Why Does Russian Support Gaddafi?

Why Does Russian Support Gaddafi?
Three Reasons.

• First, an historic defense connection. Gaddafi fashioned a hybrid economy which included many socialist features, which facilitated Libya's cold war strategy. The majority of Libyans military equipment is from the Russian defense industry,
• Second, Russia sees itself as a a counter-weight against NATO, which is working to defend the Libyan rebels.
• Third Gazprom The FSB -Laced multi-national Russian oil company Begin exploring an oil field asst swap with Libya last year.

The pensions of many KGB agents depend of Gazprom profits, and they will lose influence and oil field assets if Gaddafi leaves the scene.

-Shimron Issachar

Gazprom Planning Libya-Europe Pipeline

10 July Bloomberg- By Lucian Kim

Gazprom, Russia's state- controlled energy company, offered to buy all oil and gas available for export from Libya, threatening to grab greater control of Europe's energy supplies.

Gazprom Chief Executive Officer Alexei Miller made the proposal to Libyan leader Colonel Muammar Qaddafi during a visit to Tripoli yesterday, the Moscow-based company said in a statement.

• Libya exported about 1.53 million barrels of oil a day in 2006, almost enough to supply Italy.
• Gazprom considers the country its priority partner in North Africa and said it registered a unit called Gazprom Libya in Tripoli.
• Less than a month ago the company opened its first African office in neighboring Algeria. Russia, the world's largest producer of natural gas, is seeking to lead closer coordination among nations that produce the fuel.

The Libyan side positively evaluated Gazprom's proposal to buy all future volumes of gas, oil and liquefied natural gas assigned for export at competitive prices,'' Gazprom said. The two sides agreed to start talks on Gazprom buying ``available volumes of Libyan hydrocarbons,'' according to the statement, which didn't give further details.

• They also agreed to set up a joint venture to modernize existing oil refineries and build new plants.
• Russia will host a meeting of the Gas Exporting Countries Forum later this year.
• Gas Transportation Gazprom also said it received a proposal to help build ``new gas transportation capacity'' from Libya to Europe. ``Libya's traditional customers shouldn't worry,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said in a phone interview.
• Gazprom offered to buy whatever gas or oil that Libya has available for selling, or that has no buyer. It is not offering to take all of Libya's production.''

Libya, Africa's third-largest oil producer, wants to forge new energy partnerships after nearly two decades of international sanctions. The African nation produced 15.2 billion cubic meters of gas last year, piping 9.2 billion to Italy, and pumped 1.85 million barrels of oil a day, according to BP Plc data.

Eni SpA, Italy's largest oil company, has been in Libya since 1959 and has an average daily output of 550,000 barrels of oil equivalent from the nation.

• Supply Accord Eni and Libya last month extended an oil and gas supply agreement for 25 years, after agreeing last October to jointly invest $28 billion over a decade to expand energy production.
• No Eni official could be immediately reached for comment. `

`Nobody needs to worry, not the Americans, not the Italians who have contracts with us,'' Ghanem said. ``We will respect all the contractual terms in all the contracts.'' ``Gazprom is just another customer and they're asking for whatever extra supply we might have. If the price is right, we will sell to them.''

• Gazprom's possible move into Libya may weigh on a U.S. strategy to weaken the Russian company's grip over supplies of gas to Europe.
• The U.S. is trying to line up new gas supplies from friendly governments in Central Asia, such as Azerbaijan, and from Iraq for shipment to Europe via pipelines that skirt Russia.

Bloomberg

The China National Petroleum Corporation (CNPC)
(SEHK: 857),(SSE: 601857),(NYSE: PTR) 中国石油天然气集团公司
is a state-owned fuel-producing corporation in the People's Republic of China.

• It is China's largest integrated oil and gas company.
• As of 2006, it was the second largest company in the world in terms of number of employees.
• CNPC holds proved reserves of 3.7 billion barrels of oil equivalent.
• CNPC spun off most of its domestic assets into a separate company, PetroChina, during a restructuring.
• CNPC has 30 international exploration and production projects with operations in Azerbaijan, Canada, Indonesia, Myanmar, Oman, Peru, Sudan, Thailand, Turkmenistan, and Venezuela.

The Rest @ Wikipedia

This looks like a large multinational corporation, but it is important to understand that it an acting policy arm of the Chinese government...

CNPC, or 中国石油天然气集团公司 = Chinese Government

Why is that important to Africa ?

