• English Site
• > Europe

SPIEGEL Interview with Russia's Energy Minister

'We Cannot Continue to Waste Valuable Natural Resources'

In a SPIEGEL interview, Russian Energy Minister Sergei Shmatko discusses plans for joint ventures with German engineering multinational Siemens, secure shipments of natural resources to the West and rumors that Moscow wants to start a gas cartel modeled after OPEC.

SPIEGEL: The Russian government is courting Germany's Siemens Group in two areas: nuclear technology and energy efficiency. What do you hope to achieve?

Schmatko: In the booming nuclear business, we want to secure a fixed spot, together with Siemens, in the top echelon of the world's largest nuclear power suppliers. We should not be satisfied with third place. And greater efficiency is the largest and cheapest source of energy for our country. Conservation means cash. To achieve this, we urgently need German know-how.

SPIEGEL: The German government was initially surprised to see Siemens turn down France as a nuclear partner so that it could cooperate with Russia. How long have the talks been going on?

Schmatko: The thought, at least, is not entirely new. We have already installed Siemens' digital instrumentation and control technology in the Chinese Tianwan reactor. And we developed the WWER-640 reactor model with Siemens 10 years ago. At that time, German engineers were already testing and modernizing Russian nuclear technology. Personally, I favor a real joint venture, which offers a shared technology worldwide.

SPIEGEL: Some in Germany's Economics Ministry question whether the Russian technology is good enough for that.

Schmatko: Critics should take a look at how successful we Russians have been in the global nuclear market in recent years -- in China, India, Iran and now in Bulgaria. We are currently building seven reactors at home, which is more than any other country is doing. We expect to get know-how and the transfer of suitable technologies from Siemens. Then we will develop a project together that will also satisfy the critics.

SPIEGEL: Including a reactor in Germany?

Schmatko: Certainly not, given the current discussions there. We have deliberately avoided that. I could imagine a reactor near Kaliningrad (eds note: the Russian enclave located between European Union member states Poland and Lithuania) as a first project. The city is a good choice, because the region will face a power shortage after the planned shutdown of Lithuania's nuclear power plant. We are also very hopeful that things will progress for us in Bulgaria, the Czech Republic or Slovakia, as well as in many other countries. The demand is huge.

SPIEGEL: Will there also be limits to the joint venture with Siemens?

Schmatko: There are regions where this joint venture will proceed somewhat more cautiously. I am thinking about Iran, where we Russians have already built a nuclear power plant, which is scheduled to go into operation this year. This cooperation would continue without Siemens.

SPIEGEL: You promoted this project yourself once ...

Schmatko: ... because I am convinced that the power plant we are building in Iran does not lend itself to being misused for military purposes. This is why the Americans, for example, have also supported our involvement in this project.

SPIEGEL: But officially they criticized Russia sharply for this reactor project.

Schmatko: No. We kept them very well-informed of everything, and they were also involved through experts.

SPIEGEL: Why is Russia, with its enormous energy reserves, so interested in efficient technology?

Schmatko: Because we cannot continue to waste these valuable natural resources to such an enormous extent. Of the 640 billion cubic meters of natural gas we produce every year, we consume 400 billion ourselves. If we can manage to save up to 100 billion cubic meters of that by 2020, we will be able to sell the gas and at the same time spare ourselves the extremely costly development of new production areas in Siberia.

SPIEGEL: Why are you looking for partners in Germany?

Schmatko: During my student years in Marburg, I was impressed by how everything in the student dormitory was geared toward energy efficiency. Today an entire sector is developing around energy conservation. We need something like that in Russia. This is why we are now establishing a similar driving force at home, using the German Energy Agency as our model.

SPIEGEL: And to do so you are opening up the Russian energy market, which is normally so carefully protected, to foreign investors?

Schmatko: Gazprom is a sacred cow for us. We will not abandon the export monopoly for energy. But we are very open to competition in our country when it comes to energy conservation. German industry is highly advanced in this field. We are also in talks with Japan and Italy, but I think that German companies can develop a market in our country worth several billion euros a year, provided they act now.

