The Long Chain That Links Foreclosures in America to Gas in Russia
A long unbroken chain links foreclosures in America with gas in Russia. Russian Prime Minister Putin sent out a warning about gas. He said that the age of cheap natural gas is coming to a close – thanks to the global meltdown that has been triggered by the foreclosure crisis in USA. Expenses to maintain and develop gas fields are increasing because of this.
Speaking at a ministerial conference of Gas Exporting Countries Forum, Vladimir Putin said, “The expenses necessary for developing fields are rising sharply and this means that despite the current problems in finances, the era of cheap energy resources is coming to an end.” He added that Russia invests billions of dollars to explore gas in regions like the Yamal peninsula and also the Arctic Shelf. Gas transportation infrastructure has to be developed and for the industry to grow heavy costs are involved.
Putin offered to bear the costs for establishing a headquarter for a gas cartel with a diplomatic status in his hometown of St. Petersburg, if such a decision is taken. The GCEF was established in 2001 in Teheran and including among its members are Iran, Russia and other leading countries that exported gas. Since then it has held regular meetings but management or membership has not been formalized till date. Russia however denies that it is trying to set up an OPEC type of cartel with its own specifics.
GCEF accounts for approximately 73% of the natural gas reserves of the world and controls 42% of gas production. Previously it had planned to set up a kind of ‘gas troika’ for purposes of jointly exploring and producing.
Energy ministers from the other member states of Algeria, Venezuela, Bolivia, Egypt, Qatar, Trinidad, Libya, Tobago, Nigeria and Equatorial Guinea are continuing discussions for more cooperation in the international gas market.
Europe is largely dependent on gas supplies from Russia. Putin obliquely referred to this when he warned that the global financial crisis would lead to increased costs and prices. This was inevitable. He said, “The geography of natural gas production is changing. Active gas fields are being gradually exhausted, while most of the prospective gas resources are lying far from the leading consumption centres. Therefore, costs related with gas exploration, production and transportation will inevitably rise.” The issue of gas is gaining more and more prominence in the world of today that is facing energy crisis.
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