Russia indisputably is a growing force in world energy. That’s why it’s good to periodically hear the perspectives of actual Russians.
Two of them discussed “Russia, the European Union and China: The State of the Energy Security Debate” at a June 21 Washington forum sponsored by the US Department of State’s Bureau of Educational and Cultural Affairs. The event took place about a mile from where the US Senate was debating an energy bill aimed at reducing reliance on imported oil and increasing development of renewable and alternative sources.
The Russians were interested in diversification, too. Their country’s location between China and Europe makes it only natural for them to want to export oil and gas into more than one market, observed Maria Belova of the Institute for Energy and Finance in Moscow. “This involves not only security of supplies, but security of demand,” she said.
Shipments to the east ultimately could go beyond China. “We negotiate with all Asia-Pacific countries and try to choose the best option. China has growing demand but may not be willing to pay the best price. Negotiating with Japan and Korea may show China we have other choices,” she said.
Investment restrictions
“Russia’s energy exports are growing, and the name of the game is diversification,” maintained Vitaly Merkushev, director and cofounder of the Eurasian Political Studies Network in Moscow. Criticism of investment restrictions can run in more than one direction, he suggested.
Despite the presence of Lukoil retailers in some US cities, Russian oil has not significantly penetrated the US market because of perceived limits on export capacity and a belief that Russian crude is such low quality that it requires special refining equipment, he said.
“Russia will never sign the European Energy Charter and Transit Protocol because it will never privatize Gazprom,” the state-owned natural gas giant, Merkushev predicted. There is room to negotiate transportation and foreign investment upstream, he said, “But please give us a chance to invest downstream in markets outside our own country.”
1990s experience
Both Russians said their country has learned a lot from its initial exposure to outside investment during the 1990s. “Sakhalin lost 28% of its population during that period because the foreign partners hired Canadians and Americans instead of local people,” Merkushev said.
“We need experience and technology more than foreign investments,” added Belova, who noted that Russia’s production growth has come from Soviet era properties. “Contractors have tried to sell us adequate, rather than the best, technology. We need more common rules for technology exchanges, not bilateral agreements.”
Finally, said both Russians, while their country is interested in the benefits substantial energy exports would bring, it also wants to make certain that its own industries and agriculture grow. “Russia is not a petroeconomy. It’s much more diversified,” Merkushev said.
