Petrostate: Putin, Power, and the New Russia

By Marshall I. Goldman | Go to book overview

6
Natural Gas:
Russia’s New Secret Weapon

POWER OUT OF A PIPELINE

While its petroleum exports have generated the cash blizzard that has made Russia rich and allowed it to repay most of its foreign state debt, its natural gas and monopoly control of the gas pipelines that transport the gas to the West have transformed Russia from an anemic and essentially bankrupt charity case into a robust energy superpower with restored political muscle.

Initially it seemed like such a sensible idea. Determined to reduce their over-dependence on energy from the problematic Middle East, European leaders in the mid- 1980s, especially Helmut Kohl and later Gerhard Schroeder in Germany in 1998, concluded that Germany should diversify its sources of supply. One way to do this would be to support efforts to tap into energy exports from the USSR and its most important successor state, Russia.1

This required some rethinking by the major Seven Sister oil companies. Historically, they have worked to prevent the sale of Soviet discounted crude oil so that it would not undercut market prices in the capitalist world. This began to change in 1973. Following the lead of Eni (Ente Nazionale Idrocarburi) of Italy, which began to buy Soviet crude oil as early as 1931, Western petroleum companies began to view

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