Past episodes of energy insecurity have been fleeting and the fears have been assuaged by market forces or technical change. This paper analyses the nature of the EU's current energy security problems, emphasising the increased importance of natural gas and high level of dependence on Russian supplies through a small number of pipelines. Building alternative pipeline routes is expensive and with finite reserves in any gas field pipelines may be mutually exclusive; especially since China has entered the market for Central Asian gas, new non-Russian pipelines to the EU may not be economically feasible. However, global gas reserves are large, and high energy prices in the 2000s encouraged investment in alternative delivery modes, notable liquefied natural gas (LNG). As a spot market for LNG emerges EU energy-importing countries may face volatile prices, but will not be exposed to insecurity of supply.
Authored by: Richard Pomfret
Published in 2010
EUROPEAN GAS MARKETS – DO YOU THINK IT WILL BE VIABLE FOR EUROPEAN MARKET TO ...archanasingh388
The European natural gas market is facing a number of changes in the mid to long term.
Decreasing European production, especially in the Netherlands until 2030, entails a growing level of imports in many non-producer
countries.
Additionally, due to ongoing geopolitical tension, e.g. Russia- Ukraine crisis, and the goal of security of supply, the European Union (EU) has put forward plans to pursue the
strategy of creating an EU Energy Union in order to diminish its dependence on Russian natural gas supplies.
This paper proposes a Transit Risk Index (TRI) designed to assess the riskiness of pipeline gas imports and to study the effect of introducing new gas routes. TRI controls for gas dependency, transit route diversification, political risks of transit, pipeline rupture probability, and the balance of power between supplying and consuming countries along the transit route. Evaluating TRI for the EU-Russia gas trade, we show that the introduction of the Nord Stream pipeline would further widen already large disparities in gas risk exposure across the EU Member States. The gas risk exposure of the Member States served by Nord Stream would decline. In contrast, EU countries not connected to Nord Stream, but sharing other Russian gas transit routes with the Nord Stream countries, would face greater gas risk exposure. We discuss the implications of our analysis for the design of the common energy policy in the EU.
Find more research papers at: https://www.hhs.se/site
The European Union’s (EU) consumption of natural gas has been growing rapidly over the last two decades. Gas has become an increasingly important component of the EU’s energy mix, with gas-fired power plants gradually replacing less environmentally friendly coal plants. Domestic gas production covered close to 60 percent of the EU’s consumption needs during the 1990s, but by 2007 it declined substantially around 40 percent (see Figure 1). The rest is imported from three main sources: Russia (around 40 percent of total gas imports), Norway (around 25 percent) and various African countries among them Algeria, Nigeria, Libya and Egypt which account for around 25 percent. The last few years have also heightened public worries in Europe over the security of its gas supplies, primarily those imports coming from Russia. These fears were partly confirmed in January 2009 when several EU and non- EU countries faced a sudden cut in their gas supplies. The Russian- Ukrainian stand-off only reinforced the argument that more needs to be done to strengthen the reliability of access to vital energy resources.
Authored by: Wojciech Paczynski
Published in 2009
EUROPEAN GAS MARKETS – DO YOU THINK IT WILL BE VIABLE FOR EUROPEAN MARKET TO ...archanasingh388
The European natural gas market is facing a number of changes in the mid to long term.
Decreasing European production, especially in the Netherlands until 2030, entails a growing level of imports in many non-producer
countries.
Additionally, due to ongoing geopolitical tension, e.g. Russia- Ukraine crisis, and the goal of security of supply, the European Union (EU) has put forward plans to pursue the
strategy of creating an EU Energy Union in order to diminish its dependence on Russian natural gas supplies.
This paper proposes a Transit Risk Index (TRI) designed to assess the riskiness of pipeline gas imports and to study the effect of introducing new gas routes. TRI controls for gas dependency, transit route diversification, political risks of transit, pipeline rupture probability, and the balance of power between supplying and consuming countries along the transit route. Evaluating TRI for the EU-Russia gas trade, we show that the introduction of the Nord Stream pipeline would further widen already large disparities in gas risk exposure across the EU Member States. The gas risk exposure of the Member States served by Nord Stream would decline. In contrast, EU countries not connected to Nord Stream, but sharing other Russian gas transit routes with the Nord Stream countries, would face greater gas risk exposure. We discuss the implications of our analysis for the design of the common energy policy in the EU.
Find more research papers at: https://www.hhs.se/site
The European Union’s (EU) consumption of natural gas has been growing rapidly over the last two decades. Gas has become an increasingly important component of the EU’s energy mix, with gas-fired power plants gradually replacing less environmentally friendly coal plants. Domestic gas production covered close to 60 percent of the EU’s consumption needs during the 1990s, but by 2007 it declined substantially around 40 percent (see Figure 1). The rest is imported from three main sources: Russia (around 40 percent of total gas imports), Norway (around 25 percent) and various African countries among them Algeria, Nigeria, Libya and Egypt which account for around 25 percent. The last few years have also heightened public worries in Europe over the security of its gas supplies, primarily those imports coming from Russia. These fears were partly confirmed in January 2009 when several EU and non- EU countries faced a sudden cut in their gas supplies. The Russian- Ukrainian stand-off only reinforced the argument that more needs to be done to strengthen the reliability of access to vital energy resources.
Authored by: Wojciech Paczynski
Published in 2009
UNPI : Observatoire des taxes foncières sur les propriétés bâties entre 2008-...Monimmeuble.com
Depuis huit ans, l’UNPI a créé l’Observatoire des taxes foncières. Le but de cet Observatoire est de mesurer précisément l’augmentation de la taxe foncière sur les propriétés bâties dans toutes les communes de France.
