Energetic resources compose the basis of modern civilization. Therefore, the possibility to supervise these resources is considered to be one of the significant components of the power of a state. The beginning to this phenomenon was put by industrialization. However, the redistribution of the energetic resources gradually turned into a cornerstone of the foreign policy of the largest states.
At present, the increasing value is gained by the problem of the unevenness of distribution of the energy resources on the planet. The crucial role is played by the fact that countries with the developed liberal economies, consuming the most part of the energy extracted in the world, supervise their insignificant part. Producing more than 80 % of the world gross domestic product, the developed countries will have their own stocks of oil only for 10 years, natural gas – for 12 years. It means that there will be serious changes in existing international order and its political bases within the next decade.
Get Your Economic Essay for a Few Clicks
Therefore, the countries with a high level of the economic potential will try to keep the status quo. On the contrary, the countries, rich with the energy resources, are poorly developed economically; therefore, in the created situation, they will try to convert the power wealth into the political influence that will inevitably lead to worsening of the world political situation.
Russia has considerable stocks of energy resources and powerful fuel and energy complex which compose the base of the economic development of the country, the instrument of domestic and foreign policy. Country’s role in the world energy markets defines its geopolitical influence in many respects.
The energy sector provides the activity of all branches of the national economy, consolidation of the subjects of the Russian Federation, in many respects defines the formation of the main financial and economic indicators of the country. Natural fuel and energy resources, production, scientific& technical and personnel potential of the energy sector of the economy are the national property of Russia. Its effective use creates the necessary preconditions for the sustainable development of the national economy, providing the growth of welfare and increase of living standards of the population.
The economic growth having begun forms the expectations of the essential increase in demand for energy resources within the country that demands the solution of the economic problems, inherited and collected in the conditions of globalization and toughening of the world competition, a severe struggle for energy resources, the markets, etc.
Only a qualitatively new fuel and energy complex (energy industry) – financially steady, economically effective and dynamically developing, and accepted by the environment, equipped with the advanced technologies and highly-skilled personnel – can correspond to the requirements of modern life.
A long-term energy policy is necessary for a long-term stable provision of the national economy and the population with all types of energy. The purpose of the energy policy is the effective use of the energy resources and natural fuel and of the energy sector potential for the growth of economy and improvement of the life quality of the country’s population.
The Russian energy strategy up to 2020 is the document concretizing the purposes, tasks and the main directions of the country’s long-term energy policy in the considered period of time, taking into account the developing internal and external situation in the energy sector and its role in ensuring the economic space unity of the Russian Federation, globalization of the energy markets, tendencies of political, macroeconomic, scientific and technological development of the country.
The main task of energy strategy of Russia is the definition of the ways of achievement of qualitatively new conditions of the energy industry, the growth of competitiveness of its production and services at the world market on the basis of the use of the potential and establishment of the priorities of a complex development, formation of the measures and mechanisms of the state power policy taking into account the predicted results of its realization.
The main means for the solution of the goals being put in the formation of the civilized energy market and nondiscriminatory economic relationship of its subjects among themselves and with the state. Thus, the state, limiting own functions as the managing subject, strengthen the role in the formation of the market infrastructure as a regulator of the market relationship.
The main mechanisms of the state regulation provide:
- Measures aimed at the creation of the rational market environment (including mutually interconnected tariffs, taxes, customs, antimonopoly regulation and institutional transformations into the fuel and energy industry);
- Efficiency increase of the state ownership management;
- Introduction of the system of the perspective technical regulations, national standards and the norms increasing the controllability of the development power engineering specialists and stimulating energy saving;
- Stimulation and support of the strategic initiatives in the sphere of investment, innovative and energy saving activity of the managing subjects.
The fuel and energy complex of Russia always played an important role in the national economy. Its role has been increased greatly for the years of reforms, in connection with a sharp falling of the volume of production in other branches of the economy. It was promoted by the rich natural fuel and energy resources of the country – 1/3 world reserves of natural gas are concentrated on the territory of Russia, 1/10 – oil, 1/5 – coal and 14 % – uranium – and the unique production potential created for many years..
