THE ENERGY POLICY OF RUSSIA

AND IT’S IMPORTANCE IN

ENERGY SECURITY

Presented by
GOKUL SREEDHAR
MA PUBLIC ADMINISTRATION
INTRODUCTION

Russia an energy giant, often described as a Petro-state being the third

biggest oil producing nations behind USA and Saudi Arabia and
producing about 12% of global percentage. Russia is one of the
world's largest producers and exporters of natural gas. Russia's
dominance in the natural gas market gives it considerable influence
over energy security in Europe, as many European countries rely on
Russian gas imports. This can be seen as both an opportunity for
collaboration and a potential source of geopolitical tension.
During the times of Soviet Union from 1922 – 1991, the union was
also considered as the biggest energy power in the world. USSR was
rich in energy resources, including substantial reserves of oil, natural
gas, coal, and uranium. This abundance of resources allowed the
USSR to be a major energy producer and exporter and was a pioneer
in nuclear energy research and development. During the cold war
USSR and USA divided the whole of the world into siding with any
of the superpower.
The Chernobyl incident, the biggest nuclear disaster in the world
happened in Russia in 1986. the Chernobyl incident didn’t directly
cause the fall of the Soviet Union in 1991, The collapse of the Soviet
Union in 1991 was a complex and multifaceted process, influenced by
a combination of political, economic, social, and international factors.
However, Chernobyl's impact on the Soviet Union's downfall was
more indirect. The disaster exposed serious flaws in the Soviet
system.
After the fall of Soviet Union, Russia redeemed the status of an
energy superpower by following various diplomatic and strategical
steps. Being blessed with abundant natural resources Russia utilized
the fall of the union with more accessibility of the resources,
Privatization and Market Reforms, Increased Export of Energy
Resources, Geopolitical Importance, Investment in Infrastructure,
Energy Diversification.

ENERGY RESOURCES OF RUSSIA

1.OIL
Leading oil producers,10.5 million barrels per day, about 12% of
global production.
2. NATURAL GAS
second largest producer of natural gas and has the world's largest gas
reserves.
3. COAL
Russia has the world's second largest coal reserves, with 157 billion
tons of reserves.
4. HYDRO POWER
Hydropower accounts for about 20% of Russia's total electric power
production.
5. NUCLEAR POWER
Nuclear power produced 216 TWh of electricity in 2020, representing
20% of Russian electricity production and 11.8% of global nuclear
power production.
6. RENEWABLE ENERGY
Russia lags other countries in creating a conducive framework for
renewable energy development.
ENERGY POLICY OBJECTIVES

The newly adopted Energy Strategy of the Russian Federation in the

Period until 2035 focuses on a set of measure to be taken to ensure the
most advanced, efficient, and safe development of the energy and fuel
complex in Russia. The main objective of the national energy policy
is to facilitate the transition to an innovative path of economic
development. Demand for energy resources should be met
considering the following gist of proposed measures.
1. Russia needs to enhance its scientific and technological base
ensuring its competitive advantage and its national energy
security.
2. National economic structures are required to be changed to
expand energy-intensive sectors, the country must transfer from
export of natural resources to innovative-development
(including development of fuel and non-fuel energy both) and
related industries
3. The country should decrease the share of the fuel and energy
complex in its economic output and increase the absolute levels
of investments in the energy sector necessary for the
development and rapid modernization of the sector and growth
of its activities.
4. Energy efficiency needs to be improved along with reducing
energy intensity of national economy to the level of countries
with similar climatic conditions such as Canada and the
Scandinavian countries.
5. Step-by-step reducing carbon footprint and mitigating climate
change by reducing pollutant emissions, wastewater discharge,
greenhouse gases emissions as well as reducing energy
production and consumption waste.
The strategy sets the target of increasing the share of renewable
energy sources in the primary energy consumption from 11% to 13-
14% by 2030, To achieve projections of electricity production from
renewable energy sources, generating facilities (small hydropower
plants, wind, tide, geothermal power plants, thermal power plants
using biomass as one of the fuels, other kinds of electric units) with
an aggregate installed capacity up to 25 GW should be commissioned
within the indicated period.
The goal of this strategy is the structural transformation of the
Russian energy sector to ensure its qualitatively new state, as much as
possible contributing to the dynamic socio-economic development of
the country. The structural transformation of the fuel and energy
complex, which is economically sound, suggests several steps:
1. To update the fixed assets, increase the technological level of
production, qualifications and material well-being of the fuel
and energy complex workers, an increase in investment in R&D
and innovation, modernization of production, creation of high-
performance jobs and growth of economic and energy efficiency
is assumed.
2. Increasing market competition.
3. Increasing the share of hydrocarbons produced using secondary
and tertiary methods with increased recovery rates and from
unconventional resources.
4. Increasing the share of distributed generation in total
generation.
5. Growth in consumption of higher quality and environmentally
friendly energy products.
6. To reduce the dependence of the Russian energy sector on
imports, a significant increase in the share of domestic
equipment, goods and services.
EUROPEAN ENERGY DEPENDENCY
ON RUSSIA
The EU depends on Russia for 24.4% of all its energy needs.
Europe’s reliance on imported natural gas from Russia has again
been thrown into sharp relief by Russia’s invasion of Ukraine.
Russia's shares in the EU imports of petroleum oils and natural
gas have been decreasing continuously over time since the
second quarter of 2022.
Effect of Russia-Ukraine war
On the day that Russia invaded Ukraine, EU officials met to
agree on energy sanctions, Imports of coal and other solid fossil
fuels were first prohibited on 8 April last year. A ban on crude
oil and refined petroleum products followed.
Between January and November 2022, imports of pipeline gas
and liquified natural gas (LNG) from Russia made up just less
than a quarter of all EU gas imports.
Another quarter came from Norway and 11.6 per cent was
shipped in from Algeria. LNG imports excluding Russia
constituted 25.7 per cent. This fuel was mainly supplied by the
United States, Qatar, and Nigeria.

