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10 Pipeline Politics dominance. Backwater countries have become major players in the world of oil and gas primarily because of the oil and gas reserves within their borders. But for the discovery of oil or gas, these countries would not have nearly as much global influence as they now enjoy. But without the network of pipelines serving to transport their oil and gas to global markets, these countries would not be able to move the product over long distances. FROM RUSSIA WITH LOVE Pipelines play a crucial role in Russia’s energy policy and economy. Transporting large volumes of fuel long distances from the oil and gas fields in Siberia to the European market, for example, would be costly without pipelines. Russian state-owned energy monopolies oversee the country’s energy distribution system and its rapid expansion to nations in Europe and Asia. The rise of Russian gas firms such as Gazprom, the state- owned company that exports natural gas to Europe, has fueled Russia’s expansion in the European market. Gazprom’s monopoly over Russia’s gas production and transmission also includes the gas pipeline system, which carries gas not only within Russia but also to Europe. Gazprom has estab- lished joint ventures to build natural gas pipelines and storage depots in a number of European countries. Rosneft Oil Company, a Russian integrated energy company, is Russia’s largest oil company whose main activities include prospecting and explo- ration of hydrocarbon deposits oil, gas, and gas-condensate production offshore projects and product marketing in Russia and abroad. Transneft, another Russian state-owned company, controls Russia’s oil pipelines and distribution system. All oil trunk pipelines (except the Caspian Pipeline Consortium) are owned and operated by this state-owned company. These three organizations have a virtual monopoly over Russia’s gas and oil pro- duction and transmission systems. As Russia supplies a significant volume of both oil and natural gas to the EU through its network of pipelines, the implications of this dominance have led the EU to seriously consider other sources and means of diversifi- cation. The EU explored diversifying supplies with LNG delivered by tanker from the United States, but so far this more expensive option has not materialized. Up to now, the United States has not been able to com- pete with Russia on price. It is much cheaper to transport natural gas via pipeline rather than freeze the gas, transport it by LNG tanker, and then regasify the frozen LNG at gasification plants that can be located on land as well as on floating barges. A complicating factor is that Europe’s domestic oil and natural gas out- put is declining because the reserves in the oil fields in the North Sea and the Dutch Groningen natural gas field are slowly being depleted, thus