Russian energy giants making African inroads
The Moscow Times reported that Russian companies appear eager to gain new ground in Africa and plan to build two pipelines on the continent. These would be the longest pipelines ever built by a Russian company in Africa.
The firms that pursue the projects in the Republic of Congo and Zimbabwe are state controlled Rosneft, run by powerful Kremlin insider Igor Sechin and privately held Stroitransgaz, majority owned by Gennady Timchenko, an acquaintance of President Mr Vladimir Putin's.
Ms Marne Beukes an energy analyst for sub Saharan Africa at IHS Energy in London said that in countries like these, Russian companies do not face much competition from Western contractors which are not willing to take the high political risks.
She said that "Russian companies' willingness to take on projects where others fear to tread gives them the advantage when negotiating for such contracts while the crucial need for pipeline infrastructure in these regions means those governments cannot afford to be picky."
A statement from the Energy Ministry said that engineering company Stroitransgaz is prepared to design and build the pipeline. In the oil rich Congo, the pipeline would connect Brazzaville, Pointe Noire and Oyo.
The Congo is one of the main oil producers in sub Saharan Africa but 70% of its people live in poverty. The government has tried in recent years to increase financial transparency in the oil industry, which is the mainstay of the economy.
Ms Yelena Herold analyst of PFC Energy said that Stroitransgaz perhaps has bigger plans for its project in Congo because its principal owner, Timchenko has reportedly been considering greater diversification into upstream. Rosneft last month agreed to construct 700 kilometer oil products pipeline, a storage depot and a sea terminal in Zimbabwe in a project estimated at USD 700 million. Ms Beukes said that the funding for the projects would likely come from such institutions as the African Development Bank and the World Bank and also from private investors. Some of the previous Russian ventures on the continent however have not gone well.
As part of the visit by the Congolese president, Russia raised the prospect of oil companies like LUKoil and Gazprom Neft and electrical utility Inter RAO taking on energy projects in the African country.