Energy Diplomacy of Russia in contemporary realities

On January 31, 2023, the School of Regional Studies of the Faculty of World Economy and International Affairs, HSE University within the framework of the permanent online seminars «Contemporary Area Studies», with the support of the Russian Middle East Association, organized the 61^st online seminar with Dr. Igbal Guliev, Deputy Director of the International Institute of Energy Policy and Diplomacy of MGIMO University, author of Telegram-channel  IG Energy.

At the beginning of his speech, Dr. Igbal Guliev noted that energy is becoming increasingly pivotal nowadays, pointing out the energy crises in Europe since the pandemic. Energy security issues turn more relevant for Russia, and its foreign energy policy, as an important part of Russian diplomacy as a whole, is most influenced by political factors. Due to the fact that the budget of the Russian Federation continues to depend significantly on oil and gas revenues, the overall goal of its energy diplomacy is to preserve the country's leading positions in these markets.

Further, professor Guliev considered the current global transformations in the world energy markets, which resulted in the reformatting of energy flows, changes in the structure of the energy balance and contractual relations between suppliers and consumers of energy resources, the instability of the price environment. Increased technological competition, shifts in the global structure of consumption, new ecological requirements lead to a revision of energy policy.

Currently, according to the expert, environmental and climate agendas are taking center stage in the energy sector, but they should not undermine the country's supply of energy resources, create risks of socio-economic development. Nevertheless, as Dr. Igbal Guliev noted, they challenge the Russian Federation, which has also embarked on the path of decarbonization, but at the same time does not completely abandon hydrocarbons. He added that active use of renewable energy sources, including solar and wind ones, is also possible in Russia, but in those areas where it is economically feasible, and it is important to take into account that the Russian Federation does not have the most advanced technologies, unlike European countries or China, and may be catching-up in this area. Finally, turning to the role of renewable energy sources around the world, professor Guliev was quite skeptical about their possible dominance in the near future, due to the use, in particular, of rare-earth metals in batteries, and this may lead to dependence of their supplies from China, where these metals are mainly concentrated.

In conclusion, the expert considered in more detail the issue of sanctions, which are now having an unprecedented impact on the world economy, and, in his opinion, the negative consequences are experienced primarily by their initiators, excluding the United States. Sanctions, on the contrary, cause an increase in the price of oil and gas and, consequently, an increase in the revenue side of the Russian budget. In addition, it is unclear which countries could replace energy resources from the Russian Federation in the European market, since the negotiations of the EU leaders with Saudi Arabia and the UAE were unsuccessful: they adhere to the OPEC+ agreements, and high oil and gas prices support their economy. Finally, in the current conditions, it is possible to observe de-dollarization in the interaction of the Russian Federation with its partners, which strengthens their national currencies, as well as Russia's turn to the East, because instead of European countries, Moscow increases energy supplies to China, Mongolia, India, Pakistan.

At the end of the seminar, Dr. Igbal Guliev answered the questions of participants about the impact of sanctions on the Russian gas industry, the format of Russia's relations with Western countries in the energy sector, the price cap on Russian oil, the future of the gas market in Europe and LNG supplies from Qatar and the United States, the possibility of a triple gas union of Russia, Kazakhstan and Uzbekistan, the prospects of Turkish gas hub, as well as gasification and electrification of vehicles in Russia.