involved with the civilian/military coup plotters. #msg-4758082
-Am
Caribbean leaders to visit Venezuela
Thursday, June 23, 2005 · Last updated 11:40 a.m. PT
By BERT WILKINSON ASSOCIATED PRESS WRITER
GEORGETOWN, Guyana -- Several Caribbean leaders will visit Venezuela next week for negotiations on an agreement to receive cheaper oil from the South American country, officials said Thursday.
Guyanese President Bharrat Jagdeo, Grenadian Prime Minister Keith Mitchell and Trinidadian Prime Minister Patrick Manning are expected to meet with Venezuela President Hugo Chavez on June 29 in the eastern Venezuela oil town of Puerto La Cruz, the Caribbean Community's secretariat said. The energy ministers from Venezuela and several Caribbean countries will meet in Puerto la Cruz on June 28, the secretariat said.
Talks are expected to center on Venezuela's proposal to create a regional company to offset high oil prices by distributing crude and refined oil products to the Caribbean at lower prices than other dealers in the area. Caribbean and Venezuela oil officials agreed during an August meeting in Jamaica to create the company, called PetroCaribe.
Although Trinidad is rich in oil and gas, other Caribbean countries import most of their energy and have struggled to cope with the spike in oil prices, which topped $59 a barrel Thursday on the New York Mercantile Exchange.
Venezuela, the world's fifth-largest oil exporter and the biggest in the Western Hemisphere, has signed other deals with Caribbean countries to sell oil under preferential terms.
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