During the last decade, with the energy industry generally provided the needs of the country in fuel and energy, the energy independence of Russia is preserved. The recession tendency is overcome, and the growth of gas production, oil and coal, electricity generation, volume and depth of oil refining began. The production structures of the energy industry as a result of the carried-out structural transformations, liberalizations and privatizations considerably adapted for the market methods of managing. As a result of the carried out works on the restructuring of the coal industry, its economic efficiency raised and the unprofitable unpromising enterprises are liquidated. The reforms of the power industry and the housing-and-municipal sphere began. The bases of regulation of the economic relations in the energy sector of the economy, including questions of subsurface use, taxation and pricing, have been created.
Nowadays Russia is one of the largest export countries of oil and gas. It occupies the first place in the world on the oil production and export, having overcome Saudi Arabia. In 2006, Russia exported 255 million of oil at the total amount of oil production with the gas condensate of 480.02 million. In 2011, Russia did not only have the largest proved stocks of natural gas, but also won the first place on its export. In the gas sphere Russia is in very close relations with Europe. Gazprom has been the key supplier of the energy resources to Europe since 2010. In 2011, its share in the European market increased up to 27 %.
“As for Russia’s energy customers abroad, for the short term, the mutual dependence between Russia and, especially the EU ensures that Russia will not use its dominant position in the energy sector to exercise political or economic pressure under normal operating conditions. However, mutual dependence remains mutual only as long as both parties perceive the need for the other one. In times of real crisis in the relationship, for instance, if a weak Russia feels increasingly isolated from Europe, all bets will be off. Mutual dependence is based on rough parity, or it will no longer be mutual. Alliances, formal or informal ones, are never formed as a matter of principle. They are formed for specific contextual reasons. Alliances arise out of communities of interests. Existing alliances may collapse when conditions change, for instance, when one party is growing in power and the other is not, or even diminishes. He who has nothing to lose will not hesitate to break a relationship of mutual dependence. This is equally well known as in tribal societies as in the political science departments of modern universities”.
The use prospect of so important energy resource causes serious fears as tools of political manipulations in the competition by a principle “the winner receives everything” with the West, inclined rather suspiciously. Therefore, many western countries carefully reacted to Putin’s victory on the presidential election.
Putin’s campaign for the restraint of oligarchs and the policy of the state control over the strategic companies inevitably meant that the controlling stock of Gazprom will belong to the state. The classical example of this policy is the relations of Russia with Germany and, in particular, Gerhard Schröder. Russia promised an uninterrupted stream of cheap gas for making the ruling people of Germany the real lobbyists of the Kremlin, providing Moscow with the indirect influence on decision-making in the EU, and also releasing from the action of the UN rules.
Moreover, the ominous reality of Gazprom supervised by Putin was shown in January, 2009, when Gazprom stopped the supply of the Ukrainian market; it inevitably led to the failures of deliveries to 18 European countries. Putin wanted to make Russia the key player in the regional politics. The usage of the energetic resources as a tool of foreign policy is a standard trick. It is dangerous for the allies of the USA that the Kremlin is ready to use the energy resources as a tool of foreign policy. Certainly, the OPEC countries also do it constantly (for example, two Arab oil embargos against the West countries, in 1973 and 1979, leading to the world economic crises.
Russia is also ready to apply the power for the achievement of the geo-economics goals and for the control over the corridors of energy resources. The purposes and methods of Russia in this question were confirmed by the delays of the deliveries of energy resources to Ukraine, Azerbaijan, Belarus, Georgia and the Baltic States, and, a partial war in Georgia in 2008. In addition, the Kremlin wants to have a control over oil and gas export from the neighboring countries, trying to agree about their passing via the Russian pipelines. Within the strategy, Russia also opposes any projects which could provide Europe with the alternative sources and routes of the supply of energy sources.
