Russia has the largest known natural gas reserves in the world and is the world's second largest oil producer after Saudi Arabia. Oil and gas accounted for about 60% of Russia's exports in 2005.  

Europe depends on Russia for its energy and almost all existing pipelines head west.  

Russia has been accused of using energy to exercise political control over some former Soviet republics such as Ukraine, Georgia, Belarus and Moldova.  

In January 2006, Russia's state-owned energy giant Gazprom temporarily restricted its gas supply to Ukraine, demanding a 400% price rise to bring Urkraine in line with the global market.

This led to a 30% reduction in gas to the rest of Europe - and forced the EU to consider how to avoid becoming too dependent on gas from one source. 

Russia is building a major new pipeline across the Baltic Sea, which will bypass transit countries such as Belarus, Ukraine and Poland and provide direct access to Western Europe.