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Energy pragmatists: Prodi, Sarkozy and Yanukovich

Italian Prime Minister Romano Prodi chose his words very carefully during his visit to Kazakhstan on October 8, saying he hopes that the situation surrounding the Kashagan deposit will be resolved in the spirit of friendship and cooperation.

The government of Kazakh Prime Minister Karim Massimov has said it wanted to keep political players out of the negotiations and Eni’s position as the lead operator of the Kashagan oil field remains fragile. “When I spoke to him (Prodi) I didn’t hear anything that in his view it is a political issue. It’s a pure commercial dispute and now the negotiating parties from the Kazakhstani government and the consortium started the negotiations,” Massimov told reporters in Astana on October 12, responding to a New Europe question about the Italian press quoting Prodi as saying his government might intervene. “I hope we can manage a peaceful solution to this issue. I really, really hope so. After my negotiations with prime minister Prodi I felt that they also would like to find a peaceful solution. If not than, it will be Plan B,” Massimov said without elaborating. The Italian prime minister criticised Kazakhstan’s initiative to make amendments to the law "On mineral resources and subsoil use," saying Italian business circles were concerned about the changes.

Asked by New Europe if Kazakhstan’s initiative to make amendments to the law may hurt the business climate in Kazakhstan, Massimov said, “we had personal discussions with Prime Minister Prodi (October 8) and (foreign policy chief) Javier Solana (in Astana on October 10) about the subsoil law. Both of them raised some concerns about some changes in the law, but it was very strong commitment by President of Kazakhstan Nursultan Nazarbayev and also personally committed that...a contract which is signed by both parties will be trusted by the government of Kazakhstan and changes in the subsoil law is just a pure matter of national security. This is a very strong vehicle but we are not going to use it every time.”

Pragmatism also prevailed in talks between French President Nicolas Sarkozy and his Russian counterpart Vladimir Putin in Moscow on October 10. Sarkozy told Putin that French businesses are interested in investing in the largest Russian companies, including Russian gas giant Gazprom. For its part, Russia is pushing for a new investment deal to allow its largest companies into the EU. France’s Total and Gazprom are partners in Russia’s giant Shtokman gas field. Meanwhile, acting Ukrainian Prime Minister Viktor Yanukovich, who favours a pragmatic energy relationship with Russia, helped reach a gas debt deal between the two countries last week. Backstage diplomacy between the Kremlin and the cabinet of Yanukovich, aiming to strengthen the acting Ukrainian prime minister’s profile at home, were instrumental in reaching the agreement with Ukraine that set out a repayment schedule for $1.2 billion. Just before Yanukovich’s plane took off from Kiev, the new energy crisis was resolved, giving high impetus to the prime minister’s visit to Moscow. A similar pricing dispute between Gazprom and Ukraine led to cuts in gas supplies to Europe in January 2006, raising calls to diversify energy supplies.

Kazakhstan is seen as a key supplier for hydrocarbons to Europe. The EU and the US are pushing for the construction of a trans-Caspian pipeline, but Russian President Vladimir Putin, during a visit to Turkmenistan in May, seemed to have convinced the Turkmen and Kazakh presidents to agree on the construction of a pre-Caspian pipeline along the coast of the landlocked sea to Russia. Massimov confirmed to New Europe that he met with Russian Industry and Energy Minister Viktor Khristenko on October 8 and the pre-Caspian pipeline was discussed. “He raised this issue and (Kazakhstan’s Energy and Natural Resources) Minister (Sauat) Mynbayev and minister Khristenko are working to finalise Caspian pipeline and my understanding is work is almost done and this contract will be signed comparatively soon.” Massimov explained that the pre-Caspian pipeline would carry Turkmen gas via Kazakhstan to Russia. However, Kazakhstan does not have enough gas for the trans-Caspian pipeline for the time being. “In general I have no problem against trans-Caspian if there is a sufficient amount of gas,” he said.

The US has pushed for pipelines bypassing Russia. Chevron Texaco former vice chairman of the board, Richard H. Matzke, told New Europe in Astana on October 12: “I think it’s fairly clear that the US policy is to bypass Russia, which, in my way of thinking, is not smart, not intelligent and may even border on stupid.” (