1. Power Politics: Russia and its “Near Abroad” Dr. Theresa Sabonis-Helf National War College February 2009

2. Regional primary energy consumption patterns 2007 coal hydro nuclear gas oil From BP Statistical Review of World Energy 2008

4. Blue designates members of OPEC Green designates oil producer (non-OPEC) Base map: www.petroleumgraphics.com; Million Bbl/Day data from US Dept. of Energy EIA 2008 China: 3.8 Russia: 9.7 Kazakhstan: 1.4 Nigeria: 2.4 Angola: 1.8 Libya: 1.8 Norway: 2.8 Saudi Arabia: 10.7 Iran: 4.1 Iraq: 2.0 Algeria: 2.2 Kuwait 2.7 UAE: 2.9Indonesia: 1.0 Qatar: 1.1 2007 Oil Producers (mil bbl/day) UK: 1.7

5. Mexico: 3.7 Canada: 3.3 United States: 8.3 Venezuela: 2.8 2007 Oil Producers Base map: www.petroleumgraphics.com; Million Bbl/Day data from US Dept. of Energy EIA 2008 Brazil: 2.2 Ecuador: 0.5 Blue designates members of OPEC Green designates oil producer (non-OPEC)

6. World Oil Reserves by Country, as of January 1, 2005 (billion barrels) Oil & Gas Journal, "Worldwide Look at Reserves and Production,“ Vol. 102, No. 47 (December 20, 2004). World Total = 1,278 Billion Barrels

7. Swing Capacity

8. Bab el-Mandab 3.0 Bosporus/Turkish Straits 3.1 Strait of Hormuz: 17 Strait of Malacca 11.7 Russia 2.0 Suez Canal/Sumed: 4.2 Panama Canal: 0.6 7 2 3 4 5 6 7 5 6 1 1 2 3 4 Oil Chokepoints (Millions of Barrels per Day) Data from US Dept of Energy EIA 2005 (2004 estimates)

9. Oil in the Region: 1000 Barrels/Day RussiaKazakhstanAzerbaijan 20027659 968 315 200385351062325 200492741246318 200595111337440 200696751387647 200798741444 848 Data from EIA 2008

10. Canada’s Oil Domestic Impacts of Oil Wealth ● Boom and bust economic cycles ● Dutch Disease ● No taxation, no representation syndrome ● Economic and political development of petrostates has had limited success ● High levels of corruption are endemic ● State incurs obligations that are hard to rescind

11. Thomas Friedman’s First Law of Petropolitics From Foreign Policy May/June 2006

12. Oil & Gas Revenues AzerbaijanKazakhstanRussia Oil accounted for 20% GDP in 2007 Oil and gas accounted for 30% GDP in 2007 Oil and gas accounted for 25% GDP since 2003 Oil fund assets: $2 Billion as of December 2006, expected to reach $36 Billion by 2010. Oil Fund assets: $20 Billion as of October 2007 Stabilization fund by end 2006: $80 Billion

13. Baku-Supsa Oil Pipeline 145,000 B/day (1999) Existing Soviet Oil Pipelines “Chechen Loop” Baku-Tbilisi-Ceyhan Pipeline (BTC) 1,000,000 B/Day (2006) Caspian Pipeline Consortium (CPC) 700,000 B/Day (2001) Iran “Swap” 80,000 B/Day Map by Gavin Helf Kazakhstan- China Pipelline 200,000 B/Day (2006)

15. Where are the Hydrocarbons? Proven Oil Reserves 2007 Proven Nat. Gas Reserves 2007 From BP Statistical Review of World Energy 2008

16. European Reliance on Russian Natural Gas (2006-2007) RankCountry (bcf in 2007) 2006 % of Dom. Cons. 1Germany (1,378 bcf) 36% 2Turkey (827 bcf)64% 3Italy (742 bcf)25% 4France (346 bcf)20% 5Czech Rep (247)79% 6Poland (247 bcf)47% 7Hungary (226 bcf)54% 8Slovakia (223 bcf)100% Data from EIA Russia Country Report 2008

17. Russian Oil and Gas Pipelines to Europe: Actual & Proposed Data from US Dept of Energy EIA 2008

18. Russian Gas Sales Prices 2008 ($ per thousand cubic meters) European Market price $370.00 Lithuania (~78% of supply) $280.00 Latvia (~ 78% of supply) $280.00 Estonia (~78% of supply) $280.00 Georgia (100% of supply) $230.00 Moldova$191.25 Ukraine (66% of supply) $179.50 Belarus (Q1) (98% of supply) $119.00 Armenia$110.00 Data from EIA Russia Country Report May 2008

19. Russian Nord Stream Natural Gas Pipeline Facts Route: Portovaya Bay, Russia to coast Germany (underwater) – Baltic Sea Capacity: 27.5 billion cubic meters (2010); 55 bcm (2012 – 2nd pipeline) Length: 1,200 km (World’s largest underwater natural gas pipeline – max depth: 210 meters) Cost Estimate: 5 Billion Euros (60% Increase – 8 Billion Euros) – Cost 2.2 Billion Euros if built on land Supply: Shtokman gas field (estimated reserves of 3.7 trillion cubic meters – 2010 available) Shareholders: Gazprom (51%), BASF (24.5%), E.ON (24.5%) Contracts: Wingas – German Gas Co. – 9 bcm for 25 yrs DONG – Danish Co. – 1 bcm for 20 yrs E.ON – German Co. – 4 bcm Gaz de France – 2.5 bcm Slide courtesy of Nelson Dodd, NWC Elective 5404

21. Map from RAO-UES Annual Report 2003 RAO-UES Electricity Grid (Western View)

22. ArmAzerGeoKazKyrTajTkmUzb Main Type of Generation NuclTherHydrTherHydr Ther SynchronizedXXXXXXX*X TransmissionXXXXXX---X GenerationX---XXXX Debt for equity X---XXXX RAO-UES Interest/ Involvement * partial parallel

23. Foreign Presence in Energy Sectors ArmeniaAzerbaijanGeorgia National partners Russia, IranRussia, Georgia, Turkey, Iran Russia, Azerbaijan, Turkey Energy Sources Nuclear, hydro Imports nat. gas Oil, Gas (international private investments) Hydro, Imports nat. gas Exports Swaps electricity for nat. gas w/ Iran Oil to world market, Gas to Georgia & Turkey, Swaps nat. gas w/ Iran (for Nakhchivan) Negotiating re management of Enguri HPP (Abkhazia) RAO-UES investment Extensive Russian ownership Linked to overall grid, no ownership inside Azerbaijan Extensive Russian ownership Gazprom involvement Owns some pipelines and distribution, power plants Negotiating to purchase gas and/or gas swaps (Azer was an importer until Winter 2007) Georgia receives 10% of gas supplied to Armenia

24. Nuclear Energy

25. Russia Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan Azerbaijan Armenia Georgia Ukraine Moldova Belarus Lithuania Estonia Latvia Active RBMK Reactors Mothballed RBMK Reactors 9 1 - Rovno Complex 2- Khmelnitskiy Complex 3 - Zaporozhye Complex 4 - South Ukraine Complex 5 - Kola Complex 6 - Kalinin Complex 7 - Novovoronezh Complex 8 - Balakovo Complex 9 - Armenia Reactor Mothballed Breeder Reactor Active Breeder Reactor Active VVER Reactors All Reactors

26. Questions?