CERAWeek: No need to question Russia?



“There’s no reason to doubt the supply integrity of Russia.” So says Gerhard Schroder, former Chancellor of Germany and current chairman of the shareholder’s committee of Nord Stream, a Gazprom-controlled company heading up efforts to build a massive natural gas pipeline from Russia to the European Union by way of the Baltic Sea.
Schroder, who lost Germany’s 2005 election to Angela Merkel, said western media outlets shoulder some of the blame for a prevailing anti-Russian attitude. He called two incidents of Russia shutting off natural gas supplies to Ukraine, including one last month, “two hiccups.” But he added the hit to Russia’s reputation was probably not worth it.
“These, in my mind, were price conflicts and had far less to do with politics than some observers said.”
According to Schroder, in one case Ukraine was paying roughly 70 percent less for Russian gas then gas priced coming out of Western Europe.
“There’s no reason to think that a public company … should have to support an independent country,” he said of Gazprom’s dispute with Ukraine.
While Schroder was leading Germany, he forged stronger ties with then-Russian president Vladimir Putin. His critics roundly denounced his move to cash in on his relationship with the Kremlin by going to work for Nord Stream. That company hopes to bring a Russian gas pipeline that bypasses Ukraine into Europe by 2011.
Schroder argues the EU needs 200 billion cubic meters of additional gas supplies in six short years and much of that will need to come from Russia. Roughly half that additional need will come from increasing demand for gas. The other 100 billion cubic meters of need is due to declining production in Europe’s traditional supply basins, such as the North Sea, according to Reinier Zwitserloot, CEO of Wintershall Holdings AG, which holds a 20 percent stake in Nord Stream.
Schroder said Russia, Europe and the United States are intertwined and must put any leftover Cold War tendencies behind them. Since natural gas sales account for 25 percent of Russia’s gross domestic product, Russia needs buyers of its commodities just as much as consumers need the resource-rich nation, he said.
“Russia has huge energy reserves and needs to be part of any multilaterial solutions going forward.”