Russia’s Strategic Commodities: Energy and Metals as Security

1,63
MB Levers

182
stron

5406
ID Swedish Defence Research Agency (FOI)

2004
rok

CONTENT

FOREWORD AND ACKNOWLEDGEMENTS. 5

CONTENT 6

EXECUTIVE SUMMARY 11

COMMODITY AND SECURITY POLICY 11

CONCLUSIONS CONCERNING ALL COMMODITIES 13

CRUDE OIL. 14

NATURAL GAS . 15

ALUMINIUM . 16

NICKEL 17

PALLADIUM . 17

1 INTRODUCTION. 19

1.1 POINT OF DEPARTURE 20

1.1.1 Objective and Aim 20

Objective of the Study . 21

Aim of the Study . 21

1.1.2 Approach and Basic Assumptions 21

1.2 METHOD EMPLOYED AND SCOPE OF INQUIRY. 22

1.2.1 Delimitations of the Study and Criteria of Selection 22

1.2.2 Sources Utilised. 23

1.2.3 Methodological Problems. 24

1.3 HOW TO READ THE REPORT 24

2 STRATEGIC COMMODITIES 26

2.1 GENERAL ECONOMIC DEVELOPMENT . 26

2.2 THE RUSSIAN APPROACH TO ENERGY AND METALS. 28

2.3 COMMODITY DEPENDENCE AND VULNERABILITY. 29

2.4 CRUDE OIL . 32

2.4.1 Oil Overview 32

Methodological Considerations of Oil Assessment 32

2.4.2 Production of Oil. 33

The Oil Industry in Russia. 34

Oil Companies in Russia and Control of the Market 35

State Pipeline Monopoly by Transneft . 37

Russia vs. World Production . 38

Investments in the Oil Sector. 39

Investment Climate in the Energy Sector . 40

2.4.3 Stocks and Reserves of Oil 42

Further Comments on the Methodology of Oil Reserves Assessments 42

Location of Russia’s Oil Reserves. 43

Russia vs. World Reserves 44

Value of Russian Oil Reserves 45

2.4.4 Domestic Consumption of Oil. 45

Energy Saving . 46

2.4.5 Exports of Oil 46

Russia vs. World Exports 47

Export Prices for Oil 47

Export Quotas 49

Infrastructure for Transport . 49

2.4.6 Imports of Russian Oil 50

Dependence on Russian Oil. 50

Europe and Russian Oil . 51

Russian Oil and the World. 52

2.4.6 Conclusions - Crude Oil . 53

2.5 NATURAL GAS . 55

2.5.1 Natural Gas Overview 55

Methodological Considerations of Gas Assessment. 55

2.5.2 Production of Natural Gas . 56

The Gas Industry in Russia 56

Russia vs. World Production . 57

Investments in the Gas Sector . 58

2.5.3 Stocks and Reserves of Natural Gas. 59

Strategic Stocks . 59

Russian vs. World Reserves 59

Location of Russia’s Reserves. 60

2.5.4 Domestic Consumption of Natural Gas 61

Usage of Natural Gas in Russia. 61

Domestic Prices on Natural Gas . 61

Payment Problems in the Natural Gas Sector . 62

Causes of Non-payments and Implications for the Market. 63

2.5.5 Exports of Natural Gas. 64

Export Prices on Natural Gas 65

Transportation Infrastructure and its Political Dimension 65

2.5.6 Imports of Russian Natural Gas . 66

General Dependency of Russian Gas 66

Europe and Russian Gas 67

The Nordics and Russian Gas 70

Asia and Russian Gas 70

2.5.7 Conclusions - Natural Gas . 70

2.6 ALUMINIUM . 72

2.6.1 Aluminium Overview 72

2.6.2 Production of Aluminium and Bauxite 73

The Aluminium Industry in Russia 73

Primary Aluminium Production . 75

Russia vs. World Aluminium Production . 75

Investments in the Aluminium Sector 76

Russian Bauxite, Nepheline and Apatite Production 77

Russia vs. World Production of Aluminium Raw Materials. 77

Location of Production and Extraction. 78

2.6.3 Reserves of Bauxite, Nepheline and Apatite . 78

Raw Material Reserves 79

2.6.4 Domestic Consumption of Aluminium 79

2.6.5 Exports of Aluminium . 80

Prices and Value of Aluminium . 80

2.6.6 Imports of Russian Aluminium 82

2.6.7 Conclusions - Aluminium 84

2.7 NICKEL. 86

2.7.1 Nickel Overview. 86

2.7.2 Production of Nickel 86

The Nickel Industry in Russia . 87

Russian Production of Nickel 87

Russia vs. World Production . 88

Investments in the Nickel Sector 88

2.7.3 Stockpiles and Reserves of Nickel. 89

Strategic Stockpiles . 89

Reserves of Nickel. 89

Location of Nickel Reserves 90

2.7.4 Domestic Consumption of Nickel 90

2.7.5 Exports of Nickel . 91

Prices and Value of Nickel 92

2.7.6 Nickel Imports by and from Russia. 92

Russia’s Nickel Imports 93

Importers of Russian Nickel 93

2.7.7 Conclusions - Nickel 95

2.8 PALLADIUM 97

2.8.1 Palladium Overview . 97

Methodological Considerations of Palladium Assessments 98

2.8.2 Production of Palladium 98

The Palladium Industry in Russia 99

2.8.3 Reserves and Stockpiles of Palladium 100

Strategic Stockpiles . 100

Ore Reserves . 101

2.8.4 Domestic Consumption of Palladium . 101

2.8.5 Exports of Palladium. 102

Export Policy and Quotas 103

Prices and Value of Palladium. 103

Russia and World Supply 105

2.8.6 Palladium Imports from Russia 107

2.8.7 Conclusions - Palladium 108

3 COMMODITIES AND SECURITY 109

3.1 THE RUSSIAN NOTION OF SECURITY . 109

3.1.1 Economic Security 110

Promoting Economic Growth 110

Extending Russian International Influence. 111

Ensuring Russia’s Economic Independence . 111

3.1.2 Reduction of Dependence . 111

3.1.3 The Idea of Strategic Stocks . 112

Rationale of Holding Stocks 112

Types of Stocks . 112

Costs of Holding Stocks 113

Planning Problems. 113

3.2 COMMODITIES, SECURITY AND POLITICAL REASONS 114

3.2.1 Possible Reasons 114

3.3 MANIPULATION OF COMMODITY MARKETS 115

3.4 ENERGY POLICY AGAINST INDIVIDUAL STATES 116

3.4.1 Georgia 117

3.4.2 Ukraine 121