Carnegie Moscow Center
The Republican and Democratic candidates have fundamentally opposite views on developing the energy sector, but whoever wins—and for different reasons—it won't be good news for Russia’s oil and gas industry.
Right now, the strength of each country’s negotiating position is determined by its ability to swiftly regulate the supply of oil on the global market. Saudi Arabia has been preparing for this for decades, while Russia has failed to take advance measures that would help, such as the construction of oil storage tanks.
The slump in gas prices will create plenty of problems, but at the same time it could provide a much-needed purging of an industry that in recent years has seen increasingly absurd projects unveiled for pipelines and LNG terminals.
The Power of Siberia pipeline is a long overdue step in the right direction in developing the strategic relationship with China in the gas sector. Yet plenty of questions remain about the implementation of future pipeline projects.
Don’t be misled by Western sanctions’ limited impact on Russia. In reality, they operate with an accumulating effect: the more time passes, the greater the potential technological backlog, financing gap, and negative consequences will be. In the long run, sanctions may jeopardize Russia’s oil and gas production volumes and the development of pipeline infrastructure, gradually squeezing the country out of foreign markets, limiting its export revenues, and undermining the stability of the Russian economy.
The Carnegie Moscow Center hosted a discussion on the changing global energy market at a time of abundant supply and high policy uncertainty, particularly in regards to American energy politics under the Trump administration.
Authors of more recent studies almost unanimously state that even though it’s unclear whether the resource curse generally menace on average over the group of resource-rich countries, it definitely threatens nations with weak institutions.
Carnegie Moscow Center hosted a discussion on the impact of resource dependency on the economic development of Russia and other major petrostates in a comparative context.
Achieving economic diversification in countries dependent on oil exports is a major challenge. Most diversification strategies have failed, and there are no examples of countries that have successfully managed to fully diversify away from oil.
Between the end of World War II and the mid-1960s, the Soviet Union’s economy was one of the most vibrant in the world. The country had successfully launched the first man into space and was competing with the United States in developing cutting-edge military technology. However, by the end of the 1980s, the economy was in a miserable state.