Conférence de presse du 14 octobre 2014
http://www.unpi.org/
The recent record-high gas prices have triggered legitimate concerns regarding the EU’s energy security, especially with dependence on natural gas from Russia. This brief discusses the historical and current risks associated with Russian gas imports. We argue that decreasing the reliance on Russian gas may not be feasible in the short-to-mid-run, especially with the EU’s goals of green transition and the electrification of the economy. To ensure the security of natural gas supply from Russia, the EU has to adopt the (long-proclaimed) coordinated energy policy strategy.
UNPI : Observatoire des taxes foncières sur les propriétés bâties entre 2008-...Monimmeuble.com
Depuis huit ans, l’UNPI a créé l’Observatoire des taxes foncières. Le but de cet Observatoire est de mesurer précisément l’augmentation de la taxe foncière sur les propriétés bâties dans toutes les communes de France.
Conférence de presse du 14 octobre 2014
http://www.unpi.org/
The recent record-high gas prices have triggered legitimate concerns regarding the EU’s energy security, especially with dependence on natural gas from Russia. This brief discusses the historical and current risks associated with Russian gas imports. We argue that decreasing the reliance on Russian gas may not be feasible in the short-to-mid-run, especially with the EU’s goals of green transition and the electrification of the economy. To ensure the security of natural gas supply from Russia, the EU has to adopt the (long-proclaimed) coordinated energy policy strategy.
Ukrainian Hydrogen Export Potential: Opportunities and Challenges in the Ligh...EnergyAssociationUkr
Against the background of the ongoing war of aggression, the working paper analyzes the
opportunities and challenges of Ukraine in the topic of hydrogen and Power-to-X products.
The main findings are:
Despite the ongoing war, the EU remains interested in Ukraine as a potential future
supplier of hydrogen, to meet European energy demand and support Ukraine’s recovery.
Ukraine must adopt European standards for hydrogen and comply with European
legislation for hydrogen exports to the EU.
Green steel could become an important export product in the future, generating
additional revenues and enabling local value creation in the country.
Ukraine as well as the relevant transit countries have well-established infrastructure for
exporting hydrogen and Power-to-X products to Western Europe via pipelines and
seaports, but the repurposing of this infrastructure needs to be further investigated.
Important energy infrastructures and land for potential renewable energy (RE)
deployment are currently occupied by the Russian military. Apart from that, the war's
uncertain duration and outcome increase the risks of investing in developing the large RE
potential in Ukraine. As a result, low-cost RE might only be sufficient to cover domestic
demand.
Opportunities and obstacles: The development of a hydrogen economy can bring sociopolitical advantages, such as new jobs. Nevertheless, large-scale hydrogen production in
Ukraine might be limited due to water scarcity and competitive water use for the
agricultural sector and could imply higher energy costs for households.
Authors:
Natalia Sukurova, Martin Wietschel, Joshua Fragoso Garcia, Viktor Paul Müller, Katja Franke,
Anne Kantel (Fraunhofer ISI)
Marieke Graf, Eddy Jalbout, Natalia Pieton, Hazem Abdel-Khalek, Emily Bergup (Fraunhofer IEG)
Friedrich Weise (Fraunhofer ISE)
Essay based on the crisis in Ukraine and the role of the access to energy resources (oil and natural gas) in developing/resolving the conflict, with the focus on relations between two super powers EU and Russia.
The security of energy supply is one of the main objectives of the common energy policy on the EU. In this paper, we provide an index that evaluates the risks associated with the external energy supply of the EU Member States. The index is designed to access the short-term risk to the supply security. The index combines measures of energy import diversi cation, political risks of the supplying country, risk associated with energy transit, and the economic impact of a supply disruption for each energy type. We provide estimates for a sample of eighteen EU Member States and for three primary energy sources: oil, gas and coal. We construct a separate index for each energy type and demonstrate that European countriesexposure to risks di¤ers across energies. Most other studies provide an aggregate index that combines di¤erent types of energy. Our results suggest that an aggregate approach might be misleading at least as regards the short-term
response to risks. We also nd that the relative contribution to the overall European risk exposure di¤ers across EU Member States. We discuss the implications of our ndings for the common energy policy.
Version of July 2, 2008. Please check for updates http://www.sciencedirect.com/
Read more research publications at: https://www.hhs.se/site
Today EU’s and most of the countries’ main concern is energy security. How they reach energy at an affordable price, reliable, diverse and abundant supplies, is the main question. Moreover, energy security composed of commonly with Supply ‘Consumers’, Transportation, Demand ‘Producers’ and Physical Security ‘Producer and Consumer’. Because there is a struggle over resources, EU, ‘national and supranational governance’ should take challenges, opportunities well in to consideration
Memorandum of the 5th Section of International Security Forum - "ENERGY SECURITY BETWEEN THE EU-UKRAINE-RUSSIA: FROM CRISIS TO TRUST GAINING MEASURES", April 16, 2010, Lviv, Ukraine
This presentation was presented by Chloé Le Coq during the annual SITE Development Day 2021 conference at Stockholm School of Economics via Zoom.
Disclaimer: SITE has the permission from Chloé Le Coq to upload this presentation slide.
Poland’s Energy Security in the Context of the EU’s Common Energy Policy. The...Michal
The concept of energy security can be rather difficult to precisely define. In fact,
the scope of energy security includes a somewhat different set of issues in the
gas sector than in the electricity sector. After all, electricity can be produced in
every country of the European Union, but gas extraction is possible only in some.
