Russia's Energy Plan

Evgeny Moshkovich
December 5, 2016

Submitted as coursework for PH240, Stanford University, Fall 2016

Introduction

Fig. 1: Russian Ministry of Energy emblem. (Source: Wikimedia Commons)

Russia's modern energy strategies began forming after World War II. With the Soviet Union left standing as one of two global hegemons towering over a divided Europe, Moscow saw no barriers to achieving dominance in the global energy field. Between the 1950s and 1960s, Soviet oil output had doubled, making the Soviet Union once again the second-largest oil producer in the world and primary supplier to both Eastern and Western Europe. Revenues from oil exports started to make up nearly half of Soviet export income.

The objective of the energy policy of Russia is to maximize the effective use of natural energy resources and the potential of the energy sector to sustain economic growth, improve the quality of life of the population and promote strengthening of foreign economic positions of the country. The Strategy determines objectives and goals of the Russian energy sector long-term development for the up-coming period, its priorities and guidelines, as well as mechanisms of the state energy policy at the implementation phases of the Strategy ensuring realization of the stated objectives. As of right now however most of Russia's energy comes from the natural resources like oil, gas and coal which is evident from Table 1. [1]

Current Oil and Gas Exports

Gazprom has a monopoly for the natural gas pipelines and has control over all gas pipelines leading out of Central Asia, and thus controls their access to the European market. Russia has used Central Asia's gas, primarily that from Turkmenistan, on occasions where it has found itself unable to meet all its delivery obligations from its own production. Such circumstances in 2000 led to Gazprom allowing Turkmenistan to use its pipelines to supply gas to the Russian domestic market leaving Gazprom free to fulfil its obligations towards European customers. The main export markets of Russian natural gas are the European Union and the CIS. Russia supplies a quarter of the EU gas consumption, mainly via transit trough Ukraine and Belarus.

Coal Crude Oil Petroleum Products Natural Gas Other Solid Fuels Nuclear Renewables Electricity Heat Total
Production 134.97 470.14 - 517.13 14.36 39.72 15.05 - - 1191.37
Import 11.05 2.38 0.28 6.22 - - - 0.87 - 20.80
Export -39.23 -252.59 -97.10 -167.27 - - - -1.94 - -558.13
Stock Changes -1.26 0.07 0.77 - - - - - - -0.42
Total Primary Energy Supply 105.52 220.00 -96.05 356.08 14.36 39.72 15.05 -1.06 - 653.62
Electricity -34.19 - -3.73 -91.60 -3.35 -38.82 -15.05 81.98 - -104.77
Heat Generation -41.25 -0.79 -12.48 -129.40 -6.26 -0.90 - -3.52 161.63 -32.97
Fuel Processing -3.37 -211.80 200.49 -17.80 -0.42 - - -19.79 -32.53 -85.21
Total Final Energy Consumption 26.06 0.11 61.97 96.87 4.01 - - 57.52 130.11 376.65
Industry 22.85 0.08 7.69 24.93 2.95 - - 21.72 44.44 124.68
Building Sector 3.03 - 1.45 38.78 1.04 - - 20.37 84.24 148.91
Transportation 0.21 - 52.76 33.16 0.01 - - 6.82 1.44 94.40
Non-Energy Use 0.65 0.20 26.15 18.41 0.32 - - - - 54.73
Table 1: Fuel and energy balance for Russia in 2005. [1] (Million tonnes of oil equivalent)

Current Results of the Energy Strategy up to 2020

The following main vectors of long-term development of the fuel and energy complex were specified in the Energy Strategy of Russia for the period up to 2020: [2]

Most of the guidelines stated in the Energy Strategy of Russia for the period up to 2020 have been implemented in practice. In particular, the electric energy industry has been reformed. The electricity market is being liberalized and the nuclear energy industry is being reformed. A more favorable tax treatment has been set up for the oil and gas industries. The development of oil refineries and petrochemical plants is being promoted, while an energy exchange trade is being developed and excessive administrative barriers hindering energy companies are being removed. Infrastructure projects crucial to the development of the domestic energy sector are being implemented actively.

Conclusion

The current strategy plan has been approved in 2010 by the Russian Ministry of energy (Fig.1). Since then there really haven't been any significant effort from the Russian government to reduce CO2 emissions or try to produce some of the energy via renewable sources. With the current government, chances of things radically changing in the nearby future are very slim.

The qualitative results projected for the first phase of the Energy Strategy of Russia for the period up to 2020 implementation have not been fully achieved. [2] There has been no establishment of a competitive energy markets with fair trade principles, no conversion of the related sectors of the economy to a new level of energy efficiency and no transition from the leading role of the fuel and energy complex in the economy of the country to the function of an effective and stable supplier of energy resources for the needs of the country's economy and population.

© Evgeny Moshkovich. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.

References

[1] J. H. Millhone, "Russia's Neglected Energy Reserves," Carnegie Endowment for International Peace, 2010.

[2] G. Safronova, "Energy Strategy of Russia For The Period up to 2030," Ministry of Energy of the Russian Federation, 2010.