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Natural Gas in Putin’s Russia: The Reconstruction of Energy Geopolitics

Gazprom’s CEO Alexey Miller and Vladimir Putin



After the dissolvement of the Soviet Union in 1991 and the systematic collapse of communism in Eastern and Southeastern Europe, all the new democratic emerging states had to remodel and reconstruct their economies based on the new demands of a globalized world. Such was the case with the Russian Federation, the de facto successor of the old Soviet Union. A complete transformation occurred in the country in every sector of the economy, including the energy sector. Over the years, since the presidency of Vladimir Putin, Russia has emerged as a steady supplier of natural gas in Europe while supporting various projects that help secure its influence towards the West but also towards the East. The high demand and supply for Russian gas have created a new form of geopolitical struggle in Europe and abroad, and Russia has emerged as a major key player in the 21st-century geopolitical “chessboard”.

Energy politics during the era of communism

During the period of the Soviet Union, the country’s energy sector was one of the most important features of its planned economy. Although the Soviet Union had relatively achieved a status of self-sufficiency in energy, major problems started to appear during the late ‘70s, in a period known as the Brezhnev stagnation (1975-1985). This term was first used by Mikhail Gorbachev, in an effort to present his negative views on the socio-political and economic status of the Soviet Union that started by Leonid Brezhnev and continued under Yuri Andropov and Konstantin Chernenko. Also, this stagnation was characterized by the lack of energy demand from the West, which created a difficult situation in the supply-side economic aspect. This stagnation was inevitable, not only because of macroeconomic reasons but also because the political situation inside the Soviet Union did not allow for the appropriate technological innovation regarding the energy sector. Instead, the sheer focus and energy of the leadership in the Soviet Union were concentrated in competing with the United States in the Cold War, mostly in militaristic expansion. As a result, one can speculate that this was the reason why the Soviet Union was effective on a domestic level, but not on an international one, where it was clear that the capitalist nations had the upper hand in terms of technological advancements and innovation.

Vladimir Putin and the geopolitics of natural gas

Ten years after the dissolvement of the Soviet Union, a new era of political and economic stability came after the 2000 Presidential elections, when Vladimir Putin became the new President of the Russian Federation. Alongside many economic and socio-political reforms that began, major transformations occurred in the energy sector, especially in the natural gas sector. It became clear that the preservation of the natural gas sector became the top priority in Russia.

Some analysts argue that, especially in the natural gas sector, the Russian Federation under Vladimir Putin follows the same USSR policy as guidance. Marshall Goldman, the author of the book, Petrostate: Putin, Power, and the New Russia, argues that Putin has followed a similar line of thinking when it comes to the cancellation of exports towards buyers who might have gone against national objectives, putting forward a plan of total dependency over Russian gas, especially towards its neighboring states. The Russian state has effectively put this plan in motion for years with the increased natural gas production since the beginning of the presidency of Vladimir Putin. The main and most important asset that contributes to this plan is the Russian majority state-owned energy corporation Gazprom. Following the end of the USSR, the Natural Gas Industry was converted into the private company Gazprom, under the CEO and former deputy Minister of the natural gas industries of the Soviet Union, Viktor Chernomyrdin. Although there were objections from many politicians at that time, this politically driven decision was approved in December 1992, by the new President of the Russian Federation Boris Yeltsin.

However, the situation changed just a few months after Vladimir Putin succeeded Boris Yeltsin in 2000. In a fast and methodical way, Putin managed to suppress the overgrowing power of the oligarchy in Russia, and soon business oligarchs like Chernomyrdin were set aside from Putin’s political agenda. Chernomyrdin was fired from the position of CEO of Gazprom. The increased government stocks in Gazprom, allowed Putin to replace Chernomyrdin with Alexei Miller and Dmitry Medvedev. The new majority state-owned Gazprom was under the National Champions program, a program that was advocated by Vladimir Putin himself where corporations would remain technically private but would serve as instruments of the Russian government in order to be efficient and competitive on a domestic and international level. This mix of traditional capitalist systems with some aspects of the old Soviet Union grip over businesses could only be successfully operated in Russia. The fact that Russia has large amounts of natural gas reserves inside its territory allows it to effectively control the natural gas industry for the benefit of the state. Any sort of attempt to privatize Gazprom or exclude the Russian government to support a more laissez-faire system would collapse simply because the era of oligarchy in Russia and forced privatization resulted in an economic and societal collapse.

