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Five years ago, when oil prices were climbing steadily and economists were stoking fears about peak oil and gas, it seemed that major energy producers like Russia were holding all the cards. Then-president Vladimir Putin spoke of his country as an "energy superpower" and used energy supplies as a blunt instrument of Kremlin foreign policy. Gas cutoffs to Ukraine caused panic in Europe, while Western energy companies fell over each other to get a slice of Russia's oil and gas fields.

But all that is over. Today, the super-giant Shtockmann natural-gas field under the Arctic sea"”Russia's only big hydrocarbon discovery since Soviet times"”has just been mothballed due to the towering cost of extracting the undersea gas. At the same time, worldwide demand for Russia's gas has...