The role of natural gas in the Post-Soviet Russian foreign policy

Abstract

Russia is the owner of the largest natural gas reserves in the world. The capstone will show that Russia uses its natural gas reserves to improve its dominant position in the international system and that natural gas has a big role in the Post-Soviet Russian foreign policy. For many years Russian company, called Gazprom, had a monopolistic position for the export of natural gas to other countries and mainly to the EU. Gazprom also was the only gas supplier to its domestic market. But in the recent years, the dominant position of Gazprom and the demand for Russian natural gas is now decreased because of several factors. One of the major factors is the emergence of several gas producing companies in Russia, such as Rosneft, Novatek, Lukoil. Another factor is that Russia uses its monopolistic position and increases the price of the gas and for that reason, the demand is decreasing. The EU countries are very concerned that they are largely dependent on Russian natural gas. That is the reason why they are searching alternatives to Russian gas, although many countries, such as Hungary, Poland, etc. are largely if not completely dependent on Russian natural gas. The liquefied natural gas (LNG), imported from the US, is maybe the best alternative for the EU, as it has less political risks and shorter transportations distances. Other factors are Western sanctions, the recent economic recession. The export of natural gas is very important for Russia, as its economy mainly relies on the export of gas. Russia failed to diversify its economy also in other fields, which could be very useful for the Russian economy because the gas and oil are interconnected and the uncertain prices of oil may bring loses to the economy. So Russia needs to diversify its economy in order to be ready and not vulnerable when the prices of oil would decline.