GEOPOLITICAL IMPLICATIONS AND

DIPLOMACY
Russia has paramount interests in many European countries,
which concern marketing development, entering the sales
segments of oil and gas business, attracting investment, and
settling the transit issues. Several European countries are, in
their turn, major equipment suppliers for Russian energy and, at
the same time, potential capital exporters for Russian energy
industries.
A number one priority of Russian diplomacy is the promotion of
efficient energy cooperation in the post-Soviet space. The
relations between Russia and the exporting states of the Caspian
region and Central Asia are dominated by the issues of the
development of cooperation in transit and transportation of
Caspian oil and gas resources to major markets, Another
favorable region for Russian energy diplomacy is the Pacific
Rim in view of the economic growth and the increase in energy
consumption expected in this region, Russia places emphasis on
the implementation of the Sakhalin projects and the
development of East Siberian oil and gas fields. Of all importing
states of the Pacific Rim, the most solid political and legal
framework for energy cooperation is forming with China. An
energy dialogue is developing with India, Japan, and Southern
Korea. Among exporting countries, Indonesia, Vietnam, and
Malaysia seem to be the most promising partners.
Pipeline Politics: Russia has used energy infrastructure projects,
such as the Nord Stream and South Stream pipelines, to
strengthen its position in Europe. These projects have been
sources of contention, with debates over their impact on
European energy security and the EU's efforts to reduce
dependence on Russian gas.
As one of the world's largest oil producers, Russia's energy
policies, including decisions on oil production and exports, can
impact global oil prices. This, in turn, affects the economies of
oil-importing countries and the stability of global financial
markets. Russia's cooperation with OPEC (Organization of the
Petroleum Exporting Countries) in managing oil production
levels influences global oil supply and prices. Russia is not a
member of either OPEC or the IEA, nevertheless, it closely
cooperates with both organizations, also in the field of energy
security.
In general, the energy factor plays the most important role in the
system of the bilateral economic and political relations between
Russia and more than 90 countries. The USA is one of the
importing countries, the bilateral relations with which are a
priority of Russian diplomacy. Among other importing
countries, Russia's bilateral relations with which include energy
interests, are the CIS and Baltic Sea states, Turkey, Central and
Eastern European countries. Recently the energy factor has been
playing an increasing role in the relations with Algeria, Egypt,
as well as with several Latin American states, primarily,
Venezuela and Mexico.
After The Ukraine – Russia War
Russia is the world’s largest natural gas exporter; the second-
largest exporter of crude oil; and the third-largest producer of
crude oil. Prior to the invasion of Ukraine, Europe and China
imported around 60% and 20% respectively of Russia’s oil and
40% of European gas consumption was supplied by Russia. The
Russian invasion of Ukraine pushed crude oil prices to a 14-year
high and had a similar impact on European gas prices. High
shipping costs, reputational impact and buyers’ lack of
willingness to order oil from Russian ports mean that Russia’s
oil supply to global markets has been severely disrupted
EU fears that stripping all Russian hydrocarbons out of the
European industrial machine would tip the European into
recession. The EU has undertaken to drastically reduce its
reliance on Russian gas by two-thirds this year and to fully end
its dependence on Russian gas by 2027. This means the EU
must find other global suppliers to fill the gap, the US and Qatar
has offered help.