Natural gas is a commodity which constitutes a significant component of the export
policy of only a few countries. As a result, the scarcity of gas in the EU makes it
a very desirable resource for many countries, some of which are taking important
energy-related decisions without consulting or assessing their impact on other
Member States. This hampers the coordination of energy policy and the setting
of common objectives with regard to energy security for the EU as a whole. The
lack of cooperation among Member States has a clearly more negative impact on
Poland and the other new Member States (which depend on a single gas supplier)
than on the old EU-15, whose gas supply is generally well diversified. Moreover,
the lack of proper infrastructure and cross-border connections puts in question the
creation of a solid energy policy at the EU level in the gas sector.
EU energy policy
refereces: different references; nothing came from me. all of the informations were lifted from different sites, from EU files to different ppt presentations.
ProThe emergence of the wind energy industry in Germany and the United Kingdo...Camilla Chlebna
Research Proposal for the purpose of presentation to the Humanities Research Council at Oxford Brookes University in order to be officially registered as PHD student
3 RD EUROPEAN-UKRAINIAN ENERGY DAY Analysis and Recommendations. Conference ...ICPS
Conference Summary Report:
3
RD
EUROPEAN-UKRAINIAN ENERGY DAY
Analysis and Recommendations
May 29
th
2012
InterContinental Hotel Kyiv, Ukraine
Authors: Vivica Williams, Devin Ackles, LarionLozovoy&KaterinaMalygina, International Centre for
Policy Studies
Contents lists available at ScienceDirectRenewable and SusAlleneMcclendon878
Contents lists available at ScienceDirect
Renewable and Sustainable Energy Reviews
journal homepage: www.elsevier.com/locate/rser
Editorial
Sustainable development of energy, water and environment systems 2016
A R T I C L E I N F O
Keywords:
Bioenergy
Climate change
District heating
Energy efficiency
Energy security
Fuel poverty
Low energy buildings
Renewable energy
Rural development
Solar power
Sustainability
A B S T R A C T
This paper presents the editorial for the Renewable and Sustainable Energy Reviews joint special issue devoted
to the research work discussed and presented at the 11th Conference on Sustainable Development of Energy,
Water and Environment Systems (SDEWES), held from the 4th September to the 9th September 2016 in Lisbon,
Portugal and the 2nd South East European (SEE) SDEWES Conference held from June 15th to June 18th, 2016 in
Piran, Slovenia. This special issue is in line with the journal's aim of publishing research from across the ever-
broadening field of renewable and sustainable energy with a strong review element. Previous SDEWES con-
ference special issues have gathered a significant knowledge base in the field of sustainable development that
reflects the continuous research efforts of the SDEWES research community. Therefore, this editorial provides
not only an overview of the papers published in this particular special issue, but also a wider overview of the
current trends in the domain of sustainable and renewable energy. This year's special issue focuses particularly
on the benefits of the bio-based economy, energy security issues, fossil fuel thermal plant alternatives and
environmental constraints, district heating and cooling together with cross sector energy efficiency and energy
conservation issues. Sustainable transport systems, the issue of fuel poverty in urban neighbourhoods and re-
newable energy to support development of peripheral rural areas, optimising passive building design for hot
climates and solar-powered heating and cooling are further topics featured in this special issue. In the process of
selecting papers for this special issue, the guest editors invited in total 23 extended manuscripts for consideration
for publication. After a rigorous review process by expert reviewers overseen by the guest editors a total of 16
articles were accepted for publication.
1. Introduction
The annual Sustainable Development of Energy, Water and Environment Systems (SDEWES) conference [1] is one of the world's foremost events
for researchers in sustainable technologies to gather and present their latest findings. Similar to other sister special issues published in Renewable
and Sustainable Energy Reviews [2], the more recently established South East European Conference on Sustainable Development of Energy, Water
and Environment Systems (SEE SDEWES) provides a similar forum for researchers with a strong regional focus. This Special Issue of Renewable &
Sustainable Energy Reviews gathers together 16 o ...
The report examines the social and economic drivers and impact of circular migration between Belarus and Poland, Slovakia, and the Czech Republic. The core question the authors sought to address was how managing circular migration could, in the long term, help to optimise labour resources in both the country of origin and the destination countries. In the pages that follow, the authors of the report present the current and forecasted labour market and demographic situation in their respective countries as well as the dynamics and characteristics of short-term labour migration flows between Belarus and Poland, Slovakia, and the Czech Republic, concentrating on the period since 2010. They also outline and discuss related policy responses and evaluate prospects for cooperation on circular migration.
Podręcznik został opracowany w celu przekazania trenerom i nauczycielom podstawowej wiedzy, która może być przydatna w prowadzeniu szkoleń promujących pracę rejestrowaną. Prezentuje on z jednej strony korzyści z pracy rejestrowanej, z drugiej – potencjalne koszty związane z pracą nierejestrowaną. W pierwszej kolejności informacje te przedstawiono w odniesieniu do pracowników najemnych (rozdział 2), podkreślając w sposób szczególny to, że negatywne konsekwencje pracy nierejestrowanej są ponoszone przez całe życie. Ze względu na specyficzną sytuację cudzoziemców pracujących w Polsce konsekwencje ponoszone przez tę grupę opisano oddzielnie (rozdział 3). Ponadto zaprezentowano skutki dotyczące pracodawców z szarej strefy z wyodrębnieniem tych, którzy zatrudniają cudzoziemców (rozdział 4). Uzupełnieniem przedstawionych informacji jest opis działań podejmowanych przez państwo w celu ograniczenia zjawiska pracy nierejestrowanej w Polsce (rozdział 5) oraz prowadzonych w Wielkiej Brytanii, czyli w kraju będącym liderem w walce z szarą strefą (rozdział 6).
