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31. Russia Strives for an Oil and Gas Resurgence

Author:
Pavel K. Baev
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
The Jamestown Foundation
Abstract:
As the global economy—animated by the arrival of multiple COVID-19 vaccines—hopes for the first signs of recovery, expectations also rise in Russia for an accompanying surge in demand for oil and natural gas and renewed prominence of energy geopolitics in foreign policy-making. President Vladimir Putin is a firm believer in hydrocarbons as the world’s main energy source and a sceptic of “green agendas,” even if Chinese President Xi Jinping has subscribed to the pledge to curtail emissions (TASS, September 30). Russia’s Energy Strategy 2035, approved in June 2020, sets ambitious goals for expanding oil and gas extraction and defines the shifts in the world markets toward carbon-neutral energy production as a major challenge (Vedomosti, May 19; see EDM, June 2). Mainstream Russian experts dismiss the European Union’s post-crisis recovery plans that include new incentives for developing zero-carbon-emission energy sources; defiantly, they project that Russian energy exports to the European market will continue to expand (Kommersant, December 3).
Topic:
Foreign Policy, Energy Policy, Oil, Natural Resources, Gas, and Economy
Political Geography:
Russia and Eurasia

32. Structural Shifts and Regional Security: A View from Israel

Author:
Ehud Eiran
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Israel is still holding to its traditional security maxim. Based on a perception of a hostile region, Israel’s response includes early warning, deterrence and swift – including pre-emptive – military action, coupled with an alliance with a global power, the US. Israel is adjusting these maxims to a changing reality. Overlapping interests – and perhaps the prospect of an even more open conflict with Iran – led to limited relationships between Israel and some Gulf states. These, however, will be constrained until Israel makes progress on the Palestine issue. Israel aligned with Greece and Cyprus around energy and security, which may lead to conflict with Turkey. Russia’s deployment in Syria placed new constraints on Israeli freedom of action there. The US’s retrenchment from the Middle East is not having a direct effect on Israel, while the Trump administration’s support for Israel’s territorial designs in the West Bank may make it easier for Israel to permanently expand there, thus sowing the seeds for future instability in Israel/Palestine. The EU could try and balance against such developments, but, as seen from Israel, is too divided to have a significant impact. Paper produced in the framework of the FEPS-IAI project “Fostering a New Security Architecture in the Middle East”, April 2020.
Topic:
Security, Foreign Policy, Defense Policy, Gas, and Hezbollah
Political Geography:
Russia, Iran, Middle East, Israel, Greece, Palestine, Saudi Arabia, Cyprus, United States of America, and Mediterranean

33. The US and Russian Resource Rivalry in the Context of the Contemporary Venezuelan Crisis Perils of the Rentier Petro-State

Author:
Anurag Tripathi and Girisanker S.B.
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
Venezuela continues to face rampant inflation, poverty and diseases pilling up in light of the US sanctions against PDVSA (Petroleos de Venezuela,S.A), the Venezuelan state-owned Oil Company. Despite the crisis, Russia continues to play a key role in supporting the regime of Nicolas Maduro and sustaining oil production in the country. The research focuses on the role played by Russia is helping the current regime to survive against the US sanctions and the vested interest it brings along with it. The outcome of the research is to find out the role played by Russian oil industries in shaping Russia’s Foreign Policy in Venezuela and to know whether Moscow has any leverage over the energy sector in Venezuela. The paper gives prime importance to the Venezuelan economy and the Geopolitics of oil. The research aims to give a whole new outlook in the field of International Relations by exploring the nuances of oil giants in shaping relations between countries.
Topic:
International Trade and Finance, Oil, Natural Resources, Hegemony, Gas, and Rivalry
Political Geography:
Russia, Europe, North America, and United States of America

34. Social consequences of the oil price shock in the resource rich post-soviet countries

Author:
CESD Research Team
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Center for Economic and Social Development (CESD)
Abstract:
This study seeks to determine the impact the fall in global oil prices post-2014 had on the welfare of the populations of three resource-rich post-Soviet states: Russia, Kazakhstan, and Azerbaijan. Changes in welfare will be explored through the analysis of several socio-economic indicators affected by the local currencies’ devaluations. It will be suggested that the single-commodity export dependence of the countries concerned, and the domestic development of non-tradeable sectors faltered in the face of external shocks. Several policy suggestions are offered to mitigate the effects of the economic downturns observed.
Topic:
Oil, Gas, Exports, and Welfare
Political Geography:
Russia, Eurasia, Kazakhstan, and Azerbaijan

