Gazdasági Ismeretek | Gazdaságpolitika » Russian Chinese Axis in Oil Governance

Source: http://www.doksinet RUSSIAN-CHINESE AXIS IN OIL GOVERNANCE Olga Garanina, St Petersburg University Graduate School of Management, +7 906 251 26 35, o.garanina@gsompuru Overview Despite the apparent interdependency between energy producers and consumers, there is no global common energy security concern. Self-interest strategies lead to the situation where continuous ad hoc market adjustments dominate instead of a global institutional framework. Energy governance appears as an interplay of different elements of the international economic system including countries, groups of countries and various non-governmental players. The US plays a prominent role in oil markets. It has recently regained the status of major producer of crude oil, and it is also a dominant player in ‘paper oil’ markets. However, the phenomena of economic emergence raises the question of the adjustment of global governance structures, including those in the domain of oil. In 2014 China reached the first

rank according to the GDP on purchasing power parity, and it is expected to become the largest oil importer in early 2030s. On the other side, Russia, for both economic and geopolitical reasons, is intending to foster its ‘pivot to Asia’ policy. Recent oil and gas deals signed between Moscow and Beijing testify of intensifying collaboration between the two countries. The focus of the proposed paper is to understand how and whether the strengthening partnership between Russia and China could alternate governance structures in oil markets. Existing literature on oil markets remains dominated by applied studies on market prospects anaysis. Our expected contribution is to shed some light on the scope and possible impacts of Russia-China rapprochement from global perspective of oil governance. Therefore, our paper intends to interpret Russia-China partnership in frames of global economic governance theories applied to the case of oil markets. The first section introduces the conceptual

framework of global economic governance. The second section discusses the major features and recent trends in oil governance. The third section analyses the scope of Russia-China emerging alliance in oil markets. Last section concludes Methods Conceptual approach of global political economy. Results Firstly, we show that the global oil industry presents the case of absence of hegemonic international regime. Secondly, we argue that ‘shale revolution’ allowed the US to regain a leading position not only on the ‘paper’ oil market segment, but also in physical oil market. Thirdly, we show that economic emergence of China raises the issue of adjusting global oil governance structures and contesting the US leadership, in particular, via developing new oil pricing platforms. Finally, we demonstrate that Russia’s ‘pivot to Asia’ policy could lead to increase its dependency over China. Conclusions Heterogeneity of preferences among various market players historically

constrained the emergence of a global oil regime. Recent developments show that the US leadership in global oil governance is likely to be contested by China, driven by three major strategies: firstly, providing security of crude supplies; secondly, internationalizing its currency and thirdly, developing oil trading platforms at home. The relations with Russia are instrumental in China’s imports diversification policy. However, on Russian side, a ‘pivot to China’ policy fostered under the US and EU sanctions, could lead to increase Russian dependency over China