Russian Energy –Source of Hard and

Soft PowerHard and soft powerRussia as an energy superpower?Unconventional hydrocarbons and Russian ecological gasRussia’s APG flaring reduction policiesRussia as an ecoenergy giant?

TARTU 21.9.2013

Veli-Pekka TynkkynenAleksanteri Institute / Department of Social SciencesUniversity of Helsinki

Hard and soft power

Hard power refers to state’s influence over other states that is produced though fear and coercion -> typically military threat, but also economic relations or sanctions

Soft power refers to state’s influence on other states that is produced by attractiveness and appeal -> typically economic wealth and cultural products and traits, but also intangible cultural values

What is an Energy Superpower?

Globally central energy producer and exporter whose energy policy decisions impact both trade relations and price formation -> based on energy reserves and traded volumes: Saudi Arabia, Iran and Russia, in the future possibly Venezuela and Canada

Central: energy wealth and dependencies are used to gain not only economic, but also (geo)political objectives

Not a Great Power in traditional sense, since power on the international / regional arena guaranteed by resources, not by military might

Russia as an Energy Superpower?During Putin’s first term (Mid-2000’s) esp. Americans started to argue that Russia is behaving like an energy superpowerContext during 2000’s: centralisation of power to the Presidential Administration / Putin’s regime, nationalisation of the energy sector, high price of oil and significant economic growthGas conflicts with Ukraine and the EU, 2006 and 2009, seen as proof that Russia is using energy wealth to promote its geopolitical objectives in EuropeEU’s core vs. old socialist block / Russia’s ”near abroad”Russia denies using ”the energy weapon” – ”only economic interests and rationale”NB! Changing discourse: 2003 energy strategy: ”geopolitical resource” vs. 2009 energy strategy ”source of economic wealth and influence” -> still: Gazovyi Imperator (2010)

EU – Russia energy relations

EU countries buy 2/3 of Russia’s oil (330 mt/y), 1/3 of Russia’s gas (200 bcm/y) and coal (100 mt/y)The biggest buyer and the biggest sellerEuropean dependency (”energy superpower”) or interdependency?

German nuclear power and Russian gas?EU’s 20-20-20 objective and Russian gas?EU’s markets for RES and Russian renewables? -> environmentally sound energy giant?

Europe’s gas production dwindling

Analysing the Energy Weapon (Smith Stegen, 2011)

The state must consolidate the country’s energy resources

The state must acquire control of transit routes

The state must use the energy resources in an attempt to further its own political objectives by—either implicitly or explicitly—threatening, punishing, or rewarding a targeted client state

The reaction of the dependent government to the threats, price hikes or cut-offs

Analysing the Energy Weapon 2

The state must consolidate the country’s energy resources

Russian gas – yes, almost fully (Gazprom 80 %)Russian oil – yes, partly (Rosneft 40 %, and expanding)Russian coal – yes / no (state’s resources, but many private enterprises)Russian wood – yes / no (state’s resources, but many private enterprises)

The state must acquire control of transit routes

Russian gas – yes, fully (Gazprom 100 %)Russian oil – yes, fully (Transneft 100 %)Russian coal – no (many private enterprises)Russian wood – no (many private enterprises)

Analysing the Energy Weapon 3

The state must use the energy resources in an attempt to further its own political objectives by threatening, punishing or rewarding client

Russian gas – several, the Baltic states 1993-1994, Czech rep. 1997, Ukraine 2006 and 2009Russian oil – few, Lithuania 2006Russian coal – noRussian wood – yes, customs duties to round wood exports 2007

Overt aim to boost Russian forest and bioenergy industriesCovert aim to soften EU’s stance on Russia’s WTO membership conditions

Analysing the Energy Weapon 4

The reaction of the dependent government to the threats, price hikes or cut-offs - > successful, if intended goals are met

Russian gas – no, the Baltic states 1993-1994, Georgia 2006, Czech rep. 1997; yes, Ukraine 2006 and 2009 (in relation to Black Sea Fleet and Nord Stream)Russian oil – no, Lithuania 2006 (punitive measure - > give a general sign to Europe that Russian goals should not be overlooked)Russian wood – yes, the EU MSs that suffered from wood export tax have promoted Russia’s WTO membership with a will

What about soft power via energy?