35. The Era of the Gas Mega-Players

Author:
Nikos Tsafos
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
Within 10 years, three exporters will tower over the global gas world: Russia, the United States, and Qatar. Other exporters—Norway, Australia, Canada—will remain big players, but their influence will be regional, not global. New entrants will emerge, and existing players will expand their presence, but no country will match the big three in scale, growth, and reach. China will meanwhile become the largest destination for gas, surpassing Japan in imports and closing in on Europe as a whole. These profound changes will rewire the gas system, making it more integrated and competitive. But the system may also allow these mega-players the opportunity to exercise market power, using levers at their disposal to influence prices and flows. Geopolitics might also weigh heavily as a possible driver of behavior or source of friction. The gas world will thus be pulled in three directions: more integration and competition, more efforts to exercise market power, and more geopolitics complementing and complicating market forces. The big question is which of these three competing forces will have a greater say in this new gas era.
Topic:
Energy Policy, Natural Resources, Gas, and Exports
Political Geography:
Russia, Europe, Middle East, North America, Qatar, and United States of America

36. A New Cold War: Personal Reflections Regarding Russia’s Missed Opportunities with NATO, Ukraine and Its Western Neighbors

Author:
Keith C. Smith
Publication Date:
02-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
President Boris Yeltsin’s imperial views on the “near abroad,” and President Vladimir Putin’s regarding Russia’s alleged “sphere of influence” has left Russia considerably weaker than it would have been otherwise, and the world much more endangered.
Topic:
Arms Control and Proliferation, Cold War, Diplomacy, Economics, Politics, Armed Forces, Reform, and Gas
Political Geography:
Russia, Europe, Ukraine, Soviet Union, Germany, Estonia, Latvia, United States of America, and Baltic States

37. Russia’s Energy Strategy-2035: Struggling to Remain Relevant

Author:
Tatiana Mitrova and Vitaly Yermakov
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Russia’s Energy Strategy to 2035 (ES-2035) enters, finally, the home stretch. The Ministry of Energy submitted its version of the document to the Russian Government in early October 2019. Once approved (this is expected before year’s end), ES-2035 will become the best available indication of Russian energy policymakers’ plans. It therefore merits careful consideration. This paper reviews the key goals, scenarios and indicative ranges for output and consumption contained in ES-2035. It thus contributes to understanding the strategic compromises that Russia might be ready to take, as well as those that are unlikely to be acceptable. Our review of the draft ES-2035 suggests that it provides general guidelines to the future evolution of Russia’s energy sectors, but struggles to remain relevant amid fast-paced changes in the global markets. Several crucial but politically sensitive energy issues still need further clarification of policies: the future fiscal regime for oil and gas that could incentivize output and prevent production declines; industrial and technological policy; the choice of the future model for Russia’s gas industry and whether it is going to develop under continued state regulation or in the market environment; climate policy and the strategy to promote (or not) renewables and other technologies of energy transition; and the future of competition in wholesale and retail power markets.
Topic:
Energy Policy, Oil, Politics, and Gas
Political Geography:
Russia and Eurasia

38. Petrol and Natural Gas Market of the Visegrád Group Countries 1993–2016: Current State and Prospects

Author:
Robert Klaczynski
Publication Date:
01-2018
Content Type:
Journal Article
Journal:
Polish Political Science Yearbook
Institution:
Polish Political Science Association (PPSA)
Abstract:
The paper addresses problems related to energy policies pursued by Central Eu- ropean countries. It identifies the amounts of energy resources in individual countries in the Visegrád Group as well as the transmission infrastructures they use for natural gas and crude oil. The author discusses projects aimed at diversifying energy supplies which are of key importance to V4 countries. The article also presents relations between those countries in both within the group and bilaterally. When outlining prospects of a V4 energy strategy, the account is taken of such vital aspects as relations with the Russian Federation and the contribution made by Visegrád countries to EU actions designed to develop a single energy market.
Topic:
Energy Policy, Regional Cooperation, Infrastructure, and Gas
Political Geography:
Russia, Europe, Central Europe, and Visegrad

