OPINION | Russia’s days as an energy superpower are coming to an end

Europe will no longer depend on Russian gas, expert says 1:48 Editor’s note: Nikos Tsafos is the James R. Schlesinger Professor of Energy and Geopolitics at the Center for Strategic and International Studies (CSIS). The opinions presented in this article belong solely to its author. (CNN) — In a matter of weeks, the war in Ukraine has upended an energy relationship between Europe and Russia that dates back decades. Europe understands that it cannot sever ties with Russia overnight, as it continues to need Russian energy. But Russia’s role in the European and global energy system has faltered. This is a profound change that will mark the end of Russia as an energy superpower.
Russia is central to the global energy system. It is the largest oil exporter in the world, with 8% of the world market. And it supplies Europe with 45% of natural gas, 45% of coal and 25% of oil. Likewise, hydrocarbons are the lifeblood of the Russian economy. In 2019, before covid-19 brought prices down, oil and natural gas revenues accounted for 40% of the country’s federal budget. And oil and gas accounted for nearly half of Russia’s total goods exports in 2021. It’s hard to imagine what Russia’s economy would be like without oil and gas. Since the invasion, Europe has struggled to come up with a new energy security strategy. Most European countries had assumed that reliance on Russian energy was a risk they could manage, uncomfortable as it was at times. They believed that Russia was a rational actor that wanted to make money by selling its energy. But the biggest ground war in Europe in generations has produced a rapid reassessment of those assumptions. Europe was used to dealing with an adversary; now he must deal with an enemy. Without a doubt, the European response has been swift. Europe outlined an ambitious plan to cut Russian gas imports by two-thirds by 2022, with the goal of phasing out Russian oil and gas by 2027. Meanwhile, European leaders are debating proposals to immediately ban Russian oil imports. . The UK has already said it would phase out Russian oil imports by the end of 2022. Germany has halted approval of the Nord Stream 2 pipeline and said it would invest in infrastructure to import liquefied natural gas (LNG). A new LNG import facility is now under construction in the Netherlands. The estrangement from Russia is happening fast. The receiving station of the Nord Stream 2 gas pipeline in the early morning of February 2, 2022 near Lubmin, Germany. Big energy companies like Shell, ExxonMobil and Equinor are turning their backs on investments that go back decades. Public opinion is limiting its willingness to buy Russian oil on the open market, which is reducing Russia’s footprint on the energy scene. But Europe is now in a difficult situation. Russian oil and gas are indispensable. But depending on Russia is no longer tolerable given the atrocities committed by Russia in Ukraine and the fear that it could cut off gas supplies at any moment. So Europe wants out of that relationship. These opposing forces create a gap between where Europe is and where it wants to be. It is not clear how this will be resolved in the coming years, given that alternative supplies are limited in the short term. For now, the European Commission has asked companies to source from countries including the United States, Qatar and Egypt, a move that could push prices higher as demand pushes against limited supply. But what comes after this period of adjustment is quite clear: Europe’s energy trade with Russia will eventually shrink to almost nothing. Russia will look for clients elsewhere. About 20% of Russian oil goes to China, and its sales of natural gas to this country will surely increase, thanks to a pipeline of more than 8,100 kilometers. But Russia’s turn to the East is limited by geology, geography and geopolitics. Russia has more oil and gas resources in Western Siberia than in the east, making it difficult to get it to Asia. In addition, the existing infrastructures are prepared to send energy to Europe. China’s willingness to finance a change of this magnitude, that is, the reconfiguration of Russia’s export infrastructure to direct it eastward, is unclear. Will China accept a deal if offered? Probably. Will he choose to rely heavily on Russian energy? Probably not. Within a decade, this dynamic will change Russia’s position in global energy and in the world economy. Russia will not be completely excluded from the world energy market, but its role will be greatly reduced. This war has caused irreparable damage to Russia’s brand as an energy provider. Some strategists argue that Russia’s ability to wage war will diminish without fossil fuel revenues to finance its military. This is true, up to a point. But Russia has been involved in European affairs for centuries. Russia’s aggression, insecurity and meddling in Europe will persist long after the hydrocarbon era. After all, a Russian economy isolated from world markets will hardly be a manageable neighbor. The war will hasten the end of Russia’s era as an energy superpower. But whether the new Russia will be better, it is impossible to know.