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Energy Exports: A Source of Russian Power

Aug. 11, 2017 Energy sales are an important source of revenue, of course, but for Russia they are more than that: They are an instrument of geopolitical power. They give Moscow considerable influence over the countries whose energy needs are met by Russian exports.

France and Germany – the de facto, if often irreconcilable, leaders of the European Union – illustrate how Russian energy can shape foreign policy. France may rely heavily on foreign energy, but most of its oil and natural gas comes from Algeria, Qatar, Saudi Arabia, and Libya – not Russia. France can therefore afford to be more aggressive and supportive of sanctions against Russia.

Not so with Germany, which receives 57 percent of its natural gas and 35 percent of its crude oil from Russia. Berlin must therefore tread lightly between its primary security benefactor, the U.S., and its primary source of energy, Russia.

This is one reason Germany has been such an outspoken critic of the recent U.S. sanctions, which penalize businesses in any country that collaborate or participate in joint ventures with Russian energy firms. Germany supports the construction of Nord Stream 2, a pipeline that would run through the Baltic Sea, circumventing Ukraine – the transit state through which Germany currently receives much of its energy imports. The pipeline would help to safeguard German energy procurement, since it would allow Russia to punish Ukraine by withholding shipments of natural gas without punishing countries such as Germany further downstream.

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Of course, Germany may try to diversify its energy sources, which include Libya, Nigeria, Kazakhstan, Norway and the Netherlands, but it would struggle to do so. Germany relies heavily on pipelines for its energy, particularly Russian natural gas. It has four cross-border crude oil pipelines, four domestic pipelines, and three oil ports in the North and Baltic seas. But Germany has fewer options for natural gas and no major liquefied natural gas facilities. Simply put, Germany is beholden to the countries with which its pipelines have a connection – something that makes it vulnerable to retaliation.