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Why the World Should Trust Russias Energy Policy

01.01.70

The great majority of Western analysts assessed President Vladimir Putins article in the Wall Street Journal on Feb. 28, 2006, as an attempt to convince the West that Russia is a reliable partner in the energy sector. But, in fact, the article goes beyond this message and reveals much about the Russian leaderships plans that demonstrate that the Russian elite is not of one voice with regard to global energy issues.

Putins article touched on the other topics up for discussion at the G8 the international battles against disease and illiteracy but its main energy message was summed up in the title: Energy Selfishness is a Road to Nowhere. Putin pointed out that the energy issue is not just a problem for the one billion people living in the worlds developed countries, but one facing all of humanity. His answer is a proposal that the world create a global energy security system.

It is possible that the commonly held view in the West may be accurate that Russia has proposed energy as the main item for the G8s agenda this year because it wants to make use of its natural energy resources as unique economic advantages. Russia is home to 45 percent of the worlds natural gas reserves, 13 percent of its oil reserves, 23 percent of its coal and 14 percent of its uranium.

By 1990, 18 percent of the worlds oil reserves and 13 percent of gas reserves had already been pumped, while the corresponding numbers for Russia were 12 and 3 percent, signifying the high potential of its energy resources. Russia has accounted for 40 percent of the increase in world oil production since 2000, which has been a decisive factor in maintaining the balance of supply and demand for this vital resource.

Russias partners would do well to listen to the proposals for resolving the energy security issue. The Western press has written much about Russias supposed lack of reliability as an energy partner following the Russia-Ukraine gas crisis, which led to partial energy shortages in Europe, as well as the subsequent gas explosion in southern Russia that caused a disruption in deliveries to Georgia. The press has also focused on the policy pursued by the United States and European Union to diversify energy supplies and develop alternative energy sources. A serious analysis indicates, however, that the West will not decrease dependence on fossil fuels and, therefore, the need for Russian energy supplies will only increase in the coming decades.

Russia is ready to make proposals to the West on cooperation in the energy sector, but it has no intention of simply becoming a supplier of natural energy resources. Another initiative mentioned by Putin in the article, namely, that Russia is in favor of close cooperation with the G8 countries and the international community in general on developing new technology, drew much less attention. The president wrote that this could be the first step towards laying the technological foundation to ensure the availability of energy supplies for the future. In this respect, Russias proposal to establish an international uranium enrichment center is not an isolated proposal, but part of a larger strategy.

Russias leadership is looking not only to develop Russias technological potential, but also to integrate it with the Wests own potential, including cooperation in the energy sector in both production and transportation.

Finally, Putins call for a fairer world energy order has been repeated in many of the comments on the article, but is not given particularly concrete form, especially in relation to the Russian situation. The circumstances here are not so simple. Countries facing the greatest shortages in energy supply, such as China and India, are attempting to deal with this by buying stakes in Russian oil companies in order to guarantee energy supplies. Chinas CNPC and Indias ONGC might still buy stakes in Russias Rosneft or other companies. A real battle is underway today for access to the energy resources of Siberia, the Far East and Sakhalin, and this is not just a battle between institutions, but a global political and economic battle.

In this respect, the article is of particular significance because it lets the players on the international market and the Russian political and economic elite connected with them know that Russia will pursue an energy policy that is, above all, to its own benefit, and will apply the principle of equal distance in its business cooperation with the different political and economic players in the world.

Anatoly Belyaev is an expert at the Agency for Social Sciences. He submitted this comment to the RIA Novosti News Service where it first appeared.

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