Abstract
Russia has a deep interest in developing bilateral and multilateral cooperation with Middle Eastern countries in the oil, gas and nuclear energy sectors. However, the alliances it has built with them are fragile and unstable. This is because of external factors (such as instability in the region and fundamental changes in the global energy markets) as well as of Russia’s domestic realities. The intricacy of the situation is also determined by Russia’s view of Middle Eastern hydrocarbons producers as simultaneously a source of problems and opportunities. Russian business should not be also considered as just a tool of Russia’s policies in the Middle East. The government and the energy corporations depend on each other. The former has several times demonstrated that it can dictate its will to companies, but it also knows that it must protect their interests and therefore adjusts foreign policy accordingly. Accessing the Middle East’s hydrocarbons resources will strengthen the presence of Russian companies in the global market. Their business interests are thus one of the primary determinants of Russia’s policy towards Algeria, Egypt, Iraq and Iraqi Kurdistan, or even unstable Libya and Syria. These must be considered alongside the more common explanations of Russian assertiveness in the region.
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Notes
- 1.
Gazprom Neft Vostok is currently working on 12 oil fields located in Tomsk and Omsk districts with the proven volume of reserves in 300 mbpd.
- 2.
In the early 2020, Mubadala and Gazprom Neft signed and additional MoU on technological cooperation in the field of tight oil extraction as a proof that the cooperation between them positively developing (Gazprom Neft, 2020).
- 3.
Interview with a gas industry expert. February 2020, Moscow, Russia; February 2020, Doha, Qatar.
- 4.
For example, see the experience of oil industry of Australia, Brazil and Canada.
- 5.
Yet, the expansion of OPEC was/is not a panacea, but rather a way to make the impact of market changes less sensitive for the producers. This option was chosen because its alternatives (such as immediate monetization of oil resources) were far less appealing. However, the OPEC + that came into being in January 2017 never brought a complete stability to the market and oil prices. In 2020, even without the COVID-19 the volume of market supply was to surpass the demand by 2mbpd making the fall in oil prices inevitable (although not that drastic). The growing oil (over)supply and the understanding by oil consumers that the significance of Gulf as a source of oil supplies is decreasing changed the situation a lot. By 2018, consumers had stopped panicking when hearing about production shocks caused by to political risks in the Persian Gulf, Middle East and even beyond. It is notable that, in 2018–2019, neither the instability of oil production in Libya, nor the practical disappearance of Iran and Venezuela from the market had long-lasting effect on prices (at best, these events were only preventing prices from further sharp decline). Even the attack on Saudi Arabia's oil production and refining infrastructure in September 2019 had only a short-term impact on the market although the volume of oil single-time taken from the market was historically unprecedented since 1973. Under these circumstances, it is not surprising that in the context of a much larger excess of oil supply in 2020 caused by COVID-19, the world has almost ceased to respond to the Iranian-American tensions in the Gulf, in particular, without noticing either the resumption of the US and Iran confronting each other in the spring of 2020, or new attempts by the Houthis to shell the territory of the KSA.
- 6.
Russia was due to have a presidential election in March 2018. High oil prices allowed Putin to fund extended social programmes in order to win the support of the low-income sections of the population on the eve of the elections. Fluctuations of the oil price immediately affect key Russian macroeconomic figures. In the run up to the 2018 election, it was important for the regime to demonstrate a strong economic performance and to show that Putin is able to deliver on his promises of economic growth (Voytenko, 2017).
- 7.
The text of the Charter can be found here: https://minenergo.gov.ru/node/15216.
- 8.
Interviews with Russian experts on oil and gas markets. Doha, Qatar, February, 2020; Institute of the World Economy and International Relations under the Russian Academy of Science, Moscow, Russia, March 2020; Moscow, Russia, May 2020.
- 9.
Interviews with Russian experts on oil and gas markets, Doha, Qatar, February, 2020; Institute of the World Economy and International Relations under the Russian Academy of Science, Moscow, Russia, March 2020; Moscow, Russia, May 2020.
- 10.
As opposed to the majority of the OPEC + countries whose oil production is largely concentrated in the hands of government-controlled national oil companies, Russian oil producers enjoy relative market freedom. Consequently when persuading them to cut oil output, the Kremlin can predominantly use ‘carrots’ rather than ‘sticks’. Yet, by the end of 2020, all existing ‘carrots’ had been used by the Kremlin: the provision of further tax exemptions and financial support to Russian oil producers became economically unjustifiable while all potential loopholes in the Vienna agreement that allowed the Russian producers to justify their low compliance with the OPEC + obligations had also been used. Under these circumstances, the additional deepening of production cuts by 1.5mbpd suggested by Saudi Arabia to be followed after March 2020 became impossible for Moscow to agree to without further lowering the level of compliance with already existing obligations.
- 11.
Interviews with Russian experts on oil and gas markets. Doha, Qatar, February, 2020; Institute of the World Economy and International Relations under the Russian Academy of Science, Moscow, Russia, March 2020; Moscow, Russia, May 2020. Also see Simonov, 2019.
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Kozhanov, N. (2022). Russia’s Energy Ambitions in the Middle East. In: Farhadi, A., Masys, A. (eds) The Great Power Competition Volume 2. Springer, Cham. https://doi.org/10.1007/978-3-030-90390-9_9
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