European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
One of the key instruments applied toward these goals is the retirement age. Formally it is a legally established boundary: once people have crossed it – on average – they significantly lose their ability to perform work (the so-called old-age risk). But since the 1970s, in many developed countries the retirement age has become an instrument of social and labor-market policy. Specifically, in the 1970s and ‘80s, an early retirement age was perceived as a solution allowing a reduction in the supply of labor, particularly among people with relatively low competencies who were approaching retirement age, which is called the lump of labor fallacy. It was often believed that people taking early retirement freed up jobs for the young. But a range of economic evidence shows that the number of jobs is not fixed, and those who retire don’t in fact free up jobs. On the contrary, because of higher spending by pension systems, labor costs rise, which limits the supply of jobs. In general, a good situation on the labor market supports employment of both the youngest and the oldest labor force participants. Additionally, a lower retirement age for women was maintained, which resulted to a high degree from cultural conditions and norms that are typical for traditional societies.
Until now, the banking sector has been one of the strong points of Poland’s economy. In contrast to banks in the U.S. and leading Western European economies, lenders in Poland came through the 2008 global financial crisis without a scratch, without needing state financial support. But in recent years the industry’s problems have been growing, creating a threat to economic growth and gains in living standards.
For an economy’s productivity to increase, funds can’t go to all companies evenly, and definitely shouldn’t go to those that are most lacking in funds, but to those that will use them most efficiently. This is true of total external financing, and thus funding both from the banking sector and from parabanks, the capital market and funds from public institutions. In Poland, in light of the relatively modest scale of the capital market, banks play a clearly dominant role in external financing of companies. This is why the author of this text focuses on the bank credit allocation efficiency.
The author points out that in the very near future, conditions will emerge in Poland which – as the experience of other countries shows – create a risk of reduced efficiency of credit allocation to business. Additionally, in Poland today, bank lending to companies is to a high degree being replaced by funds from state aid, which reduces the efficiency of allocation of external funds to companies (both loans and subsidies), as allocation of government subsidies is not usually based on efficiency. This decline in external financing allocation efficiency may slow, halt or even reverse the process, that has been uninterrupted for 28 years, of Poland’s convergence, i.e. the narrowing of the gap in living standards between Poland and the West.
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance.
This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.
Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of
individuals into informal employment, I use a rich set of control variables representing several individual characteristics.
Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is
stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland.
Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland.
But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020).
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported.
In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019.
Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion).
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic.
A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
"Many brilliant prophecies have appeared for the future of the EU and our entire planet. I believe that Europe, in its own style, will draw pragmatic conclusions from the crisis, not revolutionary ones; conclusions that will allow us to continue enjoying a Europe without borders. Brussels will demonstrate its usefulness; it will react ably and flexibly. First of all, contrary to the deceitful statements of members of the Polish government, the EU warned of the threats already in 2021. Secondly, already in mid-March EU assistance programs were ready, i.e. earlier than the PiS government’s “shield” program. The conclusion from the crisis will be a strengthening of all the preventive mechanisms that allow us to recognize threats and react in time of need. Research programs will be more strongly directed toward diagnosing and treating infectious diseases. Europe will gain greater self-sufficiency in the area of medical equipment and drugs, and the EU – greater competencies in the area of the health service, thus far entrusted to the member states. The 2021-27 budget must be reconstructed, to supplement the priority of the Green Deal with economic stimulus programs. In this way structural funds, which have the greatest multiplier effect for investment and the labor market, may return to favor. So once again: an addition, as a conclusion from the crisis, and not a reinvention of the EU," writes Dr. Janusz Lewandowski the author of the 162nd mBank-CASE seminar Proceeding.
Dla wielu rodaków europejskość Polski jest oczywista, trudno jest im nawet wyobrazić sobie, jak kształtowałyby się losy naszego kraju bez uczestnictwa w integracji europejskiej. Szczególnie młode pokolenie traktuje osiągnięty przez nas dzięki uczestnictwie w Unii ogromny postęp cywilizacyjny jako coś danego i naturalnego. Jednak świadomość tego, jaki był nasz punkt wyjścia, jaką przeszliśmy drogę i jak przyczyniły się do tego unijne działania oraz jakie wynikały z tego korzyści powinna nam stale towarzyszyć. Bez tej świadomości, starannego weryfikowania faktów i docenienia naszych osiągnięć grozi nam uleganie niesprawdzonym argumentom przeciwników integracji europejskiej i popełnienie nieodwracalnych błędów. Dla tych, którzy chcą poznać te fakty, przygotowany został raport "Nasza Europa. 15 lat Polski w Unii Europejskiej". Podjęto w nim ocenę 15 lat członkostwa Polski z perspektywy doświadczeń procesu integracji, z jego barierami i sukcesami, a także wyzwaniami przyszłości.
Raport jest wynikiem pracy zbiorowej licznych ekspertów z różnych dziedzin, od wielu lat analizujących wielowymiarowe efekty działania instytucji UE oraz współpracy z krajami członkowskimi na podstawie europejskich wartości i mechanizmów. Autorzy podsumowują korzyści członkostwa Polski w Unii Europejskiej na podstawie faktów, nie stroniąc jednakże od własnych ocen i refleksji.
This report is the result of the joint work of a number of experts from various fields who have been - for many years – analysing the multidimensional effects of EU institutions and cooperation with Member States pursuant to European values and mechanisms. The authors summarise the benefits of Poland’s membership in the EU based on facts; however, they do not hide their own views and reflections. They also demonstrate the barriers and challenges to further European integration.
This report was prepared by CASE, one of the oldest independent think tanks in Central and Eastern Europe, utilising its nearly 30 years of experience in providing objective analyses and recommendations with respect to socioeconomic topics. It is both an expression of concern about Poland’s future in the EU, as well as the authors’ contribution to the debate on further European integration.
