The role of energy in international politics

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The role of energyin international politics

• Vladimir MilovInstitute of Energy Policy, Russia
• Club de MadridMadrid, November 20th, 2007

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Global resource imbalancekey factor undermining
energy security concerns
Global proved oil gas reserves, end of 2006
Share in global PPP GDP, 2006
Sources BP Statistical Review of World Energy,
The World Bank
3
Growing dependence on gas imports in major
developed and developing areas of the world
Dependence on imports of gas, of the total gas
consumption
Source IEA, World Energy Outlook 2006
4
South Eastern and Central Europe already
strongly dependent on Russian gas supplies
Share of gas imports from Russia in primary
energy consumption, 2006,
Source BP Statistical Review of World Energy
2006 (primary energy consumption), Gazprom (gas
imports by relevant countries)
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Potential consequences of resource nationalism

• Deteriorating upstream production (Iran,
  Venezuela, Russia, Mexico) or concerns over the
  potential ability to produce more (Saudi Arabia)
• Use of energy as a political weapon (Arab oil
  embargo of the 1970s, Russia in 2000s)
• The risk of monopolization of the downstream
  energy markets in import-dependent countries by
  national companies of energy exporting countries

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Specific implications of Russian resource
nationalism

• High entry barriers to foreign energy upstream
  investment
• Failure to timely develop upstream gas resources
• Monopoly grip over Central Asian energy exports
• Politicized use of energy against Eastern
  European and post-Soviet states (Poland,
  Lithuania, Ukraine)
• Risk of monopolization of the European downstream
  markets

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In such circumstances, temporary renaissance of
energy protectionism in consumer countries is
inevitable.How long it will last, depends on
when the more responsible governments will come
to power in resource rich countries.