Russia Gets Serious About Energy Security

Russian President Dmitry Medvedev recently announced plans for Russia to develop an energy security doctrine.  Speaking at a Security Council meeting at the Kremlin, the President articulated a surprisingly progressive vision regarding how Russia should approach both its internal energy issues and the role its energy sector should play in the global economy.  Although it is sometimes unclear whether the President is defining policy in Russia or if other centers of power such as Prime Minister Putin are actually calling the shots, it is worth looking in some detail at how Medvedev sees the future of energy in Russia.

Despite the fact that the Russian energy sector accounts for approximately 12% of global oil and coal supply and nearly 25% of global gas supply, the President was concerned with poor management of energy resources for Russian consumers and industry.  In particular, he noted that natural gas is being used in places where coal or oil could be used just as efficiently leading to rapid depletion of gas resources.  He gave as an example gas pipelines being built to villages in remote areas with just a few houses.  He also complained of low levels of energy efficiency in machines used by both consumers and industry.

The President envisions alternative energy being a big part of Russia’s energy future.  He singled out hydropower as having a particularly important role to play.  Also key are upgrades to existing electrical generation and distribution networks that could be made compatible with the networks of other countries which he noted, “may be to our advantage and profit.”  Setting up smart grids, utilizing nanomaterials, and investing more in research and development were important parts of the vision.

Medvedev knows that this speech will be read by people in countries that are current or future customers for Russian gas.  He reassuringly stated that “We have repeatedly said that Russia is not interested in a high monopolistic energy price; what we want is price stability and fluctuation predictability, in other words, reasonable price,” although consumers in countries such as Belarus and Georgia might be a bit skeptical of these sentiments.  Russia has in the past been very willing to use gas supplies as an instrument of power and that seems unlikely to change anytime in the new future.  He also noted that Russia would be deepening its relationship with gas customers in Asia.  “New forms of international energy cooperation should be developed. This does not apply only to Europe, where we have trodden all the paths and know the situation inside out, but also to a large extent to the Asia-Pacific region.”

All of these ideas sound like a sensible approach to energy issues in Russia although the devil is always in the details.  The energy sector is responsible for over 30% of Russian GDP so getting energy policy right is hugely important for Russia domestically as well as more broadly for Europe and Asia.  Ideas on Energy will be following the development of this doctrine and whether we see any actually changes in the energy sector as a response to what is developed.  I would be interested to hear from readers what other major issues you would want to see Russia address in its energy security doctrine?

 

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