Pumping up : Russian energy and national power

Abstract

Russia has organized its energy industry similarly to a vertically integrated energy corporation. Not only does Russia possess vast oil and gas reserves, it also has capabilities at every step in the production chain. The execution of Russian energy strategy is incredibly intricate and flows from all points including the state, firms, suppliers, degrees of ownership and transit locales. This work reviews five important aspects of Russia's vertical integration strategy. Firstly, Russia is brining the domestic industry under state control. Secondly, it has pushed out particular types of foreign investment in order to gain control of domestic reserves, their monetization and the development of important projects. Thirdly, Russia seeks to keep resource rich states in its near abroad in its sphere of influence in order to keep their supply within its grasp. Fourthly, it manages relations with neighboring states in possession of transit infrastructure to keep supply routes open to markets. Lastly, it invests abroad in order to increase market presence, cut out middlemen, and further build production chains. Russia expects to strengthen its international position, both economically and geopolitically by undertaking this strategy of vertical integration.