EU gas policy transformation in the context of EU-Russia relations

The key factor that emerges in the EU policy discourse which coincides with the transformation of EU gas policy is the awareness that Russia can be a threat for the EU in the gas field. So, the EU needs to find all possible ways in order to ensure its gas security. Russia had been perceived as a reliable supplier of natural gas ever since the Soviet Union's in the 1970s, the 2006 and 2009 crises raised substantial questions to the EU about Russia's trustworthiness. The EU started to realise that Russia could use its position as a dominant gas export to blackmail the EU. So, the situation of crisis made the EU «woke up» and perceived the urgency for a common security strategy, a common energy policy and in general a deeper cooperation between Member States. The two crises represent the moment in which the security dilemma concretely emerged because the situation of mutual dependence started to be misbalanced and appeared the threat that Russia could have more power and the interdependence started to be asymmetrical. The EU experienced interdependence sensibility, that refers to the immediate costly effects, that is the interruption of gas supply and the consequently alarming situation.

According to the Realist framework, the EU acts only in order to safeguard its highest interests that are sovereignty, independence and survival. So, security is a primarily aspect in order to protect these vital interests. In this case, we can speak about energy security because as it has been analyzed in the theoretical chapter of this work, energy security is essential for the state survival. It follows that the two energy conflicts and the way Russia behaved can be considered as the main factor that have triggered the transformation of the EU gas policy in the direction we described, especially the introduction of the concept of «energy security». Anyway, taking into account the three factors that contextualize the situation before and during the gas conflicts (the evolution of the position of energy in international relations; Russia strengthening as an economical power; EU enlargements and increase of EU gas dependence) and the Realism theory, we can conclude that Russia more than a trigger factor, was an accelerator of the process of transformation of EU gas policy making appear the securitization discourse, stress more the principles of diversification (of supplier, country transit and infrastructures) and liberalization. Indeed, Member States in front to the emergency, understood the urgency to cooperate and further integrate in the gas field. The Commission was able to use this moment in order to speed up EU integration in the gas field using the situation as an alarming situation that requires special measures in order to be overcome and convince Member States to act according to the theory of securitization. The central issue is not if threats are real or not, but the ways in which a certain issue can be socially constructed as a threat. As it has been said, the point is not if Russia represented or not a threat to the EU energy security but the fact that the EU perceived it as a threat and act by consequences. The externalisation of the EU's internal energy market by the Third Energy Package is a form of securitization and can be considered the concrete and tangible instrument of securitization.

3.2 Possible scenarios for the future of EU gas policy in the context of relation with Russia

In this paragraph, the author will analyse the EU-Russia gas relations and give some possible scenarios and proposals for cooperation in the future.

As we said, EU-Russia gas relations are determined by an interdependence status in the energy field in general. EU is heavy dependent on Russia energy but also Russia is heavily dependent on EU gas exports. About 70% of Russian energy export goes to the EU. This represents half of the Russian budget. In the graphic below it is possible to see the energy resources of Russia compared to the world.

Natural gas reserve in Russia is 25% of the world gas reserve. Gazprom possesses the world's largest natural gas reserves. It has around 17% of the world's reserves and 72% of Russia's reserves. In the pictures below it is possible to see Russian gas exports distribution in Europe.

It follows that around 80% of Russia's natural gas exports go to countries in Western Europe (including Turkey), with 20% going to countries in Central Europe.

According to experts, the energy consumption in Europe is expected to see an increase in the share of gas, now in second place after oil.

As a consequence, it is evident by numbers that EU-Russia gas relations is dominated by an elevate degree of interdependence. There are two kinds of interdependence: interdependence sensibility, refers to immediate costly effects. For example, the EU undergoes immediate costly effects if Russia cut down its gas supply. On the other hand, there is the interdependence vulnerability, which refers to the costly effects in the long term. For example, it is when a country does not have alternatives to a certain supplier option or when MSs try to impose «take or pay» contracts instead of «long term» contracts. Interdependence vulnerability has also a strategic component. Both of the two kinds of interdependences could refer to supply or demand. This has a great implication for power because it is not only «the control over the resources» but «the potential to affect outcomes».

In this context, we can deduce that EU-Russia gas relations can be regarded in the Realist framework. The most significant aspect that derives is the fact that there is a clash of paradigms between them. The EU wants to liberalize the gas market not as an ideological preference but in order to get benefits from it and reduce Gazprom control over gas resources, while Russia wants to maintain a strong state intervention is this field. So, the different nature of gas markets of EU and Russia is linked to a different-interests approach. The EU wants to create «consumer market», characterized by maximum competition between gas suppliers leading to lower prices. On the other hand, Russia wants to maintain the «producer market» concept, characterized by the state control of energy suppliers, long-term contracts and separate investments deals.