SPIEGEL: For the time being, almost everything in Russia revolves around the production and sale of oil and gas. This was also evident in the high-stakes poker game with Ukraine. Was it worth it for Russia, interrupting gas deliveries to Europe and leaving hundreds of thousands of people in the cold?

Schmatko: That's very provocatively put. I cannot agree with your poker analogy. The issue was that Ukraine should pay a reasonable price for our natural gas and fulfill its obligation to guarantee safe transit for the gas to the West, as stipulated in the European Energy Charter. The European Union still has to make it clear to Ukraine that it, and not we, violated the Energy Charter.

SPIEGEL: But many people in the EU are furious with Russia.

Schmatko: Setting aside the fact that we disagree over who is at fault, we will definitely do everything, and I mean everything, so that this sort of interruption of deliveries will never happen again. To be honest, the events felt like a nightmare to me. Russia and Europe have developed a close and trusting relationship. We reliably supplied natural gas to Europe for 40 years, even under the difficult conditions of the Cold War. Of course, we do not simply want to gamble away this trusting relationship. That's why we had no motive to start the conflict.

SPIEGEL: What went wrong?

Schmatko: The early warning system with the EU, which was established within the framework of the energy partnership, didn't work. We should have implemented the measures that have been underway since mid-January earlier. If we had managed, in mid-December, to install international observers and a consortium for the so-called technical gas, none of this would have happened. We must learn our lessons from this quickly and work together even more closely.

SPIEGEL: What happens if Ukraine decides to stop payment again, perhaps because of the economic crisis? A repeat of the situation could quickly take shape.

Schmatko: No, I don't think so. The important thing is that the international observers remain in Ukraine. We are already hearing demands from Kiev that the observers be pulled out. That would be fundamentally wrong, from our perspective. The system has to prove itself first.

SPIEGEL: Is everything back to normal, now that the pipeline network is up and running again?

Schmatko: We are assessing that right now. For the first time in the history of this complex technical system, the natural gas flowed backwards in Ukraine. It was a decision made by Ukrainian specialists, and it was dangerous and even unpredictable. We were very concerned that something could happen.

SPIEGEL: Because of the interruption in delivery, the EU is seeking alternatives to Russian natural gas. Does this worry you?

Schmatko: We take a very pragmatic view of this. According to our own forecasts, Europe will consume about 620 billion cubic meters of natural gas in 2020. That's 100 to 120 billion cubic meters more than today. Our supply agreements are structured for the long term, so that our position as supplier to the EU over the next 25 years is not in jeopardy. To avoid transit risks in the future, we are building the new North Stream and South Stream pipelines. We are even investing in the liquid natural gas business, so that we can reach new customers for whom we cannot build pipelines. And we are also building pipelines in new directions -- to China, for example.

SPIEGEL: Is Russia in the process of forming a gas OPEC?

Schmatko: I don't know where this unfortunate term comes from. I chaired a meeting of the new Forum of Gas Producing Countries in Moscow at the end of December, and I wish to make it clear that Russia is not interested in agreements between countries regarding production volumes. We don't want a gas OPEC.

SPIEGEL: But an increase in the gas price was discussed.

Schmatko: That's something else. Russia is also seeking dialogue with the consuming countries over ways to include the high costs of investment in the development of new gas fields in the price. We would like to arrive at a fair price, one that is more stable than today's price and allows us to fulfill our long-term obligations.

SPIEGEL: Why didn't you invest more heavily in the infrastructure during the years of high gas prices?

SPIEGEL: Investments were made, but it wasn't enough. As gas prices rose, so did the prices of services, personnel and technology, making modernization more expensive. That's why we prefer to put a stop to his little speculative game with derivatives and other financial products relating to oil and gas.

SPIEGEL: And set the price as part of an agreement among the supplier countries?

Schmatko: No, not at all. Instead of a conspiracy among gas and oil producers, we need a new pricing mechanism -- one that is not based solely on supply and demand, but also on long-term investment needs. We would like to negotiate with Europe on this issue soon. Together, we should make ourselves more independent of irrational fluctuations in the markets.

Interview conducted by Jan Puhl and Christian Schwärgerl. Translated from the German by Christopher Sultan.