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Gazprom's Venezuela deal alarms U.S.

Conal Walsh

Pipeline to link Venezuela's gas reserves through Brazil to Argentina

London: Gazprom, Russia's state-controlled gas company, is risking a diplomatic row with the United States over a mooted multi billion-dollar pipeline investment in Venezuela.

The Russian gas giant is close to a deal on the project, according to Venezuela's firebrand President, Hugo Chavez, who has led opposition to U.S. influence in Latin America.

News of the possible tie-up follows Gazprom's recently declared interest in investing in Bolivia, another regional enemy of the U.S., and is the latest sign of Moscow's deteriorating relationship with Washington.

It comes after Russian President Vladimir Putin failed at the G8 summit in St Petersburg in July to secure American support for its entry to the World Trade Organisation. Mr. Putin has also argued with Western countries over the growing power of Gazprom, which supplies 25 per cent of the European Union's gas and controls the vast pipeline network linking Siberia and the Caspian region with the West.

Temporary disruption

A dispute over gas pricing between Gazprom and the Ukrainian Government brought temporary disruption to Europe's gas supply earlier this year, and prompted U.S. Vice-President Dick Cheney to accuse Moscow of "intimidation and blackmail". The U.S. and Russia have also disagreed over human rights and Iran, and the prospect of a state-backed Russian company entering the western hemisphere is likely to jangle many nerves in Washington.

On a visit to Moscow last week, Mr. Chavez told a Russian TV news programme, "Gazprom and its technicians are studying a project for the construction of a gas pipeline from Venezuela to Argentina".

The proposed pipeline, championed by Mr. Chavez, aims to link Venezuela's huge natural gas reserves through Brazil to Argentina, with branches extending to Bolivia, Paraguay and Uruguay.

Gazprom already has two exploration licences in Venezuela, Latin America's biggest hydrocarbons producer. But the pipeline would represent a step-change in its involvement there. In June, Gazprom revealed that it was in discussions to invest $2-3 billion in Bolivia, which, alongside Venezuela and Cuba, is part of a self-declared "Bolivarian axis" that aims to be a regional counterweight to the U.S.

- Guardian Newspapers Limited 2006

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