AZERBAIJAN - Negotiating Russia's Expansions.

Russian, US, EU and Japanese officials are negotiating over whether Moscow should be allowed greater freedom to invest in their utilities, pipelines, natural gas facilities and other infrastructure. In a draft declaration intended to be offered for endorsement at a G-8 summit meeting in mid-July in St. Petersburg, broadened Russian access is endorsed for approval as long as it is in accordance with market principles. Paired with that principle in the summit draft is something the West wants: greater access by foreign investors in Russia's energy industry, which has made Russia into one of the biggest oil and gas producers in the world. The manoeuvring in advance of the summit meeting came at a time of anxieties in the West over Russia's use of its energy to expand its political influence around the world. On May 4, US Vice President Dick Cheney rebuked Russia for its increased state takeover of the energy sector, its crackdown of political dissent and what Americans say is an effort to muscle out Western investments in oil and gas pipelines in the Caspian Sea.

Igor Shuvalov, President Vladimir Putin's chief aide in summit planning, said Russia was determined to get the G-8 meeting to endorse the principle that for Russia energy security means greater access to investment in the West. Shuvalov said Russia was prepared to use its leverage to get that access. He said, for example, that Moscow had postponed a decision on bids from foreign companies for exploring a potentially huge gas reserve off the Russian coast in the Barents Sea until it was clear that Western countries would be receptive to offering similar bids by Russia of ownership in US and European energy facilities.

Russian investment has begun to stoke controversy. Gazprom wants to buy Centrica, Britain's largest natural gas distributor. The Centrica bid provoked anger in Britain analogous to the ones in the US over a Chinese bid for Unocal and a Dubai company's bid to control operations at several American ports. Rebuffing pressure from many in Britain, Prime Minister Tony Blair said he would not try to stop the Russian effort. Gazprom is not the only Russian entity looking abroad. In the US, Russia's biggest oil company LUKoil has invested in filling stations. Now the Russians appear interested in investing in pipelines, facilities converting LNG into its gaseous state and other facilities on the US East Coast. Analysts fear such a push could reignite passions swirled around Unocal and the Dubai port deals, both of which fell through.

The New York Times on June 12 quoted Thane Gustafson, a senior director of Cambridge Energy Research Associates and professor of politics at Georgetown University, as saying: "Gazprom has not been specific on what it wants in North America. But what they want to do is replicate [of] what they've done in Germany and in varying degrees throughout Eastern Europe". Putin aims to use the St. Petersburg summit to demand respect for Russia as a major energy producer and player on the world economic scene. Russia wants to rebut the argument, heard after the Ukraine gas cutoff, that it is not a reliable producer and to bury suggestions from some critics in the US that it should be expelled from the G-8.

The NYT quoted Shuvalov as saying: "The summit should recognize that Russia plays a key role in providing energy security, and that Russia is ready to open its energy reserves to foreign investment. We think that after this summit, no one will again question the membership of Russia in the G-8". The US is looking to the summit to back President George W. Bush's vision of energy security, particularly reduced dependence on Middle East oil, greater variety of oil resources and more nuclear power. One other important part of the US vision is there should be more efforts to bypass Russia for gas exports, mainly to Europe. Nor have the Russians a different definition for energy security, interpreting the term to mean greater guarantees of access of Russian energy to Europe, not less. Ownership of European and US pipelines would support that goal, Russians say. One area of Russian-US competition at the summit is the activity in the Caspian Sea, where since the collapse of the Soviet Union, the US has sought to encourage oil and gas pipelines to bypass Russia. US Secretary of State Condoleezza Rice urged Turkey and Greece this year not to engage Gazprom as a partner in bringing gas to Southern Europe.

Gazprom is viewed in the West as a shadowy creature of the Russian state which has enriched the circle of people around Putin. Shuvalov said: Comments like those of Rice and Cheney challenging Russian energy dominance in the region had hurt the atmosphere for the summit meeting.