Poland’s new Employee Capital Plans (PPK) scheme, which is mandatory for employers, started to be implemented in July 2019. The article looks at the systemic solutions applied in the programme from the perspective of the concept of the simultaneous reconstruction of the retirement pension system. The aim is to present arguments for and against the project from the point of view of various actors, and to assess the chances of success for the new system. The article offers a detailed study of legal solutions, an analysis of the literature on the subject, and reports of institutions that supervise pension funds. The results of this analysis point to the lack of cohesion between certain solutions of the 1999 pension reform and expose a lack of consistency in how the reform was carried out, which led to the eventual removal of the capital part of the pension system. The study shows that additional saving for old age is advisable in the country’s current demographic situation and necessary for both economic and social reasons. However, the systemic solutions offered by the government appear to be chiefly designated to serve short-term state interests and do not create sufficient incentives for pension plan participants to join the programme.
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991.
As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Estonia has Europe’s most transparent tax system (while Poland is second-to-last, in 35th place), and is also known for its pioneering approach to taxation of legal persons’ income. Since 2000, payers of Estonian corporate tax don’t pay tax on their profits as long as they don’t realize them. In principle, this approach should make access to capital easier, spark investment by companies and contribute to faster economic growth. Are these and other positive effects really noticeable in Estonia? Have other countries followed in this country’s footsteps? Would deferment of income tax be possible and beneficial for Poland? How would this affect revenue from tax on corporate profits? Would investors come to see Poland as a tax haven? Does the Estonian system limit tax avoidance and evasion, or actually the opposite? Is such a system fair? Are intermediate solutions possible, which would combine the strengths or limit the weaknesses of the classical and Estonian models of profit tax? These questions are discussed in the mBank-CASE seminar Proceeding no. 163, written by Dmitri Jegorov, deputy general secretary of the Estonian Finance Ministry, who directs the country’s tax and customs policy, Dr. Anna Leszczyłowska of the Poznań University of Economics and Business and Aleksander Łożykowski of the Warsaw School of Economics.
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit.
Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
This Report has been prepared for the European Commission, DG TAXUD under contract TAXUD/2017/DE/329, “Study and Reports on the VAT Gap in the EU-28 Member States” and serves as a follow-up to the six reports published between 2013 and 2018.
This Study contains new estimates of the Value Added Tax (VAT) Gap for 2017, as well as updated estimates for 2013-2016. As a novelty in this series of reports, so called “fast VAT Gap estimates” are also presented the year immediately preceding the analysis, namely for 2018. In addition, the study reports the results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). It also scrutinises the Policy Gap in 2017 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses.
More from CASE Center for Social and Economic Research (20)
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...Amil Baba Dawood bangali
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US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
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Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
3. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
The CASE Network is a group of economic and social research centers in Poland,
Kyrgyzstan, Ukraine, Georgia, Moldova, and Belarus. Organizations in the network regularly
conduct joint research and advisory projects. The research covers a wide spectrum of
economic and social issues, including economic effects of the European integration process,
economic relations between the EU and CIS, monetary policy and euro-accession,
innovation and competitiveness, and labour markets and social policy. The network aims to
increase the range and quality of economic research and information available to policy-makers
and civil society, and takes an active role in on-going debates on how to meet the
economic challenges facing the EU, post-transition countries and the global economy.
1
The CASE Network consists of:
• CASE – Center for Social and Economic Research, Warsaw, est.
1991, www.case-research.eu
• CASE – Center for Social and Economic Research – Kyrgyzstan, est.
1998, www.case.elcat.kg
• Center for Social and Economic Research - CASE Ukraine, est. 1999,
www.case-ukraine.kiev.ua
• CASE –Transcaucasus Center for Social and Economic Research,
est. 2000, www.case-transcaucasus.org.ge
• Foundation for Social and Economic Research CASE Moldova, est.
2003, www.case.com.md
• CASE Belarus - Center for Social and Economic Research Belarus,
est. 2007.
4. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
2
Contents
Abstract..................................................................................................................... 4
1. Energy security in the EU and Beyond............................................................. 5
2. Energy Security: A Shifting Concept ................................................................ 6
3. The Problem with Gas and the Evolution of the CIS Gas Market ................. 10
4. EU Gas Security................................................................................................ 15
5. In the Long-term Russia's Gas Power will Decline -
but how far off is that?...................................................................................... 17
6. Conclusions ...................................................................................................... 22
References .............................................................................................................. 24
5. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
Richard Pomfret has been Professor of Economics at Adelaide University since 1992.
Previously, he was Professor of Economics at the Johns Hopkins University School of
Advanced International Studies in Washington DC, Bologna (Italy) and Nanjing (China) 1979-
91, and worked at Concordia University (Montréal) 1976-9 and at the Institut für
Weltwirtschaft (Kiel) 1974-6. In 1993 he was seconded to the United Nations for a year,
acting as adviser on macroeconomic policy to the Central Asian republics of the former
Soviet Union. He has also been consultant to the EU, World Bank, UNDP, OECD and Asian
Development Bank. He has published over a hundred articles and seventeen books,
including The Economics of Regional Trading Arrangements (Oxford UP, 2001),
Constructing a Market Economy: Diverse Paths from Central Planning in Asia and Europe
(Edward Elgar, 2002), and The Central Asian Economies since Independence (Princeton UP,
2006).
3
e-mail: richard.pomfret@adelaide.edu.au
6. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
4
Abstract
Past episodes of energy insecurity have been fleeting and the fears have been assuaged by
market forces or technical change. This paper analyses the nature of the EU's current
energy security problems, emphasising the increased importance of natural gas and high
level of dependence on Russian supplies through a small number of pipelines. Building
alternative pipeline routes is expensive and with finite reserves in any gas field pipelines may
be mutually exclusive; especially since China has entered the market for Central Asian gas,
new non-Russian pipelines to the EU may not be economically feasible. However, global
gas reserves are large, and high energy prices in the 2000s encouraged investment in
alternative delivery modes, notable liquefied natural gas (LNG). As a spot market for LNG
emerges EU energy-importing countries may face volatile prices, but will not be exposed to
insecurity of supply.
7. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
1. Energy security in the EU and Beyond
Energy security is often presented as a clear and present danger, but episodes of energy
insecurity have been fleeting and the fears have been soothed by market forces or technical
change. This paper emphasises the shifting nature of energy security. It analyses the
nature of the EU's current energy security problems, and the forces that will nullify energy
security concerns.
The paper starts by analysing the nature of energy security, paying particular attention to the
oil crisis of the 1970s and to current EU concerns about security of gas supplies controlled by
Russia. The energy crises of the 1970s had two dimensions: an energy security aspect
embodied in the Arab oil embargo of countries supporting Israel in the 1973 War and a
cartel-driven increase it the relative price of oil. The energy security threat was brief, as the
Arab oil embargo lasted less than six months and was terminated without achieving a
primary goal of Israeli withdrawal from occupied territories. The oil price increases of the
1970s led to demand and supply responses which produced an oil glut by 1986, and the
plethora of suppliers ensured availability of supply at the world price. The 1998-2008
oilboom had winners and losers, but did not have an energy security dimension; any oil-importing
country could obtain as much oil as it wanted at the world price. Meanwhile, the
EU had become increasingly reliant on gas imports from Russia, and the disruption of those
supplies in January 2006 and more seriously in January 2009 raised concerns about energy
security, especially as Russia had become increasingly assertive since the turn of the
century.
A feature of oil and gas markets is that both supply and demand respond slowly to price
changes, so that any small shift in demand or supply conditions causes a larger short-term
change in prices. In the longer term, however, new sources of supply will be discovered and
exploited, and energy-users will adopt energy-saving measures or will turn to alternative
sources of energy. The surest form of energy security is when alternative supplies can be
called upon at relatively low additional cost, but investment in new energy projects is typically
lumpy and expensive, whether exploring and exploiting new oil or gas fields or building new
pipelines. Thus in the short term there is typically a trade-off between costs and security,
which is complicated by uncertainty about future prices and technology which will impact on
the financial returns from large investment projects.
The particular features of the gas trade that underlie the current EU energy security fears
arise from pipelines being the dominant delivery mode and from specific features of the
pipeline network inherited from the Soviet Union which have given Gazprom (and hence
5
8. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
Russia) a dominant supplier position.1 Because pipelines are expensive to build and have no
alternative uses, the contractors require a long-term commitment from both sides on the
amount to be traded and the price to be paid. Given the current pipeline network to the EU,
when gas supplies from Russia are disrupted there is in the short-term no alternative, while
in the longer term EU buyers are committed to purchasing minimum quantities from Russia
at the agreed price.
The apparent stability is, however, misleading. Gazprom is a business whose profitability is
threatened by declining reserves in existing gas fields and by diminishing ability to purchase
gas from Central Asia at lower prices than it receives for its exports to the EU. Although
pipelines are expensive, new ones can be built and the EU has options of supporting
different pipelines from Russia or Central Asia even though it may be in competition with
other energy importers, notably China. Finally, pipelines will lose their position as the
dominant transport mode as alternative delivery modes, such as liquefied natural gas (LNG),
become technologically and economically feasible; once LNG is readily available by takers
from a variety of suppliers, any supplier will have difficulty targeting individual buyers. This
paper examines each of these prospects, and its implications for EU energy security.
2. Energy Security: A Shifting Concept
Energy security has meant different things in different eras. Before 1914 coal was king;
Stanley Jevons (1865) worried about the "Coal Question", or whether Britain's diminishing
coal reserves would undermine its status as a Great Power. Even in the 1950s the Coal and
Steel Community was a key precursor of the EU; France, West Germany, Italy and the
Benelux countries believed that, if coal production were supervised by a supranational
commission, a third intra-European war would be less possible. Such concerns about coal
security now seem quaint because technical change has diversified our primary energy
sources. Recognizing the increasing importance of nuclear power, the European Atomic
Energy Community (Euratom) was established in 1957 as one of the European
Communities, although in practice it remained a minor institution and nuclear power's
1 Here and at several later points Russia and Gazprom are used interchangeably. Gazprom became a joint stock
company in 1993 with the government as the main shareholder; the government share was gradually increased
until it reached 51% in 2005. While it is clear that Gazprom at times operates as an arm of Russian foreign policy,
there are also occasions when Gazprom is serving its own interests or those of its top officials (who may be
serving the interest of senior Russian politicians). No attempt is made to disentangle these skeins of decision-making
6
within the Russian gas sector.
9. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
acceptance has been constrained by safety concerns (highlighted for Europeans by the 1986
Chernobyl disaster), i.e. a different type of security concern.
In 1973-4 oil took centre-stage with the Arab boycott of countries supporting Israel, which
was accompanied by OPEC-driven oil price increases. The Organization of the Petroleum
Exporting Countries (OPEC) had been formed in 1960, principally to coordinate negotiations
with the seven integrated oil companies that dominated the industry at that time. Following
the outbreak of a new round of Arab-Israel conflict on 6 October 1973, the Arab members of
OPEC plus Egypt and Syria announced an embargo on oil supplies to countries supporting
Israel. The embargo was initially targeted at the USA, which was airlifting replacement
equipment and supplies to Israel, but could apply to any other country. Some European
nations and Japan sought to disassociate themselves from the US Middle East policy, but
the embargo was extended to include the Netherlands which provided landing facilities for
US aircraft supplying Israel. More or less simultaneously, OPEC ministers announced an
increase in their target price of oil and began production cuts.2 The market price of oil rose
rapidly from $3 to $12 per barrel, and it remained above this level for the remainder of the
1970s (Figure 1).
