Siberia: Russia’s Secret to Superpower Status?

Seems Russia is in the news a lot lately for being an international bad boy (as viewed from the West), so here is a quick look at one aspect of Russia’s geopolitical power.

The 21st century saw Russia labeled as an ascending energy superpower (Hill, 2002). Many thought it could break the power of OPEC, making the energy market more competitive. Most of Russia’s oil and natural gas production comes from Siberia, a geopolitical location that can uniquely serve European and Asian markets (see Map 1). The vast majority of oil and natural gas comes from West Siberia, but East Siberia is growing in reserves and production. 

RussiaNatGas
Map 1. Russia’s energy moneymaker: West Siberia.

But it seems Russia has fallen short on superpower status due to lower commodity prices and limited markets. The price of oil rose steadily in the 21st century from about $26 a barrel in 2001 to $150 a barrel in 2008, then the worldwide recession and oversupply brought prices down to $26 a barrel again by 2016 (Macrotrends, 2017). Regarding markets, there was high demand for Russian energy until the 2009 gas crisis and the 2014 Crimea invasion. In January 2009, Russia halted delivery of natural gas to Ukraine due to price disputes, and this disrupted delivery to some 18 European countries (see Map 2) getting natural gas via pipelines from Russia (Reuters, 2009).

EuropePipelines
Map 2. European customers for Russia’s natural gas in 2009.

At that time, many felt the Russian disruption of gas supplies to Europe was a warning to the European Union to not interfere with Ukraine. As a result, many European countries made plans to reduce their dependence on Russian energy. Then European countries imposed sanctions on Russia after it invaded and annexed Crimea in 2014. These sanctions put Russia into recession in 2015 (CNBC, 2016). While Russia is still a major supplier of energy, Europe is diversifying its sources of energy to countries such as Algeria, Angola, and the United States (Reuters, 2017).

Lower prices and reduced European markets have hampered Russia’s energy growth and income. Russia looks to the east, especially China, to export Siberian energy; but with pipeline costs high and energy prices low, Russia may reduce exports to China  (Reuters, 2016). Exports to China will increase in 2025 after the Power of Siberia pipeline is completed (see map and image below).

siberiaPipeline

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Power of Siberia pipeline under construction.

In the end, Russia needs markets for its energy, especially natural gas, more than China needs Russian energy. Europe continues to move away from Russian energy, and prices are still relatively low as of May 2017, with oil hovering around $50 a barrel — a third of the 2008 price. It would seem that energy superpower status for Russia remains elusive.

 

Power
Can Russia’s natural gas and oil threaten Europe…
PowerIllusion
…or is Russia’s energy power an illusion?

Works Cited

CNBC, These are the only sanctions that Russia cares about, http://www.cnbc.com/2016/08/16/these-are-the-only-sanctions-that-russia-cares-about.html, Accessed 2 May 2017.

Hill, Fiona. Russia: The 21st Century’s Energy Superpower? Brookings, 1 March 2002, https://www.brookings.edu/articles/russia-the-21st-centurys-energy-superpower. Accessed 3 May 2017.

Macrotrends, Crude Oil Prices ¾ 70 Year Historical Charthttp://www.macrotrends.net/1369/crude-oil-price-history-chart, Accessed 3 May 2017.

Reuters, Exclusive: Russia likely to scale down China gas supply plans, 15 January 2016, http://www.reuters.com/article/us-russia-china-gas-exclusive-idUSKCN0UT1LG,  Accessed  4 May 2017.

Reuters, FACTBOX – 18 countries affected by Russia-Ukraine gas rowhttp://www.reuters.com/article/uk-russia-ukraine-gas-factbox-idUKTRE5062Q520090107?sp=true, Accessed 3 May 2017.