Geopolitics: Europe faces the Russian energy threat.

Last June, Russia cut gas supplies to Ukraine because of the civil war raging in the Donetsk region. These events demonstrate that oil and gas are now use by the Kremlin as means of intimidation and pressure upon other States.

“Gas Wars” which oppose Russia to Ukraine since the Orange Revolution of 2004 reflect the inability of the EU to conduct an independent foreign policy[1]. The EU-28 is extremely vulnerable to the threat of a gas shortage organized from Moscow and that is why the Russian government can easily take advantage of the situation. However, can Russia really afford to lose its main customer?

  • Ukraine gas crisis.    

Ukrainian recent events have increasing tensions between Europe and Russia. In November 2013, President Viktor Yanukovych has waived the accord of an association with the EU in order to face the Russian’s sanction threat. Aiming to increase the price of gas, Russia is ready to use energy as a weapon. The pro-European demonstrations, which were held later in Kiev and the West, have led to the fall of the government of Viktor Yanukovytch and the annexation of Crimea to Russia.

Nevertheless, the pending gas deliveries should resume shortly in Ukraine. Since last June, they have been stopped because of the on-going civil war at the Eastern borders but the conflict seems about to ended. An agreement was recently concluded under the aegis of the European Commissioner for Energy, resolving for a short time the war.

  • European participation in the mediation process.

On September 26, mediation of the European Commissioner Gunther Oettinger leaded to the signing of a winter plan between Russian and Ukrainian Ministers of Energy in Berlin. This temporary settlement had to ensure Ukraine’s gas supply until next spring in exchange for early payment but the current solution remains unsatisfactory. This agreement allows the delivery of 5 billion cubic meters of gas, needed by Ukraine for the coming winter if the immediate payment is a part of the gas debt (€ 3.1 billion arrears on € 5.2 billion being the total amount due to Moscow)[2].

The price charged to Ukraine (€ 308 for 1000 m3) remains undoubtedly lower than the price charged by Gazprom comparing to countries in the European Union (€ 382 for 1000 m3) but the cost is much higher than what Kiev has previously paid (€ 211 for 1000 m3) and the Ukrainian economy won’t certainly be able to sustain for the long term this gas value.

Nevertheless the contract has not been ratified yet, due to the fact that the Russian minister did not attend the meeting in Brussels on the 3rd of October. His absence was a way to reproach the non-respect of the cease-fire sign in Minsk to the Ukrainian army on the 5th of September[3].

  • The issue of the “reverse gas flow” and Moscow intimidations towards the EU.  

Central European countries (such as Poland, Czech Republic, Slovakia, Hungary) and Eastern Europe (Estonia, Latvia, Lithuania, Romania, Bulgaria) are entirely dependent upon Russian gas. Western European countries are less concerned but the price’s raise could affect them as well (Germany 33%, Italy 27%, France 26%). This constant has prevented them from conducting an independent foreign policy beyond their borders[4].

http://www.courrierinternational.com/

Map: The dependence of the EU on Russian Gas.

Photo credit: Courrier International.

Thus, in late September, Polish, Slovak and Hungarian gas companies, at the demand of Brussels, supplied for a few days Ukraine through the technique of the “reverse flows” but they have recorded a drop pressure in their pipelines[5]. This is clearly an intimidation from Moscow which believes that the re-export of gas to Ukraine is a manifest violation of contracts between the Western Companies and Gazprom.

  • An increasingly integrated EU-Russia energy system: is this interdependence beneficial? 

Russia exports 85% of its oil to the European Union. Henceforth their links appear to become increasingly narrow by virtue of the energy issue. Major Gas Western companies have taken a very important part in the consortium and are willing to build new pipelines bypassing Ukraine (Nord Stream and South Stream). The phenomenon of interdependence is strengthening by the contracts called “take or pay”: the buyer agrees to purchase annually an amount of gas from the supplier or to pay a penalty for the products he doesn’t take[6].

Thus, if the EU is said to be highly reliant on Russian natural resources, Russia must also sell its hydrocarbon exports knowing that its economy is based on the energy sale. This mutual dependence might be beneficial for international relations considering that it may explain the retention of the two sides during the conflict.

However, this interdependence is likely to diminish over time. The EU attempts to diversify its energy mix by using renewable energy and American shale gas, while Russia seems to win new customers in Asia.

Definitions:

Gas wars: conflicts concerning the price and distribution of natural gas from Russia through Ukraine.

Reverse gas flow: the fact for a country of the European Union to buy Russian gas for its own consumption and to sell it later to Ukraine.

[1] NIES (Suzanne), « L’énergie, l’UE et la Russie » dans « Hérodote », n°138, 3e trimestre 2010, p. 79-93.

[2] http://www.lemonde.fr/europe/article/2014/09/26/la-russie-et-l-ukraine-proches-d-un-accord-pour-retablir-les-livraisons-de-gaz_4495157_3214.html

[3] http://www.lemonde.fr/europe/article/2014/10/04/retard-dans-le-   reglement-du-contentieux-gazier-entre-moscou-et-kiev_4500524_3214.html

[4] MAZZUCCHI (Nicolas), « La manne énergétique russe : un vecteur géoéconomique d’influence au cœur des enjeux européens » dans « Les Grands Dossiers de Diplomatie » n°21, juin-juillet 2014, p. 24-29.

[5] http://www.lemonde.fr/economie/article/2014/09/11/le-gaz-russe-arme-d-intimidation-en-europe-centrale_4486241_3234.html

[6] MAZZUCCHI (Nicolas), « La puissance par les ressources » dans « Les Grands Dossiers de Diplomatie », n°5, octobre-novembre 2011, p. 37-42.

 

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1 réponse

  1. Artur BILICI dit :

    Molodetz, very good article!

    And don’t forget that Moscow never sleep 🙂

    https://www.youtube.com/watch?v=B6c7ajAYsJk

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