(Gunfire and Russian voices)
Three years ago, Russian troops plowed into Georgia, occupying the breakaway republics of South Ossetia and Abkhazia and threatening the capital city of Tbilisi. It was only the latest in a string of conflicts between the Kremlin and the states of the former Soviet Union.
Russia was, and still is, the dominant supplier of natural gas to both its ex-Soviet neighbors and to much of Europe. In the years leading up to the Russo-Georgian War, the Kremlin increasingly used that advantage as a blunt instrument, cutting off gas supplies at key moments in order to get its way. Such concerns largely tied Europe’s hands during the war, with the result that Russian troops remain in Georgia’s breakaway republics to the present.
Amy Myers Jaffe of the Baker Institute says that Russia’s repeated use of energy as a weapon has backfired.
“It’s lost about 10% market share already in Europe, and that’s had a, I think, significant effect on the political bargaining power between Russia and its European neighbors.”
For that, Jaffe and her colleagues give large credit to competition from U.S. exports of shale gas. In a study entitled “Shale Gas and U.S. National Security,” they project U.S. exports will cut Russia’s share of Europe’s gas market by more than half over the next three decades.
“In effect, this strengthens the U.S.’s strategic position without the U.S. actually having to do anything.”
Anders Çºslund is a fellow with the Peterson Institute for International Economics in Washington, DC. Like Jaffe, he sees U.S. shale gas as weakening Russia’s hand.
“One sign of this is that Gazprom’s market value now is half of what it was in May 2008.”
Not everyone is buying the argument. Peter Zeihan is an analyst with Austin-based private intelligence firm Stratfor. Zeihan says there are still a lot of technical hurdles to the U.S. becoming a major exporter of natural gas, including the lack of LNG export terminals anywhere in the lower 48 states. In the meantime, he says, the Russians are hardly sitting back and waiting for the U.S. to take European energy markets away from them.
“They’re doing anything they can to discredit shale gas any way that they can. So, they’ve been participating in some of the anti-shale media hype in the Northeast, for example. They’ve also been very active, via their intelligence agencies, in lobbying against shale gas everywhere in the world, including India and France.”
Russia’s lobbying efforts in the U.S. have put it into an odd coalition. Its partners range from coal companies to environmentalists concerned about the effects of hydraulic fracturing. Zeihan says the Russians don’t care who they have to get into bed with, as long as it slows the production of shale gas down.
From the KUHF Business Desk, I’m Andrew Schneider.