"Gazprom is not a market player, it’s a political weapon"

[Strelnikov_]

This is a revelation?

Putin has long been nursing ambitions of using Russia's vast oil and gas supplies as an instrument of power. In the mid '90s, after 15 years in the KGB, Putin went back to school, attending the St. Petersburg Mining Institute. He wrote a dissertation titled "Toward a Russian Transnational Energy Company." The topic: how to use energy resources for grand strategic planning.

“In the early stages of pro-market reforms in Russia the state temporarily lost strategic control over the mineral resources industry. This led to the stagnation and disintegration of the geological sector built over many decades…. However, today the market euphoria of the early years of economic reform is gradually giving room to a more balanced approach that... recognises the need for a regulatory role of the state.”

- Vladimir Putin, “Toward a Russian Transnational Energy Company.”, PhD dissertation, St. Petersburg Mining Institute


”The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles. Our goods are traded on global markets. Why are not they traded in Russia?”

— President Vladimir Putin, Speaking before the full Russian parliament, Cabinet and international reporters, May 2006


”Russia has found the Achilles’ heel of the US colossus. In concert with its oil-producing partners and the rising powerhouse economies of the East, Russia is altering the foundations of the current US-led liberal global oil-market order, insidiously working to undermine its US-centric nature and slanting it toward serving first and foremost the energy-security needs and the geopolitical aspirations of the rising East”

- W. Joseph Stroupe, author, Russian Rubicon: Impending Checkmate of the West, as quoted in the Asia Times, November 22, 2006


From the Russian perspective, the Saudi role and OPEC model have benefited the United States, which can pressure Saudi Arabia into opening the spigot to deal with supply emergencies; the US also pressures other oil producers, such as Libya, Iraq, Iran, Venezuela, and Indonesia, by military methods, diplomacy, and economic sanctions. In the Russian alternative, the US will be far less influential, and have fewer levers, commercial or military, to effect pressure on the energy suppliers. Russian arms and defense-industry partnerships are on offer to relatively weak, intervention-prone energy producers in Africa and Latin America to offset US pressure.

In the OPEC model, the benchmark is Brent crude, priced in US dollars. In the Russian model, the discount and disadvantage between the Brent and Urals benchmarks will be reduced, and pricing will evolve toward a currency basket, including the ruble. In the OPEC model, suppliers hold much of their cash and government securities in US controlled institutions. In the Russian model, cash is held in the form of a currency basket; conversion from cash is sought into non-US assets, particularly in the European market.

In the OPEC model, investment in new energy reserves should be open to, and may be controlled by, US corporations. In the Russian model, strategic reserves should be controlled by national companies, state-controlled champions, or joint ventures in which Russian interests are in the majority. The Russian model also extends to energy-convertible coal, uranium, and other mineral resources. Through negotiations for Russian accession to the World Trade Organization (WTO), the US, Australia, Canada and other resource-exporting states have sought to gain unlimited access to search and development of Russian minable resources.

The Russian model rejects this, and instead assigns priority and equity control of domestic resources to national resource companies. The model proposes tradeoffs and partnerships in resource exploitation in third countries, especially the developing states. The US-backed OPEC model assigns international priority to the Arab states. The Russian model assigns priority to the Central Asian alliance, including China, India, and Iran; secondarily to Latin America and ultimately Africa.”

- John Helmer, “Russian energy model challenges OPEC,” Asia Times, July 18, 2006,