Two perspectives on Russia’s role in energy security
A global energy security concept is the chief issue placed on the St. Petersburg G8 summit agenda by Russia, as the host nation. Russia’s position is set out in a recent article signed by President Vladimir Putin. How realistic and specific is President Putin’s proposed program?
The G8 energy ministers will meet in Moscow on March 16. Together with their counterparts from China, India, Brazil, Mexico, and South Africa, along with representatives of the International Atomic Energy Agency, the International Energy Agency, and the World Bank, they will discuss a concept for global energy security – the chief issue placed on the St. Petersburg G8 summit agenda by Russia, as the host nation.
Russia’s position is set out in an article signed by President Vladimir Putin, published simultaneously in early March by a number of publications in Russia and abroad. So what is Russia bringing to the high-level meeting? How realistic and specific is President Putin’s proposed program?
Maksim Korobov, member of the Duma committee on energy, transport, and communications, former president of the Tomsk Oil and Gas Company:
President Putin set out a fairly detailed energy security concept. It outlines the material base in the form of energy resources, capacities to transform those resources into energy, and networks that help deliver that energy to end-users. That’s the primary foundation. The second is political will and awareness of Russia’s unique role. Russia can serve as a guarantor and stabilizer in the energy market, primarily for our traditional trade partners and political partners in Europe, North America, and Asia – an island of stability and confidence that people won’t run short of heating and electricty, regardless of world events.
Look, there is much talk in Europe these days about being overly dependent on energy resources from Russia. Yet this also means that we are overly dependent on Europe. In order to ensure our common security, we need to be more active in developing new directions: the Far East, China, other Asian countries. These are very promising markets, with a high payment capacity and growing demand. We need to get in there: preferably with primary processed products, not raw materials – petroleum products, rather than crude oil.
That means we have to adopt advanced technologies. Russia still doesn’t produce liquefied natural gas, for example, although efforts to do so were started back in the Soviet era, even going as far as producing gas tankers that were advanced at the time. Then everything petered out. We need modern oil-refining technologies, and we have to work with gas as well, including ways of turning it into fuel for vehicles. The Russian Academy of Sciences is doing research; our scientists are still keeping up research in these priority areas. But none of Russia’s oil and gas companies are working on this, although it promises incredible profits from both the environmental and economic standpoints. Several large factories of this nature are being constructed or already operating in South Africa, Malaysia, and the Middle East.
Besides, no matter how huge our oil and gas reserves are, they’re going to run out some day. The human race is developing renewable, environmentally friendly energy sources: wave power, wind power, geothermal sources. The most promising area is hydrogen fuel, with water as a byproduct. I think there will be a radical breakthrough in this area within the next decade.
So far, however, the leading alternative to hydrocarbons is uranium. The problem is that nuclear technology can also be used for military purposes, as we know. Nuclear energy can help meet the energy demands of many countries; the only question here is effective supervision. Building an international uranium enrichment center in Russia or Europe, under IAEA supervision, would be a great step forward in reducing the nuclear threat to the human race.
Valery Zubov, economist, member of the Duma committee on crediting organizations and financial markets, former governor of the Krasnoyarsk territory:
President Putin’s article proposing a global energy security concept is more of a political gesture – a message to the rest of the world that Russia understands the global economy’s vulnerability with regard to energy resources, and is assuming a certain moral responsibility for ensuring the world’s energy security.
Unfortunately, this declaration is not backed up by economic calculations; neither are mechanisms for realizing the concept specified. Given that our government is incapable of making well-considered decisions and consistently turning them into reality, I fear it won’t be able to cope with implementing President Putin’s energy project in Russia’s interests.
President Putin makes the fair point that Russia also needs energy security, and needs to cooperate as an equal with the world’s leading nations. When we started charging our neighbors market prices for gas, we faced accusations of trying to establish a “gas empire.” Against the background of the current anti-Russia campaign, however, we might well express concern about Europe’s monopoly on importing Russia’s hydrocarbons, with everything here dependent on that: economic growth rates, the Stabilization Fund, social policy. When we start supplying our products to Japan, China, India, and South-East Asia, this will enable us to free ourselves from the role of Europe’s energy appendage and expand Russia’s zone of influence in adjacent regions.
And here’s another point: even as we consider global issues, let’s not forget that thousands of towns and villages in Russia itself still lack gas supplies.
We are vulnerable in that our federal budget is tied to international energy prices, yet we have no say in setting those proces. And President Putin points out, quite reasonably, that the cornerstone of order in the world energy system is well-founded prices that satisfy exporter and consumer nations alike.
Prices are high at present; at first glance, that seems extremely advantageous for us. Elsewhere in the world, however, high prices for oil and gas are stimulating increased investment in seeking out new sources of raw materials, cheaper and more accessible, and more intensive development of alternative energy sources. Attitudes to nuclear energy are changing. All this will change the energy resources balance and facilitate a decline in hydrocarbon prices.
While calling on the international community to cooperate more closely in developing innovative energy technologies, we should also give priority to energy-saving measures at home. Unfortunately, the state has lost control of the natural monopolies, and they have ceased doing any serious work on new technologies. Look at our residential infrastructure, where energy consumption is four to six times higher than common international standards. Judging by the situation, the government has no idea how to handle this matter.
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Russia exported 256 million tons of crude oil to Europe in 2005. Export volumes came to 144 million tons last year (according to the Industry and Energy Ministry).
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Joke of the day
If the price of oil is $10 per barrel, Russia is the West’s raw materials appendage. If the price of oil is $110 per barrel, the West is Russia’s consumer goods appendage.