As of today, Russia is considered to have the world’s largest natural gas reserves, with a steady increase in both natural gas and oil since the presidency of Vladimir Putin. In addition, Gazprom is the world’s largest energy major in terms of natural gas reserves and production. According to the company, its hydrocarbon reserves have amounted to 34.899 billion cubic meters of gas, while analysts predict that by 2030 Russia will double its gas exports in Europe and at the same time Europe’s gas demand will increase by 100 bcm over the next ten years. The latest information regarding natural gas exports in Europe allows us to investigate even further to what extent the Russian government uses Gazprom and natural gas as a geopolitical tool to expand its influence. The fact that Russia has the largest natural gas reserves in the world gives it leverage of economic and political influence, especially over the post-Soviet states. One country that has been influenced the most by Russia, is Ukraine. It is estimated that at least 80% of the exported natural gas to the West is transitioned from Ukraine, allowing Russia to promote its political agenda to the country. However, after the Maidan events of 2014 in Kyiv, the relations between the two states have deteriorated, to a point where Russia tries to find other routes and projects that could boost its influence in Europe.

The new era natural gas projects

The latest statistics show that Russia’s gas production has reached its highest-ever level, producing at least 725 billion cubic meters. Also, Russia’s liquified natural gas has become a significant power tool and a global force, with the possibility of further expansion in the coming years. With that being said, Russia has acquired a status of an energy superpower, and as a superpower, it aims to spread its influence in a more realpolitik strategy. To achieve this, Russia has invested in numerous gas pipeline projects. The most significant projects are the TurkStream gas pipeline and the Nord Stream II gas pipeline.

The TurkStream gas pipeline is running from Russia to Turkey. Starting from Anapa in the region of Krasnodar, it crosses the Black Sea, ending up in the terminal of Kıyıköy in Turkey. The project was announced back in 2014, and the official construction started in 2017. In 2020 the first gas deliveries to Bulgaria officially began. Although Southeast Europe as a regional gas market is often overlooked because of its relatively small size, a project like TurkStream could change this dynamic. Researcher Julian Bowden makes two good points about the significance of the project. First of all, it will change the regional gas flows into Southeast Europe by diverting the transit from Ukraine. It is estimated that at least 19 billion cubic meters per year will be removed from the Ukraine transit in 2020. Secondly, this project has the potential to transport 31.5 billion cubic meters of gas per year, which can be equal to the energy demands of 15 million households. All in all, Russia is expected to be able to divert 19 bcm away from Ukraine. Also, the AKP, the ruling party in Turkey has seen this project more positively, saying that it will eliminate transit risks for Turkey’s security of supply and decrease external dependency by replacing the Western Line.

The other most significant project and by far the most controversial one is the Nord Stream II gas pipeline. The pipeline is part of an offshore natural gas pipeline system in Europe, crossing the Baltic Seas and ending up in Germany. The recent project of the Nord Stream II pipeline began in 2015 and as of June 4, 2021, the first section of the project has been fully completed despite numerous sanctions that were imposed by the U.S. For Alan Riley, an expert in energy and environment issues, the Nord Stream II has divided the West. Supporters of the group might argue that the project will bring the much needed natural gas supplies to Western Europe, while opponents of the project argue that it is only masquerading as a commercial project and in reality, it is used as a political “weapon” to undermine the European Union and give Russia political leverage over the EU countries in Eastern and Central Europe. Some European countries are concerned that the recent disputes with Ukraine and the general foreign policy of Russia towards Eastern Europe, are strong indications of the Kremlin’s intentions to use the Nord Stream II pipeline as a political tool of influence. Although Russia and Germany have expressed their opinions about the project saying that it is purely commercial, it is certain that for whatever reason this project might be used in the end, the geopolitics of Europe has drastically changed and in the short-term, it seems that Russian has the upper hand in energy politics in Europe.