• Companies make agreements all the time time to keep each other's information private (see confidentiality agreement , called a non-discosure agreement in the US). In example, should an oil exploration company have some promising findings, it may want to share with oil investors, they may want to sign a confidentiality agreement before they come to an agreement about wheterht to go into business together.
• Since CNPC = China and China = CNPC, everypart of Chinese national intelligence, military intelligence must get the information.
• When CNPC makes a strategic decision, is a state policy move, or a business deicsion?
• State objectives and priorities will trump business ones in every case.
• How can the parternship be equal? CNPC becomes the master, the other party, the servant.

......At the very least it is not a straightforward business decision, so as they say "buyer beware"

Gazprom, a Russian state-controlled oil company operates in much the same way.

-Shimron

08.09.2007Libyaninvestment.com
Gazprom, NOVATEK and LUKOIL are going to participate in the tender on the development of the field in Libya, National Oil Corp. informed.

The fields are set out at the tender within the EPSA-4 program. They were selected by the Lybian side as probable project operators. Other participants involve
Gasprom Libya B.V.,
Lukoil Overseas Holding,
Novatek JSC,
Gas de France,
Pakistan Petroleum Limited,
BG Libya,
Woodside Energy Ltd,
ExxonMobil Libya Limited,
Total E & P Libye,
Wintershall Holding AG,
Statoil ASA,
Hess Libya Limited,
Sonatrach,
OMV Petroleum Exploration GmbH,
Conoco Libya Ltd,
Maersk Olie og Gas AS,
Polskie Gornictwo Naftowe i Gazownictwo SA,
Shell Exploration and Development
Libya GmbH,
BP Exploration Libya Limited,
Eni North Africa B.V.,
Marathon International Petroleum Libya,
Ltd., Oxy Libya, LLC,
Chevron Intrternational Exploration and Production Company,
Petronas Carigali Overseas,
Inpex Corporation
Petrobras-Petroleo Brasileiro S.A,
Petrocanada Libya Exploration B.V.,
PTTEP Public Company Limited,
ONGC Videsh Ltd.,
Talisman Energy Inc.,
RWE Dea AG,
Oil & Gas Development Co. Limited,
Naftogaz of Ukraine,
Pan American Energy LLC.
The list of probable investors involve Edison International Spa, Mubadala Development,
Burren Energy plc,
Addax Petroleum,
MOL Plc,
INA Industrija Nafte d. d.
Hellinic Petroleum S. A.
Oil India Limited
Itochu Corporation
Japan Petroleum Exploration Co., Ltd.
Mitsubishi Corporatiion,
Mitsui Oil Exploration Co. LTD.
JOGMEC, SK energy,
Korea Gas Corporation,
Indian Oil Corporation Limited
Nippon Oil Exploration Limited
Centrica Energy
E.On Ruhrgas
Union Fenosa
Bridas Corporation.
[akm.ru]

Alrosa is Now an Arm of Putin and The Russian Government

There is a transformation underway. In 2006, the Putin government made a deal with Alrosa, the Russian Mining company. After significant pressure, similar to what happened with Gazprom, Alrosa accepted State Control and received a monopoly in the Russian Diamond trade. Alrosa now claims to control 100% if the Russian Diamond trade, and 20% of the trade in the rest of the world.

Why is this important?

Because in Africa, when Gazprom or Alrosa speaks it must be clearly understood that it is the Putin government speaking

-make no mistake of entering into arrangements with them believing that they are private companies, as is understood in the west....

Gazprom's methods will be much more like the KGB than BP

Look at the Boards of these companies, read the very public biographies. Note that the "Seconds" in Gazprom and Alrosa are former KGB old guards, and maintain Active FSB ties.

For more background, read about Putin's People in The Economist.


-Shimron

Here is a long, boring 256 page report about how they did it. What follows is a brief excerpt of an English translation of a Russian document, so please bear with the economic-English-Russian speak:


"....ALROSA JSC − to the Center became the «price» of prolongation of
Vyacheslav Shtyrov’s powers.

Vladimir Putin set this task before the Ministry of
Finance in 2001, however its solution was hampered by the fact that the process
of redistribution of the «diamond» financial streams is touching upon the
interests of very many influential political players of federal scale.

In this case both the representatives of the «liberal» grouping of elites, for which ALROSA
assets constitute the main resource base, and «siloviks», potentially interested in
the expansion to the sphere of their competitors’ traditional influence, are
implied.

The fight for ALROSA continued for several years at the regional level, but
only in November of the last year[2005-added by shimron] the administration of the Ministry of Finance headed by Alexey Kudrin managed to make the administration of the Republic of
Saha (Yakutia) sign the protocol fixing the main stages of federalization of the
Joint Stock Company.