Gazprom extracted 250.62 million of oil for export, being 216.44 million out of them to the foreign countries and 34.18 million to neighboring countries. It is important to mention that Russia appeared to be sawn-off from the traditional oil fields, from the Baku Sea and continental wells with their developed infrastructure: terminals, pipelines, oil refineries and a powerful base of mechanical engineering after the disintegration of the USSR.
Russia occupies strategically important geographical position and location between Asia and Europe. The UN and the Association of South East Asian Nations have the political and economic goals, which do not often coincide with the Russian ones. Russia pushed the CIS away from itself; now Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan are ready to force Russia out from the market of the energy resources on the whole former Soviet Union. Russia understood not at once that friendship with the former Soviet Union countries defined the national security of its borders. After all, it is located among three world markets – American, European and Asian ones.
“Without any doubt, in the future, Russia will occupy the dominant position with regard to energy supplies, in particular to the European Union. However, the dependence will be mutual. While the European Union will not be able to forego Russian energy deliveries, Russia will, for reasons of export infrastructure, not be able swiftly to divert its energy exports elsewhere, in case if the two parties cannot agree. Russia is dependent on the incomes from gas and oil. No less than 37% of the federal budget revenues and 20-25% of the Russian GDP derive from oil and gas.In other words, Russia and the European Union will be mutually dependent: the European Union on energy imports, Russia on export revenues. Thus, there is no need to exaggerate the risks of Russo-European mutual energy dependence. Russia is increasingly becoming a rational trading partner”.
Main Body
The Russian Energy Policy in Foreign Relations
Russia uses its energy power as a tool of foreign policy. The development of the export of electric power is a strategic problem of the state importance as, unlike an export of the hydro carbonic raw materials, represents promotion on the foreign markets of the knowledge-intensive hi-tech finished goods. In this regard the state will give an active support to the expansion of export of the electric power, including simplification of the procedure of customs registration, harmonization and synchronization of the functioning of the Russian wholesale market of the electric power (capacity) with the norms and rules accepted in the European Union (UCTE).
The development of the branches of the energy industry, introduction of the new progressive technologies causes the necessity for the improvement of the current and creation of new competitive equipment and materials, corresponding to the requirements of each technological chain.
The expert community came to the consensus that the large structural shifts are expected in a gas sector of the world energy sector; in particular, it is the shale revolution, providing the independence of the USA from the import of energy and prospect of the massed deliveries of LNG to the EU countries. However, Gazprom does not participate in these innovations; its experts denied and continue to deny the existence of this problem. As a result, the management of Gazprom was not ready for the competition at the European market.
Analyzing the materials of the Russian experts, it is possible to conclude that there is the “state” position in this environment; its essence is Russia being the leading energetic state of the world. Consequently, it takes priority and duty to be the leader in the global energy sector, in particular, to establish the price of the European gas. The reason of this position is in the fact that fuel and energy resources of Russia are huge. The country, occupying 13 % of the planet, has over 34 % of the world gas and 13 % of oil reserves, and 4 trillion tons of coal. By the energy resources, the country is included into the first five of the world: 1700 million tones of all types of energy resources were received in 2011.
“The international activities of Russia within the energy sector should, according to the energy strategy, be (1) the export of energy resources, (2) exploitation of energy resources in other states, (3) increased participation in the domestic energy markets abroad, and taking control over energy resources and energy infrastructure in these countries, (4) attraction of foreign investments to the Russian energy sector, (5) work with neighboring energy firms, (6) transit of energy exports, and (7) international technical and legal co-operation” (Fredholm 2005, p.4).
According to Makarychev A. (2006), the main task of the modern energy policy is to provide a free access to the Western Europe and to receive fair – the cheapest possible – price for the energy delivered to Ukraine and Belarus. There is the alternative: either to agree with the transit countries, or to look for the roundabout routes for the Russian energy carriers. In Baltic, it is Nord Stream, which represents a replacing sea route to Europe, bypassing Ukraine and Poland. The first pipeline (27.5 billion cubic meters a year) has already been built.
