Energy is a high stake, and at times dirty, game. And as the old cliché says in love and war everything is justified, so is the case with the energy world too.
The death of Alexander Litvinenko on Nov. 23 of poisoning appears a cloak and dagger story — direct from an Alfred Hitchcock’s plot. The killing — rather assassination as some are accusing - of Litivenko was related to his ‘unearthing of some energy related secrets of the Russian government,’ some reports insist.
It is now emerging that Litvinenko, a former Russian intelligence agent, who defected to the United Kingdom in 2000, had vital information about the involvement of Russian agents in the break up of the Russian energy giant Yukos. It was reported that Alexander Litvinenko traveled to Israel just weeks before his death to hand over evidence of how agents working for Russian President dealt with his enemies running the Yukos oil company.
The Sunday Times reports that the now dead Livinenko passed the information to Leonid Nevzlin, the former second in command to the now jailed Yukos chief Mikhail Khodorkovsky. Nevzlin now lives in Tel Aviv. He fled to Israel after Kremlin seized and then sold of the $40 billion energy company.
The documents he handed over ‘shed light on most significant aspects of Yukos affair.’ Investigators told The Times that Litvinenko had apparently uncovered “startling” new material about the Yukos affair and what happened to those opposing the forced break-up of the company. Several figures linked with Yukos are reported to have disappeared or died in mysterious circumstances while its former chief Khodorkovsky languishing in prison.
Energy has emerged as a major tool in the hands of Russia to regain the lost glory of the old Soviet days. In an era where energy security has become one of the major issues in the global diplomatic channels, President Putin knows too well how to use this asset. He could not have left this asset in the hands of a few and therefore the former KGB boss, that President Putin is, was ready to take his chances when he decided to dismantle the private controls on the prized Russian asset - Yukos.
After all President Putin is comfortable with the fact that Europe’s reliance on Russian gas is increasing and major British companies have deep business interests in Russia. BP has successfully bought its way into the potentially lucrative region of the Russian far east. Russian company. Further Rosneft and BP have just signed shareholder and operating agreements for joint activity on the East-Schmidt (Sakhalin-5) and the West-Schmidt (Sakhalin-4) license blocks. Analysts point out to the fact that as UK ‘s dependence on energy imports increases, so the reliance on sound economic ties with Russia is bound to grow. It would thus be difficult for these countries to go much beyond rhetoric, owing to their internal compulsions.
Even the US could not afford to annoy Putin and his government beyond a certain level, for it knows the Russian role in balancing the global energy demand and supply equation today. For the fact remains that Russia has been producing crude at par with Saudi Arabia for the last few months. In some of these months, unrestrained by OPEC cuts, Russian production has even surpassed the Saudi output.
So Putin want Russian energy assets under Moscow ‘s tight control and grip, to be used for furthering his geopolitical ambitions. Earlier, Moscow also had a row with the energy giant Shell on Sakhalin concessions when mid November it sought huge sum on account of ‘damages to environment and other losses.’ Russia blamed Royal Dutch Shell-led consortium, involved in a liquefied natural gas project in the Far East , for all these damages.
The Russian Natural Resources Ministry accused the consortium of illegal logging and of damaging rivers in the course of its pipe-laying work on the Pacific island of Sakhalin .
Many analysts and other observers, however, believed that the pressure on the Shell led consortium was aimed at reconfiguring to the Kremlin’s benefit the terms of the deal under which Shell acquired the rights to develop the huge fields, as well as securing favorable terms for the natural gas monopoly Gazprom to enter the project.
Earlier Gazprom, the world’s largest natural gas producer, suspended talks with Shell about taking a 25 percent stake in Sakhalin-2 last year after Shell raised its cost estimate for the project to $22 billion from $12 billion.
Shell and its partners, Japan ‘s Mitsui and Mitsubishi have infuriated Russia by doubling the cost estimate of the Sakhalin-2 oil and gas project to $22 billion, meaning the Russian state will have to wait longer to see any profit from the venture.
Russian officials have put pressure all of its three Profit Sharing Agreements (PSAs) in the last few months, launching environmental and technical checks on ventures led by Exxon Mobil and Total as well as Sakhalin-2. Russian gas monopoly Gazprom planned to take a stake of 25 percent in Sakhalin-2 by means of an asset swap with Shell, but the doubling of the budget has thrown the proposed swap into disarray.
Russia was now expecting that the Shell led Sakhalin -2 project consortium would ultimately accept a change in terms of its product sharing agreement ‘soon’.
And not long ago, only mid last year, an unsolicited bid by the Chinese National Offshore Oil Co (CNOOC) to buy Unocal, a US oil company, was forcibly thwarted by none other than the leader of the ‘free world’ citing security concerns. And the entire US establishment appeared behind the blocking game.
It would be virtually impossible to find out who poisoned Litvinenko or for that matter the real issues behind the Shell saga. However, the fact remains that stakes are so high in this game that everything is possible and plausible. In such a high stake game no possibility can and should be written off!