Another case of bad gas

There's an audible sigh of relief that US consumers will have more change in their pockets because the price of oil has fallen below $60/barrel. Nevermind it is still shockingly high. Well, the energy market is variegated, but prices of all products tend generally in the same direction. And this new mightened be good news for those with a nose for economic noose:

Gazprom price boost raises new stand-off fears

Gazprom said that it would double the price of fuel supplied to Georgia, its neighbour in the Caucasus, raising fears of another winter gas stand-off between Russia and a former Soviet satellite state.

The signal that Gazprom will raise its price from $130 per 1,000 cubic metres to $230 came as further evidence emerged that Russia’s energy juggernaut may be running out of steam.

Russian oil output slipped back in October, the second month of a decline that is raising concerns that nationalist politics is hindering development of Russia’s natural resources.

The Caucasian republic is a vital piece of an energy jigsaw puzzle in Central Asia, a transit point for pipeline and rail tanker traffic from the Caspian Sea to the Black Sea and the Mediterranean.

With American support, BP has invested billions of dollars building oil and gas pipelines across Georgia to ship hydrocarbons from the Caspian Sea to Turkey.

Blame for Russia’s oil slippage was cast yesterday on the delayed start-up of oil exports from an ExxonMobil oil terminal at the US company’s Sakhalin-1 project in Eastern Siberia. A dispute over environmental compliance prevented a timely start-up.

Signs that the Russian energy machine was slowing emerged as the Foreign Ministry accused Washington of using “artificial geopolitical schemes” to frighten Europeans from participating in Russian pipeline ventures.

The outburst followed a critique by Mattthew Bryza, a senior US State Department official, who questioned the wisdom of German participation in Nord Stream, a project to lay a pipeline the length of the Baltic with a landfall in Germany. Mr Bryza questioned whether the new pipeline would only increase Germany’s dependence on Russian gas.

Evidence is mounting that the post-Soviet growth in Russian oil production has reached a plateau and that without substantial new investment, production will begin to dwindle. Oil output in October was less than 1 per cent higher than a year ago, a signal that the Russian oil motor is beginning to stutter.

Investment by foreign entities and oligarch-controlled companies caused an 11 per cent surge in annual output in 2003 and production rose a further 9 per cent in 2004, but last year growth slowed to less than 3 per cent.