Russian Oil and the Pacific

I remember in the early 1990s after the opening of Russia having many conversations in DC with both Government officials and Halliburton folks, specifically Brown and Root, about developing strategic relationships with Russia to get the oil pipelines to the Pacific coast and having the US and Russia being in a position to strategically control key elements of the global oil markets, the US with production and distribution, Russia with extraction and distribution. Of course the answer was that Russian oil has no value and if they want anything from the US they will pay us.

Thus I was interested in the article from the Moscow Times today which states:

"Russia expanded its foothold on the Asian energy market with the click of a mouse Monday.

Prime Minister Vladimir Putin pressed a button to get Siberian oil flowing into the first tanker for delivery to an Asian customer, in Hong Kong, from Russia’s Pacific coast. In addition to China, supplies will also target Japan and South Korea.

The ceremony completed four years of work to construct the East Siberia-Pacific Ocean pipeline and the Kozmino port, worth a combined 420 billion rubles ($14 billion) to ease the industry’s reliance on the European market.

“It’s a strategic project because it allows us to enter the completely new, growing and promising markets of the Asian-Pacific region,” Putin said at the launch. “It’s a great present to Russia for the New Year.”

The foray into the Asian oil market follows Russia’s arrival as a major supplier of liquefied natural gas, or LNG, for its eastern neighbors earlier this year. The Gazprom-led Sakhalin-2 project — with Shell, Mitsui and Mitsubishi as partners — started shipping the gas, chilled to a liquid for loading into tankers, from Russia’s offshore fields in the Pacific in February.

As it expands into new markets, Russia is keeping abreast of the global trend of diversification among both energy buyers and sellers, which will make the business more competitive worldwide, said Elena Shadrina, a visiting energy researcher at the Norwegian Institute for Defense Studies.

“No supplier or consumer will have a dominant position,” she said by telephone from Oslo.

Europe is trying to offset its dependence on gas imports from Russia by looking to buy more from Africa, while Turkmenistan began exporting its gas to China earlier this month, ending Russia’s role as its only major buyer. Asia, in turn, has been seeking alternatives to supplies from the Middle East.

Russia’s progress in eastward expansion has been spectacular, defying doubts that the country has sufficient oil reserves and investment, Shadrina said."

Russia clearly has no further use for the US and the great window of opportunity was lost. Strange that both Government and industry here in the US were clueless. Putin is a shrewd and perceptive action driven leader whose return is most likely to occur soon. The expansion of these resources will further strengthen his position.