Russia Tightens Europe’s Energy Noose
Moscow now has its sights set on Spain's largest oil company.
A leaked intelligence document issued by Spain’s CNI spy agency in October warns that Russia is aggressively pursuing a plan to “monopolize access to energy supplies to Europe.” The report validates what many analysts have been saying for a long time, namely that Moscow is using Russian energy companies to gain geo-strategic control over northern, central and southern Europe.
Now Russia’s largest independent oil company, Lukoil, is negotiating the purchase of a 30 percent stake in Repsol YPF SA, Spain’s largest oil company. The deal, which is valued at 5 billion euros ($6.5 billion), calls for Lukoil to buy a 20 percent stake in Repsol from Sacyr Vallehermoso SA, a debt-laden Spanish construction company, and another 10 percent stake from La Caixa, a Catalan savings bank. Lukoil is now seeking financing in order to close the deal.
News of the politically sensitive acquisition has come as a shock to many Spaniards, who now are fiercely debating the wisdom of giving effective control of their “national energy champion” to a Russian company. Analysts say the deal could lead to a full-scale takeover or break-up of Repsol, which has lagged rivals in profitability and in reserves growth in recent years. Under Spanish takeover law, a shareholder must launch an offer for the entire company once it passes the 30 percent threshold.
Spanish Prime Minister José Luis Rodríguez Zapatero had vetoed a similar deal with Lukoil in 2006. At the time, Repsol was talking with Lukoil about cross shareholdings and joint ownership of oil reserves. But those plans were abandoned after Sacyr built up its holdings in Repsol in late 2006, presumably in order to keep Repsol in Spanish hands.
Page 1 of 2 Next ->
Soeren Kern is Senior Analyst for Transatlantic Relations at the Madrid-based Grupo de Estudios Estratégicos / Strategic Studies Group.
 |
 |
 |
Podcasts |  PJM Home |
Pajamas Media appreciates your comments that abide by the following guidelines:
1. Avoid profanities or foul language unless it is contained in a necessary quote or is relevant to the comment.
2. Stay on topic.
3. Disagree, but avoid ad hominem attacks.
4. Threats are treated seriously and reported to law enforcement.
5. Spam and advertising are not permitted in the comments area.
The clause regarding "hate speech" has been deleted because readers criticized it as being too loosely defined. We agreed.
These guidelines are very general and cannot cover every possible situation. Please don't assume that Pajamas Media management agrees with or otherwise endorses any particular comment. We reserve the right to filter or delete comments or to deny posting privileges entirely at our discretion. If you feel your comment was filtered inappropriately, please email us at story@pajamasmedia.com.
38 Comments
1. chuck,:The Russians had one card, their energy, and play it masterfully. We had so many cards and played them like hicks one a Saturday night spree. Right now, i wish Putin was our president-elect.
Nov 30, 2008 - 5:44 am 2. Peter:So now Zapatero is selling out Spain’s heritage to Putin? Yes, Spain is getting what it deserves. Putin will strip Europe to the bones and laugh all the way to his Swiss Bank.
Nov 30, 2008 - 6:59 am 3. Instapundit » Blog Archive » RUSSIA TIGHTENS Europe’s energy noose. …:[...] RUSSIA TIGHTENS Europe’s energy noose. [...]
Nov 30, 2008 - 7:05 am 4. Person of Choler:Also, Europe’s carbon phobia is aiding Gazprom’s plans to monopolize fuel supply for the continent’s electricity generation.
Nov 30, 2008 - 7:19 am 5. Buck Smith:I would say Russia’s cards, in order of importance are:
1. Commitment to amoral use of force. This is worth more than hundreds of millions of barrels of proven reserves, especially against pacifists!
2. Nukes.
3. Energy, but this is an asset is past it peak, per the spot market pricing.
Against that they have the boat anchor of a dying economy. Steve Forbes talks about how there are only 5 or 6 things needed to make capitalism work, contract law with [reasonably honest] court system, stable currency, free trade… Russia just does not have enough parts in place to have a growing economy.
Nov 30, 2008 - 7:34 am 6. Nobody:Hey, remember that Europe is full of enlightened, superior socialists who know best. Green power is the answer. All they have to do is conserve an awful lot and use wind power. Who needs the Russians anyway? The Russians are just doing Europe a favor by discouraging the use of fossil fuels. The Russians are REALLY anti-global warming and this proves it.
Nov 30, 2008 - 7:40 am 7. Typical Whte Person:Thank heavens Putin knows how to run Spain.
We shall see how well Obama’s Clinton troops run the USA
Nov 30, 2008 - 7:44 am 8. rvastar:This is just the first taste of the “Change” that’s coming for the Europeans who so desperately wanted Obama in office. His election sent a clear signal to our enemies that there are no longer ANY serious nations or people left in Western Civilization.
