Indra Overland

Space and timing: why was the Barents Sea delimitation dispute resolved in 2010?

Abstract An explanation of the timing of the 2010 agreement resolving the marine delimitation dispute between Norway and Russia in the Barents Sea must be sought mainly on the Russian side. Russias willingness to compromise on the spatial disagreement between the two countries at this specific juncture was not,as sometimes assumed, driven by a thirst for the energy resources in the formerly disputed area, but instead by broader Russian foreign policy considerations. These include a general effort to reduce the risk of conflicts with neighboring states by clearing away as many territorial disputes as possible, the intention to improve Russias image as a rule-abiding player on the international arena, and interest in strengthening the UN Convention on the Law of the Sea as the framework for Arctic governance.

Pricing Pain: Social Discontent and Political Willpower in Russia's Gas Sector

Abstract This article explores the influence of socio-economic discontent on the determination of decision makers to cut subsidies on natural gas for Russian households. The authors outline first the organisation of gas supplies and subsidies, and secondly the relationship between policymaking signals and public opinion concerning the minor price adjustments implemented so far. They then examine previous cases of discontent in other sectors, extrapolating implications for a major increase in gas prices. The conclusion is that Russian policymaking is characterised by a pattern of ‘two steps forward, one step back’: decision makers are concerned about discontent, but nonetheless they ultimately press on with reform.

Subsidies for fossil fuels and climate change: a comparative perspective

This paper argues that the most obvious measure to combat greenhouse gas emissions is to remove the vast subsidies that promote higher energy consumption in more than half of the countries in the world, and that this measure should take precedence over many others. The article discusses also why removing energy subsidies is so difficult, and which type of state may succeed. This question is examined with reference to China, India and Russia, all major contributors to global warming. Non‐democratic governments and energy importers might be expected to be more likely to halt subsidies. In fact, energy trade imbalances do not seem to significantly affect the capacity to reduce subsidies. The risk of social unrest is a political restraint in all three countries. Perhaps surprisingly, democratic states may be better positioned to remove subsidies than non‐democratic ones.

Rosneft's offshore partnerships: the re-opening of the Russian petroleum frontier?

During an intense period of only 14 months, from June 2010 to August 2011, six major cooperation agreements between oil companies were announced in Russia. Almost all of these partnerships involved offshore projects, with an international oil company as one of the partners and Rosneft as the other. The agreements were concentrated along Russias Arctic petroleum frontier, and the three that survived the longest involved oil or gas extraction in the Arctic. This article analyses and compares the contents and contexts of the agreements, to ascertain what they have to tell about access for international companies to Russias offshore petroleum resources and the influence of competing Russian political actors over the countrys petroleum sector. The article argues that the new partnerships did represent an intention to open up the Russian continental shelf, and that the agreements were driven and shaped by a series of needs: to secure foreign capital and competence, to reduce exploration risk, to lobby for a better tax framework, to show the government that necessary action was being taken to launch exploration activities, to improve Rosnefts image abroad, and either to avert or prepare for future privatisation of state companies such as Rosneft.

Natural Gas and CO2 Price Variation: Impact on the Relative Cost-Efficiency of LNG and Pipelines

This article develops a formal model for comparing the cost structure of the two main transport options for natural gas: liquefied natural gas (LNG) and pipelines. In particular, it evaluates how variations in the prices of natural gas and greenhouse gas emissions affect the relative cost-efficiency of these two options. Natural gas is often promoted as the most environmentally friendly of all fossil fuels, and LNG as a modern and efficient way of transporting it. Some research has been carried out into the local environmental impact of LNG facilities, but almost none into aspects related to climate change. This paper concludes that at current price levels for natural gas and CO2 emissions the distance from field to consumer and the volume of natural gas transported are the main determinants of transport costs. The pricing of natural gas and greenhouse emissions influence the relative cost-efficiency of LNG and pipeline transport, but only to a limited degree at current price levels. Because more energy is required for the LNG process (especially for fuelling the liquefaction process) than for pipelines at distances below 9100 km, LNG is more exposed to variability in the price of natural gas and greenhouse gas emissions up to this distance. If the prices of natural gas and/or greenhouse gas emission rise dramatically in the future, this will affect the choice between pipelines and LNG. Such a price increase will be favourable for pipelines relative to LNG.

