Abundant oil and gas have strengthened Russia’s leadership, freeing its political hand to act both internationally and domestically. How long will this hydrocarbon blessing last?
Can Russia Become an Oil Paradise?
It is not wholly appropriate to apply the term‘petrostate’ equally to all larger exporters of oil, asif they were identical. ‘Petrostates’ can be clearlydivided into two unequal groups: those countrieswhere the population is sufficiently small to live welloff of hydrocarbon exports, and those countrieswhere such income is barely sufficient to cover themost basic needs of the population and the appetitesof government bureaucrats. A large population anda significant domestic demand for energy effectivelymean that Russia can never become an ‘oil paradise’.For all intents and purposes, the question offunding Russia’s broad modernization on the backof its energy potential can be considered moot. It isimpossible, and there are not sufficient resources forsuch an endeavor.
Emerging Energy Security Dilemma
The energy sector is central to the future economicsecurity and development of both Russia andthe EU and is a central element of the EU-Russiarelationship. It is a dimension that is of realimportance, rather than concocted political desire.It would severely undermine the energy security ofboth the EU and Russia if the relationship beganto drift apart in the search for superficially morereliable sources. Concerns about Russia’s reliabilitycannot be dismissed out of hand, but problems mustbe more accurately pin-pointed. It is important thatthe rhetoric moves away from notions of mutual“dependence” on the other and producer vs.consumer relations. The relationship is a mutual one,with benefits as well as down-sides for both.
‘Friendship of Nations’ In the World of Energy
The most likely scenario is that Russia’s increasingpresence on Central Asia’s energy scene will notbe able to serve as a decisive factor in the evolvingeconomic and political fates of these nations, butwill be diminished through the growing role of anynumber of other international actors — includingChina, India, the U.S. and Europe — who will offernew alternatives to Central Asia’s leaders. And asCentral Asia’s leaders and their advisors begin tobe replaced by a younger and more highly skilledgeneration, such alternatives may seem increasinglyattractive.
Russian Production in the Middle East
Among the Russian oil majors, Lukoil is the mostambitious when it comes to plans outside thecountry. The Middle East is central to its strategyof concentrating 23 percent of its total productionoutside of Russia by 2015, and these plans in largepart focus on Iraq. Unlike Lukoil, with its giganticresources, Tatneft is developing one of Russia’soldest fields. With each passing year, the problemof renewing its resources becomes pressing for thecompany. This drives its aggressive attempts to gainaccess to fields both in Russia and abroad. Tatneftis the only Russian company that managed to winrecent auctions for exploring and drilling Libyanresources.
A major overhaul of energy and transportation indeveloped countries, including a transition frommined hydrocarbons to hydrogen and renewableresources, may not only free the leading countriesfrom their dependence on oil and resolve ecologicalproblems, but also increase employment andfuel economic growth over the course of severalyears. The American capital markets will havenew favorites, companies working to develophydrogen infrastructure. Europe may thus overcomeunemployment. The only question is where one getsthe money for such wonders.
Brave New World of Nuclear Power
The reasons for Russia and the United States tocooperate extend beyond their mutual interest in theexpansion of nuclear power to a broader strategicgoal: dissuading Iran from becoming a nuclearweapon state. Indeed, their interests are also engagedhere, for if Iran continues to insist that the only way toexpress its right to peaceful nuclear energy is throughan enrichment program, then it will be impossibleto expand nuclear power in a proliferation-resistantmanner. If other countries follow Iran’s lead, then theacquisition of nuclear power will become the directdoorway to nuclear weapons programs around theworld. This, in turn, would spell the death of the Non-Proliferation Treaty and the nonproliferation regimethat it underpins.
Gazprom: From the Big Pipe to Big Business
Tat`iana Mitrova and Iakov Pappe
Gazprom has been forced to abandon its inertstrategy, in which its primary efforts have beenfocused on developing its own, increasingly complexfields, in favor of a new strategy that will transformit from a national, natural monopoly into a globalcorporation. As a model, the company is aiming tobecome a diversified energy super-holding, includingdrilling, transportation and oil-and-gas processing,energy production, and the distribution of the endproducts on consumer markets.
Gazprom: A Risky Strategy
For the foreseeable future, Gazprom will remainthe prisoner of numerous poorly manageable risks,which call into question the company’s abilityreliably to fulfill its obligations to its foreign partners.As before, the company is not ensured against forcedparticipation in uninteresting (from a business pointof view) projects, such as the purchase of media,sponsorship of Olympic sports, or the gasification ofRussia’s regions. To these can be added the recentinitiative of the Ministry of Finance and the Ministryof Economic Development and Trade, to skim offGazprom’s ‘superprofits’, gained through the growthof gas prices.
Rosneft as a Mirror of Russian Evolution
In the run-up to the placing of Rosneft shares oninternational capital markets, the Russian president’sgood will defends investors against political risks,making the company more attractive to investorsand raising the potential price of its shares. OutsideRussia, however, the forthcoming Rosneft initialpublic offering has raised numerous questions.Western analysts are concerned about its tremendousdebt load. Other international experts are concernedthat Rosneft is an instrument of government policyand may thus pursue political goals, to the detrimentof shareholders. Indeed, Russian citizens wouldbe well served to learn whether this state-ownedcompany is managed more for the benefit of its ownmanagement, the state establishment, or the country’snational interests.
Belarussia’s Identity-Building Project
The Belarusian presidential campaign marked theend of the country’s imitative ‘transition’ and thebeginning of its real transition. However, despite theincreasing dissatisfaction with the current situationamong both the elite and the ‘masses’, there areno actors on the Belarusian political stage whocan propose a true vision of Belarusian statehood.The opposition, led by Aleksandr Milinkevich, haveyet to evolve into a unified, competent actors, whilethe ruling elite has only begun to understand itsautonomy vis-а-vis the president’s will.