Aug.01, 2012 | 5:20 AM–About a month ago, Russian President Vladimir Putin made his historic visit to Israel. According to some reports, the main topic in his talk with Prime Minister Benjamin Netanyahu was a proposal by government-owned Gazprom to “collaborate” in developing Israel’s new offshore gas fields.
The Russian delegation talked about setting up a special subsidiary, Gazprom Israel, which would drill for gas and lay the pipelines connecting the fields to onshore installations. Unknown at the time was that Gazprom was also competing for a $1 billion tender put out by the Israel Electric Corporation for the purchase of liquefied natural gas. The few who knew about this were concerned.
Colloration with Gazprom poses risks
“As far as collaboration with Gazprom goes, you’re not really a partner,” says Dr. Avinoam Idan from the energy studies program at the University of Haifa’s management school. “Intervention by Gazprom in the Israeli energy sector carries risks that people may not be aware of.”
Why the concern?
“In contrast to oil, trading in gas has a much more significant political component, since it involves long-term contracts. Trading in oil is mostly done in spot transactions, with changing suppliers. Oil pipelines carry oil to the closest terminals, without a direct link between buyer and seller, as is the case with gas. So political interdependence is an intrinsic component of gas dealings.
“Gazprom has always served as an instrument for furthering Russia’s political interests. This meshes with Putin’s worldview, which he expressed in his thesis work in 1997. He stressed the importance of using energy resources as a tool for improving Russia’s position in the world and for restoring its global power, which it had lost. This concept makes Gazprom’s involvement a more complicated matter. What lies behind this company’s avid interest in the Israeli energy sector?”
Idan answers this question by pointing out that there is no economic rationale behind this giant company’s interest in Israel. Gazprom had a net profit of $44 billion in 2011 on revenues of $158 billion…Read More>>