Concerning the actual agreement in the gas field between the EU and Russia, in February 2011, the European Commission and the Russian government agreed to create a long-term perspective for their energy relations. The Roadmap should provide promising recommendations for strengthening cooperation between the EU and Russia in the energy decade by 2050. The contract was signed by G.H. Oettinger, a member of the European Energy Commission and the Minister of Energy of the Russian Federation, A.V. Novak. Strategic goals by 2050 should be the achievement of a European energy space, the functioning of an integrated network infrastructure, open, transparent, efficient and competitive markets. In order to achieve these goals and ensure energy security, cooperation between Russia and the EU in the energy sector is necessary. Goals concerning gas supplies: construction of new infrastructure, gas pipelines and repair of existing infrastructure, increase in gas production; development of liquefied natural gas production; increase in liberalization and competition in the gas market.

As it has been said, the EU wants to diversify gas imports but it is not easy to find alternatives. In fact, Algeria is a vulnerable partner, the TANAP pipeline from Azerbaijan through Georgia and Turkey is not yet operational and Norway does not have enough gas for the EU. Liquefied natural gas opens up new import possibilities for the EU but it is more expensive than natural gas because it requires new and costly infrastructures. It follows that not finding any better alternatives, gas imports from Russia have increased in the recent years. The responsibility of this increasing needs also to be linked with the new Nord Stream gas pipeline, which has been in operation since 2012. Since that moment, only 16% of gas imports to the EU from Russia pass through Ukraine (previously it was 80%). So, the Nord Stream pipeline increased the gas dependence from Russia. Concerning diversification of supply, in September 2016, the European Parliament published a report on liquefied natural gas. The document says that liquefied natural gas represents an alternative to pipeline gas supplies and it can contribute to the EU's diversification and security. It is likely that in the long term this will affect the cost of gas in the EU and future gas pipeline projects with Russia. In fact, the international energy agency predicts that the US will become the third exporter of liquefied natural gas by 2020 and can export a significant amount of liquefied natural gas to the EU. Also, export of liquefied natural gas from other countries can play a big role in changing the gas market. Research work from Columbia University has shown that liquefied natural gas from the US will not exclude EU dependence on Russian gas, but it can provide important diversification of supply and types of contracts since supplies from the US are not related to long-term contracts as deliveries from Russia.

On the other hand, also Russia wants to diversify its exports: it signed an agreement with China on gas exports through a new gas pipeline. Gazprom said the company plans to supply gas to China via the east route of the China-Russia natural gas pipeline as early as May 2019, while at the beginning was planning for 2018.

EU-Russia gas energy relations got worse following Russia-Ukraine energy disputes. To this aspect it needs to be add the negative reaction of Russia after the adoption of the Third Energy Package. Russia perceived it as an unfair aggression against Russia and an instrument of geopolitical influence.

As already mentioned, both EU and Russia do not have a wide choice of diversification of suppliers by one side and demand by another, and therefore it is very likely that Russia will remain the main gas supplier for the EU in the near future. Moreover, according to IEA forecasts, Russia will become the largest gas producer in the world in 2035 and make the largest contribution to the growth of supply during the forecast period. Of course, it is difficult to make forecasts in the long term, as much depends on new technologies, new types of energy and on the political situation. Regional gas markets, particularly in North America and Asia, will have an increasing impact on EU-Russia gas relations and may affect the level of prices in the EU.

Concerning the scenarios about EU-Russia gas relations, it is likely that in the near future Russia and the EU will try to find new alternative routes to bypass Ukraine and «unstable countries» (as in fact they have already begun to do so). In order to find an agreement on new infrastructures built on common interests, Russia and the EU should trust each other, and must proceed from the fact that both need each other in the gas field and for this reason it is important to build stronger cooperation in this area. The goal should be to reduce uncertainty, recognizing that the continuation and deepening of gas relations will require significant investment for both sides. As we described in the second chapter of this work, the EU's approach to gas relations with Russia encompasses a multiplicity of actors and interests, which means that a coherent European gas policy is difficult to put into practice, both internally and externally. It follows that bilateral agreements between Member States and Russia will continue to prevail.

The recommendations that this work wants to give to both sides:

- reducing the risks associated with infrastructure and ensuring uninterrupted transportation between Russia and the EU;

- develop cooperation within the energy dialogue between the EU and Russia on specific gas infrastructure projects and support for new gas infrastructures that are of interest for both Russia and the EU;

- creation of a joint operational platform for Europe, Russia and other operators;

- promotion of Russian business investment in the gas sector in the EU and the opposite;

- develop scientific and technical cooperation between Russia and the EU in the field of production and transportation.