The Russians are going to squeeze them in an energy vise, and within 20 years, their unassimilated Muslim masses are going to teach them what happens when weak-willed idealists from one culture meet strong-willed moralists from another.
Actions have consequences. The Europeans are about to get their first lessons in relearning that oh-so basic law of life.
Nov 30, 2008 - 7:54 am 9. buddy larsen:That’s getting weird –how often i hear people say they wish Putin was our prez. Chuck makes it about 10 this month. What can this mean? We need a stronger executive –meaning weaker legislative –to swim the future waters?
Nov 30, 2008 - 8:06 am 10. Anonymous:This is pretty silly. The only blackmail Russia can exert is over the assets on its own soil (and of places it controls, e.g. in the “Near Abroad”).
Assets in Spain, South America, etc. are subject to instant takeover if Russia tries to use them in a way that’s against the interests of Spain, etc. The distribution systems in Spain, the oil in South America, they’re all rather safely out of Russia’s effective reach.
Financially, of course, one assumes Russia expects to make money on these deals, which they desperately need….
Nov 30, 2008 - 8:08 am 11. John:#10 – Fairly obvious why you prefer to remain “Anonymous”
Nov 30, 2008 - 8:43 am 12. fred:I remember back during the Eighties Ronaldus Magnus warning Europe to not do the gas deal with the Soviet Union. But, they went and done it anyway…
Nov 30, 2008 - 8:56 am 13. cubanbob:The Spanish would be foolish indeed to let this deal fall through. They need the money now. The consequences of letting the deal fail are far worse than the minor mischief the Russians could cause. Besides as Anonymous #10 pointed out, far be it that a Socialist government be restrained from nationalizing a foreign owned enterprise when it suited its purposes. The Russians will scream but in the end thy only have oil and gas to sell (weapons are a distant third)and they will sell to anyone who has the cash to buy. No real threat to Spain at all.
Nov 30, 2008 - 9:30 am 14. dk70:I wouldn’t expect the Russian’s to act like Europeans, Canadians, or Americans if Spain chose to nationalize a Russian foreign asset.
Nov 30, 2008 - 9:46 am 15. buddy larsen:To get a fuller picture, take a look at BP’s recent adventures in Russian legal-land –try a search on [ bp court russia ]. Move a little further back in time with [ Shell Sakhalin ]. Or start at the front end of the current phase: [ putin gazprom ]. It was the Kremlin’s complete, cost-free success against (then private) Gazprom that really set the stage we’re now, like it or not, all actors upon.
At the time of Putin’s Gazprom grab, the west still had the commercial & diplomatic power to have prevented the usurpation. But we weren’t paying much attention –there was a fresh new phase of the terror war to worry about.
Nov 30, 2008 - 10:10 am 16. K T Cat:I think that #10 makes a good point. When a country begins undergoing an existential crisis, there’s no telling what they might nationalize.
Nov 30, 2008 - 10:36 am 17. Gilligan:This is the time when France can really come to the rescue in Europe.
Electricitie d’France has an excellent record for safely and profitably building and operating nuclear power plants. Poland, Hungary, Spain, the Czech Republic, Romania and Bulgaria should be crawling over each other to offer favorable deals to build French nuclear reactors on their territory. The electricity without threats of interruption will make those places attractive to locate factories and bring jobs. Electric transmission from those nuclear plants will help Germany and the Scandinavian countries who are too green for nukes survive when Russia cuts off their natural gas.
Nov 30, 2008 - 10:42 am 18. Joan:Russia and Venezuela are certainly the buddies these days, too. Maybe for a future strong-arming against North America? (If Hugo can last that long before he goes broke)
Nov 30, 2008 - 11:29 am 19. Chrismas Sale Online » Blog Archive » Pajamas Media » Russia Tightens Europe’s Energy Noose:Drill, baby, drill.
[...] unknown wrote an interesting post today onPajamas Media » Russia Tightens Europeâ??s Energy NooseHere’s a quick excerptby Bridget Johnson; Christmas Shopping in a Time of Recession by Michele Catalano; Happy Thanksgiving in Unhappy Times by Roger L Simon; Sanctions? What Sanctions? German-Iranian Trade Booms by Matthias Küntzel; Giving Thanks — and … [...]
Nov 30, 2008 - 11:41 am 20. robotech master:Yes nazism through nationalizing stuff will save them…. work for iceland… sure it will work for spain…and france and the UK and every other EU country thats going down the tubes right now.
It would be a bad move to do it because russia will turn around and do it to them… and even better you think pirates are bad now wait until russia starts “collecting” on the debt by taking over shipping thats owned by spain and spainish nationalized companies…
Nov 30, 2008 - 12:03 pm 21. Russia Tightens Europe’s Energy Noose | 1913 Intel:[...] Read More… [...]
