By PAC Intern Kay Minkiewicz
The Washington D.C. based Center for European Policy Analysis (CEPA) presented a webinar Russia and the Geopolitics of Energy in the Covid-19 era on April 14, 2020. This webinar put forward two key points.
First, Russia is struggling without success to respond to the decrease in demand for its natural gas from its customer countries in Europe including Poland. This decrease in demand has been caused because many of these Russian customer countries are seeking other sources of natural gas. Many of them are buying from members of the Gas Exporting Countries Forum (members include Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Trinidad and Tobago, and Venezuela). Russia is trying to hold on to its European Market share with the creation of Turk Stream, a pipeline connecting Russia and Turkey. United States sanctions passed in December 2019 stopped the construction of Nordstream 2 which would have allowed Russia to sell a lot of its natural gas to European countries. Furthermore, the Baltic Pipeline received permits to start construction in March 2020, and this will allow Poland to receive natural gas from Norway thereby decreasing her dependence on natural gas from Russia.
Second, the future for Russian oil does not look bright. A consequence of a COVID-19 pandemic will be a further decrease in demand for Russian oil. Russia’s decision to violate the OPEC oil production caps, started a price war with the USA and Saudi Arabia. This has cost Russia 1.7 billion dollars per month to bail out its state-run oil companies. We recall that the Russian government’s budget assumes constant oil price of $45 per barrel. This price is not sustainable. Oil now has fallen to $20 per barrel. Moreover, many Russian oil extraction facilities can not be closed down because they are located in Western Siberia. If production is stopped to meet OPEC caps, the wells will be shut off by ice. This is why Russia is reluctant to observe OPEC oil production caps.
To watch the webinar please visit: https://www.cepa.org/russia-and-the-geopolitics-of-energ
Are you interested in exploring this topic further? Would you like to support the work of the Polish American Congress? Please click:
Kay Minkiewicz is a Policy Intern at the Polish American Congress and a first-year student at The London School of Economics and Political Science, where he is majoring in Philosophy and Economics.