What about soft power via energy?

Future of Russian oil production

Unexpected challenger – shale gas

Unconventional hydrocarbons and pollution?

Constructing “Russian ecological gas”

Russia and Gazprom are fully aware of the environmental consequences – risk of ground water pollution – of shale gas production in the USA

Gasprom has started to construct a particular “environmentally friendly gas” discourse for its products:

Russian gas helps to switch from polluting coal (and nuclear) powerRussian gas is more environmentally sound than European shale gas

This discourse construction cannot be done (seriously) without addressing the gas production and transport efficiency and APG flaring issues -> has become a prestige issue for Russia

APG flaring in Russia35 Bcm of associated petroleum gas is flared~10 % of EU’s gas consumption (~420 Bcm in 2010)

In 2007 Russia produced 12 % of world’s oil and was responsible for 34 % of world’s APG flaring In 2010: production 13 % and flaring 26 %

Russia’s APG flaring reduction policy

In 2007 a 95 % utilisation level for APG was set (by 2012)In 2011 the dead-line was postponed to 2014Russia claims that in 2010 76 % was utilised (49 / 65 Bcm) and 16 Bcm flared World Bank states that 35 Bcm was flared and only 58 % utilisedSurgutneftegas 95 % vs. Rosneft (TNK-BP) 65 %APG utilisation plan 2020:

55% as dry gas (methane) transferred to Gazprom pipeline19% as propane-butane and other liquid fractions13% in electrical power stations8% pumped back to earth layers

Wasted hydrocarbons as a resourceCombined waste in Russia’s oil and gas production 70-90 Bcm – ca. one third of Russia’s gas export volume

Russia future source of soft power – an ecofriendly energy giant?

Russia’s energy strategies of 2003 and 2009Energy efficiency Renewable energy as a substitute to domestic fossil energy consumptionRenewable energy as an export commodityAPG flaring reduction policies

Why research on governmentalities in the Russian energy sector is interesting? -> From democracy “trap” to modernisation and ecological “traps”

Energy strategy 2020 (2003)

Increasing energy efficiency by 40 %Renewable energy to cover 1 % of electricity production by 2020

Energy strategy 2030 (2009)Government’s guidelines for state policy of energy efficiency through use of renewables for the period up to 2020 (2009)”to form a long-term policy in order to enhance the use of renewable energy sources””to increase the share of renewable energy resources in production of electricity from 0,5 to 4,5 per cent”Investment goal up till 2030: ~120 B$ (Oil ~610 B$, Gas ~580 B$, Coal ~70 B$)

Source: Korppoo et. al 2009

Source: Pristupa 2011

Future challenges for soft power – energy, societal development & security

Materiality and geography of hydrocarbons and development

Carbon leakage leads to environmental racism locally and globallyColossus structure of the oil industry leads to leap-frog developmentVertical ‘geography of holes’ and horizontal ‘choke-point geography’ reassert authoritarian regimes, lead to militarisation and the logic of violence -> power from control over these points & corridors, not via development of the territory as a whole

-> social and environmental responsibility along the energy commodity chain?

Molecular logic of hydrocarbons

EU renewables goals and Russian bioenergyEU 20-20-20 goal: 20 % with renewables by 2020 (now ca 10 %)

2050 road-map goes beyond: 30 % with renewables by 2030

Documents state that Russian renewable energy is a good source for Europe, because it helps to combat climate change and other adverse environmental effects of energy production and adds to the security and stability of production areas (i.e. Russia)

-> materialities / geography of energy already play a role!

Veli-Pekka TynkkynenProfessor in Russian energy policy

veli-pekka.tynkkynen@helsinki.fihttp://www.helsinki.fi/aleksanteri/crm