The Foreign Service Journal, December 2003

after the December Duma elec- tions and the March 2004 presi- dential election, bring the return of a favorable business climate and renewed zest for investment in the Russian oil and gas sector? And whither American policy? Is a funda- mental reassessment required on energy cooperation and how best to advance U.S. policy goals? The Fundamentals At first glance, the case for a commonality of interests between Russia and the U.S. in energy relations is very simple. Russia is rapidly returning to the earlier Soviet position as the largest oil producer in the world. It is already the second largest oil exporter, behind Saudi Arabia. It has the largest natur- al gas reserves in the world. Oil and gas represent more than a quarter of GDP and half of export earnings. The sector has been the engine of economic growth and led the moderniza- tion of business practices since the financial collapse of 1998, and had started to attract signif- icant direct foreign investment into the Russian economy. The United States is the largest oil and gas con- sumer in the world. Well over half the oil we con- sume is imported from increasingly politically uncer- tain parts of the world, not only the Middle East but also more recently unstable countries in South America and West Africa. American oil companies need to augment existing production with new oil reserves, but are largely blocked from making equity F O C U S D E C E M B E R 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 33 The U.S. search for a diversity of sources is a good fit with Russia’s search for markets. 2000 N. 14th Street ■ Suite 500 Arlington, VA 22201 Telephone (703) 797-3259 Fax (703) 524-7559 Tollfree (800) 424-9500