Russia and the Geopolitics of Energy in the COVID-19 Era
Russian energy resources&# 160; and geopolitics in the era&# 160; pandemics&# 160;
Global crisis has weakened the Kremlin’s ability to use energy&# 160; as a geopolitical weapon, but did not change its long-term strategy, according to American experts&# 160;
Is Moscow continuing to use energy as a geopolitical tool amid the spread of the coronavirus pandemic? How has the current crisis affected the Kremlin’s position, and what impact will the global drop in oil prices have on Russia? These issues were discussed by experts during the web event “Russia and Energy Geopolitics in the Era of COVID-19”, organized on Tuesday, April 14, by the Center for European Policy Analysis (CEPA).
Former Adviser for European Energy Security at the US Department of State, now a Research Fellow at Harvard University Benjamin Schmitt (Benjamin Schmitt, Harvard University) Highlights The Kremlin Continues To Use Energy Resources In 2020 To Increase Its Political Influence.
The expert cited as an example the suspension of oil supplies by the Kremlin-controlled oil company Transneft to Belarus, which is more than 80% dependent on Russia’s energy resources. The interruption of supplies was a way of exerting pressure in order to force Minsk to further integrate with Moscow within the framework of the so-called “Union State”. And although supplies resumed in early April, this was done only after Belarus bought oil from alternative sources and the US Secretary of State’s assurances about Washington’s readiness to supply Minsk with all the oil and gas volumes necessary for the country, Benjamin Schmitt recalled..
At the end of 2019, the expert notes, some European countries began to fill their gas storage facilities due to the potential danger of disrupting the deal between the Russian Gazprom and the Ukrainian Naftogaz on the transit of oil to Europe through Ukraine. Gazprom signed a new five-year gas transit contract with Naftogaz only after the US imposed sanctions on the Nord Stream 2 gas pipeline, which aims to deliver Russian gas to Europe across the Baltic Sea, bypassing Ukraine. Benjamin Schmitt emphasizes that neither Nord Stream-2, nor the completed Turkish Stream, which began to supply Russian gas to Turkey along the Black Sea bottom, including for its further distribution to Europe, are not aimed at supplying new volumes of gas to Europe, and aim to bypass Ukrainian transit.
Notes the former State Department adviser and the departure of the Russian oil and gas company Rosneft from Venezuela, which a number of analysts described as a success of the US sanctions policy.
“In a sense, this is certainly true. – says the expert. “But Rosneft also announced that it was selling its stake in a company wholly owned by the Russian government. So, now the Kremlin may have even more control over operations than before. “.
As for Russia’s withdrawal from the OPEC + deal in March this year and the ensuing oil price war between Moscow and Riyadh, the expert does not exclude that one of the goals of this could be a desire to damage the US shale industry..
“The Kremlin’s short-term thinking will lead to much more destruction of the economic situation in Russia in the coming years than it will be successful in eliminating the US shale industry,” says Benjamin Schmitt, noting that the Russian economy is 60% dependent on energy exports, while the economy The United States is more diversified. And although a number of American shale companies may indeed go bankrupt due to low oil prices, they, in turn, can contribute to the development of technological innovation among shale oil producers in the United States, which can strengthen this industry in the long term, the expert said..
Associate Fellow, Center for European Policy Analysis and Expert, Jamestown Foundation Margarita Assenova (Margarita Assenova, CEPA, Jamestown Foundation) notes that the global coronavirus pandemic does not stop the Kremlin from trying to complete the construction of Nord Stream 2 bypassing US sanctions amid the ongoing PR campaign for the project in Germany.
Russia has two vessels that it can use to complete the project: Akademik Chersky and Fortuna, notes Margarita Assenova. The first, however, requires modernization of technology to be able to lay the pipes, and the second requires the establishment of automatic maintenance of the ship’s course without the need to use an anchor in the deep waters of the Baltic Sea. This is a key requirement of the Danish authorities in the field of environmental protection, the expert notes. To start using Nord Stream 2 by the end of the year, Gazprom has put forward the idea of using a special tug for Fortuna, and is trying to acquire permission from the Danish government in the coming months..
Meanwhile, Margarita Assenova notes, gas prices are declining, which is partly due to the fall in oil prices and the filling of gas storage facilities in Europe at the end of 2019..
“We expect that both gas and oil revenues will continue to fall,” says an expert at the Jamestown Foundation, adding that low energy prices will primarily affect the Russian economy, which will have a negative impact as the fight against the coronavirus pandemic. and the implementation of the social programs promised by President Putin at the beginning of the year. “Therefore, social upheavals and, possibly, protests in Russia cannot be ruled out.”.
Expert of the “Atlantic Council” Agnia Grigas (Agnia Grigas, Atlantic Council) notes that while the coronavirus pandemic, which has contributed to lower demand for oil prices, and weakened the Kremlin’s ability to use energy for political influence, Russia continues to implement aggressive energy policies.
The expert cites as examples the Nord Stream 2 and Turkish Stream projects, tough negotiations with OPEC and the price war with Saudi Arabia, as well as the strengthening of Russia’s political influence in the Middle East and North Africa and Moscow’s more active participation in The Gas Exporting Countries Forum, which she has chaired since 2018. The forum is a gas cartel of 12 countries, but does not include the United States and a number of its allies, Grigas notes..
“This is a rather comprehensive and aggressive approach,” the expert said. “But at the same time, this approach testifies to the desire to maintain relevance, to attempts to retain market revenues and influence, since the Russian side sees that it may lose them”.
The Atlantic Council expert also notes that the oil price war with Saudi Arabia harmed Russia, but Moscow felt it could withstand the negative consequences in order to take the American shale oil producers out of business, which are representatives of the private sector in the United States and not directly supported by the government.
Journalist «Voices of America». Prior to that, she worked for international non-governmental organizations in Washington and London, in the Russian-language version of the Estonian daily newspaper “Postimees” and as a spokesman for the Estonian Ministry of Internal Affairs. Interests – international relations, politics, economics