At that, having formally agreed to the conditions of division
of the property suggested by the federal center, President of Yakutia for a long time
has been evading from taking active steps in this area, preferring the policy of
«maneuvering» with the purpose to avoid an open conflict with main federal
interest groups and oriented at the support of local elites and the republic’s
population.

Simultaneously the negotiation process was carried out on the issue of
compensation of the inevitable budget losses of Yakutia. The transfer of the
property of the production and scientific association Yakutalmaz, on the facilities
of which in the early 1990−ies the company was created (the parties must introduce
these assets to the authorized capital of ALROSA as the payment for the federal
and republican shares), to the property of Joint−Stock Company ALROSA entails
the decrease of the republic’s income by 10 billion (according to the
administration) or 9 billion (according to the Ministry of Finance) rubles a year.

The originally declared demands of the republic’s administration in this
connection totaled to the unprecedented amount – 500 million dollars from the
federal budget.

However, accomplishment of the process of transfer of diamond monopoly
under control of the federal Center before the end of the current year was of
strategic importance, − in the first turn, for the administration of the Ministry of
Finance, therefore, to achieve the set goal, Alexey Kudrin was ready to agree to a
series of concessions to regional elites.

One of them, in the long run, became the prolongation of Vyacheslav Shtyrov’s powers. The economic aspect of the achieved agreements looks as follows.
Russia 2006. Report on transformation

Deputies of Il Tumen (the State Assembly) have approved the variant of the
amicable agreement pursuant to which the main share of the property of
Yakutalmaz will be transferred to the state with its subsequent introduction into the authorized capital of ALROSA JSC. [highlingted and bolded by Shimron]

In its turn, the new procedure of distribution of the Mineral Extraction Tax is called to satisfy the economic requirements of Yakut elites: in accordance with the recently adopted law, all receipts of the diamonds extraction tax are transferred to regional budgets (earlier their share
constituted 60%).

Yakutia will get practically all losses of the federal center (2,6 billion rubles a year), with the exception of 18 million rubles in favour of the budget of Arkhangelsk region (extraction of diamonds by Severalmaz JSC) and 0,4 million rubles to Perm Krai (Uralalmaz mine).

The transfer of several social objects and infrastructure from the balance of Yakutia to the balance of the Russian Federation will become the second source of compensation.

These assets in the amount of 2 billion rubles are included into the state budget of 2007.

Deductions of ALROSA for implementation of local social, economic and ecological
programs – 2% of the cost of crude diamonds sold by ALROSA – will also remain
in the republic’s budget.
Besides, representatives of Gazprom OJSC [emphasis added by Shimron] have already declared that of the 2,4 trillion rubles planned for implementation of the general scheme of gas supply and gasification of the Far East, over 500 billion rubles will be used in the republic. At last, Rosimushchestvo (the Federal Property Management Agency) took the principle decision on recognition of the legitimacy of the recent incorporation of the company Yakutugol (Coal of Yakutia): the
government of Yakutia (75% minus 1 share) and Mechel group (25% plus one
share) became the shareowners.

Thus, the main stage of returning the diamond monopoly to the state property should be accomplished before the end of the year.

Strengthening of the administrative positions of Alexey Kudrin, the head of the
Ministry of Finance and one of the leaders of «liberal» grouping, who has
implemented Vladimir Putin’s strategically important order, will be the most
significant political consequence of the final redistribution of assets.

Gazprom management, increasing its influence in the region which is perspective from the
point of view of the resource potential, will have to solve the problem of
minimization of possible «costs» of interaction with national elites in future."

-Russia 2006. Report on Transformation, page 57

Gazprom Opens Office in Algiers

The Russian gas company GAZPROM has decided to gain a foothold in Algeria by opening a representation office in the capital Algiers.

The move comes in the framework of an agreement signed last May between the Algerian hydrocarbons company Sonatrach and Gazprom.

The accord is aimed at upgrading cooperation and exchanges in the gas field and related matters between the two major companies.

It should be noted that Algeria's Sonatrach and Russia's Gazprom now stand as the main gas suppliers of European countries.

From echoroukonline.com

Russia makes Gazprom the largest Private Army in the World

Gazprom, with its 430,00 employees, has been doing oildeals with companies all over Africa., NowRussia has made it exempt from laws so that it can send armies into Africa to Gaurd it pieplines.

But It opens the door for professionally armed Armies to deploy to Africa without Russian government oversight.

Read this Reuiters article from 4 July 2007.

