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22 comments on They see it here, they see it there, they see that Gazprom everywhere*

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westexas on April 13, 2006 - 12:49am Permalink | Subthread | Comments top
(My knowledge of Russian oil production is limited to an HL plot; I know even less about Russian gas production.  However, I thought the following article was pretty interesting, especially the fact that Russia is the #2 natural gas consumer in the world behind the US.)

http://www.times.spb.ru/index.php?action_id=2&story_id=17285
Gazprom's Looming Crisis
By Nadejda M. Victor

Excerpt:

Russia controls more than a quarter of the world's gas reserves -- more than any other country. Most of the known Russian reserves (about 80 percent) are in west Siberia and concentrated in a handful of giant and super-giant gas fields. Since the early 1970s the rate of discovery for these new fields has been declining. Moreover, output from the country's mainstay super-giant fields is also steadily falling.

Huge investments are needed to replace this dwindling supply, and all the options for new production will prove costly and difficult. New fields in the far north and east of the country are distant from most of Russia's people and export markets, requiring wholly new transport systems such as pipelines. Moreover, most of these fields are found in extremely harsh environments where it is technically and financially difficult to operate.

So far Gazprom has been able to forestall crisis. Economic stagnation across the former Soviet Union and Eastern Europe since 1990 dampened gas demand. Russia, which had a surplus at the time, sharply increased its gas exports and made contractual commitments that will remain in force for many years.

But following the long stagnation, Russia's internal gas consumption is rising again as the economy expands. And new Russian policies to promote development of the country's eastern regions will, in the next few years, require large new commitments to supply gas to that region (along with spending on railroads, airports and other infrastructure).

Even when the Russian economy was in the doldrums the country was notable as a large gas consumer because of its extremely inefficient energy system. Today Russia is the world's second-largest gas user after the United States, although its economy is only one-twentieth the size of the U.S. economy.

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totoneila on April 13, 2006 - 4:12am Permalink | Subthread | Parent | Comments top
Hello Westexas,

Thxs for posting this article.  I, too, claim little expertise in Eurasian energy affairs, but the phrase: "because of its extremely inefficient energy system" caught my eye.

Is this because the housing, factories, and offices are so poorly built and weather-insulated that huge quantities of natgas are required to try and maintain a comfortable working temperature against a typical Russian winter?  Or is most of the inefficiency due to using old natgas electrical generators, the mentioned 33% to make electricity and heavy powerline distribution losses?  The fact that most of Russia is NOT gas-metered is simply mind-blowing to me.  

If I was Putin, I would be brutally honest to his public on the looming crisis, and immediately start a crash program of super-insulating homes and offices in exchange for gas-metering the structure.  I think this program would achieve vital conservation results faster than the too-short required time to expand internal Russian gasfields and related piping infrastructure.

IF this insulation and conservation program can be done, then export quantities will not diminish much; it might even increase providing vital foreign earnings to help the Russian people.  The success of this program will make foreign investors more willing to then ante up the required cash to expand the exploration and exports of the new gasfields.

The former Soviet republics need a crash super-insulation program of their own too.  To not do this will leave them ever more prostrate as the EU can afford to outbid them  for at least the next few years.  Stealing gas meant for EU countries can setoff widespread violence if people are freezing to death.

To not do this first setups a vicious future example of yours & Khehab's accelerated export depletion scenario.  The continued waste of inefficient natgas burning then sets off the spiraling dilemna of the last paragraph:

"The gas shortage is likely to become most acute over the next few years. If there is an unusually cold winter in 2008, the year of Russia's presidential election, then Gazprom will face a politically unpleasant choice: whether to cut off internal customers (voters) or the Western customers who are the firm's main source of hard cash."

Gazprom's mngt has very little time to be seen as a 'reliable supplier' to not only Europe, but also to the Russian proles themselves.  This is my definition of being caught between a rock and a hard place-- conservation seems like the best way out, but I fear the Gazprom corporate structure is too inept and corrupt to take this path.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

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