As we all know, across its vast territory Russia has all sorts of energy resources.

And, as energy gets scarcer, Russia therefore gets richer and can throw its weight around again, right?

Not so fast.

The problem with vast energy reserves is that it costs a vast amount to develop them. So Russian firms either do this themselves, borrowing money on a vast scale to do so, or do it in partnership with foreign energy giants.

We have gone through a period of Russia doing deals with the big energy companies then briskly ‘renegotiating’ those deals to benefit the sprawling Kremlin-favoured Russian energy enterprises.

Since then energy prices have tumbled. So how is it all going from the point of view of Russia now?

A complicated story. But one answer might be: badly.

Bottom line:

Without the injection of foreign capital into developing their reserves Russia’s grand vision as being a global energy provider look to remain as mere dreams unrealised. Perhaps surprisingly, the cash rich western oil companies still have an appetite for investment in Russia, and several are showing an interest in partnering Gazprom in the giant Yamal development in Arctic Siberia.

Without a doubt they will be far more careful the second (and for some the third) time around and we can expect to see guarantees in the form of internationally held bonds and cost-reimbursable contracts to be commonplace if such partnerships go ahead.

But having spent the past three years assuring its population that Russia is back to being a strong, independent country which does not need to partner with foreigners (a refrain which shows no sign of abating), how is the Russian government going to explain itself if it is once again signing "unfavourable" deals with western oil giants from a position of weakness?

At root this is all about attitudes to honesty and diligence.

We in the so-called West tend to think that when a contract is signed it has both legal and moral value, bringing a negotiation to an end.

The dominant political culture in much of the former communist world has it that a contract has no real significance, either legally or morally. Why should it have? But the signing of a contract often does mark the start of a more significant negotiation process.

Thus this Vast Negotiation. They need Money. We need Energy.

Those who run the Kremlin know that Russia needs huge sums of money to develop its energy reserves. But they chaff at the normal disciplines imposed by the West in lending it to them.

Yet we in the West need Russian energy – how tough can we be in insisting on transparency and respect for contracts?

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