19 September 2003 02:17
Gas Takes Spotlight at St. Pete Summit
A year ago, in Texas, it was all about oil. But when the second U.S.-Russia Commercial Energy Summit opens in St.
Petersburg next week, the star of the show is expected to be natural gas, particularly in its liquefied form.
Eager to diversify its supplies from declining Canadian production, the United States is setting its sights on Russia
as a long-term supplier of liquefied natural gas by sea.
Notably, Russia has no capacity for the time being to fulfill the role, and North American ports are not equipped to
receive any large volumes of LNG. A lot of these issues are likely to pop up at the two-day summit, which starts
Monday.
Sending Russian gas to the United States "is a natural marriage of interests" because America wants to
diversify supplies and Gazprom wants to expand its markets, a U.S. Department of Energy official said.
In the long run, the opportunities are huge. Although the United States imported only about 6.5 billion cubic meters
of LNG last year, it may be importing up to 100 bcm by 2020 under a plan to boost the share of gas in domestic fuel
consumption. The country last year used nearly 670 bcm of natural gas, more than a quarter of the world's gas
consumption.
With such drastic plans to increase gas consumption, many U.S. officials are openly talking about Russia, which holds
the largest gas reserves in the world. And while 2020 may be years away, the first trial balloons have already been sent
across the Atlantic.
Gazprom CEO Alexei Miller went to the United States last week for what some insiders called a relationship-building
trip. Miller was warmly greeted by Energy Secretary Spencer Abraham, who told him that America "welcomes the
possible appearance of Gazprom on the American natural gas market as a supplier of LNG," according to Gazprom.
Commerce Secretary Donald Evans expressed similar interest.
Both Abraham and Evans are to attend the summit in St. Petersburg. Abraham was to meet with Nuclear Power Ministry
officials to discuss nuclear issues in Moscow on Friday.
While the potential of a U.S.-Russian gas deal is big, the summit is unlikely to yield any concrete results, said
Stephen O'Sullivan, co-head of research at United Financial Group.
"In the immediate future, and based on the experiences of last year's summit, it is likely to be more talk
than action," O'Sullivan said Thursday.
While gas is a key issue, Russian oil will not be forgotten. Speculation is swirling that a U.S. oil major is
considering buying a stake in Yukos and that a deal might be announced during the summit. All of the key players in such
a deal are expected to attend the summit.
A senior U.S. diplomat, however, said the U.S. Embassy in Moscow has not been approached for help in navigating any
possible deal through the corridors of Russian leadership.
A report is to be presented during the summit on how to lower barriers for commercial cooperation between Russian and
U.S. companies in the oil and gas sector. The report, prepared by industry officials, will focus on legislation and
other government issues that obstruct the development of commercial ties. Sources familiar with the report said they
hoped both the U.S. and Russian government would take the findings seriously.
Attempts to find closer cooperation have not been glitch-free in preparations for the summit. Conspicuously absent
from the agenda is the issue of Iraqi oil.
One summit topic that seems to be a priority only for the Russian side is cooperation in electricity production. U.S.
officials who participated in the summit's preparation said this week that electricity was added to the agenda
because UES management expressed an eagerness to find investment to fund the restructuring of the sector.
U.S. officials and diplomats, however, said in various off-the-record remarks that the bid is unlikely to be
successful given the huge demand for investment in the sector back in the United States.
.TX-..**********************************************
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