39. The Impact of US LNG on Russian Natural Gas Export Policy

Author:
Tatianna Mitrova and Tim Boersma
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
The United States and Russia have long been the world’s largest natural gas producers, but they traditionally have not faced off in direct competition in that market. The United States was expected to become a net importer of natural gas, while Russia’s state-owned Gazprom took a prominent position in the European market. The boom in US shale-gas production changed that. While the United States had been trading gas regionally by pipeline for decades, the shale boom allowed for the export of US liquefied natural gas, putting the two gas giants in competition. Even before the first molecule of US LNG shipped, rising US production had diverted LNG destined for the United States into the European Union. Facing increased competition pushed Russia toward a more market-oriented strategy, with Gazprom adjusting its long-term oil-linked contracts that had previously been the backbone of Russian sales to European customers to use more hybrid formulae. This was just the beginning. After a slow start, the competition brought on by US gas is to a large extent shaping the Russian natural gas strategy in Europe and beyond. For Europe, rising gas competition from new suppliers has both economic and energy security implications. Globally, it is also raising questions about how Gazprom will compete in Asia, where demand is growing and gas suppliers are looking to place future production, as well as in other markets. Understanding how Gazprom will react to US gas is thus a critical economic and geopolitical question for LNG importers and exporters worldwide. In this paper the authors examine how Gazprom will maneuver in global markets under specific circumstances. It opens with a discussion of how the US and Russian gas sectors developed and interacted in the period before shale gas. The paper then examines how Gazprom’s gas trade has been impacted by new US production and what changes may be coming as US exports continue to increase. It finds that the advent of US LNG has already reduced Russian gas revenue, undermined its oil-linked pricing model, forced contract renegotiations and accelerated domestic gas market liberalization and LNG development. The authors argue that Russia is in a good position to defend its market share in Europe and looks at some of the strategies that could be pursued under various market scenarios, including the following: High Asian demand and low oil prices: If oil-linked gas prices were pushed below spot prices, Gazprom would not need to further adjust its pricing policy (as was the case in 2015–2017). In certain situations Gazprom might even limit supplies to drive prices up and increase its rent, becoming the price maker. Such a strategy would be utilized cautiously to avoid demand destruction and prompting new FIDs for new (US) liquefaction capacity. High Asian demand and high oil prices: In this scenario Gazprom’s position would be well served in the short to medium term by strong revenues. In the longer term, however, high prices will attract more competitors to the markets (and prompt new FIDs), so it is important for Gazprom to keep its own prices competitive and to keep the margin of the aggregators, which are supplying the European market, below their margin in Asia. There are already almost no “pure” oil-linked contracts left, and Gazprom in Europe mainly has hybrid pricing, but this scenario will require a more fundamental shift in the pricing, with the share of spot-indexed prices becoming dominant. Low Asian demand and low oil prices: Gazprom may be forced to keep prices for its long-term contracts below short-run marginal costs of US LNG. Gazprom might voluntarily move to completely spot-indexed prices, simultaneously trying not only to find new markets for its gas (both in Asia and in Europe) but also to stimulate new demand. The company would need more flexible and creative marketing, and it would seek to improve the efficiency of its operations, both internationally and domestically. Should Gazprom start to see its market share decline, Moscow could decide to liberalize the pipeline export monopoly, a decision that would make Novatek and Rosneft more powerful players. Low Asian demand and high oil prices: Russia would feel competitive pressure not only from the United States but also from all existing low-cost LNG suppliers like Qatar, which may have to switch to Europe and keep gas prices at a low level. Gazprom would have to engage in this price competition as well, flooding the market using spare capacities and driving the prices down to the level of its short-run marginal costs, which will disincentive US LNG aggregators to offtake their LNG. Gazprom has considerable underutilized upstream capacities and huge spare transportation capacities, allowing it to drive down European prices below the level acceptable for US LNG suppliers. This scenario hurts everyone on the supply side, and it is warranted to ask how long it could be upheld. The study finds that even in scenarios where Gazprom sees gas revenues driven down to 2009 or 2016 levels, this should not prove catastrophic for Russia. For Moscow, facing more competition in Europe is a new situation that Gazprom and decisions makers in the Kremlin will have to deal with. Under normal circumstances, competition between various sources of supply can result in net benefits for the end consumer. In addition, this paper demonstrates that the changes in the global gas market have forced Gazprom to adjust its business practices. However, the increased politization of natural gas in the United States carries a risk of inflamed tensions between Moscow and Washington.
Topic:
Globalization, Natural Resources, European Union, and Gas
Political Geography:
Russia, United States, and Europe

