Now seems to be Latin America's turn, a region which, in the words of Stanislav Tsygankov, head of the gas giant's foreign trade division, should become one of its future outposts.
To be sure, Gazprom, as a state-controlled monopoly, could not have launched a peaceful offensive overseas, or even declared its intention to do so, without full backing from the Kremlin. And the more the West criticizes Russia's economic expansion and its desire to dominate world energy, the more active this support becomes. President Putin's trips to Algeria and some Latin American countries are eloquent examples. Putin is becoming a powerful lobbyist for Russian business. And it is no accident that his visits spawn documents on strategic energy partnerships.
The Russian president appears to be a keen advocate of Russian corporate investment in the Latin American energy sector. He has asked for and secured from Venezuelan leader Hugo Chavez guarantees for Russian companies and their capital against possible nationalization in the oil and gas industry of Venezuela.
Economic cooperation, rather than political slogans, has lately become the foundation of ties between Russia and a number of countries in Latin America, as indeed it has in some other regions of the world. Big business, and Russian business is no exception, puts profits and new markets above all else, and the slightest hint of political intervention greatly adds to the risks and breeds problems. Just recall the Baku-Tbilisi-Ceyhan oil pipeline.
Global competition for hydrocarbon reserves has shown that state-run companies and companies enjoying state support are better placed to win dominant positions on international markets. The management of the Russian gas giant is aware that if state and commercial approaches are combined, long-term plans can be devised based on the prospective balance of gas inside and outside the country. In its Latin American strategy, Gazprom is happily combining the advantages of a transnational energy giant with the strong points of a national state-owned company.
Not surprisingly, in the Latin American region, the Russian gas mammoth is cooperating chiefly with state-controlled and state-supported companies. In Brazil, the key player is Petrobras (Petroleo Brasileiro S.A.); in Bolivia, the state corporation YPFB (Yacimientos Petroliferos Fiscales Bolivianos); and in Argentina, Transportadora de Gas del Sur (TGS) (the former state-run gas transportation company Gas del Estado). In Venezuela, Gazprom is working with state-owned Petroleos de Venezuela S.A. (PdVSA).
This is no mere coincidence, since in many South American countries it is the government that chooses a strategic ally in the gas and oil sector. Brazil, Venezuela, Bolivia and Argentina - countries with vast hydrocarbon resources - propose in the near future to dramatically increase their output, link their countries together with a common gas trunk line, reform national systems, and review their inventories, i.e. to make the oil and gas industry more profitable.
So what about the Russian company is so attractive to Latin American countries? Above all, it has thirty-five years of unique experience in geological prospecting for and production of natural gas. Last year, Gazprom produced 547.9 billion cubic meters of gas, exporting 249.09 billion cubic meters of it. Within five years, the Russians boosted annual output by 36 billion cubic meters, an amount comparable to annual consumption in Argentina.
Gazprom partners are no doubt also interested in the experience of building and operating high-capacity gas pipelines. Only a specialist can appreciate the scale of Gazprom's building effort - last year the concern put into service 1,400 kilometers of long-distance pipelines and feeder branches, building in addition eight large compressor stations and underground gasometers. Underground gas-holding capacities have grown by 1.86 billion cubic meters.
In this light, Gazprom's experience is simply invaluable for plans to lay a trans-South American Venezuela-Argentina-Bolivia-Brazil gas pipeline more than 8,000 kilometers long, capable of transporting up to 150 million cubic meters a day, and costing $15 billion. And it looks very certain that the Russian concern will participate in the construction of this new gas artery. In fact, Venezuela and Brazil have already made unofficial overtures to the Russians. Gazprom has not yet made up its mind, but the Russians have already offered to carry out feasibility studies for this grand multi-national project on the South American continent.
No doubt many Latin American countries are also interested in domestic transport projects (including Bolivia and Paraguay) and can benefit from Gazprom's expertise, particularly in laying undersea pipelines. The latter is especially important for the Brazilians, who are developing the Santos deep-water deposit on the Atlantic shelf. The knowledge and skills acquired by Gazprom in laying the world's deepest gas pipeline, running along the bottom of the Black Sea to Turkey at depths of over two kilometers, are stirring up real interest at Petrobras. An attractive point for them is that the Russians work with a pressure of 200 atmospheres in their pipelines, twice as high as in Brazil.
Another area where Russia is ahead of the rest of the world is the establishment and operation of a single gas supply system. Gazprom created it and operates it, and the system has no match anywhere. It is run from one center and can respond flexibly to any engineering, economic and climatic factors. It ensures uninterrupted supplies to consumers, even at peak loads. There is great interest in such systems among gas-producing Latin American countries.
At the same time, Gazprom is not a charity and expects returns from the use of its technologies in Latin America, and not only direct ones. They say the concern is also curious about South American technologies, especially natural gas used as a motor fuel, production of liquefied gas, and much else. In short, cooperation is going to be profitable and mutually beneficial.
