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Vladimir Putin’s Energy Strategy

Vladimir Putin’s Energy Strategy

A new system of managing the oil and gas sector has been formed in general. It shows what staff conflicts we may witness in the near future.

However, it is also important to understand what the sector should expect. The oil and gas industry faces a series of crucial problems whose settlement is impossible to ignore further.

Putin obviously retained control over the oil and gas sector in 2008 to 2012. Yet, his return to the presidential chair may mean certain adjustment of the economic course.

Cancelation of the inertial policy in the oil and gas sector should be anticipated; otherwise it can lead to serious decline in production in the medium-term perspective.

The report elaborates on the following issues: :

The role of the oil and gas sector in the Russian economy
- Putin’s comeback as president was accompanied by a great number of economic declarations. The oil and gas sector was much discussed in them – often these were opposite ideas. What should we believe: promises to continue the course of economic diversification or pledges to rehabilitate the oil and gas sector and stake on it as innovation sector?
Russia’s budget policy
- To understand the future role of the oil and gas sector better it is necessary to analyze the draft budget for the next three years. It vividly demonstrates that the state is not ready to remove an “honorable duty” of the main state donor from the sector. The budget clearly shows what in reality Putin’s term “fiscal maneuver” means. Actually the sector should not expect serious taxation preferences. This concerns the gas industry actively attacked by the Cabinet and oil producers.
Struggle against stagnation of production amid new redistribution of property in the sector
- State policy in the sphere of privatization and its possible influence on production parameters
Export policy of the state
- Sharpening of the export question amid growth in the domestic demand and risks of production decline. The state encourages Russian companies to turn into global players, risks for the Russian upstream segment.
Forecast of developments

The contents of the report:

Introduction	3
Chapter 1. Role of Oil and Gas Industry in Russian Economy	5
Chapter 2. Struggle Against Decline in Production Amid New Redistribution in FES	15
2.1. Privatization – Clan War for Property Instead of Strategic Choice	16
2.2. Agonizing Search for Growth Strategy	20
Chapter 3. Search for Export Strategy	36
Forecast of Developments	49

Date of issue:	August 6, 2012

If you are interested to obtain please contact » Elena Kim

Other issues:

Special report:

Nord Stream 2 and Ukraine: Costs Should Decide

There has been much discussion about how Russia – Europe’s biggest gas supplier – can continue to supply gas to Europe over the coming decades in the most secure and cost efficient way. Gazprom and its European partners have decided that building two additional pipelines through the Baltic Sea (Nord Stream 2) is the best commercial solution to secure future gas supplies for the EU, where gas production continues to decline and demand is expected to grow.

Shale Revolution: Myths and Realities

The boom in shale gas production in the US and its wide-ranging influence on markets rocked the gas world. Liquefied gas deliveries were redirected, altering the already fragile balance of demand and supply in traditional markets for pipeline gas in Europe.

Liquefied Natural Gas Outlook: Expectations and Reality

World market has shown interest to liquefied gas. Russia has so far been aside of it. However, producers have announced several large LNG projects. The new study will help investigate this delicate subject and understand what is in store for LNG production and export in the nearest years.

Analytical series “The Fuel and Energy Complex of Russia”:

State regulation of the oil and gas sector in 2023, 2024 outlook

The year 2023 posed a serious challenge to the Russian oil and gas sector that was subjected to extremely tough sanctions that could have led to collapse in exports of crude oil and petroleum products. The oil industry and corresponding regulatory mechanisms were tested throughout the year. The state, being in dire need of financial resources, had to save the chicken that lays golden eggs. How well is it coping with this task?

Gazprom in the period of expulsion from the European market. Possible evolution of the Russian gas market amid impediments to exports

The year 2023 saw an even larger drop in Russian exports of pipeline gas to Europe. In the past two years, Gazprom failed to export some 120 bcm of natural gas, and these quantities are now locked up in Russia. Another difficult case concerns extension of the current gas transit contract with Ukraine, which expires at the end of 2024. Gazprom is already looking for new opportunities.

New Logistics of Russian Oil Business

When the G7 and the EU as of 5 December 2022 imposed an embargo on oil from Russia and the price cap mechanism that was later complemented with the same measures against petroleum products, Western analysts confidently predicted inevitable collapse in Russian exports by at least one-third. The new report explains in detail how the mechanism of Russian oil transport and sales works and whether Western companies remain in this business.

Russia’s New Energy Strategy: on Paper and in Fact

The Energy Strategy to 2050 was originally supposed to be approved before 15 September 2022, yet it was never adopted even as of November 2023. Moreover, not even a draft of the ES 2050 has been published yet. On the one hand, this vividly demonstrates the attitude to strategic documents on energy. It turns out that the industry on the whole copes with the unprecedented pressure of sanctions even without official strategies. On the other hand, Russian oil and gas has been facing really serious challenges that cannot be taken lightly. And immediate problems are a reflection of long-term threats too.

Outlook for Russian LNG Industry

European sanctions and Brussels’ policy of abandoning Russian energy resources plus the destroyed Baltic gas pipelines have shut in Russia a respectable volume of pipeline gas that cannot promptly be sent to alternative markets. This would seem a strong argument in favour of developing LNG production in Russia. The new NESF report must give the answer to the question about what part of the plans for dramatic increase in LNG production in Russia can be considered realistic.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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