A leading Washington research organization, the American Enterprise Institute, Friday held a forum on Russia and the world energy market. VOA's Barry Wood reports that analysts believe Russia must make considerable new investments just to maintain current levels of oil and gas production.
Cliff Gaddy, the Russian economy expert at Washington's Brookings Institution, worries that Russia's oil production will decline in coming years. Massive new investment, he said, is required to meet Russia's goal of maintaining and then boosting production. After Saudi Arabia, Russia is the world's biggest oil exporter. Gaddy said the world needs Russian oil.
"Just ask yourself, where would world oil prices be without these three million extra barrels a day of oil that Russia has contributed since 1999? I mean, that is a real counter-factual and a lot of other things might have happened. Maybe China wouldn't have grown as much without that oil, maybe the whole world would be in a depression, but maybe oil prices would be not $70 to $80 a barrel, but $120 a barrel, or $150 a barrel, or $200 a barrel," he said.
In short, said Gaddy, the world economy benefits from Russia's oil.
Marco Fratini, an energy expert at the European Commission in Brussels, said his 25 nation economic bloc will remain dependent on Russia for much of its oil and gas. The E.U. imports 70 percent of its energy. Thirty percent of its oil and 50 percent of its gas comes from Russia. Even though the E.U. is seeking to diversify its suppliers and remains angry about a brief supply interruption in January, Fratini says the E.U. has limited options.
The E.U. and Russia are bound to remain major partners. Nevertheless the current (unfavorable business) climate results from concrete issues that must be addressed.
Fratini says the E.U. wants more competition among Russian suppliers and worries about the monopoly that state-controlled Gazprom has over Russian gas sales to western Europe.
The experts acknowledge that Russia has essentially renationalized its oil and gas industry and keeps foreign energy companies out of the Russian market. Cliff Gaddy of Brookings said there is little the west can do and that this is an example of a clash between politics and economics.