Opinion: Russia’s days as an energy superpower are coming to an end

Publisher’s note: Nikos Tsafos holds the James R. Schlesinger Chair in Energy and Geopolitics at the Center for Strategic and International Studies (CSIS). The opinions expressed in this comment are his own.

In a matter of weeks, the war in Ukraine has upended a decades-old energy relationship between Europe and Russia. Europe understands that it cannot sever ties with Russia overnight, as it still needs Russian energy. But Russia’s role in the European and global energy system has been shaken. This is a profound change that will mark the end of Russia as an energy superpower.

Russia is central to the global energy system. is the largest in the world exporter of oil, which represents around 8% of the global market. and supplies Europe with 45% of its natural gas, 45% of its coal and 25% of its oil. Likewise, hydrocarbons are the lifeblood of the Russian economy. In 2019, before Covid-19 depressed prices, income oil and natural gas accounted for 40% of the country’s federal budget. And oil and gas accounted for nearly half of Russia’s total. exports of goods in 2021. It is hard to imagine what the Russian economy would be like without oil and gas.

Since the invasion, Europe has been struggling to come up with a new energy security strategy. Most European countries had assumed that reliance on Russian energy was a risk they could handle, uncomfortable as it was at times. They believed that Russia was a rational actor that wanted to make money by selling its energy. But the biggest ground war in Europe in generations has produced a rapid reassessment of those assumptions. Europe was used to dealing with an adversary; now he must face an enemy.

Without a doubt, the European response has been swift. Europe outlined an ambitious plan to cut Russian gas imports by two-thirds by 2022, with the goal of eliminating Russian oil and gas by 2027. Meanwhile, European leaders are debating proposals for an immediate ban on Russian oil imports. the United Kingdom already said it would eliminate Russian oil imports by the end of 2022. Germany stopped approving the Nord Stream 2 Pipeline and he said he would to invest in infrastructure to import liquefied natural gas (LNG). A new LNG import facility is now being built in the Netherlands. The move away from Russia is happening fast.

The receiving station for the Nord Stream 2 pipeline stands at sunset on February 2, 2022 near Lubmin, Germany.

Major energy companies like shell, exxonmobile and equinor they are moving away from investments dating back decades. Public opinion is restricting its willingness to buy Russian oil on the open market, which is reducing Russia’s footprint on the energy scene.

But Europe is now in a difficult situation. Russian oil and gas are indispensable. But relying on Russia is no longer tolerable given Russia’s atrocities in Ukraine and the fear that it could cut off gas supplies at any moment. So Europe wants out of the relationship.

These opposing forces create a gap between where Europe is and where it wants to be. It is not clear how this will be resolved in the coming years as alternative supplies are limited in the short term. For now, the European Comission has asked companies to secure supplies from countries including the United States, Qatar and Egypt, a move that could push prices higher as demand rises in the face of limited supply. But what comes after this adjustment period is clear enough: Europe’s energy trade with Russia will eventually drop to almost zero.

Russia will turn elsewhere for customers. About 20% of Russian oil is heading to China, and its natural gas sales are sure to rise, courtesy of a pipeline that travels more than 8,100 kilometers. But Russia’s turn to the East is limited by geology, geography and geopolitics. Russia has more oil and gas resources in western siberia than in the East, which makes it more difficult to serve Asia. Existing infrastructure is also set up to send power to Europe. China’s willingness to finance a change of this magnitude (reconnecting Russia’s export infrastructure to head East) is unclear. Will China accept a bargain deal if offered? Probably. Will he choose to rely heavily on Russian energy? Probably not.

Within a decade, this dynamic will change Russia’s position in global energy and the world economy. Russia will not be completely excluded from the world energy market, but its role will be greatly reduced. This war has done irreparable damage to Russia’s brand as an energy supplier.

Some strategists argue that Russia’s ability to wage war will diminish without fossil fuel revenues to finance its military. This is true up to a point. But Russia has been involved in European affairs for centuries. Russia’s aggression, insecurity and meddling in Europe will persist long after the hydrocarbon era. After all, a Russian economy that is isolated from global markets is unlikely to be a compliant neighbor. The war will hasten the end of the era in which Russia is an energy superpower. But whether the new Russia is better, that is impossible to know.

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