The struggle for international political influence

The projects that were mentioned, surely have the potential to change the geopolitical structure of Europe. This statement cannot be seen as an exaggeration. According to Eurostat the Russian Federation is the largest exporter of natural gas in the European Union. The total imports of energy products from Russia account for at least 60%. From that 60%, at least 39% represents the natural gas imports. This is an important figure, not only for economic reasons but because it also represents a geopolitical struggle between Russian and the United States. The previous American administration under Donald J. Trump has accused Russia of holding the EU as a “captive” due to its energy reliance. His administration and the current administration of Joe Biden have imposed sanctions on the project but with no results as the project seems to be almost done. However, there are still efforts to convince the EU to diversify its energy sources to stop the energy dependency from Russia. One country that can be a potential energy supplier for the future is Qatar. The U.S is very keen on seeing one of its closest Middle East allies as the main energy supplier for the EU to halt the economic and political influence of Russia. According to Reuters, there is a possibility for the creation of a liquefied natural gas pipeline towards Germany in the next five years. As of now, Qatar has promised to invest at least $10 billion to strengthen its ties with Germany who currently is the biggest energy consumer in Europe.

The energy politics of Russia, combined with the ongoing projects that affect Europe and the external pressure from the United States of America, is a great example of how natural gas and energy play a significant role in the reconstruction of the geopolitical map. What can be seen at first glance, as purely economical and commercial projects and energy trade policies, hides underneath it the core essence of the international struggle for political influence. Since the 2008 financial crisis, global natural gas production has been boosted by new innovative technologies and besides the traditional Cold War rivals, other countries like Norway or Qatar seem to climb the “ladder” of natural gas producing countries. Qatar and Norway are producing at least 124 billion cubic meters and 112 billion cubic meters of natural gas respectively. Generally speaking, natural gas markets globally are becoming more integrated. This is because the costs of the liquefied natural gas transportation have fallen significantly over the last few years. This can be interpreted as an important factor not only to the diversification of energy imports in the EU but also to the geopolitical changes in Europe and beyond.

The energy sector in Russia, especially natural gas production, will play a significant role in the following years to come. Russia is entering a new era of energy production and energy exportation, significantly increasing its influence and political power to the West but also the East. One can expect that the ongoing rivalry between Russia and the United States will not stop as both countries are applying a more realistic approach towards their foreign policies and re-evaluating their existent energy diplomacy and trading tactics.

Bachelor's Degree in International Relations & Political Science. Columnist focusing on Global Affairs

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Energy transition is a global challenge that needs an urgent global response



COP26 showed that green energy is not yet appealing enough for the world to reach a consensus on coal phase-out. The priority now should be creating affordable and viable alternatives 

Many were hoping that COP26 would be the moment the world agreed to phase out coal. Instead, we received a much-needed reality check when the pledge to “phase out” coal was weakened to “phase down”. 

 This change was reportedly pushed by India and China whose economies are still largely reliant on coal. The decision proved that the world is not yet ready to live without the most polluting fossil fuels. 

 This is an enormous problem. Coal is the planet’s largest source of carbon dioxide emissions, but also a major source of energy, producing over one-third of global electricity generation. Furthermore, global coal-fired electricity generation could reach an all-time high in 2022, according to the International Energy Agency (IEA).

 Given the continued demand for coal, especially in the emerging markets, we need to accelerate the use of alternative energy sources, but also ensure their equal distribution around the world.

 There are a number of steps policymakers and business leaders are taking to tackle this challenge, but all of them need to be accelerated if we are to incentivise as rapid shift away from coal as the world needs. 

 The first action to be stepped up is public and private investment in renewable energy. This investment can help on three fronts: improve efficiency and increase output of existing technologies, and help develop new technologies. For green alternatives to coal to become more economically viable, especially, for poorer countries, we need more supply and lower costs.

 There are some reasons to be hopeful. During COP26 more than 450 firms representing a ground-breaking $130 trillion of assets pledged investment to meet the goals set out in the Paris climate agreement. 

