Global Energy Security

Fact Sheet

We will strive to create an energy security system sensitive to the interests of the whole international community. Basically, all it takes is for mankind to create a balanced potential in order to provide every state with sustainable energy supply, and international cooperation opens all avenues for that.”

VLADIMIR PUTIN, Feb. 28, 2006

Context

• Russia is the world’s second-largest oil producer after Saudi Arabia and the leading source of natural gas. Russia holds 34 percent of the world’s gas and 13 percent of the prospected oil reserves. From 2002 to 2004, it posted the world’s highest growth rate for major oil-producing nations, and by 2015, its oil production can reach 530 million tons and its export, 310 million tons.

• Russia and Gazprom – its market-oriented, publicly traded energy company – have adopted modern, democratic energy policies and emphasize they will follow the same rules as all others. They have never reneged on a contractual obligation. Russia has moved away from Soviet-era subsidizing of its neighbors’ energy prices to employ a new universal pricing mechanism based on the market. Gazprom spends about US$5 billion on investment in fields, supplemented by billions of dollars in joint projects with foreign companies.

Energy security at the G8

• Russia will urge its G8 partners to redouble efforts to ensure global energy security. Russian President Putin considers it “crucial” to solve a problem that directly influences the social and economic development of all countries. He promises Russia will boost global energy supplies through major new projects, including a plan to build a Northern European Pipeline under the Baltic Sea to diversify gas-supply routes and guarantee consistent supplies to all of its consumers.

• For a viable global energy security policy, Russia believes the G8 must accomplish at least four things. They are:
  • Ensure consistent supplies to all consumers and that suppliers and consumers alike respect and fulfill their commitments.
  • Promote energy efficiency and energy saving through enforced standards, shared information of energy-saving targets and cooperation on alternative and renewable energy resources.
  • Guarantee predictable and consistent government regulation through clear investment frameworks, consistent taxation, minimal red tape, contract enforcement and access to workable dispute-settlement procedures.
  • Address fair pricing by liberalizing prices and discontinuing subsidized energy resources, steps that will increase competition and the use of energy-saving technologies.

• The only way to achieve true energy security is through interdependence. Security of supply and security of demand must be considered equally. Russia wants to convert its economy from an oil-and-gas economy to an innovative-based society, and can only achieve that with co-operation with its G8 partners. Russia’s strategy is to sell oil and gas to its G8 partners and, in return, gain access to technology.

• Russia is ready to participate in creating a global energy infrastructure for the effective production, transfer and use of clean energy. It intends to recommend a package of measures and an action plan to overcome economic and technological barriers to boosting the efficiency of traditional and developing energy technologies.

• President Putin maintains that Russia will remain a reliable supplier of gas to Europe. He blames the Ukraine for the temporary dip in deliveries earlier this year to some European Union nations. Indeed, Russia has established itself as a highly reliable and responsible energy provider. For the last 40 years, it has exported energy to European markets through Ukraine without ever contravening its contractual obligations. This record rivals that of any other energy provider in the world.

• President Putin considers the United States “our principal partner” on global security threats and nonproliferation.

Russia has placed energy security at the top of its G8 agenda because reliable and adequate energy supply is key to the socio-economic development of mankind. Existing energy networks have grown highly integrated globally, and, unfortunately, the failure of one element inevitably affects the other. Parochial national efforts to ensure energy security haven’t proved successful, so this global challenge calls for concerted global action.