This book examines Russia’s capacity to respond to a changing world through the lens of the country’s oil industry. Against a backdrop of social, political and climatic change, Indra Overland and Nina Poussenkova present a systematic analysis of how modern energy developments in the form of shale oil, offshore oil and the global energy transition are handled.
The world’s largest exporter of oil is facing mounting problems that could send shock waves through every major economy. Gustafson provides an authoritative account of the Russian oil industry from the last years of communism to its uncertain future. The stakes extend beyond global energy security to include the threat of a destabilized Russia.
Russia is a major player in world energy markets. It has more proven natural gas reserves than any other country, is among the top ten in proven oil reserves, is the largest exporter of natural gas, the second largest oil exporter, and the third largest energy consumer. Energy exports have been a major driver of Russia's economic growth over the last five years, as Russian oil production has risen strongly and world oil prices have been very high. This type of growth has made the Russian economy dependent on oil and natural gas exports and vulnerable to fluctuations in oil prices. The Russian government has moved to take control of the country's energy supplies. It broke up the previously large energy company Yukos and acquired its main oil production subsidiary. In Central Europe, Russian firms with close links to the Russian government have used leverage to buy energy companies to gain control over energy supply. In East Asia, Russia is contemplating a pipeline destination that would allow it to decide to whom its oil gets sold. Also, Russia briefly cut off gas supply to Ukraine because the latter did not agree to greatly increase what it pays for the gas. Russia restored supply after other European countries, which were affected, complained. Much of Russia's gas exports to Europe pass through Ukraine. The dispute was resolved temporarily through a compromise. Russia's ability to maintain and expand its capacity to produce and to export energy faces difficulties. Russia's oil and gas fields are aging. Modern western energy technology has not been fully implemented. There is insufficient export capacity in the crude oil pipeline system controlled by Russia's state-owned pipeline monopoly, Transneft. And, there is insufficient investment capital for improving and expanding Russian oil and gas production and pipeline systems. Moreover, Russia's cutting off gas supply to Ukraine and subsequent actions and events damaged its reputation as a reliable energy supplier. A number of proposals would build new or expand existing Russian oil and natural gas export pipelines. Some are contentious, and although the Russian government is faced with a perceived need to expand its oil and gas export capacity, it also has limited resources. This report discusses several different major proposals. Given that the United States, as well as Russia, is a major energy producer and user, Russian energy trends and policies affect U.S. energy markets and economic welfare in general. An increase in Russia's energy production and its ability to export that energy westward and eastward may tend to ease the supply situation in energy markets in the Atlantic and Pacific Basins. On the other hand, the Russian government's moves to take control of the country's energy supplies noted earlier may have the effect of making less oil available. Possibly as important as Russian oil and gas industry developments is the associated potential for U.S. suppliers of oil and gas field equipment and services to increase their sales and investment in Russia. However, while they consider the climate to be improving, potential investors complain that the investment climate in Russia is inhospitable with respect to factors such as poor intellectual property rights protection, burdensome tax laws, and inefficient government bureaucracy. This report will be updated as events warrant.
One of the dominant export-oriented industries in Russia, oil is a major source of tax revenue and wealth. The privatization of these vast assets has made the industry a site not only for conflict between power holders but also a strategic target for international corporations and Western governments. In this thoughtful analysis, a group of international specialists explores the political and economic issues and controversies surrounding the oil industry's move to capitalism. The authors examine the spread of crime and corruption, the role of Russian and Western financial institutions, regional tensions, and the international dimension. As a paradigm for the Russian economy as a whole, the case of oil industry provides invaluable insights for understanding the political and economic problems confronting Russia today.
The challenges in Russia's energy sector are changing. On the demand side, Europe is seeking to limit its dependence on Russian oil and gas, with the result that China and other Asian countries are likely to eventually become growing export markets for Russian energy. On the supply side, oil and gas fields in West Siberia are diminishing and in future Russia's energy will have to come more from East Siberia and the Arctic, which will necessitate new infrastructure development and the employment of advanced technologies, which may increase Russia's dependence on commercial partners from outside Russia. This book explores the challenges facing Russia's energy sector and the resulting security implications. It includes a discussion of how far the Russian state is likely to continue to monopolise the energy sector, and how far competition from private and foreign companies might be allowed.
This timely book analyses the status of hydrocarbon energy in Russia as both a saleable commodity and as a source of societal and political power. Through empirical studies in domestic and foreign policy contexts, Veli-Pekka Tykkynen explores the development of a hydrocarbon culture in Russia and the impact this has on its politics, identity and approach to climate change and renewable energy.