Nov 30, 2008 - 4:03 pm 22. WestGuard:Don’t do it Spain! Russia aready uses threats to cut off energy to Europe to influence European policy. Regarding Europes reluctance to take a much harder stand against the Russians for refusing to leave Georgia after invading and bombing it, a European spokesman said ” What can we do? They have us over a proverbial energy barrel. They can cut us off”
To give the Russians yet more control over European energy would be downright suicidal. If Europe keeps selling pieces of itself to the Bear, the Russians won’t need nukes, they can bring Europe to it’s political knees, at will, with the mere threat of flipping the “energy switch.”
Nov 30, 2008 - 9:24 pm 23. Jonesy55:At this rate the Russians will end up submitting Europe before Islam can. Don’t do it Spain!
Free trade and cross border investment is a cornerstone of the capitalist system and Russia’s grip on Europe is exaggerated anyway. Repsol could probably do with the investment.
The more Russia attempts to use energy as blackmail, the more Europeans will look for alternatives, whether it be renewable energy/efficency improvements, nuclear power, gas pipelines to Africa, LNG shipments from Qatar or most likely a combination of all the above.
Energy blackmail wouldn’t really work anyway I don’t think as Russia couldn’t afford to cut off its main source of foreign income for any length of time.
Dec 1, 2008 - 3:49 am 24. Michael:CubanBob and Anon #10 are the same person (sock puppetry) and he or she works for the FSB (what was once the KGB) propaganda corps.
You’ll see comments from these folks all over threads like this and in comments on news articles. They appear to be very active.
The comment approach is always the same:
1. Oh, don’t worry.
2. It’s all in your mind.
3. You make too much of this.
4. Russia is acting like any other country. You would do the same thing.
Lull the children to sleep. Sleep child, sleep…
It’s interesting to watch the Europeans fall under the Russian thumb yet again. Yet some part of me is strangely enjoying it, I guess because I think they deserve it.
Dec 1, 2008 - 5:13 am 25. Jonesy55:Michael, don’t worry, we’re less likely to be ‘falling under Russia’s thumb’ than the US is to be ‘falling under China’s thumb’ due to selling out half the American production base so that consumption of big TVs and cheap toys could be increased. Unlike you though I don’t take any pleasure in an ally coming unstuck.
Russia simply doesn’t have the population, economy or military spending to be a serious threat to European security. It can be a nuisance if it chooses to be but that’s about it.
Dec 1, 2008 - 5:35 am 26. dan:“Russia simply doesn’t have the population, economy or military spending to be a serious threat to European security”
Possibly.
Another way to think about it is that population is essentially irrelevant; there are, after all, no grassroots revolutions, and Russian energy already strangles Germany, the former Eastern Bloc, and the Asiatic landmass.
Or what are we to make of Gerhardt Schroeder loudly farting about US imperialism in Iraq, and then, upon Merkel’s victory, moving to the board of Gazprom – in Russia, the country that received by far the most Oil for Food money? In Russia, where even the Orthodox Church – a front for the KGB – is involved in the take?
The problem with Russia is that it is Leninist both by design and by personality. Therefore, all strategic maneuvors – such as coopting a nation’s energy corporations – are designed to further the dominant strategy: subversion. Every move is a trojan horse; every trojan horse’s occupants wait patiently and silently for nightfall.
Does anyone seriously think all this Kremlin manuevoring by a government comprising 80% “former” KGB officers is just some coincidence?
To quote Fred Thompson’s character in Red October, “the Russians don’t take a dump without a plan, son.”
By the way, I continue to believe that the purpose of the present jihad is to make it absolutely credible as the author of a nuclear strike on the USA. Just like to throw that out there.
Dec 1, 2008 - 6:17 am 27. Jonesy55:Yes, that’s another way to think about it, a rather paranoid one, but interesting nonetheless.
I still believe that Russia has enough internal problems of its own to be a serious threat to us though. Trying to control energy supplies is just an attempt to maximise the returns they get from their natural resources and increase their general political influence for its own sake. It won’t work to any major degree I don’t think and it’s only the same thing that many other countries do on a daily basis, part of the global geo-political game rather than a hostile act.
Europe can and should in my opinion expand nuclear energy production to proportions seen in France or Sweden, continue research and development of renewable sources such as wind, solar, tidal, geothermal etc and continue to make efficiency savings to lessen dependence on Russia and the middle-east.
Dec 1, 2008 - 7:04 am 28. dan:i agree it is mildly paranoid, it’s just that there is a certain character to Russia, at least its statecraft, that is inherently conspiratorial – as the old debate goes, a more Asiatic than European sense of government. Fraud and force and machismo. And here we have sort of incredible examples of Russian energy diplmacy in its near abroad; the poisoning of Yushenko; the nuclear sponsorship of Iran and Venezuela; the running of the country by KGB officers.
