The Russians are coming

This sounds like a nightmare waiting to happen on the shores of the St. Lawrence at Quebec City.

The big-picture point is that Gazprom, Russia’s state-controlled energy conglomerate, is promising to supply natural gas to other energy companies all around the world, in exchange for ownership stakes in the terminals that will receive it.

Gazprom is the entity Russian President Vladimir Putin used to shut off the gas to Ukraine — and put intense pressure on western Europe in the process — when he got annoyed with Ukrainian President Viktor Yushchenko as 2006 began. Essentially, it’s part of the Russian government and a lever for exerting Russian power. It is most definitely not a source of natural gas that Canadian consumers should want to come to count on.

According to the Globe and Mail, the terminals in Canada it might acquire some of include proposed liquefied-natural-gas ports in Lévis (across the river from Quebec City) and downriver at Gros-Cacouna (near Rivière-du-Loup).

The Canadian partners in the two projects — Gaz Métro and Enbridge Inc. at Lévis, Petro-Canada and TransCanada Corp. at Gros-Cacouna — are private enterprises. Why they would even consider climbing into bed with Gazprom is beyond me. Sure, Gazprom is a moneymaker, but that’s not a motivation its associates can count on in figuring out what kind of partner it’s likely to be.

On the up side, the Globe quotes an industry-watcher saying the guaranteed supply contracts Gazprom is reportedly dangling are a joke:

[A]nalyst Elena Herold of PFC Energy said any company that is counting on Gazprom’s Baltic project for LNG supplies could well be disappointed. “It’s ridiculous – more talk than a real project,” said Ms. Herold, who covers Russian energy for the Washington-based consultants.

Ms. Herold said Gazprom has no dedicated natural gas supply to feed the Baltic project, and that it makes more sense to ship the gas by pipeline to Europe than liquefy it and send it by tanker to North America.

Also, during my little spin around Quebec City last week, I was almost distracted by the number of posters I saw tacked up opposing the proposed terminal at Lévis. They might all have been put up by one guy with a staple gun, but the project does not seem to be a done deal, even if the proprietor (a consortium called Rabaska) intends to start operations by 2011.

The private companies involved are, of course, free to make deals with whatever suppliers they want. Consumers should be striving to make deals like these, which invite authoritarian foreign governments into important roles in critical and sensitive infrastructure, unnecessary.

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