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Tuesday, March 14, 2006

OPR UPDATE: RUSSIA'S 'INALIENABLE RIGHT' TO REGULATE

Russian Energy and Industry Minister Viktor Khristenko lent an interesting insight yesterday into Moscow's thinking on the role of the state in Russia's energy sector. Responding to U.S. Deputy Energy Secretary David Sampson's contention that the state's hand in the sector was hampering Russian supply growth, Khristenko said:

Market reforms are not an end in themselves, but an instrument to raise the efficient and reliable function of world energy. . . . An inalienable part of that process is the regulatory role of government in . . . eliminating the risks of energy insecurity.

Russia in particular needs both foreign capital and technical assistance to explore and develop frozen reserves in East Siberia and the Arctic. Russia's recentralization of the oil industry, however, isn't helping that cause. There is significant uncertainty in the investment community about just what the 'rules of the game' are for foreigners looking for a piece of Russia's large energy pie.

Russian online news service Kommersant summed up Khristenko's comments at the conference thus:
According to Khristenko, an alternative to competition of energy strategies could be “establishing a global system of power engineering, which will ensure the stream deliveries of energy to the population worldwide at the economically reasonable prices.”

Therefore, Russia’s proposals to the G8 summit could be as follows. Russia doesn’t think it is possible to improve the out-of-balance condition of the energy demand/supply through some private companies. Instead, it calls for introducing regulative actions of the state. The biggest consumers and producers of energy resources are expected to provide the state guarantees to each other concerning coordination of mutual interests. The interests of national companies should be naturally taken into account.
It is hard to fathom what Khristenko might mean by "establishing a global system of power engineering" but I bet it goes over like a lead balloon at the G8.

1 Comments:

At 7:32 AM, Blogger David Amulet said...

"A global system of power engineering?" Sounds like some kind of uber-OPEC. Yikes.

-- david

 

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