Russia’s Energy Minister Alexander Novak had this to say: “Russia is seeking to acquire 25 per cent of the world’s natural gas market share in the near future...”. That’s a significant percentage, particularly in light of the current stakes held by other major producers Qatar, Iran and the US.
The minister’s statement does have a good deal of credibility. Acquisition of such a substantial share is doable if we take into account multiple factors. First, Russia’s possession of the world’s largest natural gas infrastructure, with its supply pipelines extending across the world from east to west and north to south, to supply the consumers in Europe, China and Asia, all with growing consumption.
This is an advantage that other producers, who rely on costly tankers, do not have. Russia is seeking to build more pipelines, capitalising on its location and its immediate neighbourhood. This is unlike the situation that exists for Qatar and Iran, which are politically and economically constrained due to their interference in others’ affairs.
Gigantic reserves
Additionally, Russia holds the largest reserves of natural gas in the world, roughly equivalent to the combined reserves of Qatar and Iran, which possess the second and third largest gas reserves. These two factors would enable Russia to realize its desire to acquire a quarter of the global gas trade, with its production capacity expected to rise by as much as 130 per cent within five years to 68 million tonnes, compared to 29.5 million tonnes last year.
These developments add complexity and spark severe competition, especially after the entry of the US as one of the largest gas exporters, as well as the announcement of major discoveries in Saudi Arabia, the UAE, Bahrain and Egypt. This means having flexible and cheap infrastructure will play a crucial role in deciding the winner of this fierce competition. But the odds clearly favour Russia.
Therefore, it is expected that the gas markets will witness many changes, specifically with regard to the role of some producers, such as Russia and the US, and the decline of others, such as Qatar and Iran. Russia will have the final say in the gas marketplace, much like how Saudi Arabia is the arbiter in the global oil market.
Change of direction
This requires other players to look for new ways to develop export infrastructure, and this will depend mainly on the geographical location of each country, its investment capabilities, its relations with neighbours, and how well it can ensure the safety and stability of supplies.
Combined might
In terms of these requirements, Saudi Arabia, the UAE and Bahrain have the best conditions for building a gas supply network branched in more than one direction, as they possess the needed investment capabilities, geography, and solid relations with other countries.
This is in addition to security guarantees for transportation and protection of supply lines, especially after recent geopolitical developments in the Middle East, which have created new conditions for cooperation between many actors. This will create opportunities that will have significant implications on all economic sectors within the region.
Such changes in the energy industry and in the relationship between countries in the region will force all parties to reconsider their old ways and to protect their own interests before they get further harmed.
This will probably lead to an easing of political conflicts and foolish interference in others’ affairs to impose agendas and illusions of greatness about old empires. Such agendas do not fit with the era of the Internet and artificial intelligence. Now is the time of economic power based on technology and knowledge.
Flexing muscles and military supremacy is merely a comedy show, given how outdated these have become in imposing agendas. Hence, the failure of those who hold on to such agendas is absolute.
- Mohammed Al Asoomi is a specialist in energy and Gulf economic affairs.
