-Caveat Lector- Paris, Saturday, October 21, 2000 Russia Set to Sign Strategic Deal to Supply Oil to West Europe http://www.iht.com/IHT/TODAY/SAT/FPAGE/ruble.2.html By William Drozdiak Washington Post Service BRUSSELS - It has long been regarded as one of the grand bargains of the global energy game: In return for helping Russia develop its vast oil and natural gas reserves, the heavily fuel-dependent economies of the European Union would be able to ensure long-term supplies. After decades of dashed hopes, the deal now seems close to completion. At the end of this month, President Vladimir Putin will travel to Paris to sign a series of energy contracts with EU leaders that should greatly escalate the degree of mutual dependence linking the largest nation in terms of land mass with one of the world's leading commercial powers. The new strategic partnership, also to be signed by President Jacques Chirac of France and the EU's executive president, Romano Prodi, promises major benefits for both sides. Russia hopes to lure billions of dollars in capital investments to improve its dilapidated facilities for producing and exporting oil and gas. And Europe foresees an opportunity to diversify fuel sources at a time of soaring oil prices and turmoil in the Middle East. ''As the EU embarks on a process of enlargement that could expand its membership to as many as 28 countries in the next few years, we need to make sure there are no new walls built with our large neighbor to the east,'' Mr. Prodi said in a recent interview. ''Our goal is to expand the zone of stability to Russia itself, so that all of our citizens feel safer.'' Besides the economic advantage of securing reliable fuel supplies at steady prices, EU officials believe the 20-year energy deal will serve as a harbinger for greater political cooperation between Russia and Europe. ''The European Union is already a customer of Russia for its oil exports,'' said Mr. Prodi's spokesman, Jonathan Faull. ''We want to change the commercial relationship into a long-term strategic partnership that will help stabilize Russia, which is in the interests of all parties.'' The creation of an ''energy bridge'' between East and West has long been one of Europe's most elusive geopolitical goals. In the early 1980s, Europe was eager to fund construction of a pipeline with the Soviet Union that would have greatly expanded natural gas exports to the West. But that Cold War deal foundered over hostility from the United States, which warned its European allies that the pipeline would create a precarious dependency that could be exploited by Moscow for nefarious political aims. This time, the visionary goal of pumping vast quantities of Russian oil, gas and electricity into Western Europe is widely recognized as a healthy political development that could establish a more equitable relationship between Moscow and its most natural economic partners. President Bill Clinton and Chancellor Gerhard Schroeder of Germany have been among the project's most enthusiastic supporters, not least because they see it as a useful way of purging Russia's debts and getting Moscow to contribute to European security. With North Sea oil supplies diminishing, Europe will soon be importing as much as 85 percent of its energy supplies. Currently, Russia provides only about 20 percent of Europe's natural gas needs and 16 percent of its oil supplies, and EU officials say they hope the energy pact will soon lead to a doubling of imports from Russia. While the political obstacles may have vanished, the economic and logistical hurdles remain formidable. Russia's harsh climate, rampant corruption and chaotic political situation have deterred Western oil and gas companies from making big investments to tap into the nation's enormous reserves. But the new promise of EU incentives and government subsidies - coupled with the allure of profits from soaring world energy price - have made exploitation of Russia's resources more attractive than ever. This week, the Russian gas giant Gazprom announced it was forming a new consortium with leading gas companies from Germany, France and Italy to build a $2 billion pipeline for gas exports that will bring an extra 60 billion cubic meters of natural gas supplies to the European Union every year. The 600-kilometer (370-mile) project would involve two lines crossing through Belarus, Poland and Slovakia. The decision to bypass Ukraine, which would offer a more direct route to Western markets, came after much criticism from Gazprom that Ukraine had refused to pay nearly $2 billion in debts and was illegally siphoning off gas destined for Western European customers. President Leonid Kuchma dismissed the complaint as another example of Russia's seeking to intimidate its neighbors. Russia also plans to increase its electricity exports to the West. A former prime minister, Anatoli Chubais, who now heads Russia's national power company, said that several new contracts had been signed with Germany and that fresh electricity supplies from Russian power plants have been flowing there since August. ''We have proven that besides raw materials like oil and gas, we can penetrate Western markets with our electricity, which is much more advanced in terms of value added,'' Mr. Chubais said at a news conference in Moscow last week. ''We are ready to show that the energy bridge to the West can become much greater than most people realize.'' The biggest energy challenge, say Western analysts, may be rehabilitating Russia's decaying oil industry. While Russia has the capacity to be the world's largest oil producer at some 12 million barrels a day, its facilities are so decrepit that much of its potential is squandered. The country's pipelines are not able to export even one-fourth of that capacity- current crude oil exports are running about 2.6 million barrels a day. <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! These are sordid matters and 'conspiracy theory'�with its many half-truths, mis- directions and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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