40. Russia’s National Oil Champion Goes Global

Author:
Edward C. Chow and Andrew J. Stanley
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
After the Soviet Union collapsed and Russia was roiled by political and economic chaos, many state-owned assets were privatized based on political connections and corrupt practices. The oil sector was a particularly attractive, but by no means the only, target for these privatizations. By the end of the 1990s, almost all of Russia’s oil production was privately owned. In spite of continued nontransparency, the oil sector began to resemble a competitive market with private investors introducing Western technology, financial accounting, and operating and management practices. It also started to attract major foreign investments. The remaining state oil assets were managed by a sleepy state enterprise named Rosneft that, in spite of its name (Russian Oil), produced less than 5 percent of Russia’s oil. Today, majority state-owned Rosneft produces almost half of Russia’s oil. Its daily oil production of 4.6 million barrels, according to its last reported quarterly results, is double that of the world’s largest oil company by market capitalization, ExxonMobil, which last reported daily liquids production of 2.3 million barrels. Rosneft’s rapid rise coincided with the rule of Vladimir Putin, who first became president of Russia in 2000. Its production increases were built largely on the backs of controversial acquisitions of assets previously held by private companies such as Yukos, TNK-BP, and Bashneft. Rosneft’s acquisition spree accelerated after Putin’s close associate and Russia’s then-deputy prime minister Igor Sechin became chairman of its board of directors in 2004. Sechin left government in 2012 to take over as Rosneft’s chief executive officer. Rosneft’s board of directors is now chaired by former German chancellor Gerhard Schroeder. Rosneft’s transformation as Russia’s national oil champion is consistent with Putin’s policy of regaining state control over the commanding heights of the Russian economy, which is more reliant on oil income today than the Soviet Union ever was. Rosneft is Russia’s largest taxpayer and contributed a quarter of government revenue in 2014. Until recently, Rosneft concentrated mainly on consolidating its dominance over the domestic oil patch. It is also Russia’s leading refiner and is increasing natural gas production for direct sales to domestic gas users, producing 67 billion cubic meters in 2016. In 2014, Russia was hit by the twin shocks of a global oil price collapse and Western economic sanctions enacted after its aggression against Ukraine in the Donbas region and annexation of Crimea. These developments affected Rosneft severely since it involved the value of the commodity it produces and sells and restricted Rosneft’s access to international financing when it was heavily indebted from the aforementioned acquisitions. A normal company might hunker down, repair its balance sheet, and wait for external conditions to improve. Instead Rosneft has done the exact opposite and expanded its international business aggressively. As part of the 2014 U.S.-led sanction efforts, Igor Sechin, as the leading figure of Russia’s largest petroleum company and his having “shown utter loyalty to Vladimir Putin,” was directly sanctioned. Further Russian sanctions enacted by Congress in 2017 called on the U.S. Department of the Treasury to submit a detailed report on senior political figures, oligarchs, and parastatal entities as determined by their “closeness to the Russian regime and their net worth.” While the unclassified version of the report released to Congress on January 29 included Igor Sechin, the report was poorly received and largely regarded as nothing more than a “rich list” by Russian experts. However, the report also contains classified annexes, including a list of parastatal entities and supporting analysis, which by definition would have included Rosneft. Although Rosneft’s rapid international expansion is too recent to assess definitely, this paper describes some of Rosneft’s overseas ventures and explores possible motivations, economic and political, behind them.
Topic:
Energy Policy, Oil, Foreign Direct Investment, Sanctions, Gas, Transparency, and Private Sector
Political Geography:
Russia, United States, Europe, and Eastern Europe