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Bloomberg: Russian Energy Resources Help Its Foreign Policy, Lavrov Says

By Halia Pavliva

July 19 (Bloomberg) — Russian Foreign Minister Sergei Lavrov defended the government’s policies of regaining control over energy industry from foreign investors and said energy resources help Russia pursue its foreign policies.

“Russia does consider energy to be a strategic sector that helps safeguard independence in its foreign relations,” Lavrov said in an article written for Foreign Affairs magazine and published on the ministry’s Web site today. “The Russian government’s energy policy reflects a global trend toward state control over natural resources.”

Lavrov refused to publish the story in the magazine after the editors cut it by 40 percent, which he compared with “the worst features of Soviet censorship,” the ministry said in the statement on the web site today.

President Vladimir Putin, whose second and final four-year term in office expires next year, has tightened his grip on Russia’s petroleum and mineral resources. OAO Gazprom, the state- run natural-gas company, has taken control of $8.5 billion in projects from Royal Dutch Shell Plc and BP Plc.

Russia’s understanding of the energy industry’s role in policy making is “understandable given the negative external reactions to Russia’s strengthened economy and enlarged role in international affairs, in which Russia lawfully gained freedom of action and speech,” Lavrov said. “It should not be criticized by those who frown on a stronger Russia.”

Gas Cut Off

Gazprom, the world’s biggest natural-gas exporter, cut gas supplies to Ukraine in January 2006, citing a dispute over prices and interrupting shipments to Europe. The incident cast doubt over Russia’s reliability as a supplier of energy, since most Russian gas exports go through Ukrainian pipelines to Europe.

In January 2006, Russia’s oil pipeline monopoly OAO Transneft shut supplies to western Europe via Belarus, again citing a dispute over pricing.

“Russia has never failed to fulfill any of its hydrocarbon- supply contracts with importing countries,” Lavrov wrote in the story.

Record energy prices have emboldened governments in countries that are rich in oil and gas, such as Russia and Venezuela. The average price of Urals, Russia’s major export blend of oil, has risen more than fivefold from 1998, when the country defaulted on domestic debt and the ruble collapsed. The price of Urals averaged $54.46 a barrel in the first quarter compared with $10 in 1998, according to Bloomberg data.

Russia has 79.5 billion barrels of untapped oil, the sixth- largest reserves in the world, behind Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, according to 2006 figures published by London-based BP. The country pumped 9.77 million barrels of oil a day last year, enough to supply 64 percent of U.S. demand. Only Saudi Arabia had higher output with 10.9 million barrels a day, according to BP.

To contact the reporter on this story: Halia Pavliva in New York at [email protected] .
Last Updated: July 19, 2007 13:21 EDT

 

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