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EU–Russian Energy Links: A Marriage of Convenience?

  • Debra Johnson

Abstract

This article explores issues of energy supply security from the perspective of the EU–Russian energy relationship and of competing foreign energy policy paradigms. Using approaches developed by Peter Rutland within the context of Russia's energy policy towards the CIS and the three pillars of EU energy policy as a starting point, the article concludes that the overall EU–Russian energy relationship can be best explained through a framework of mutual interest and dependency: that is, the EU is becoming increasingly, but not totally, dependent on Russian energy, particularly gas; and Russia is becoming increasingly, but not totally, dependent on European markets. Nevertheless, other paradigms continue to yield useful insights in relation to individual components of the EU–Russian energy relationship.

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1 European Commission, For a European Union Energy Policy – Green Paper, Com (94) 659, 1994.

2 Further development of nuclear power has been a political non-starter for some years within the EU but the difficulties of building up renewables to a level at which they can make a meaningful contribution to potential supply shortfalls and the potential for nuclear to reduce greenhouse gas emissions means that the possibility of a nuclear power revival should not be entirely written off.

3 P. Rutland, ‘Oil, Politics and Foreign Policy’, in David Lane (ed.), The Political Economy of Russian Oil, Lanham, MD, Rowman & Littlefield, 1999, pp. 163–88.

4 According to the US Department of Energy's Energy Information Administration, Gazprom is obliged to sell natural gas to domestic consumers at about one-tenth of the export price and at less than cost. Energy Information Administration, Russia Country Analysis Brief, 2003, at www.eia.doe.gov/emeu/cabs/russia.html (accessed April 2004).

5 In May 2004, the EU and Russia signed an agreement concluding their bilateral market access negotiations as part of the WTO accession process. This involves Russia agreeing to gradual increases in gas prices to industrial consumers but pipeline and related issues remain unchanged.

6 For further information on the rise of the oligarchs and analysis of their role in Russia's transition, see the following: S. Hedlund, Russia's ‘Market’ Economy: A Bad Case of Predatory Capitalism, London, UCL Press, 1999; D. Hoffman, The Oligarchs: Wealth and Power in the New Russia, New York, Public Affairs Books, 2002; M. Goldman, The Piratization of Russia: Russian Reform Goes Awry, London, Routledge, 2003.

7 Delegation of the European Commission in Russia, Russia's Middle Term Strategy Towards the European Union (2000–2010), unofficial translation of Russia's response to the EU's Common Strategy, 2000, at http://www.eur.ru/eng/neweur/usereng.php?func=apage&id=53.

8 European Commission, Final Report on the Green Paper ‘Towards a European Strategy for the Security of Energy Supply’, COM (2002) 321.

9 European Commission, Energy and Transport in Figures, 2003, at (accessed April 2004).

10 European Commission, European Energy and Transport Trends to 2030, 2003, at (accessed April 2004) and European Commission, Final Report on the Green Paper.

11 Prospects for the EU of shifting out of oil are limited given that much of the easy oil substitution in the industrial and household sectors has already taken place and that two-thirds of EU oil demand is in transport and 98 per cent of transport demand is for oil. Alternative transportation fuels (e.g. fuel cells) are a technical possibility but commercial viability and dissemination will take time.

12 European Commission, Energy and Transport in Figures.

13 BP, BP Statistical Review of World Energy, BP, London. This review is published annually and is used as one of the core source of statistics for this article. Various issues have been used.

14 European Commission, Energy and Transport in Figures.

15 European Commission, European Energy and Transport Trends.

16 BP, BP Statistical Review.

17 European Commission, European Energy and Transport Trends.

18 European Commission, Energy and Transport in Figures.

19 Ibid.

20 Energy Information Administration, Russia Country Analysis Brief.

21 BP, for example, lost its investment in Sidanko, worth over $300 m; Elf Aquitaine abandoned a joint venture in the Komi field, as has Amoco at Priobskoe, and Texaco, Exxon and Norsk Hydro in Timon Pechora

22 International Energy Agency, Russia Energy Survey 2002, Paris, IEA, 2002, p. 35.

23 BP, BP Statistical Review.

24 Ibid.

25 Ibid.

26 Ibid.

27 European Commission, Energy and Transport in Figures.

28 BP, BP Statistical Review.

29 Ibid.

30 EU–Russia Summit, Joint Statement, Paris, 30 October 2000, at, http://europa.eu.int/comm/external_relations/russia/summit_30_10_01/statement_en.html.

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EU–Russian Energy Links: A Marriage of Convenience?

  • Debra Johnson

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