A difficult situation has arisen in state monopolies. The fighting between Gazprom and RosNeft has intensified (one of the opinions which actively circulates in Russian expert circles is that a series of mysterious suicides of top managers of oil and gas companies is an outcome of the wars between Miller and Sechin and a result of “mole cleansing” campaigns). The inconsistency of actions between the two energy giants can lead to disastrous consequences for the Russian economy as a whole.
Economists claim that:
1. A shortage of funds for the gasification of regions is possible due to a drop in gas export earnings. Investments in the country’s gas sector will be reduced by about $41 bln over the 8 years, to 2030. Withdrawal of technological partners from LNG production projects will shift the timing of the commissioning of new capacities.
2. According to the most negative scenario, it is expected that by 2027 European countries will be able to refuse Russian oil completely.
3. The decline in petroleum products exports may reach 55% by 2021 (or decrease by 80 mln tons), which in turn will lead to a drop in refining by 25-30% and difficulties in ensuring sufficient gasoline production for the domestic market, which leads to increase of fuel prices.
These figures were announced at a closed meeting with the head of the Government of the Russian Federation Mishustin on August 30 (“On strategic directions of activity in the new conditions for the period up to 2030”). The following points also became an unpleasant signal for Russia:
– Europe is actively filling gas storages, much faster than expected. As of mid-August 2022, 79.4 bln cubic meters were filled compared to 63.4 bln in the same period a year ago.
– Filling of UGS takes place from 12-14 to 43-44 weeks of the year, i.e. an average of about 30 weeks of completion. We are now in week 33, with 10 weeks left until November.
– Filling rates are quite high: from June 1, they fill at a rate of 2.8 bln cubic meters per week, from July 1 to 2.7 bln cubic meters per week, and over the past 30 days the rates have not changed.
Given Europe’s insistence on filling gas storage facilities literally “at any cost”, it can be assumed that 25-27 billion cubic meters (bcm) will be filled in the next 10 weeks, creating a gas reserve for the winter of 95-98 bcm, while the all-time maximum was 106 bcm. On the contrary, last year there was a 5-year minimum of 83 bcm.
Thus, it is clear that Europe will confidently exceed the 2021 indicator in terms of gas storage occupancy, aiming to approach the maximum. This occurs when the Yamal-Europe pipeline completely stopped, loading of the Nord Stream is about 20% and a quarter – of the Ukrainian gas transport system.
During winter Europe increases gas supplies to an average of 9 bcm per week, consuming so much that gas reserves reduce at a rate of 3.5-5 bcm per week, reaching a maximum reduction of 6 bcm (depending on weather).
Current global gas supplies to Europe are almost equal 7.3 bcm and this is close to the limit, given that Gazprom provided 2.2-2.5 bcm per week. They are likely to reduce gas consumption and introduce rationing in the industry.
These figures show that the bet on the “gas blackmail” of Europe did not work, and therefore, closer to the New Year, Putin will demand an account from both Sechin and Miller, and from everyone who convinced the President of the Russian Federation that Europe would capitulate. Therefore, it is possible to make personnel decisions, mainly for Gazprom. The current Deputy Prime Minister Alexander Novak, who is in good standing with Putin, has long been asking to replace Miller.
Also, according to many sources, Putin has recently had rather cool relations with the chief of Rostech Sergey Chemezov. Although if Putin will disseminate his inner circle (so-called “Politburo”), then Chemezov will be the last to leave (an old, since Dresden, friendship makes itself felt). But if earlier Putin and Chemezov met quite often, now Chemezov may not be seen for several weeks or even months. At the same time, Putin often communicates with Chemezov through the head of the Administration, Anton Vaino (a person close to Chemezov). But Putin’s visit to the Kaliningrad region, which is run by Anton Alikhanov, another protege of Chemezov, demonstrated that personnel changes in the environment of the Chemezovites are not yet ripe. Most likely, Chemezov will be able to keep his position.
After analyzing numerous statements of Russian politicians, we conclude that the informal negotiating process between the United States and the Russian Federation, during which a wide range of issues, including Ukraine, is discussed, really exists and is actively used. From Russia’s point of view, Ukraine is not the most important component of the negotiations. Russia keeps the point of view that the old, American-centric system of the world is collapsing and will be replaced by a bipolar model. In this model, Russia will be assigned the role of China’s junior partner. Claims for equality in relations are initially dismissed by Beijing, which thinks not in geopolitical categories, but in geoeconomic ones. From Russia’s point of view, the war in Ukraine is a challenge to the West (Russia has neither the strength nor the desire to take and keep Ukraine completely in its orbit) and a claim for leadership in the process of the collapse of the American-centric world (the role of a battering ram). The main point that describes Russian-Chinese relations today is the lack of mutual trust. Moreover, in many issues, China and Russia are explicit competitors (the Pacific region, Central Asia, Kazakhstan).