The conclusions of this chapter are the following:

- the two Ukraine-Russia energy disputes triggered the introduction of the term «energy security» in the EU political discourse;

- Russia was an accelerator of the process of transformation of EU gas policy;

- Member States considered the two Ukraine-Russia energy disputes as an emergency situation and understood the urgency to cooperate and further integrate in the gas field;

- EU-Russia gas relations are dominated by an elevate degree of interdependence;

- there is a clash of paradigms between EU and Russia in the gas field because of different-interests approach: EU wants to create a «consumer market», while Russia a «producer market».

- both EU and Russia do not have a wide choice of diversification and therefore it is very likely that Russia will remain the main gas supplier for the EU in the short-term prospective.

- bilateral agreements in the gas field between Member States and Russia will continue to prevail.

Conclusion

EU gas policy transformation in the context of EU-Russia relations is a very complex and multifaceted topic because it encompasses different notions, players and interests. For this reason, in this work three different theories have been used in order to completely analyse this topic. The theory of Liberal Intergovernmentalism is able to describe EU gas policy integration, Realism can be used to study EU-Russia gas relations and the Theory of Securitization wants to examine how issues perceived as a threat are securitized.

Referring to EU gas policy integration, the author concluded that EU gas policy integration is slower than other energy policies due to the complexity and particularity of the gas market, that is characterized by a monopolistic structure due to its distinctive traits as a regional market regulated by long-term contracts. In fact, ccompetences in the energy field are shared between the EU and its MSs. MSs can decide their energy mixes and conduct bilateral energy relations with non-EU countries. Member States want to keep their control over gas policy and have divergent standpoints in shaping the EU gas policy as the case studies of Germany, Poland and Italy analyses in this work have shown. This is evident when practical pipelines projects are taken into account. In fact, different interests emerged as it has been described in the cases of Nord Stream and Nord Stream 2. Germany's position is strengthening in the EU and in gas relations with Russia, leading to the division between MSs within the EU. The absence of integrity of EU gas policy in relation with the different interests of MSs shows the weakness of the EU gas policy. It follows, that is possible to conclude that there is no basis for an efficient Energy Union because there is still a gap between EU gas policy discourse and gas policy practice. This is because gas is intrinsically linked with the concept of security and each Member States still wants to keep its control over it. Moreover, energy and gas in particular, is the only element able to influence so much global politics and economics in the current international system.

Following the two Ukrainian gas disputes, EU gas policy transformed and moved to the direction of new principles and priorities: energy security, diversification, liberalization and renewable energy. This transformation was triggered mostly but not completely by Russia since there are some context factors that also have contributed to this transformation: the evolution of the position of energy in international relations, new economic powers and growing of the gas demand, EU enlargements and increase of EU gas dependence and skepticism towards Russia. It follows that Russia triggered the EU gas policy transformation. Russia accelerated EU gas policy integration and triggered the direction of this transformation. In fact, without Russia as a trigger factor, it is likely that the EU integration in the gas field would have been much slower. The central factor of this transformation was activated by the awareness of the urgency to take extraordinary measures in order to ensure EU gas security, like the Third Energy Package.

Speaking about EU-Russia gas relations, it has been concluded that they are dominated by an elevate degree of interdependence. This interdependence is at the basis of the security dilemma, which shape their gas relation. EU needs Russian gas in order to sustain its economy and Russia needs to sale its gas to the EU for the same reason. The interdependence between EU and Russia do not lead to cooperation because both sides consider that future interdependence to be asymmetrical, that is they would become more dependent than the other side, so more vulnerable and weak. In other words, they perceive each other as a threat to their own security. Moreover, there exists a clash of paradigms between EU and Russia in the gas field because of different-interests approach: EU wants to create a «consumer market», while Russia a «producer market». The EU wants to institutionalize EU-Russia energy relations and export its normative values in order to liberalise the EU-Russia gas market, while Russia opposes and refuses to adopt the EU norms and align its legislation with them. Even if both countries want to diversify by each other in order to reduce this interdependence, EU and Russia do not have a wide choice of diversification. Therefore, it is very likely that Russia will remain the main gas supplier for the EU in the short-term prospective. The most convenient thing to do for both sides is to cooperate in the gas field, encompassing the actual political difficulties and divergences. The author tried to give some recommendation in order to develop EU-Russia cooperation in the gas field: reducing the risks and ensuring uninterrupted transportation between Russia and the EU, develop cooperation and energy dialogue when common interests are met in specific gas infrastructures, promote mutual investment in this sector.

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