International Studies Journal (ISJ)

International Studies Journal (ISJ)

The Impact of International Sanctions on Russia's Energy Security

Document Type : Original Article from Result of Thesis

Authors
Abbas Maleki 1
Shahab Alddin Shokri 2
1 Prof. at Department of Energy, Sharif University of Technology
2 Ph.D. Student of Russian Studies, Dept. Faculty of World Studies, University of Tehran.
10.22034/isj.2024.457551.2172
Abstract
Due to the dependence of its state budget on oil and gas revenues, the Russian economy has suffered since 2014 from various sanctions caused by the Ukraine conflict. The purpose of this research was to examine the impact of the 2014 and 2022 sanctions on Russia's energy security. The question was whether there has been a significant difference in Russia's fossil fuel export trend due to the embargo? This research was causal-comparative. The dependent variable was dependence on Russia's fossil fuels and the grouping variable was the countries studied. OriginPro 2024 and SPSS 27 software were used for data analysis. According to the results, the 2014 sanctions did not have a significant impact on Russia's dependence on fossil fuels in 87% of the countries and regions examined, which may be due to the nature of the sanctions and Russia’s multilateral approach. But the 2022 sanctions had a significant impact on Russia's energy security. In terms of dollar value, Russian natural gas exports recorded the most significant decline. On the other hand, Russia was largely able to maintain its oil exports despite restrictions imposed.

Highlights

 Introduction

Since 2014, the conflict in Ukraine has led to a series of sanctions that have had a negative impact on the Russian economy, primarily because the budget relies heavily on hydrocarbon revenues. Putin's rise to power led to structural economic changes in Russia, supporting alternative ideologies and undermining the oligarchs through the nationalization of companies, particularly in the energy sector. As global oil prices rose and oil and gas reserves became the main source of Russian foreign policy, energy was strengthened as the key institution for regaining great power status. In March 2014, the United States and the European Union imposed “Crimea-based sanctions” in response to the annexation of Crimea. In addition, new sanctions were introduced in July 2014 against long-term projects in the three sectors of finance, oil and defense technology. The European Union, the United States and other partners, including the United Kingdom, Canada, Japan, New Zealand and Norway, have put together a compact sanctions package aimed at defeating the energy hegemon in response to Russia's military operation in Ukraine in February 24.02 .2022, with the aim of influencing the behavior of the target country. The aim of the article is to examine how sanctions have affected Russia's energy security. One measure of this security is the dependence of Russia's energy-related business partners on the country's fossil fuel portfolio. An analysis of the impact of sanctions on crude oil and natural gas as main indicators of Russia's fossil energy was also examined. The main questions are: Is there a significant difference in the process of Russian fossil fuel exports to the target regions based on the sanctions variable or not? What strategies is Russia pursuing to mitigate the effects of sanctions? The impact of sanctions on crude oil and natural gas, the main indicators of Russia's fossil energy, was also examined.

 

Methodology

Given the goal of assessing the impact of sanctions on Russia's energy security, the authors have used the integrated framework of interdependence and resource nationalism to quantify the impact of sanctions and explain Russia's counterstrategy. The authors believe that the theory of resource nationalism based on neorealism precedes the use of the dependency framework. According to this approach, Russia is a country that follows a “resource nationalism” and whose energy discourse is dominated by neorealism. From this point of view, there is a strong connection between the stability of energy resources, the volume of exports and the country's national power. The continued dependence of Russia's trading partners on its fossil fuels and the emergence of new dependencies are considered an indicator of Russia's energy security and a test variable. The grouping variable was the countries examined. To answer the research question, the studied period regarding sanctions was extended from 2014 to the period from 1990 to 2021, since in this period the impact of Russia's energy disputes on its energy interactions was significant, which is an example of the gas crisis between Russia and Ukraine in 2006. It lasts until 2009. Regarding the 2022 sanctions, two periods A-January 2021 to May 2022 and B-June 2022 to September 2023 were tested in the field of crude oil exports, corresponding statistics. Descriptive analysis of trend charts by volume, destination and value was used for overall dependence on fossil fuels and natural gas through February 28, 2024. OriginPro2024 and SPSS27 software were used for analysis.

 

Results and Discussion

Regarding the 2014 sanctions, the results showed that there is some sort of convergence between two categories of countries: A – Countries that did not find a significant difference in their dependence on Russian fossil fuels. B- Countries whose dependence on Russian fossil fuels increased after the 2014 sanctions. In 87% of cases, Russia's dependence on fossil fuels not only did not decrease after the sanctions were imposed, but in some cases even increased significantly. To explain this finding, the nature of the 2014 sanctions and Russia's interaction should be examined. The Russian energy security status from February 2022 to February 28, 2024 was also reviewed. All in all, Russia has largely managed to maintain its oil exports by switching export destinations, which, according to this research, are China, India, Turkey and the European Union. Monthly exports of Russian crude oil to China, India and Turkey have increased significantly since May and June 2022, in parallel with the adoption of the European Union's sixth sanctions package, which bans the import of Russian oil and oil products. On the other hand, the monthly export of Russian crude oil to the European Union has decreased significantly. The daily value of Russian natural gas exports by value and volume and in pipeline form in the period of 732 days from January 14, 2022 to January 15, 2024 was analyzed based on the latest data. The results showed that Russia's natural gas exports via pipelines fell more than 3.5 times from 10.1 billion euros in March 2022 to about 2.8 billion euros in December 2023.

 

Conclusion

Based on the comparative quantification, the research hypothesis that the 2014 sanctions have an impact on Russia's energy security is not confirmed. The reason probably lies in the nature of the sanctions and Russia's reciprocation. However, the impact of sanctions in 2022 on Russia's energy security and its strategic direction in emergency situations was effective and significant. In the meantime, we should pay attention to the aspects affecting Russia's energy security, especially after the sanctions in 2022. China, the European Union, Turkey and India, each of which, according to its position, makes a significant contribution to Russia's energy security strategy. Although part of Russia's energy demand shock can be offset in the short term through temporary responses, in the medium- and long-term Russia faces fundamental infrastructure, sustainability and governance issues in the area of ​​its energy security. These issues will pose new challenges for Energy Strategy 2035, resource nationalism and energy-oriented foreign policy. Based on the analysis of the four sides, it is proposed to analyze Russia's energy security in the context of sustainable development, as well as the expectation of a future change in the international order and the emergence of new regulations in the near abroad. We should also pay attention to the weakening of Russia's geo-economic ties at the level of regional and inter-regional unions, since, according to the results of this research, a significant turn has occurred since the beginning of the war in Ukraine. Russia's dependence on fossil energy sources, on the one hand, means a decline in its energy-oriented ties and on the other hand an increase.

Keywords
sanction 2014
sanction 2022
comparative analysis
energy dependence
four sides

Subjects

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