Russia has been the world’s single largest exporter of energy for more than a decade. This is the result of its clear plan to develop itself into an energy superpower, covering the entire fossil energy spectrum and nuclear energy.
The loss of its guaranteed markets of the Soviet Union’s friends and allies in the post-Soviet era to primarily the western countries, added to its lack of competitively exportable goods. Scarce funds have been diverted into respective export projects since the fall of the Soviet Union, especially pipeline ones, to export oil and gas targeting the largest energy markets.
For the most part of the post-Soviet era, Europe has been the main market: its energy poverty made it heavily dependent on imports, and its close proximity and decades-long ties with Russia through the Soviet-built Drozhba (Friendship) gas pipeline. In addition to the EU’s lack of ideological opposition to expand ties with now non-Communist Russia, these factors have helped substantially expand Russia’s energy exports, particularly to Europe. The twin-pipe Nord Stream (55 billion m3/y) is an example in this regard.
Russia’s energy: EU vs Asia
This reality is gradually changing for various reasons. Despite the ongoing civil war in Ukraine, the deteriorating Russian-EU relationship over that conflict is not the main reason. Such relations will certainly result in declining Russian oil and gas exports to the EU over the next two decades or so, should the EU and Russian stay their current course.
Now and in the future, the EU cannot reduce substantially or end its imports of Russian fuels, given the absence of alternatives to Russia. Until the EU secures long-term and reliable suppliers to replace Russia, all it can do is to prevent further expansion of its energy dependency on Russia.
Russia’s shift towards Asia began years before its ongoing conflicts with the EU, as it recognised the EU’s declining energy requirement. As the EU has given up its rank as the world’s largest energy consumer to Asia, Russia has shifted its focus, while continuing its large exports to the EU for as long as it can.
Russia’s current oil/gas (LNG) exports to Asia are dwarfed by its exports to Europe. In particular, its piped exports to Asia are still confined to oil exports to China via a branch (1030 km Skovorodino-Daqing) of its East Siberia-Pacific Ocean Pipeline (ESPO; 4857 km) enabling it to export oil by tanker to East Asian countries (Japan and South Korea) via its Kozmino Port on the Sea of Japan.
Mindful of this reality, Moscow has taken steps to expand its exports, resulting in two major piped gas projects to China (68 billion m3/y). Simultaneously, it is seeking to maintain and expand its share of the EU market through the Turk Stream, which is in progress according to the Russians.
Part 2 coming soon!
Written by World Pipelines' correspondent Dr. Hooman Peimani, and edited from published article by Stephanie Roker
To read the full version of this article, please download a copy of the October 2015 issue of World Pipelines.
Read the article online at: https://www.worldpipelines.com/special-reports/30122015/russia-a-changing-superpower-part-1/