Figure 1. Crude oil prices 1960-2008 (current and constant 2008 USD)
Note: 1960-1983 Arabian Light posted at Ras Tanura and Dated Brent since 1984.
Source: BP, Statistical Review of World Energy 2009.
2 The chronology is clouded by distinctions between formal announcements of the embargo and of OPEC actions
as a cartel to affect price through quantity restrictions, and by the role of Saudi Arabia as the key actor in both
cases. According to Yergin (1991, 597) the Saudi government in secret meetings with the Egyptian leadership in
August 1973 had already committed itself to using the oil weapon in the event of renewed Arab-Israel warfare,
although the embargo was only announced in response to US decisions in October 12-19 to airlift material
support and commit $2.2 billion in emergency aid to Israel. The OPEC price increases and production cuts were
announced on October 16 after negotiations with the major oil companies had broken down.
7
10. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
The 1973-4 oil price increase was a global economic shock. The magnitude of the price
increase constituted a large negative supply shock for oil-importing countries and contributed
to the dismal combination of stagnation and inflation that characterized the rest of the 1970s
for the high-income countries. Oil exporters benefited from the higher prices, although in
some cases inexperience in using the windfall led to "resource curse" outcomes and the
world economy had trouble recycling the large new source of global savings.
In the energy security context, the most dramatic element of the post-1973 energy crisis was
concern that the western countries could be held to ransom by a handful of oil-rich Middle
Eastern countries. The situation was highlighted, despite its brevity, by the Arab oil
embargo, and later in the decade and in the 1980s by the increased assertiveness of Iran
and Libya (and of the Soviet Union, which invaded Afghanistan in December 1979). In the
event, however, concerns about the new global power of oil producing nations proved to be
exaggerated. Their economic power increased, as would be the case for any country which
experienced a sudden multiplication of the value of its resource base, and increased wealth
could be spent on foreign adventures or provide a platform for discarding foreign influence
without worrying about the consequences. However, the oil-exporting countries' strategic
ability to obtain political goals by threatening oil-importing countries' energy security was
fleeting; the Arab oil embargo was lifted in March 1974 and has not been reimposed since
then.3
Conditions in the world oil market before 1973 had not been favourable to the producing
countries. From 1947 to 1967 the world price in US dollars increased by less than two
percent per year, barely keeping pace with inflation and discouraging exploration for new oil
fields. Between 1967 and 1973, as the US dollar came under increased pressure and was
devalued substantially against other major currencies after December 1971, the value of
dollar-denominated oil exports fell relative to the cost of manufactured imports from Germany
or Japan. Irrespective of the geopolitical situation, the oil exporters were in a strong position
once they chose to flex their muscles and support oil price increases by managing supply.
The world price of oil remained in the mid-teens from 1974 until 1979, when a fresh round of
OPEC-driven supply restrictions pushed the price up to almost $40.
Oil consumers responded by adopting oil-saving technologies as their factories or equipment
were renovated and by buying more fuel-efficient cars when it came time to trade in their car.
Hydropower, natural gas and other alternatives became more important as primary energy
sources. The historically high oil prices provided an incentive to find new deposits, and to
develop techniques to better recover oil in adverse conditions, as in Alaska or beneath the
3 The USA began a parallel set of negotiations with Arab oil producers to end the embargo and with Egypt, Syria
and Israel to arrange Israel's withdrawal from some of the territories occupied since 1967. With the promise of a
negotiated settlement between Israel and Syria, the Arab oil producers lifted the embargo in March 1974. The
Arab goal of Israeli withdrawal from the Golan Heights was not achieved, and remains the case today.
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North Sea or the Gulf of Mexico (the Canadian tar sands also entered the picture, although
the combination of technology and price has yet to make them really economical). By 1986
there was an oil glut; prices dropped to around $10 per barrel and remained there until 1998.
The important point is that market forces worked, but because of the nature of both demand
and supply the time lags were measured in years.
With lower prices, there was less incentive to invest in oil, and eventually a new cycle began
as demand outstripped supply. The extent of the sustained price increase over the next
decade was unforeseen; oil prices peaked at over $140 in spring 2008. However, there was
no security of supply issue. All oil-users could obtain as much oil as they wanted as long as
they were prepared to pay the price. There were some concerns about over-dependence on
the Middle East and on increasingly important Russian oil, reflected in pipeline projects to
access oil supply from Central Asia and the Caucasus; notably the Baku-Tbilisi-Ceyhan
pipeline which opened in 2005 and the pipeline across Kazakhstan to China, but these could
be economically justified at the high oil prices, and the former was as much about reducing
the CIS oil exporting countries' dependence on transiting Russia as about security of supply
for the West; indeed once oil reaches the Turkish port of Ceyhan it can be shipped by tanker
to anywhere in the world.
In sum, the 1998-2008 oil price increase was an important economic event with winners and
losers, but less drastic than the 1973-4 and 1979-80 oil price increases because both buyers
and sellers were better prepared for the challenges involved. It was neither an oil crisis nor a
security challenge, because by 1998 OPEC supplied less than half of the world's oil and
transport by tanker meant that no country could hold another hostage by controlling the
transport routes. The 1970s oil price hikes encouraged exploration and new entrants into the
world oil market and the next big increase in oil prices in 1998-2008 saw no physical supply
problem; any customer could purchase oil at the world market price.
In the early 21st. century, energy security issues have centred on gas, especially for the EU.
