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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Gazprom Funds Anti-Fracking Campaigns in Europe?

Is Moscow secretly funding campaigns against Europe’s shale gas plans? Quite possibly.

Russia used to sell natural gas to Europe and the rest of the world for an average of $10 per unit, but since the shale gas boom took off in the US prices there have fallen to $3 a unit, and the world has taken note.

Fiona Hill, an expert on  Russia at the Brookings Institution, remarked that “this is where everything is being turned on its head. Their days of dominating the European gas markets are gone.”

Shale gas has the ability to completely change the world of energy. Harvard University’s Kennedy School of Government concluded in a report that “the relative fortunes of the United States, Russia, and China — and their ability to exert influence in the world — are tied in no small measure to global gas developments.”

Some European countries started to imagine a future away from the oppressive shadow of Gazprom, and the Russian natural gas giant was obviously not happy with that, yet the signs are there that it is losing its grip on Europe. Last year Gazprom reported profits of $44 billion, whereas this year they have fallen by almost 25 percent.

Mitt Romney said in one of his campaign papers that he “will pursue policies that work to decrease the reliance of European nations on Russian sources of energy.”

Poland’s Ministry for the Environment also stated that “an increased production of natural gas from shale formations in Europe will limit the import via pipelines from Algeria and Russia.”

Fiona Hill noted that industry experts have suggested that Russia is funding environmental groups to oppose fracking in the UE, which could severely reduce Russia’s natural gas export market, as well as Gazprom’s profits.

By. James Burges of Oilprice.com



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  • Francisco on November 04 2012 said:
    Not necessarily. This would celtainry a headache for the band of thieves inside and outside the Kremlin who plunder Gazprom, but it wouldn't necessarily hurt Russian growth and influence, both of which would benefit hugely from forced diversification of Russia's lopsided, resource-heavy economy.A shock to the easy money that flows into (and right out of) Gazprom's coffers would be the best thing to happen to Russia's non-resource economy in 20 years. This would give hope to millions of Russians seeking to shake off the resource curse that causes so many oil-rich countries to stagnate economically and politically, as Russia has done for more than a decade. Were Russia's elites to see the end of their Nigerian-style energy windfall, they might get serious about the root cause of Russia's weakness, which is the lack of rule of law and intellectual property rights. It's these barriers more than anything else which are preventing that nation's extraordinary scientific, math and engineering talent from developing their own global technology powerhouses. Set these brilliant technologists free, make it possible for minority investors to give them money with confidence that minority shareholders' rights will be protected, and you'll soon see any number of new world-class Russian companies spring up in areas from materials science to big data to nanoscience. Russia has greater reserves of talent celtainry than Finland, which produced Nokia, or Korea or China.Russia's entrepreneurs could easily develop offshore IT companies to rival India's Wipro and Infosys provided they had a stable legal environment to operate within.One more aspect to this story is that, as the EU melts down, it makes more and more sense for Germany to deepen its already deep economic ties to Russia. These go way beyond energy. The Russian market is already the major source of growth and profits for European exporters, and it could be a major source of offshore, as it were, manufacturing as well again, provided that Russia improves rule of law and protection of IP, at least to China's level (which isn't very high).As hundreds of German firms have already discovered, there's a natural fit between Germany's high-priced labor/manufacturing expertise and Russia's huge supplies of resources and cheap labor. Given America's increasing neglect of Europe, the shrinking of the EU project, and Germany's own need for export markets, it makes perfect sense for Germany and Russia to emerge from this crisis much closer than before. Russophobes, be careful what you wish for.

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