The Russian Rock: Re-landscaping
CEE energy (in)Dependence
Michael LaBelle, Assistant Professor
CEU Business School & Depa...
Outline
1. The era of dependence: Russian resources and technologies
2. The era of independence: Strategic shift away from...
Energy Dependence: Setting the landscape
Dependency Characteristics
• Pipelines
• Electrical grid
• Nuclear technology
• S...
Energy Independence: Markets and security
Independence Elements
• Re-orientation towards EU – Away from
Russia!
• FDI and ...
Establishing a new energy market: Actors
ERRA member and
new EU Member State
Year regulator legally
established
Year first...
The Shift:
Energy & Society
Bulgaria Anti-fracking protests
Bulgaria Electricity price protests
Hungary 10% electricity an...
Conclusion: Reaching Energy (in)Dependence
Market and Infrastructure Realities
• No mega-project
• Small scale diversifica...
Energy Dependent Energy (in)Dependent
Regional Security
• Interconnectors
• LNG
• Shale gas
• Storage
Investors out
State ...
Transition to (in)Dependence
Nabucco
strikes
out
Creating
Market
reforms
Building
Pipeline
network
Dependence
(1958 Druzbh...
Additional slides
Expansions and Privatizations
Company Acquisition and Divesture Transactions by year in New Member States
0
2
4
6
8
10
12
...
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The russian rock mcl presentation

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The Central Eastern European Region, including the Southeast of Europe, is heavily dependent on Russia’s energy resources. This includes gas, oil and nuclear technology. The ability to cement through physical infrastructure and human capital during Communism established a robust connected system of resources and expertise between the region’s countries and Russia. The headlines hold that gas security is the most contentious issue. But finding a solution to this dependency requires a complex and stable energy investment climate. Since the fall of the Berlin Wall and eastward expansion of the EU, diversification away from Russia was the overall most important headline issue.
There are three stages I outline here demonstrating evolution of the region’s energy system and the political-economic strategies involving Russia and the CEE and SEE countries. Stage one, fully dependent on Russian resources and technology; stage two, building an energy system semi-independent of Russia; and stage three, ‘(in)Dependence’ on Russia’s energy wealth, the recognition of benefits gained from dependence coinciding with diversification of energy sources. The energy landscape of the region remains the same with traversing pipelines and Russian supplied power plants, but diversification with neighbors and other EU countries improves the energy security of the new EU Member States.

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The russian rock mcl presentation

  1. 1. The Russian Rock: Re-landscaping CEE energy (in)Dependence Michael LaBelle, Assistant Professor CEU Business School & Department of Environmental Sciences and Policy Central European University Presentation for: ENERGY SECURITY AND DIPLOMACY IN 2013 August 26, 2013, Budapest
  2. 2. Outline 1. The era of dependence: Russian resources and technologies 2. The era of independence: Strategic shift away from Russia 3. The era of (in)Dependence: Rebalancing and realities Political Technocratic
  3. 3. Energy Dependence: Setting the landscape Dependency Characteristics • Pipelines • Electrical grid • Nuclear technology • State ownership • Direct political control Source: BBC
  4. 4. Energy Independence: Markets and security Independence Elements • Re-orientation towards EU – Away from Russia! • FDI and privatization of energy assets • Establishment of energy market • Institutional reform • Exploring supply diversification (LNG, interconnectors, storage – NETS!!) • Market reforms – Markets for security? • Nabucco vs. South Stream Source: LaBelle 2009
  5. 5. Establishing a new energy market: Actors ERRA member and new EU Member State Year regulator legally established Year first electricity or gas distribution company privatized with EU member company Bulgaria 1999 2004 Czech Republic 2001 2002 Estonia 1998 1997 Hungary 1998 1995 Latvia 1996 1997 Lithuania 1997 2001 Poland 1997 1997 Romania 1999 2005 Slovakia 2001 2002 Source: REKK 2008
  6. 6. The Shift: Energy & Society Bulgaria Anti-fracking protests Bulgaria Electricity price protests Hungary 10% electricity and gas cut 2009 Gas dispute No Nabucco The Russian Rock Poland’s faltering shale gas revolution War of Independence Ends: Russia and CEE Settle Gas Dispute
  7. 7. Conclusion: Reaching Energy (in)Dependence Market and Infrastructure Realities • No mega-project • Small scale diversification and security of supply investments • Political control remains • Isolation of technocrats • Out with complex market structures • Limitation: Overlooked regional integration and trading hubs International Relations: Trade-offs • EU: transparency, competition and technocratic approach • Russia: existing infrastructure, business and politics as usual • Investors? • No energy efficiency or RES • Status quo hedges political- economic risks • Maintain historical relations and infrastructure for greater political control, including national and international benefits
  8. 8. Energy Dependent Energy (in)Dependent Regional Security • Interconnectors • LNG • Shale gas • Storage Investors out State financed Price/Society Risk hedging IR considerations Regional focus (in)Dependent Market Security? Technocratic Privatization Alternatives? Complex Independent Transit Centralized Resource Centric Technology Reliable Dependent The Russian Rock remains
  9. 9. Transition to (in)Dependence Nabucco strikes out Creating Market reforms Building Pipeline network Dependence (1958 Druzbha pipeline) Independence (early/mid 1990s) (in)Dependence (2009)
  10. 10. Additional slides
  11. 11. Expansions and Privatizations Company Acquisition and Divesture Transactions by year in New Member States 0 2 4 6 8 10 12 14 16 1994 1996 1998 2000 2002 2004 2006 Year Companiesacquiredand divested CEZ EON EDF RWE Gaz de France LaBelle, Michael. “Expanding Opportunities: Strategic Buying of Utilities in New EU Member States.” Energy Policy 37, no. 11 (November 2009):.

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