A signifying moment is that another attempt was made by the Russian government to negotiate with China. At the end of August, parties were trying to agree on the arrangement of state debt in yuan, but the attempt came to a standstill. The Chinese authorities are not ready to change the regulation to allow their investors to invest in Russian yuan government bonds. According to the Deputy Minister of Finance of the Russian Federation Timur Maksimov, the Chinese “do not like it when money goes through the financial account,” although this issue may be resolved in the future. “The strategy there is very clear – it is the liberalization of the currency regime and the internationalization of the yuan,” Maksimov said.
China, which politically supported the Russian so-called “special military operation” in Ukraine and blamed the United States for the war, is in no hurry to support Russia economically and technologically.
At the same time, Russian political circles increasingly discuss talks that Yuri Ushakov, a long-term curator of foreign policy, is gradually losing his part and influence on foreign policy. Alexander Venediktov, a young 44-year-old deputy of Nikolai Patrushev, will become the new curator of foreign policy in Putin’s entourage. Hence the possible change in the paradigm of Russia’s relations with the West: if earlier it was about strengthening Russian influence on the West, now it is about a “brilliant disengagement.” Venediktov’s concept provides for a complete freeze of economic and political contacts with the West (except for provocative activities in the “buffer zone” – Eastern Europe and the Western Balkans). Shaping the image of the enemy embodied in the West – at all levels of communications within Russia. Restructuring of educational work in the educational system, mobilization of the cultural sphere, etc. Venediktov managed to convince the president that Russia should not beg the West for mercy, but speak from the position of “okay, our communication is dead.” And at the same time, it is also necessary to hit the pain points of the West – titanium, gas, communications, sales markets, etc.
The majority of the people do not perceive dissociation from the West as a tragedy. The possibility of travelling abroad worries mostly citizens of capitals and metropolitan areas. According to the data obtained by the Levada Center, 41% of Russians have been abroad, while only about 20% of respondents were in Western countries, and only 2-3% of the total number of respondents have been to the USA. These indicators are highly differentiated by location: mostly, Moscow residents have been abroad (62%), as well as those living in cities with a population of 500,000 or more (45%), while the chance of visiting other countries is many times less among residents of the rest of the country.
In pursuance of a sociological survey, a quarter of Russians have a foreign passport, and according to the migration departments, approximately 30% of the country’s residents have such a document. According to sociologists, 5% of Russians have a passport with an open visa, and we are not necessarily talking about Schengen visas. In 2013, approx. 7 mln Schengen visas were issued to Russians, and in 2020 and 2021, the number was only near 500-600 thousand. By the end of this year, experts anticipate a further reduction because of geopolitical confrontation between the West and Russia and the refusal of a significant number of countries in the Schengen zone on issuing visas to Russians.
Only 5% of respondents said that they had been abroad in the last twelve months (for comparison: in 2018, 11% of respondents gave this answer). The current level of travel abroad, according to sociologists, is comparable to the situation in the mid-1990s, when a small piece of society (4-8%) had the opportunity to travel abroad.
The lessening in the opportunities for a significant part of society to travel abroad is obvious: sociologists identify a trend characterized by polarization of opinions on this matter. Residents of capitals and metropolitan areas with a middle and above income level do not want to give up travelling abroad at all, even though nowadays many believe that the current time is not suitable for travelling not only to Western countries. For the vast majority of the population, the problem of travelling abroad is irrelevant, mainly due to economic reasons.
Thus, for Putin, there is no problem of “mass revolt” because of the closed borders. Another thing is that most of the Western sanctions hit the middle class, which is gradually being eroded and either proceeds with emigration (internal and external) or chooses to service oligarchs.
As of today, Goloshchapov’s getaway is perhaps the only act of defiant disobedience to Putin among the oligarchs. Friedman’s or Deripaska’s fronding, and Abramovich’s shuttle diplomacy does not make a difference – these individuals have always been considered only as “fellow travellers”.