Whatever the answer to this riddle is, it certainly is not that, somehow, these factors balance into a foreign policy that is more or less like, for example, an Anglosphere democracy. Did you hear of the recent arrest of a top NATO official who is charged with having spied for the Russians for over a decade? There are things in the legitimate press that do not, for some reason, make their way into the general spotlight.
The article suggests that Russian energy policy is an important plank in its gradual, backroom co-option of the European energy grid. Europe’s armed forcea are already neutered, and its governments comprise an elite working at EU transnational sovereignty and on administering their enervating socialist-lite experiments.
I dunno. Give the really historical weakness of the USA at the moment, this all sounds like a ripe moment to push the envelope precisely in places like Spain. Russia’s government just doesn’t give a crap about its people the way almost any other nation does either because it desires to or because it is forced to.
Dec 1, 2008 - 7:51 am 29. David W. Lincoln:Here is something I am in favour in: Canada to sell its oil to those who are willing to listen to more than those who decry “dirty oil”, for those knuckle draggers are not taking various things into effect.
Let the United States, under new management, go to Venezuela for oil.
Dec 1, 2008 - 10:11 am 30. Juan:Putin is the strong will and iron hand of Russia. Without Putin, Russia either goes to vodka or to the mafia.
Still, Russian women continue to “just say no” to having little Russian babies. Russia is dying from the inside. Putin’s Russia is a bit less criminal and besotted than Yeltsin’s, but it is still no place to have any kind of decent life. Men dead before 55. Women childless and alone, cold through the long Russian winter nights. Putin and friends all billionaires, in control of the oil and the media. Everyone else out of luck.
Dec 1, 2008 - 11:49 am 31. colleen:Russia’s birthrates last year were at 20-year highs and this year is projected to be much higher than last year.
Many people throughout history have thought Russia was finished, but were proven wrong.
Just sayin’.
Dec 1, 2008 - 12:34 pm 32. Marie Claude:Hey, remember that Europe is full of enlightened, superior socialists who know best. Green power is the answer. All they have to do is conserve an awful lot and use wind power. Who needs the Russians anyway? The Russians are just doing Europe a favor by discouraging the use of fossil fuels. The Russians are REALLY anti-global warming and this proves it.
dear Nobuddy, Lukoil is your capitalist trojan horse, see ya all screwed, he, the villan socialist Euros, aren’t so dumb !!! and you didn’t even know ! how comes, such intellence escape from your witty mind ?
“Today, LUKOIL owns more gas stations in the United States than it does in Russia. It became the first Russian oil firm to buy a New York Stock Exchange-listed company when it bought Getty Petroleum and its 1,300 stations in November 2000, and then added nearly 800 Mobil-branded stations from ConocoPhillips to its fleet in 2004.”
http://www.russiablog.org/2006/09/post_1.php
Dec 1, 2008 - 1:01 pm 33. dan:http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/eu_serbia_russia_south_stream
check this out – russia to buy serbia’s ‘oil monopoly’ (just has to agree to build a pipeline between serbia and the black sea).
Dec 1, 2008 - 1:06 pm 34. William Carver:This time it looks like Russia really is finished. Probably will be overrun by central asian republic former client states. You know those folks who decided to keep breeding.
Dec 1, 2008 - 4:33 pm 35. deguello:Europe will soon get a taste of the new world economic order,Russian style;but don’t worry:Obama will save them!Speaking of birth rates,Spain’s is as low if not lower than Russia’s, and unlike Russia, Spain isn’t doing anything about it.BTW I didn’t know Spain had a spy agency;does the pacifist euroidiot who is Spain’s defense minister know abou this violation of Euroweeniehood?
Dec 4, 2008 - 5:15 am 36. Jonesy55:‘Europe will soon get a taste of the new world economic order,Russian style’
With oil at less than $50 a barrel, natural gas prices also plummeting and with Russian reserves pretty expensive to extract I think that I will sleep soundly tonight.
It’s worth remembering that the economy of the EU is over 10 times the size of the Russian economy.
Dec 4, 2008 - 8:30 am 37. Russia Tightening Europe’s Energy Noose « True Discernment:[...] “We must not sleepwalk into Europe’s energy dependence crisis.” This article appeared at Pajama’s Media on November 30, [...]
Dec 4, 2008 - 1:34 pm 38. Russia Tightening Europe’s Energy Noose | Commodity:[...] “We must not sleepwalk into Europe’s energy dependence crisis.” This article appeared at Pajama’s Media on November 30, [...]
Dec 4, 2008 - 1:49 pm