ENERGY SECURITY CHALLENGES

Russia heavily depends on oil and natural gas exports for
revenue, this dependence makes the country vulnerable to
fluctuations in global energy prices. Any significant drop in oil
or gas prices can negatively impact Russia's economy. Russia
remains highly reliant on commodities, a dependency which not
only hampers its long-term economic potential but also renders
it vulnerable to shocks.
Lack of economic diversification, the Russian economy is
heavily dependent on the energy sector, which can be a risk if
there is a lack of diversification. Over-reliance on a single sector
makes the country susceptible to economic shocks and reduces
its overall resilience, moreover Russia relies heavily on
revenues from oil and natural gas, which in 2021 made up 45%
of Russia's federal budget, almost 50% of Russia’s economy
depends on oil and natural gas
Aging of Russia's energy infrastructure, including pipelines and
refining facilities, is aging and in need of modernization. The
lack of investment in infrastructure can lead to inefficiencies,
disruptions, and potential environmental hazards. The pipelines
which controlled Russia’s control over energy in Europe is
slowly declining.
Geopolitical tensions with neighboring countries and Western
nations can impact Russia's energy security. Sanctions imposed
by Western countries, for instance, can affect the energy sector
by limiting access to technology, finance, and markets. The
Ukraine war have forced the European union in cutting down
exports from Russia which have increased the prices, and the
European market is now available for countries like US and
China. This dependency on European markets for energy
exports means that any geopolitical or economic tensions with
Europe can have a significant impact on Russia's energy sector.
The global shift towards cleaner energy sources and the growing
concern over climate change pose challenges for Russia, which
has traditionally been a major producer of fossil fuels. Adapting
to these changes and diversifying the energy mix are crucial for
long-term sustainability.
TRANSITION TO RENEWABLE
ENERGY
A country blessed with fossil fuels, only depended on oil and
natural gas as its prime sector of energy production, the share of
renewables (without hydro) as a percentage of total energy mix
was 3% in 2017, but slowly increasing. Today, energy transition
is driven by a complex of different drivers: the climate agenda,
technological progress and the availability of new technology
solutions able to dramatically increase the efficiency of the
energy sector and transform its traditional way of functioning,
the desire among all countries to ensure the competitiveness of
their national economies and boost their development of
affordable energy, and finally, the need to increase energy
security.
For the Russian Federation, renewable sources began to be of
increased interest more than a decade ago. However, the first
steps to abandon non-renewable energy sources have not yielded
significant results. This situation is related to the fact that for
Russia, non-renewable energy sources such as oil and natural
gas are the flagship industries that make up the bulk of the
country foreign economy.
The energy sector of the Russian Federation is the basis of
national security and makes a significant contribution to the
socio-economic development of the country, being a key source
of formation of the budget system. So, the threat of oil and
natural gas depletion in the time span of 35 and 50 years implies
that at the current stage of Russia's economic
development, this puts at risk financial sustainability not only of
fuel and energy complex organizations but also of the country.
The current negative trend determines the widespread
introduction of the use of renewable energy sources, including
their storage, goals with the use of increasing energy efficiency
and reducing the use of fossil energy resources.
The renewable energy sources in the Russia are Solar energy,
Wind power, Hydropower, Tidal Power, Wave power,
Geothermal power, Thermal energy, Biomass of plants and
production and consumption waste, Biogas, coal mine gas. The
resource potential of the country for renewable energy
deployment is quite high but tends to decrease because of the
vast area covered and the uneven distribution of solar days,
wind speed, water resource location and geothermal sources.
This means that different renewable energy generation systems
need to be implemented in different administrative areas of the
Russian Federation, which can lead to unnecessary economic
costs and imperfections in the logistics of energy supply.
Therefore, gaseous biofuels should be given the most attention
as a flagship source, as they have the potential to increase and
can be applied almost throughout the country, while wind, solar,
geothermal and hydropower plants should be introduced
gradually as auxiliary sources.

MITIGATING THE RISKS

 Diversification of Energy Sources: reduce the dependence
on the fossil fuels and encourage investment of alternate
and renewable energy.
 Energy Efficiency Programs: Implement and promote
energy efficiency measures to reduce overall energy
consumption, making the country less vulnerable to
disruptions in energy supply.
 Infrastructure Investment: The major drawback of Russia
is the regressive technology and energy infrastructure than
the other European countries, its major rival the US is far
advanced. So, developing and maintaining a robust and
 resilient energy infrastructure that can withstand
disruptions and diversify supply routes.
 Political Diplomacy: Russia have always taken drastic
measures against countries that oppose the country’s
ideology, the relation with US has been infuriating since
cold war and the war with Ukraine have weakened the
relationship with European union, which in fact have
lessened the energy exports. efforts must be taken to foster
cooperation with other countries and other key energy
suppliers, strengthen alliances with energy-producing
nations to create a more stable and diversified energy
network.
 International Agreements and Treaties: Participate in and
support international agreements and treaties that promote
energy security and cooperation, collaborate with other
nations to establish common policies and standards that
enhance global energy resilience.