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Russia’s Energy Disputes

Introduction

Russia’s use of energy as a tool for foreign policy and its efforts to reimpose Kremlin control of its energy sector has set off alarm bells in foreign capitals. Moscow’s latest infraction: the takeover by the state-owned gas monopoly Gazprom of the $22-billion Sakhalin II project. Russia also has drawn criticism for its heavy-handed efforts to hike up gas prices and cut subsidies to neighboring states like Belarus, Ukraine, and Georgia. With global energy prices on the rise, Russia’s government has sought to reimpose state control of its energy sector and leverage itself as the European continent’s principal supplier of natural gas.

What is Russia’s role in global energy markets?

It sits atop a fifth of the world’s known reserves of natural gas. Russia supplies Western Europe with a quarter of its gas needs, but delivers the bulk of it through pipelines that crisscross Ukraine and Belarus, both which have had protracted energy disputes with Moscow. Russia has its sights set on energy markets further east, with pipeline projects with China and Japan in the works. “[Russia] has regained the prominence (PDF) in global energy markets it enjoyed in the 1970s and 1980s when the Soviet Union, not Saudi Arabia, was the world’s preeminent oil producer,” writes Fiona Hill, a senior fellow at the Brookings Institution, in Energy Empire: Oil, Gas, and Russia’s Revival.

What are some obstacles to developing Russia’s energy industry?

Some 80 percent of Russia’s energy resources lay beneath the remote and harsh wilderness of Western Siberia and are concentrated in a few large gas fields. The trouble, experts say, is getting the product to market. Given Russia’s climate and the scarcity of deep-sea water ports, energy capacity has not caught up to production. Russia produces roughly seven million barrels of...

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