EU Caught Playing Dirty and it’s all about Russian Gas
There was a lot going on this week, but it’s all being overshadowed by the fascinating geopolitical game over Cyprus. This is a stage on which a country’s pending financial collapse hinges explicitly on its hydrocarbons potential, and whoever turns up with aid will win access to exploration blocks. Yesterday morning, Oilprice.com’s Jen Alic took us through the nuances of this game, noting that Russia could bail out Cyprus in return for a nice chuck of exploration acreage offshore. By the close of the day, that is exactly how things appeared to be unfolding. Later in the day, it began to emerge that Gazprom had reportedly offered Cyprus a bailout deal in return for offshore exploration rights. But by Friday, Russian and Greek Cypriot officials had said no deal had been reached. The deal Cyprus put on the table was the creation of a Cypriot state company with control of gas reserves into which Russian companies could invest, along with a nice stake in Cypriot banks to be rescued by the Russian investment fund. It’s not enough for Moscow, which is holding out for more—and likely to get it if the EU refuses to budge. This all came after the EU tried to get Cyprus to agree to partially fund an EU bailout package by putting a levy on bank deposits and offering account-holders compensation in the form of potential gas futures. This is where the EU was caught playing dirty—and it’s all about Russia. Russian oligarchs use Cyprus for their offshore banking needs, and as such hold a lot of the bigger accounts that would have been targeted under this scheme.