 The benefits of existing investment are also becoming clearer. Global hydrogen initiatives, for example, are accelerating rapidly, and if investment is kept up, the Hydrogen Council expects it to become a competitive low-carbon solution in long haul trucking, shipping, and steel production.

 However, the challenge remains enormous. The IEA warned in October 2021 that investment in renewable energy needs to triple by the end of this decade to effectively combat climate change. Momentum must be kept up.

 This is especially important for countries like India where coal is arguably the main driver for the country’s economic growth and supports “as many as 10-15 million people … through ancillary employment and social programs near the mines”, according to Brookings Institute.  

This leads us to the second step which must be accelerated: support for developing countries to incentivise energy transition in a way which does not compromise their growth. 

Again, there is activity on this front, but it is insufficient. Twelve years ago, richer countries pledged to channel US$100 billion a year to less wealthy nations by 2020, to help them adapt to climate change. 

The Organization for Economic Cooperation and Development estimates that the financial assistance failed to reach $80 billion in 2019, and likely fell substantially short in 2020. Governments say they will reach the promised amount by 2023. If anything, they should aim to reach it sooner.

There are huge structural costs in adapting electricity grids to be powered at a large scale by renewable energy rather than fossil fuels. Businesses will also need to adapt and millions of employees across the world will need to be re-skilled. To incentivise making these difficult but necessary changes, developing countries should be provided with the financial support promised them over a decade ago.

The third step to be developed further is regulation. Only governments are in a position to pass legislation which encourages a faster energy transition. To take just one example, the European Commission’s Green Deal, proposes introduction of new CO2 emission performance standards for cars and vans, incentivising the electrification of vehicles. 

This kind of simple, direct legislation can reduce consumption of fossil fuels and encourage industry to tackle climate change.

Widespread legislative change won’t be straightforward. Governments should closely involve industry in the consultative process to ensure changes drive innovation rather than add unnecessary bureaucracy, which has already delayed development of renewable assets in countries including Germany and Italy. Still, regardless of the challenges, stronger regulation will be key to turning corporate and sovereign pledges into concrete achievements. 

COP26 showed that we are not ready as a globe to phase out coal. The priority for the global leaders must now be to do everything they can to drive the shift towards green energy and reach the global consensus needed to save our planet.

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Pakistan–Russia Gas Stream: Opportunities and Risks of New Flagship Energy Project



source: twitter

Russia’s Yekaterinburg hosted the 7th meeting of the Russian-Pakistani Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation on November 24–26, 2021. Chaired by Omar Ayub Khan, Pakistan’s Minister for Economic Affairs, and Nikolai Shulginov, Russia’s Minister of Energy, the meeting was attended by around 70 policy makers, heads of key industrial companies and businessmen from both sides, marking a significant change in the bilateral relations between Moscow and Islamabad.

Three pillars of bilateral relations

Among the most important questions raised by the Commission were collaboration in trade, investment and the energy sector.

According to the Russian Federal Customs Service, the Russian-Pakistani trade turnover increased in 2020 by 45.8% compared to 2019, totaling 789.8 million U.S. dollars. Yet, there is still huge potential for increasing the trade volume for the two countries, including textiles and agricultural products of Pakistan and Russian products of machinery, technical expertise as well as transfer of knowledge and R&D.

Another prospective project discussed at the intergovernmental level is initiating a common trade corridor between Russia, the Central Asia and Pakistan. Based on the One-Belt-One-Road concept, launched by China, the Pakistan Road project is supposed to create a free flow of goods between Russia and Pakistan through building necessary economic and transport infrastructure, including railway construction and special customs conditions. During the Commission meeting, both countries expressed their intention to collaborate on renewal of the railway machines fleet and facilities in Pakistan, including supplies of mechanized track maintenance and renewal machines; supplies of 50 shunting (2400HP or less) and 100 mainline (over 3000HP) diesel locomotives; joint R&D of the technical and economic feasibility of locomotives production based in the Locomotive Factory Risalpur and other. The proposed contractors of the project might be the Russian Sinara Transport Machines, Uralvagonzavod JSC that stand ready to supply Pakistan Railway with freight wagons, locomotives and passenger coaches. In order to engage import and export activities between Russian and Pakistani businessmen, the Federation of Pakistan Chamber of Commerce signed a memorandum with Ural Chamber of Commerce and Industry, marking a new step in bilateral relations. Similar memorandums have already been signed with other Chambers of Commerce in Russian regions.