They were highlighted on 1 January 2006 when Gazprom reduced gas supply levels to
Ukraine, and about 100 million cubic metres that was expected in countries west of Ukraine
was not delivered. Although the supply interruption only lasted three days and was relatively
easily coped with from available storage and through fuel-switching, the interruptions raised
concerns in Europe regarding energy security (Whist, 2008, 9). Such concerns were re-ignited
in January 2009 by a more serious disruption of gas supply from Russia following a
commercial dispute between Russia and Ukraine over the size of gas debts owed by
Ukraine, the price to be paid by Ukraine for Russian gas and the transit fee to be paid by
Russia on gas passing through Ukraine to the EU. On 1 January 2009 Russia cut off gas to
Ukraine, and within a few days EU members were reporting reduced pressure in their
pipelines. The bilateral dispute was settled on 18 January, but from 7-20 January no gas
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supplies from Russia reached the EU. In both 2006 and 2009 the EU was caught as a
bystander in a bilateral dispute, which could happen again, or Russia might use the threat of
holding up gas supplies to achieve political objectives.4
3. The Problem with Gas and the Evolution of the CIS Gas
Market
Use of natural gas as a fuel has expanded rapidly since 1973, and especially over the last
two decades. The trend has been especially pronounced in the EU, where gas accounted
for less than 5% of energy consumption in the early 1970s, and about one quarter today. EU
consumption increased from under 350 billion cubic metres (bcm) in 1995 to 500 bcm in
2005.5
In the 1990s the EU was about 60% self-sufficient in gas, but self-sufficiency dropped
sharply in the 2000s. Output in the largest EU producer, the United Kingdom, began to
decline after 2000 as its reserves ran out; the UK produced 108 bcm in 2000 and less than
70 bcm in 2008. The next largest EU producers in 2008 were the Netherlands (68 bcm),
Germany (13 bcm), Romania 12 bcm and Denmark (10 bcm). Total EU output of around 190
bcm in 2008 covered less than 40% of EU consumption. External supply is heavily
concentrated, with Russia, Norway and Algeria accounting for about 26%, 17% and 11% of
EU consumption respectively, and all other suppliers about 5%.6
The problem with reliance on external sources of gas is that there is no world market, which
reflects the importance of bilateral delivery agreements and the difficulty of rerouting
supplies. Prices quoted for the US Henry Hub, Alberta, the UK, EU and liquid natural gas
(LNG) delivered to Japan differ substantially, e.g. the 2008 EU price was $353 and the
Alberta price $224 per thousand cubic metres. Because pipelines are the dominant transport
mode, much gas trade is under long-term contracts specifying price and quantity negotiated
as part of a pipeline construction agreement. Gas is to some extent a substitute for oil, so
that oil and gas prices trend together but the prevalence of long-term agreements means that
4 As many Russian policymakers pointed out, the idea that Russia would cut off gas supplies may be paranoid,
since Russia cannot easily sell the gas elsewhere. The three weeks' lost sales to the EU in January 2009 cost
Gazprom around $2 billion. For more details of the 2009 dispute and on the impact on EU members, see the
European Communities Commission Staff Working Document The January 2009 Gas Supply Disruption to the
EU: An Assessment
http://ec.europa.eu/danmark/documents/alle_emner/energi/2009_ser2_autre_document_travail_service_part1_ve
r2.pdf (accessed 3 January 2010).
5 Unless otherwise stated, all energy data are from BP Statistical Review of World Energy 2009 - available online
at http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622
6 The largest European producer, Norway (99 bcm in 2008), is not an EU member.
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gas prices are much stickier and respond to oil price increases with a lag. This was very
clear in the 1998-2005 phase of the last oilboom, and especially so in the web of
arrangements involving European and CIS gas markets.
The price of EU gas imports from Russia is based on a formula which includes the price of
oil. The explicit link meant that the delivered (cif) price of Russian gas in the EU increased
from a low of $50 in 1999 to $353 in 2008, and has subsequently declined. The increase in
prices brought a windfall gain to Russia. However, the monopoly Russian supplier Gazprom
was obliged to supply domestic consumers at a far lower price, and domestic demand
hampered its ability to maximize profits on EU sales. In 2006, for example, the wholesale
prices charged to domestic industrial consumers averaged $44 per thousand m3 and
residential consumers paid much less, while the price of gas exported to the EU was on
average $240 per thousand m3 (Locatelli, 2008, 11).7
An important link in Gazprom's strategy has been to import gas from Central Asia to supply
CIS customers such as Ukraine as well as Russia, and hence release Russian gas for sale
to the EU. According to Ariel Cohen (2008, 168), Central Asian gas accounts for 22% of
Russian exports to Europe. Imports from Central Asia are primarily from Turkmenistan,
whose gas production is the second largest in the CIS.8 The lower the price paid for
Turkmen gas and the greater the amount of Turkmen gas that could be sold to Russian
domestic consumers, the higher Gazprom’s profitability.
Up until 2005 the intra-CIS gas trade was highly non-transparent, with shady intermediaries
and barter arrangements. Within Russia, gas markets during the 1990s were opaque; until
1999 Gazprom was not allowed to disconnect companies for non-payment and accounts
were often settled by offsets or by barter, with great scope for corruption.9 On intra-CIS trade
Gazprom paid inflated prices to intermediaries, which benefitted well-connected individuals.10
After Vladimit Putin became President in June 2000, one of his first steps was to replace the
senior Gazprom management (Chairman Viktor Chernomyrdin and CEO Rem Vyakhirev) by
7 Spanjer (2007) and Tsygankova (2008) analyse the impact of the proposed gradual introduction of netback
pricing (i.e. linking Russian domestic price to the export price minus transport costs) between 2008 and 2011.
Apart from reducing consumption (452bcm in 2006) and improving Gazprom’s balance sheet, the price increases
are connected to Russia’s WTO accession negotiations in which underpriced domestic gas has been a major
issue. