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Supply and demand (background and statistics)

In order to understand the politics in the energy sector, we need to understand the infrastructure and the numbers that back up the politics. According o Keppler, Europe has a great geopolitical advantage when it comes to securing energy supplies – Europe is within the “pipeline distance” (3000 km or less) of two thirds of global gas reserves. The other advantageous thing about Europe is that the consumers are relatively energy efficient (most of them). Europe is the global leader in reducing greenhouse gas emissions, an effort that also reduces hydrocarbon dependence. Several European companies such as BP, Shell or Total are amongst the world leaders in the exploitation of hydrocarbons. According to the researcher in the energy security policy Michael A. Toman, energy security is fundamentally an international problem that transcends any one country’s supply picture or policy measures; effective measures to countervail energy disturbances may require significant international cooperation. The proposal of Budrys is to use the geopolitical approach to the problem of energy security. Energy security becomes energy geopolitics, or geoenergetics. Geoenergetics is one of the aspects producing the strongest correlation between geography and economics, which shows how the unequal distribution of natural resources on the Globe brings geoeconomic advantage and power to specific areas. Geoenergetics may also be used to define energy policy as the use of energy systems to achieve desired goals. Actors which implement such a policy are geoenergetic actors.

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Least import-dependent EU countries

Countries from central-northern-eastern Europe dominate this group. Domestic production of fossil fuels covers a considerable share (more than 50 percent) of gross consumption in all of these countries – with the notable exception of Sweden. Denmark and the United Kingdom also have the ability to produce both oil and gas. In Poland, the Czech Republic and Estonia modest dependence on fossil fuels is explained by larger consumption of coal. Netherlands is able to produce its own gas, and Sweden with Denmark have an exceptionally large share of renewable energy (around 30%) combined with nuclear (35%).

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Russia has two allies: oil and gas

Carbon economy

The natural resources also play a key role in the re-establishment of Russia as a global player with influence over its near neighbours, are all overwhelmingly dependent on its fossil-fuel resources. As has been very nicely put by Helm, Russia now has largely a carbon economy, and at the narrow political level, the success of Vladimir Putin exactly corresponds with the recovery of oil prices from 1999. By the year 1999 Russia found itself in a state of chaos. The country was run by an alcoholic and ill president, manipulated by a small group of oligarchs and family members, who in turn had accumulated considerable wealth.

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Import dependency

Development of Import dependence up to 2030

Development of Import dependence up to 2030

The graph above presents an overview of import dependency from imports in general, not just the Russian Federation. From the graphs below, we can see the distribution of the main EU gas and oil sources. EU is able to produce around 18 percent of its total oil consumption. Russia accounts for 26% of all oil, consumed in EU. Looking at the graph displaying the origin of gas, imports from Russia account for 29% of total consumption. Even though Europe does have alternatives of import countries, they require LNG terminals and regasification terminals. Due to vast investments required in the field this is option is suitable to all the countries.

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Energy policy priorities till 2020

Currently there are two documents in Russia which define the official Russian energy strategy. That is the Energy Strategy up to 2020, issued in 2000, and the 2003 revision. These documents cover all energy sectors – gas, oil, coal and hydroelectric power – and point out steps on the improvement of each sector. The Strategy introduces new, though not always self-explanatory, approaches to more effective energy use, such as energy preservation and penalties for energy waste, a notion heretofore unfamiliar to the Russian leadership’s energy policy. The Strategy also outlines regional and external energy policy.
The road to the current energy policy was a long one, since the question was brought forward after the dissolution of the Soviet Union. In September 1992, the government approved the main provisions of the ‘Concept for Energy Policy under New Economic Conditions’ which aimed to look out to the year 2010. The main emphasis of the policy in general principles did not differ all that much from current priorities: to provide Russia with a reliable supply of energy, to ensure the independence and security of Russia, and to support the potential to export energy. It also emphasised the need to develop a raw materials base, increase efficiency, and develop renewable energy resources.

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