— Today, the ties between Russia and Pakistan are objectively strengthening in all areas including economic, political and military collaboration. But we, as businessmen, are primarily interested in the development of trade relations and new transit corridors for export-import activities. For example, the prospective pathways of the Pakistan-Central Asia-Russia trade and economic corridor project are now being actively discussed at the intergovernmental level, — said Mohsin Sheikh, Director of the Pakistan Russia Business Council of the Federation of Pakistan Chambers of Commerce and Industry. — For Islamabad, this issue is one of the most important. Based on a similar experience of trade with China, we see great prospects for this direction. That is why representatives of Pakistan’s government, customs officers, diplomats and businessmen gathered in Yekaterinburg today.

However, the flagship project of the new era of the Pakistan-Russia relations is likely to be the Pakistan Gas Stream. Previously known as the North-South Gas Pipeline, this mega-project (1,100 kilometers in length) is expected to cost up to USD 2,5 billion and is claimed to be highly beneficial for Pakistan. Being a net importer of energy, Pakistan will be able to develop and integrate new sources of natural gas and transport it to the densely populated industrialized north. At the same time, the project will enable Pakistan—whose main industries are still dependent on the coal consumption—to take a major step forward gradually replacing coal with relatively more ecologically sustainable natural gas. To enable this significant development in the Pakistan’s energy sector, Moscow and Islamabad have made preliminary agreements to carry on the research of Pakistan’s mineral resource sector including copper, gold, iron, lead and zinc ores of Baluchistan, Khyber Pukhtunkhwa and Punjab Provinces.

A lot opportunities but a lot more risks?

The Pakistan Stream Gas Pipe Project undoubtedly opens major investment opportunities for Pakistan. Among them are establishment of new refineries; the launch of virtual LNG pipelines; building of LNG onshore storages of LNG; investing in strategic oil and gas storages. Yet, it seems that Pakistan is likely to win more from the Project than Russia. And here’s why. The current version of the agreement signed by Moscow and Islamabad has been essentially reworked. According to it, Russia will likely to receive only 26 percent in the project stake instead of 85 percent as it was previously planned, while the Pakistani side will retain a controlling stake (74 percent) in the project.

Another stranding factor for Russia is although Moscow will be entitled to provide all the necessary facilities and equipment for the building of the pipeline, the entire construction process will be supervised by an independent Pakistani-based company, which will substantially boost Pakistan’s influence at each development. Finally, the vast bulk of the gas transported via the pipeline will likely come from Qatar, which will further strengthen Qatar’s role in the Pakistani energy sector.

Big strategy but safety first

The Pakistan Stream Gas Pipeline will surely become an important strategic tool for Russia to reactivate the South Asian vector of its foreign policy. Even though the project’s aim is not to gain a fast investment return and economic benefits, it follows significant strategic goals for both countries. As Russia-India political and economic relations are cooling down, Moscow is likely to boost ties with Pakistan, including cooperation in economy, military, safety and potentially nuclear energy, that was highlighted by Russian Foreign Minister Sergey Lavrov during visit to Islamabad earlier this year. Such an expansion of relations with Pakistan will allow Russia to gain a more solid foothold in the South Asian part of China’s BRI, thus opening up a range of new lucrative opportunities for Moscow.

Apart from its economic and political aspects, the Pakistan Stream Project also has clear geopolitical implications. It marks Russia’s growing influence in South Asia and points to some remarkable transformations that are currently taking place in this region. The ongoing geopolitical game within the India-Russia-Pakistan triangle is yet less favorable for New Delhi much because of the Pakistan Stream Project. Even though the project is not directly aimed to jeopardize the India’s role in the region, it is considered the first dangerous signal for New Delhi. For instance, the International “Extended troika” Conference on Afghanistan, which was held in Moscow last spring united representatives from the United States, Russia, China and Pakistan but left India aside (even though the latter has important strategic interests in Afghanistan).

