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Abstract
Energy trade is an essential factor in EU–Russia relations. This essay argues that Russia and the European Union have deployed two types of power in their post-Cold War energy relationship. Russia has predominantly exerted geopolitical power through the sale of its vast energy resources and selected strategies to channel them to partners. With a large market but lacking fossil fuels, the EU attempted to achieve its aims mostly through regulatory power. However, both the Russian and the EU external energy policy strategies have recently become more nuanced. This evolution in their approaches has resulted in Russia’s gradual acceptance of the regulatory and market principles promoted by the EU.
Notes
1 ‘EU Energy in Figures’, Statistical Pocketbook (Luxembourg, Publications Office of the European Union, 2017, pp. 24–6).
2 ‘BP Energy Outlook’, 2018, available at: https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/energy-outlook/bp-energy-outlook-2018-region-insight-eu.pdf, accessed 10 October 2018.
3 ‘Oil and Natural Gas Sales Accounted for 68% of Russia’s Total Export Revenues in 2013’, U.S. Energy Information Administration, 23 July 2014, available at: http://www.eia.gov/todayinenergy/detail.cfm?id=17231, accessed 24 March 2017.
4 Finland is also 100% dependent on Russia for its gas supplies, but it has back-up supplies in the sectors where gas is used and would therefore have alternatives if Russian gas supplies were disrupted.
5 EU attempts to exert geopolitical power through the construction of pipelines, such as the Nabucco project, have largely failed, thereby exposing the EU’s weakness as a geopolitical actor. Although the Commission has reasserted plans to develop a southern energy corridor, linking it to producers in the Caucasus and Central Asia while bypassing Russia, current projects have limited ambitions and seem unlikely to significantly reduce the Union’s gas dependence on Moscow.
6 The Energy Community includes the EU, Albania, Bosnia & Hercegovina, the former Yugoslav Republic of Macedonia, Kosovo, Moldova, Montenegro and Serbia, and Ukraine.
7 The Energy Community Treaty, 2006, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=URISERV:l27074&from=EN, accessed 24 March 2017; EU–Ukraine Deep and Comprehensive Free Trade Area, 2013, p. 7, available at: http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150981.pdf, accessed 24 March 2017.
8 ‘Market Legislation’, European Commission, available at: https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation, accessed 10 October 2018.
9 In addition, Finland and the Baltic states have their own direct pipeline connections to Russia.
10 ‘Gazprom Will Continue to Transit Gas via Ukraine—Miller’, Interfax, 4 April 2018, available at: http://interfaxenergy.com/gasdaily/article/30275/gazprom-will-continue-to-transit-gas-via-ukraine-miller, accessed 10 October 2018.
11 Gazprom’s statistics for gas delivered to Europe in 2017 are available at: http://www.gazpromexport.ru/en/statistics/, accessed 26 April 2018. Existing pipelines to Europe and Turkey that bypass Ukraine include Nord Stream (55 bcm/year), Yamal-Europe (33 bcm/year) and Blue Stream (16 bcm/year).
12 See also ‘Turkey, Russia Strike Strategic Turkish Stream Gas Pipeline Deal’, Hurriyet Daily News, 10 October 2016, available at: http://www.hurriyetdailynews.com/turkey-russia-strike-strategic-turkish-stream-gas-pipeline-deal.aspx?pageID=238&nID=104822&NewsCatID=348, accessed 22 March 2017.
13 ‘Russia Says South Stream Project is Over’, Euractiv, 2 December 2014, available at: https://www.euractiv.com/section/global-europe/news/russia-says-south-stream-project-is-over/, accessed 10 October 2018.
14 ‘South Stream Bilateral Deals Breach EU Law, Commission Says’, Euractiv, 4 December 2013, available at: http://www.euractiv.com/section/competition/news/south-stream-bilateral-deals-breach-eu-law-commission-says/, accessed 22 March 2017.
15 See also the next section.
16 Russian gas is currently supplied to European Turkey via Ukraine and the Trans Balkan Pipeline.
17 European companies that have an interest in building the pipeline include BASF, E.ON, ENGIE, Shell and ÖMV. In early September 2015, they signed a shareholders’ agreement with Gazprom for Nord Stream-2. However, their role in the project remains unclear due to legal challenges brought forward by Poland, which forced them to withdraw from the joint venture in late 2016 (Gotev Citation2018).
18 ‘Market Legislation’, European Commission, available at: https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation, accessed 10 October 2018.
19 ‘South Stream Bilateral Deals Breach EU Law, Commission Says’, Euractiv, 4 December 2013, available at: http://www.euractiv.com/section/competition/news/south-stream-bilateral-deals-breach-eu-law-commission-says/, accessed 22 March 2017.
20 See also ‘Antitrust: Commission Invites Comments on Gazprom Commitments Concerning Central and Eastern European Gas Markets’, European Commission, Press Release Database, 13 March 2017, available at: http://europa.eu/rapid/press-release_IP-17-555_en.htm, accessed 23 March 2017. If Gazprom does not uphold its commitments, the Commission could still impose a large fine of up to 10% of Gazprom’s annual turnover.
21 See ‘Dispute DS476: European Union and its Member States—Certain Measures Relating to the Energy Sector’, World Trade Organization, available at: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds476_e.htm, accessed 10 October 2018. See also Siddi (Citation2018a, p. 5).
22 ‘Gazprom Could Use Next 10 bcm of TAP Capacity to Supply Gas to EU—EC Official’, Interfax, 31 January 2018, http://www.interfax.com/newsinf.asp?id=806862, accessed 27 April 2018. The adjoining pipeline to Nord Stream-2 on German territory, Eugal, will be operated by a consortium with a majority of European companies, see ‘Gascade Names Three Partners for Eugal Pipeline Project’, Reuters, 18 October 2017, https://af.reuters.com/article/energyOilNews/idAFL8N1MT2M1, accessed 27 April 2018.
23 ‘Russia’s Novatek Launches Yamal LNG Project, 1st Cargo Loading Set for Friday’, Platts, 5 December 2017, available at: https://www.platts.com/latest-news/natural-gas/moscow/russias-novatek-launches-yamal-lng-project-1st-21730812, accessed 27 April 2018.
24 See for instance Dickel et al. (2014).
Additional information
Notes on contributors
Marco Siddi
Marco Siddi, Senior Research Fellow, Finnish Institute of International Affairs, Kruunuvuorenkatu 4, 00160 Helsinki, Finland. Email: [email protected]
