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US shale revolution and Russia: shifting geopolitics of energy in Europe and Asia

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Abstract

Increased shale gas and shale oil production in the USA will affect global geopolitics and national security considerations. An influx of Qatari LNG into Europe and Asia, which is diverted from the USA, erodes the tremendous market share held by the Russian gas company Gazprom and significantly reduces its pricing power. The USA did not begin to import the quantities of LNG from countries like Qatar and Trinidad and Tobago. Those quantities have instead been redirected to other markets, including Europe. As part of the impact of the US shale revolution, Russian energy control over Europe will be greatly reduced. Russia’s power over the region will also be reduced. Russia has earned from US$42 billion to US$60 billion per year from selling gas to Europe. Fewer exports and lower prices will cut those revenues. Given the importance of oil and gas companies to Russia’s economics, it is urgent for Moscow to restrict Central Asian production and infrastructure to mainly or even exclusively Russian channels lest Russian oil and gas become less competitive due to its own high cost and wasteful monopolistic structure and dilapidated infrastructure.

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Notes

  1. As experts know, when a pipeline goes only to one country, the consumer in effect owns the pipeline as he can determine whether or not to receive supplies at any time, leaving the supplier with no options.

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Acknowledgments

This work was supported by the National Research Foundation of Korean government (NRF 2012S1A3A2033350).

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Correspondence to Stephen Blank.

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Kim, Y., Blank, S. US shale revolution and Russia: shifting geopolitics of energy in Europe and Asia. Asia Eur J 13, 95–112 (2015). https://doi.org/10.1007/s10308-014-0400-z

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