tournament of shadows

7/29/2019 Tournament of Shadows

1/18

Russia, the West, and Energy

Geopolitics in the CIS; A NewTournament of Shadows?

Stephanos S. Germenis


2/18

2

Contents

The Great Game / Tournament of Shadows

The New Great Game / Tournament of Shadows Goals & Results: Russia & the West

Analysis

The New Great Game: Dj-vu?

Sakhalin

Conclusion


3/18

3

The Great Game / Tournament of

Shadows

Kiplings Kim (1901)

Russo-British struggleover Central Asia

Security of supply

Empire & spheres of

influence

Global importance


4/18

4

The New Great Game /

Tournament of Shadows Dissolution of

U.S.S.R.

3 stages of policythinking:

Retreat / pro-West Regroup

Rise of nationalism

Eurasianism Emphasis on CIS

1996 Draft Doctrine on

Energy Security


5/18

5


Tournament of Shadows contd. New energy opportunities

in NIS Compatibility with the

West?

Security of supply?

Investment opportunities Local need for capital

PSAs

E.U. Blue Stream & INOGATE


6/18

6


Tournament of Shadows contd. Russia:

1990s privatizations Yeltsin & the Oil-

igarchs

The West 1990s: need for capital

& know-how

3 ways Direct investment

J oint venture

Upstream investment


7/18

7

Goals & Results: Russia

Sphere of influence Yeltsin Doctrine & Secret Directive 386

Energy Strategy for the Period Until 2020(May/August 2003) Economic coercion Putin era: appoint associates to key positions

Limit foreign presence in CIS

Controlled instability: Azerbaijan, Georgia, Tajikistan

Issues: Threat to infrastructure Military reform

Maintain assertive role in CIS Military bases Boarder guards Peacekeepers


8/18

8

Goals & Results: Russia contd.

Control of strategic resources &transportation network

Transneft Vs BTC CPC

Gazprom

Control of the domestic energysector Gazprom

Limit foreign presence

Relations with the U.S. 9/11

Tactical marriage of convenience?


9/18

9

Goals & Results: Russia contd.

Private sector: Close cooperation with the state

VagitAlekperov: the state has a significant say in our company(LUKoil), and in return state protectionism and patronage enablesus to obtain specific projects in other former Soviet republics

YuKOS Company strategies

Export maximizationmaximized unitary income Seek immediate liquidity Limited investment in exploration

State exercises control through: Main transportation networks Tariffs Reserves Defining & dictating export volumes


10/18

10

Goals & Results: the West

Need for foreign investment: Expertise & know-how

Capital

U.S. State level

Caspian oil: a piece of the pie Military bases & aid

Pro-Western projects (i.e. BTC)

Private level

Possibility of exporting LNG Sakhalin, Shtokman, St. Petersburg

E.U. INOGATE & Blue Stream


11/18

11

Analysis

The CIS as an oil and gas producer Reliability

Potential (oil V gas) Potential output Aims to export 160-170 million tons p.a. for the next 20 years Increase amount of extracted oil to 540 million tons p.a. until 2015 Significant drop in exploration

Geographic & environmental restrictions Export to China?

2004: 5.25 million tons exported to China Poor transportation infrastructure

Security premium Export to North America?

Sakhalin & LNG


12/18

12

Analysis contd.

E.U. Vs the Far East Far East:

Supply meets demandrequirements in China Projects in Central Asia J apanese investment Potential projects:

Angarsk-Nakhodka/Daqing

E.U. 63% of its gas imported from

Russia ( 70% by 2020)

Oil: 150-160m tons p.a. by 2020($30/bbl)

Growing dependence active role in ensuring security of

supply


13/18

13

Analysis contd.

Energy-dependent economy

$1/bbl change in oil prices

$1.4 billion change inRussian government revenues

World Bank: 25% of Russias GDP from oil & gas

sector; but employing less than 1% of population Russian majors comfortable with $15-18/bbl, if not

less

Close ties between state and Russian private energymajors

Revenue from energy sector: Putin Vs Yeltsin


14/18

14

A New Tournament of Shadows /

Great Game? Long-term capabilities:

Oil: 20-25 years

Gas: different story! 2005: 598 billion cubic meters produced; 21.6 of world total

Post-9/11 Notion of cooperation in CIS

Re-integration Vs domination & exploitation Shanghai-6, Central Asian Cooperation Org. Sphere of security Strategy of dependence shifted into the energy sector

Mutually beneficial U.S.-Russia relations Rapprochement; recognition of mutual position & role

New players involved


15/18

15

A New Tournament of Shadows /

Great Game? contd. Questions:

If U.S. military presence in Central Asiatemporary, why has American aid to theregion been so intense?

How will presence be accounted for whenAfghanistan & Iraq are deemed stabilized?

Russias stance & reaction?


16/18

16

Sakhalin

Ecological approval for Sakhalin IIcanceled by Russian Natural

Resources Ministry Shell: The project complies fully withRussian and internationalenvironmental standards and isintroducing environmental best

practice into Russia . Political motive?

Gazprom& Zapolyarnoye-Neocomian

Wider effects Russias position & image as supplier Foreign relations Bureaucracy & delays


17/18

17

Conclusion

Issue in question is geographically regional, but

global in importance and impact Prize of the New Great Game: untapped oil &

gas reserves, pipeline networks, tanker roots,

LNG export hubs, consortiums diversification & security of supply

Changing role & position of players after 9/11

Game at end?


18/18

18

Thank you

Stephanos S. Germenis

tournament of shadows

Documents