-Shimron

MOSCOW (Reuters) - Russia's parliament handed gas giant Gazprom the right to form its own armed units on Wednesday with a law one legislator said opened a "Pandora's box" that could lead to the creation of a private army.

A law backed by 341 lawmakers in the 450-seat State Duma lower house of parliament gave Gazprom, and oil pipeline monopoly Transneft, special exemption from strict limits on private businesses wielding arms.

The two state-controlled companies will for the first time be allowed to employ their own armed operatives instead of contracting an outside security firm.

Their armed units will also have access to more weapons and more freedom to use them than private security companies.

Gazprom is already described by some observers as a state within a state: it has 430,000 employees, controls some of Russia's biggest media outlets, has a firm grip on gas exports and owns the country's third largest bank.

"This law is like a Pandora's Box," said Gennady Gudkov, a lawmaker with the left-wing Fair Russia party who opposed the law on its third and final reading in the Duma.

"Gazprom and Transneft are proposing the creation of their own corporate armies," he told the chamber.

"If we pass this law we will all become the servants of Gazprom and Transneft. These companies seem to be following the maxim ... that what is good for them is good for Russia."

BETTER PROTECTION

Supporters of the law said it was needed to improve protection of oil and gas pipelines -- the economic lifeline for a Russian economy driven by revenue from energy exports -- from attacks by militants.

Russia supplies almost a quarter of Europe's natural gas and is the world's No.2 exporter of crude oil, after Saudi Arabia.

"A couple of terrorist acts and an ensuing ecological catastrophe would be enough to immediately declare Russia an unreliable partner and supplier of energy resources," said Alexander Gurov, one of the deputies who drafted the law.

Gazprom's press service said in a statement sent to Reuters: "This law will allow us to increase the reliability of protection for Russia's unified gas supply system."

Gazprom owns all trunk pipelines transporting natural gas across Russia and exporting it abroad. Transneft controls Russia's oil and oil product pipelines.

The weapons that Gazprom and Transneft armed units will be allowed to carry under the new law are restricted to hand-guns and pump action shotguns. The law includes no restriction on the number of armed employees.

They can be deployed only to protect infrastructure. But given both firms' have pipelines throughout the vast country, that would mean they could operate almost anywhere.

One security analyst said it was already common practice for big companies to have their own armed security units, but their legal status was murky.

"They (private armies) already exist to a certain extent so this is just sort of legalising it," said Pavel Felgenhauer.

The law adopted on Wednesday must be approved by the Federation Council, or upper house of parliament, and signed by President Vladimir Putin before it comes into force.

Under the new law, the armed units of Gazprom and Transneft will have powers to use weapons similar to those enjoyed by interior ministry security guards.
(Additional reporting by Tanya Mosolova)

Learn more about Reuters

Gazprom & Odex Compete for Libyan Oil Development

Originally Posted in October of 05, but of note today

-Shimron

The successful Mitsubishi-Teikoku bid for two concessions in Ghadamès basin Area 82, offering production shares of 7.5 per cent and $6 million signature bonuses, frustrated another relatively aggressive bidder.

Russia's state-owned gas giant Gazprom narrowly missed all three of the Ghadamès basin licences it bid for, in what was overall a bad result for the Russians, Tatneft excepted. It had been hoping to use EPSA-IV as a means of substantially increasing the reach of its overseas E&P.

Gazprom had been very keen on acquiring Libyan acreage, and is likely to pursue other options as a result of its failure in this round, such as an asset swap with Libya's Oilinvest. Gazprom's banking arm is a shareholder in Odex, a subsidiary of Oilinvest established three years ago with UK-based Soco International, and negotiations for Libyan-Russian asset swaps between the three parties are reportedly underway.

Soco's interest in Libya arose through the relationships between some of its non-executive directors and larger shareholders such as Pontoil Intertrade, owned by the family of Mario Contini, which has an Italian refinery among its other interests. Pontoil has a 20.55 per cent interest in Soco and Ettore Contini is a non-executive director. Mario Contini, chairman Patrick Maugein and another non-executive director, Rui de Sousa, all have a background in the downstream sector and were instrumental in bringing Soco into Libya. Gazprombank now has 20 per cent of Odex, alongside Oilinvest (46 per cent) and Soco (34 per cent).

So far, Odex has not found either upstream or downstream opportunity, partly because the government has been focused on open bidding rounds. According to Soco's Roger Cagle, "We can't compete at the levels bid in the last bid round." Rather, "our intention is to partner with Libyan companies and look for some sort of exploitation/development project. [But] with the government focusing on open bid rounds this concept takes a back seat."

Menas Associates 27-Oct-05