The Shtokman shelf field is the source of the raw materials of the gas pipeline. This gas pipeline is the most advertized and expensive (the cost of an underwater pipe 2-2.5 times as much as the land one) energy project of the decade, but it serves as a strong argument in the negotiations on the gas price and transit conditions. It is necessary to note that sea tariff, pumping under all conditions, will be higher than that through the Ukrainian or Polish networks. It is explained by the heightened interest of monopoly in gas transport systems of these states: they are necessary for the control of the entrances of the EU countries at the gas market.
For Russia, there is not any sense to weaken the statehood of its friendly neighbors, at least in front of threat of the Islamic radicalism. Therefore, the CIS countries should receive the worthy price for the energy resources. Accordingly, Gazprom’s claims for the Central Asian policy of the limited gas sovereignty are not equitable to the long-term interests of Russia on the strengthening of a belt of the friendly stability on the eastern frontiers. The reconstruction of Gazprom is required, meaning its market orientation to the joint interests of Russia and the neighboring countries of the CIS.
“Today, Russia adheres to a rather securitized, and simultaneously highly politicized, approach to energy policy. Energetic issues are at the heart of Russia’s uneasy relations with its neighbors, including the Baltic countries, Poland, Ukraine and Georgia” (Makarychev 2006, p. 2).
The beginning of the official investigation of exclusive activity of the Russian Gazprom by the European commission (it belongs to the Kremlin by more than 50%) that disturbs a free competition in Europe became the reason of the activation of the European Union on the creation of the uniform energy market. Russia uses the anticompetitive policy: reduces the prices for gas to the separate countries of the Western Europe to divide the EU and to hold the political hegemony in the Old World. Gazprom impedes the plans of the diversification of gas supply. Moreover, it gives the political support to the ecological movements which struggle against the use of the nuclear power plants and development of the deposits of not conventional gas in Poland and Romania. In cooperation with some loyal energy companies, namely with the Italian Eni, with the German Wintershall, with the French EDF and the national companies of Greece, Slovenia, Macedonia, Serbia and Montenegro, Gazprom developed the South Stream gas pipeline construction project.
This gas pipeline should supply the Southwest Europe directly with the Russian gas that makes the construction of Nabucco impossible. Thus, such countries of the European Union, as Romania, Poland and Lithuania, treated unfriendly by the Kremlin, will be isolated.
The Alternatives to the Russian Gas
The Qatar Gas
The gas supply from Qatar is rather bad because this country has no alternative of the transportation of LNG. However, in case of emergence of a friendly regime in Syria, Qatar can try to construct the gas pipeline through Saudi Arabia, Jordan and Syria to Turkey. If such project is realized, it will strongly strike the interests of Russia. The results of 2011 showed that Turkey bought 26 billion cubic meters of gas from Gazprom and took the second place on this indicator after Germany (34 billion cubic meters). In the first half of 2012 Turkey appeared the only country which increased the gas purchases from Russia (by 9.6 %), but, for example, Germany reduced them by 11 %, and France by 20 %.
The main obstacle for gas pipeline construction from Qatar to Turkey is the instability in the Middle East. After all, this pipeline should go through the territories, which occupy not only Sunnites, but also Shiites. Besides, there are big communities of Kurds in Syria, Turkey, Iraq and Iran; they want to create the state Kurdistan. There is the most difficult situation of Kurds in Turkey, where they are treated as the citizens of the second grade and, consequently, struggle with the authorities. In particular, they regularly blow up the Iran-Turkey gas pipeline. Therefore, until Turkey solves the problem of the Kurds (they occupy about a third of the territory of this country), the gas pipeline from Qatar to Turkey will be hardly constructed.
Thus, soon it is possible to expect the instability increase in the Middle East. It can result in the oil and gas shortage at the world market and to rise in prices for them. It will be favorable to the USA as there are considerable oil and gas deposits on the territory of North America. It is the matter of bituminous sand, and also deposits of shale oil and gas. The production of these hydrocarbons is profitable only if the price of oil is about 100 dollars per barrel. The instability in the Middle East can allow the USA to increase oil and gas production in North America, but Europe and Asia should struggle for the stable deliveries of energy resources. In these conditions, Russia can strengthen the position at the international energy market.