With the recent withdrawal of the U.S. military forces from Afghanistan, Moscow has become literally the only warden of Central Asia’s security. As Russia is worried about the possibility of Islamist militants infiltrating the Central Asia, the main defensive buffer in the South for Moscow, the recent decision of Vladimir Putin to equip its military base in Tajikistan, which neighbors Afghanistan, seems to be just on time. Obviously, Islamabad that faces major risks amidst the Afghanistan crisis sees Moscow as a prospective strategic partner who will help Imran Khan strengthen the Pakistani efforts in fighting the terrorism threat.

From our partner RIAC

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How wind power is transforming communities in Viet Nam



In two provinces of Viet Nam, a quiet transformation is taking place, driven by the power of renewable energy.

Thien Nghiep Commune, a few hundred kilometres from Ho Chi Min City, is a community of just over 6,000 people – where for years, people relied largely on farming, fishing and seasonal labour to make ends meet.

Now, thanks to a wind farm backed by the Seed Capital Assistance Facility (SCAF) – a multi-donor trust fund, led by the United Nations Environment Programme (UNEP) – people in the Thien Nghiep Commune are accessing new jobs, infrastructure and – soon – cheap, clean energy. The 40MW Dai Phong project, one of two wind farms run by SCAF partner company the Blue Circle, has brought new hope to the community.

For the 759 million people in the world who lack access to electricity, the introduction of clean energy solutions can bring improved healthcare, better education and affordable broadband, creating new jobs, livelihoods and sustainable economic value to reduce poverty.

“It’s not only about the technology and the big spinning wheel for me. It’s more about making investment decisions for the planet and at the same time not compromising on the necessity that we call electricity,” said Nguyen Thi Hoai Thuong, who works as a community liaison. “The interesting part is I work for the project, but I actually work for the community and with the community.”

While the wind farm is not yet online, a focus on local hiring and paying fair prices for land has already made a big difference to the community.

“I used the money from the land sale to the Dai Phong project to repair my house and invest in my cattle. Currently, my life is stable and I have not encountered any difficulties since selling the land,” said Ms. Le Thi Doan.

Powering change

The energy sector accounts for approximately 75 per cent of total global greenhouse gas emissions (GHGs). UNEP research shows that these need to be reduced dramatically and eventually eliminated to meet the goals of the Paris Agreement.

Renewable energy, in all its forms, is one of humanity’s greatest assets in the fight to limit climate change. Capacity across the globe continues to grow every year, lowering both GHGs and air pollution, but the pace of action must accelerate to hold global temperature rise to 1.5 °C this century.

“To boost growth in renewables, however, companies need to access finance,” said Rakesh  Shejwal, a Programme Management Officer at SCAF. “This is where SCAF comes in. SCAF works through private equity funds and development companies to mobilize early-stage investment low-carbon projects in developing countries.”

The 176 projects it seed financed have mobilized US $3.47 billion to build over one gigawatt of generation capacity, avoiding emissions of 4.68 million tons of carbon dioxide (CO2) equivalent each year.

But SCAF’s work isn’t just about cutting emissions. It is bringing huge benefits across the sustainable development agenda: increasing access to clean and reliable electricity and boosting communities across Asia and Africa. SCAF will be potentially creating 17,000 jobs.

This is evident in Ninh Thuan province, where the Blue Circle created both the first commercial wind power project and the first to be commissioned by a foreign private investor in Viet Nam.

Here, the Dam Nai wind farm has delivered fifteen 2.625 MW turbines, the largest in the country at the time. These will generate approximately 100 GWh per year. They will avoid over 68,000 tCO2e annually and create more than an estimated 302 temporary construction and 13 permanent operation and maintenance jobs for the local community.

Students from the local high school in Ninh Thuan Province were also given the opportunity to meet with engineers and technicians on the project, increasing their knowledge about how renewable energy works and opening up new career paths.

SCAF, through its partners, is supporting clean energy project development in the Southeast Asian region and African region. SCAF has more than a decade of experience in decarbonization and is currently poised to run till 2026.


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