Environment and Energy Publishing, LLC
Greenwire
May 8, 2006 Monday

OIL AND GAS: Bush questions Russia’s willingness to use energy as
political weapon

President Bush questioned Russia’s energy policy today, rebuking
President Vladimir Putin for using oil as a political weapon.

In an interview published today in the German newspaper Bild, Bush
said: “One of our concerns is economic nationalism, to a certain
extent, where [Putin] is using his oil companies to achieve what
appears to be political objectives.” He added: “And we make our
concerns known when someone uses natural gas, for example, to send
signals to government.”

Bush also said there is full agreement between Moscow and Washington
about nuclear non-proliferation. “It is very important that the
United States and Russia work closely to make sure that nuclear
materials are stored as safely as possible,” he said (Agence
France-Presse, May 8). Russia responds to Cheney’s accusations

The comments came after Vice President Dick Cheney last week accused
Russia of betraying democracy by using oil and gas supplies to bully
its neighbors, speaking at a summit in Vilnius, Lithuania.

“No legitimate interest is served when oil and gas become tools of
intimidation or blackmail, either by supply manipulation or attempts
to monopolize transportation,” he said.

Cheney said Russia must return to democratic reform soon, rather than
trying to harness its position as an energy giant. Russia drew
worldwide criticism for turning off natural gas supplies to Ukraine
earlier this year (Greenwire, May 4).

Today, Russian officials responded to the criticism, saying it is
time the West came to terms with Russia’s progress as a market
economy.

“We are deeply puzzled by recent commentary in the West that distorts
Russian energy policies,” Russian Energy and Industry Minister Viktor
Khristenko wrote in the Financial Times. “The truth of the matter is
that Russia has moved away from Soviet-era arrangements of subsiding
the energy prices of our neighbors and turned to market-based pricing
mechanisms.”

Khristenko said Russia’s policies on energy and market and democratic
reform were “consistently misinterpreted.”

“We are aware that old impressions fade slowly, but it is time for
the West to recognize and acknowledge the maturing role and state of
progress that Russia has achieved,” he wrote. “At a time when Russia
has embarked on a speedy transition to market principles, we are
accused of politicizing the energy issue” (Agence France-Presse, May
8). Natural gas price hikes spurring efficiencies

While former Soviet republics now pay substantially more for their
natural gas after Russia started raising prices, the jolt is starting
to force fundamental change on some of the most energy-wasteful
economies in the world.

Georgia scrapped plans to build new gas-fired power stations. It is
going to build a hydroelectric plant instead. Armenia also has
ordered a plan targeting gas consumption.

Maxim Burtovy, director of an energy savings company called Energy
Alliance, is trying to put together a project to capture more waste
heat from an electricity-generating station and pump it into the
city’s heating system. He estimates that doing so could cut gas
consumption by 500 million cubic meters per year, worth about $47.5
million at the price Ukraine currently pays for gas from Gazprom, and
twice that on world gas markets (Marc Champion, Wall Street Journal
[subscription required], May 8). — LK