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WASHINGTON – Russian agreement to a reduced natural gas price in a deal with Poland helps ensure Moscow’s near-monopoly over Europe’s natural gas supply and the enormous political leverage that the Kremlin can exert as a consequence, according to a report from Joseph Farah’s G2 Bulletin.
Gazprom, which has a near-monopoly on oil production and a full monopoly on natural gas exports, is viewed by experts as an effective tool of the Kremlin to not only be a weapon for political leverage but actually to greatly influence events in Europe.
Moscow’s strategy has been to undertake long-term contracts with lower natural gas prices. This has been aimed at countries which the Russians regard as strategic, particularly Germany.
However, a reaction is setting in among these countries. They don’t like the control that it gives to Gazprom and have decided to take the Russian monopoly to court.
In addition, the European countries are looking to a competitor – not so much another country which cannot begin to provide the volume they need. Instead, they are looking at importing more liquefied natural gas as a means to unlock the hold the Russians now have on their natural gas needs.
In an effort to avoid that loss of influence, Russian President Vladimir Putin is considering diminishing Gazprom’s monopoly and opening up sales to such Russian competitors as LUKOil, Rosneftgaz and others to create more competition.
The issue creates all kinds of problems all around, since Russia is looking to diminish Gazprom’s monopoly if Europe doesn’t sue in European court. At the same time, Gazprom’s own stockholders will be leery of diminishing their power not only in Europe but within Russia itself and giving up prominence they now hold.
For the Kremlin, the stakes are high. It needs to find alternative means of generating revenue and not rely so much on the energy sector. At the same time, Russia must develop internal competition without affecting Gazprom so much, given its influence and existing holdings in Europe.
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