The Hunter Becomes the Hunted: Gazprom Encounters EU Regulation

This chapter addresses two questions. Firstly, judging from the growing regulatory pressure on Gazprom, has the EU really become liberal mercantilist, or is it still just liberal? Secondly, how can Gazprom respond to the pressure? The chapter finds that the EU has become far more systematic and salient in its measures to handle Gazprom, but that it is methodologically difficult to say, on the basis of this case alone, whether the regulatory tightening amounts to a new liberal mercantilist stance or not. The chapter lays out several avenues that Gazprom has followed or could follow in response to the EU and concludes that the best approach for Gazprom would be to adapt to EU market liberalization rather than fighting it—which it is increasingly doing.

Norway: Public Debate and the Management of Petroleum Resources and Revenues

This chapter assesses the importance of civil society involvement and public debate for Norwegian petroleum governance. It finds that during the early years of the country’s oil and gas development, the most important choices were made by a small number of decision-makers in government with little input from the rest of society. The attitude of government officials was therefore decisive for Norway’s early successes. During the two first decades of Norway’s petroleum era, also economists at the Ministry of Finance, the Norwegian School of Economics, Statistics Norway and the University of Oslo played important roles. One of the greatest successes of Norwegian oil and gas governance, the sovereign wealth fund, was created by technocrats in interaction with politicians. However, over time, and in a way similar to the Netherlands, civil society and public debate came to play more influential roles. What characterizes contemporary Norwegian petroleum governance is that it has many legs to stand on: an active and diverse civil society, free and diverse media, many political parties representing differing interests, numerous institutions of research and higher education and, importantly, a strong technocracy inside and outside government. In combination, these legs provide for both reliability and dynamism as Norwegian petroleum governance evolves. Finally, a key aspect of Norway’s Nordic model is constant compromise—which is difficult to achieve in more polarized societies.

Kazakhstan: Civil Society and Natural Resource Policy in Kazakhstan

In Kazakhstan, civil society is held back and has had a limited role in the management of the petroleum sector. As this chapter notes, civil society has had little experience of promoting its own interests vis-a-vis the state, and public discussion of natural resource issues has been mainly government-driven. The fact that Kazakhstan made a notable step forward—from being a collapsing socialist economy in the 1990s to becoming a regional economic player with improved social and economic performance—has helped to legitimize non-transparent natural resource policies. As long as the socio-economic situation continues to improve or remains stable, the non-transparent management of natural resources is likely to be accepted by the population, which, like the Russian population, puts a premium on stability. The relative passivity of civil society has been compensated by Kazakhstan’s exposure to international initiatives and organizations such as the World Bank, the International Monetary Fund, the Organization for Security and Co-operation in Europe (OSCE), and numerous UN agencies. As in Azerbaijan, the Extractive Industries Transparency Initiative (EITI) has provided a platform for some civil society engagement with industry and government.

Did China Bankroll Russia’s Annexation of Crimea? The Role of Sino-Russian Energy Relations

This chapter analyses bilateral Chinese–Russian energy relations, pre- and post Crimea. The signing of the Power of Siberia megaproject in May 2014, only two months after Russia’s annexation of Crimea, created the impression that China bankrolled Russia out of the crisis. To assess the veracity of this impression, the authors draw a longer timeline of Russian–Chinese cooperation, examining general economic data as well as Chinese involvement in four concrete energy projects managed by leading Russian energy companies. They find that, in general, deals made from 2014 onwards are in line with trends that originated well before the current crisis in Russia’s relations with the West, and that Chinese financial contributions to the sector are not as large as they sometimes appear.

EU Climate and Energy Policy: New Challenges for Old Energy Suppliers

Climate policy will transform the EU energy demand mix. This has implications for the main suppliers of fossil fuels to the EU, foremost among which are Algeria, Colombia, Kazakhstan, Nigeria, Norway, Russia, Saudi Arabia and the USA. Norway has a better starting point for adapting to changing EU energy demand than the other energy suppliers and therefore represents a best-case scenario. Whatever Norway fails to do, the other countries are even less likely to achieve. The question is whether Norway has been quick enough to exploit the opportunities to play a proactive role in the EU’s energy transition. This chapter argues that it has not, dragging its feet on natural gas vehicles, Norwegian wind power, electricity interconnectors, green battery development and mixing of hydrogen into natural gas. Some possible reasons for the tardiness are Norway’s dual resource course of oil and hydropower, carbon lock-in, energy populism, resource nationalism and blind spots in the perception of Norway’s place in international climate and energy policy.