Gas market developments and their effect on relations between Russia and the EU

Abstract

The changes on the European Union (EU) gas market are likely to affect Europe's relations with its natural gas suppliers who are facing increasing competition. Heading this list of producing countries is Russia. Gas relations between Russia and the EU are characterised by strong interdependence. But these relations are currently being hampered by serious lack of understanding, making it difficult for the two parties to reach agreement on a new energy partnership. The aim of this article is to analyse the effects of this new European gas context on Gazprom's strategy and how the issues of energy security and cooperation between Russia and the EU will be affected by this new order.

Gazprom and the complexity of the EU gas market: a strategy to define

“…If it increases, securing adequate profitability, the company might be tempted to shoulder the cost of future price uncertainty in the EU market and trade at marginal prices for limited periods of time. It is essential to bear in mind that Gazprom's strategy with regard to the EU has never been wholly independent of its strategy in the home market, which accounts for most of its sales (Boussena and Locatelli 2011). …”

When Interdependence Produces Conflict: EU–Russia Energy Relations as a Security Dilemma

“…57 EU authorities are calling for a turn towards spot pricing, arguing that long-term contracts are a barrier for entry into the market and thus contradict the EU's policy of promoting competition in energy markets. 58 In September 2012, the European Commission launched an antitrust investigation against Gazprom which focuses on the company's policy of linking contract gas prices to oil prices. Proponents of the probe argue that through this policy Gazprom has illegally hindered the free flow of gas through Europe and prevented supply diversification.…”

Regional and international aspects of energy security

“…However, to interpret and explain the renewed imperial ambitions of Turkey, in no doubt strengthen its influence in the Balkans, especially in the last decade. 5 It is difficult to reliably assess whether it is part of a wider political settlement of some of the great powers, but Turkey remains the strongest and most reliable U.S. ally in the Middle East. The recent U.S.A. pressure on the European Union to speed Turkey's full membership speaks for the concerns of allies, but is also an effort to slow or prevent internal political diversion of the Turkish nation toward Islamic fundamentalism.…”