Eurasian Energy Security: Recent Trends in the European Game of Natural Gas Projects Abstract The paper discusses the development prospects of the major gas pipeline projects planned to link Europe to the Caspian region (Nabucco and South Stream), on the one hand, and to northwestern Siberia and the Barents Sea (Nord Stream), on the other hand. The analysis indicates the following: the construction work of Nord Stream‟s first phase will likely start in the late spring of 2010, though the project has no developed supply field for its second phase; Nabucco‟s fate is still uncertain, in spite of some recent political progress; and the South Stream project is a mere “paper tiger,” working mainly to undermine Nabucco. Besides, it is argued that the opening of the Central Asia-China pipeline, which gives Turkmenistan a major export outlet other than Russia, is a true “game changer,” and that along with the development of new LNG infrastructure, the promising results of “unconventional gas” developments in Hungary show that Europe‟s security of supply is not exhausted by the pipelines game. Keywords: Energy security, Southern Corridor, Nabucco, South Stream, Nord Stream, White Stream
1. Introduction: The EU-Russia energy interdependence
The EU currently imports more than 40% of its natural gas from Russia, a figure which is expected to rise to 60% by 2030. The level of dependence is
considerably higher for a number of European states which rely on Russian imports for virtually their entire gas needs.1 The situation did become a public concern during the Russo-Ukrainian “gas war” of January 2009, which left parts of South-East Europe in the cold for two weeks in the middle of the winter. Gazprom, the monopolist exporter owned 51% by the Russian state, which produces around 19.4% of the world’s total output of natural gas, sells two thirds of its gas to the EU countries. In 2006, for instance, Gazprom’s gas sales to Europe reached 161.5 billion cubic meters (bcm), exports to the CIS and the Baltic States amounted to 101 bmc, while the Russian domestic market received 316 bcm, or about 54.6% (Mitrova, 2008: 2). The Russian market price is considerably lower than what EU countries pay on average. Since about two thirds of Russia’s export earnings come from oil and gas, Europe is by far the largest and most profitable market for Russian energy sales. Apparently, the equation of energy interdependence between Europe and Russia is simple: the world’s biggest gas market meets the world’s largest gas producer, and each of them has what the other one needs. Yet the real picture is much more complicated. In fact, the situation is structurally dissatisfying for both parts. On the one hand, the EU member-states – despite important differences among them in their dependence on Russian gas and the warmth of their relations with Moscow – have grown concerned about Gazprom’s capacity to produce sufficient natural gas for the domestic market and its export obligations. These worries typically draw on the following kind of considerations: “Russia’s energy production remains imperiled by inefficiency, underinvestment, politicization, high taxes, and falling prices – not to mention the increasingly urgent search for ways of moving beyond a carbon-based economy” (Mankoff, 2009: 8). Besides, the newly entered members of the European Union have obvious
apprehensions about the possible Russian misuse of energy as a means of political coercion. Again, the January 2009 gas crisis galvanized the European
According to Gazprom, while Finland, Slovakia, Serbia and Bulgaria all import over 90% of their gas from Russia, states like Italy, France, Romania, the Netherlands and Belgium all depend for less than 25% on Gazprom.
determination to reduce that level of dependence, though this has not really translated into anything of a common, broad and coherent EU-level approach to energy security....