Russia's energy strategy amid mounting Western sanctions

The Russian government is looking to finalize its long-awaited Energy Strategy 2050 amid a dynamic and rapidly changing global environment following successive US and EU sanctions against Moscow's energy business.

Heavy Western sanctions imposed following the conflict in Ukraine have forced Russia to overhaul its entire energy sector and caused work on its 2050 Energy Strategy to face numerous delays.

As a result, the energy strategy that Russian President Vladimir Putin called for two years ago has yet to be submitted to the Russian parliament for consideration.

A worker of the Surgutneftegas oil and gas production corporation near oil pumps in the Surgut region, in the West Siberian oil basin, Russia. Photo: TASS

Russian Deputy Prime Minister Alexander Novak, in charge of energy issues, told Interfax news agency in July that the Russian government was in the final stages of developing the strategy.

“According to the instructions of the President of Russia, the Energy Strategy 2050 is in its final stage, with the aim of minimizing the negative impact of the fuel and energy sectors on the environment and adapting to climate change,” Mr. Novak said.

According to Yuri Stankevich, deputy chairman of the Energy Committee of the State Duma (lower house of parliament) of Russia, the final draft strategy could be widely discussed in the fall of this year.

During the first year of the war, an energy crisis in Europe sent prices soaring and gave the Kremlin an all-time high current account surplus of $235 billion.

However, when sanctions on Russian oil and oil products came into effect at the end of 2022, the surplus fell to $51 billion in 2023. More recently, in December last year, the US began imposing additional sanctions that shut down about 10% of the “shadow fleet” used to transport Russian oil to Asian customers.

The Energy Strategy 2050 needs to address all of these issues, as well as the need to build new infrastructure to reroute energy supplies and reorient Russia's pipeline network from West to East, among other challenges.

Sanctions against Moscow are still mounting, especially as the US increasingly targets Russia’s plans to expand its liquefied natural gas (LNG) capacity and its future oil production projects.

Recent sanctions targeting Novatek's Arctic LNG 2 project in the Arctic and contractors involved in Vostok Oil's major program underscore the growing pressure on Russia's energy ambitions.

As the global outlook for oil and gas demand changes, with many advocating a gradual energy transition, the Russian government is also facing falling revenues from its oil and gas sector due to rising costs.

Mr Stankevich, in an interview with the Russian newspaper Rossiyskaya Gazeta, published last week, proposed focusing more on improving the quality of production rather than quantity.

However, Russia faces a major challenge in this regard after the West imposed sanctions in the technology sector, cutting off vital inputs that Russia previously received from Western suppliers.

The Arctic LNG 2 project is particularly hard hit because it relies on complex components manufactured by a small number of companies around the world, mostly Western ones.

The power generation sector has also been hit hard because most of the gas turbines used in power plants are made by German company Siemens, which has also pulled out of Russia, leaving Russian power companies without a source of spare parts.

Minh Duc (According to IntelliNews, Interfax)

Source: https://www.nguoiduatin.vn/chien-luoc-nang-luong-cua-nga-trong-boi-canh-lenh-trung-phat-day-dac-cua-phuong-tay-204240831155056406.htm