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Skip to 0 minutes and 0 secondsRussia is another major player in the oil and gas race. It's a leader in crude oil production and falls to second to the U.S. in natural gas production. Russia is - and will remain - among the biggest energy exporters in the world. It produces 12.7 per cent of the world’s oil, 16.7 per cent of its gas. Accordingly, Russia is the most important energy supplier to the EU, with 35 per cent of its oil, 30 per cent of its gas and 26 per cent of its coal imports originating from Russia. The energy trade is one of the major income sources for the Russian budget, with shares of 50 per cent.

Skip to 0 minutes and 51 secondsThe share of energy products in exports was almost 88 per cent in 2014. The Russian state budget, which has seen ever-higher break-even oil prices, has been hit by the oil price slump that began in summer 2014. The fiscal breakeven point for the Russian budget in 2015 was reported to be around US $100 per barrel in the winter of 2014 and 2015. President Vladimir Putin has also used the energy sector as an instrument for his preservation of power. Let me explain a little bit about the Russian company Gazprom. Gazprom is a state-controlled monopoly gas company in Russia. The biggest gas company in Russia.

Skip to 1 minute and 42 secondsAt first, Gazprom’s leadership and the Russian government treated the shale gas revolution as a myth, a “Hollywood action, Hollywood stunt,” or even a propaganda campaign unleashed by the West to topple Gazprom. Recent global developments in the energy sector appear to threaten the Russian oil and gas dependent economic model. In relation to gas exports, Russia previously faced very little competition (mainly in Europe). Delivering natural gas in such great quantities provides Russia with political leverage vis-a-vis energy-dependent countries. Growing gas production in the United States has freed up LNG for European markets, resulting in cheaper spot markets for gas and reducing the importance of gas transportation through pipelines. That means a lowering geopolitical significance of pipelines.

Skip to 2 minutes and 40 secondsIn these new circumstances, the Russian government is decreasingly able to use gas exports as a geopolitical tool. Therefore, to make up for loss in Europe, Russia is now pivoting to East Asia, Northeast Asia in particular. The case in point is China-Russia energy co-operation. Russia is now pivoting to China. In 2014, Russia has made several oil and gas agreements with China. In March 2015, there was a historic natural gas agreement in the amount 400 billion dollars in the next 30 years. Now the goal of Russia is to expand into China, Japan and Korea. China is more successful than in Japan and Korea.

Skip to 3 minutes and 39 secondsSo, the more important goal of Russia is to move into the market of Japan and the market of Korea. So in the next few years, we have to watch out whether or not Russia is successfully moving into the energy market of Japan and Korea.

Russia

In Russia, oil and gas, rather than the army and the navy, are being touted as the country’s most important assets.

Oil and gas continues to dominate the Russian economy despite attempts at modernization and diversification. The oil sector is the main revenue provider. Russia remains very exposed to global oil prices; a fall even to $80/bbl would be serious.

In 2012, the revenue from raw materials including oil and gas accounted for 50.2 percent of the Russian government’ s total revenue, and in 2011 it was around 48 percent.

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This video is from the free online course:

Global Resource Politics: the Past, Present and Future of Oil, Gas and Shale

Hanyang University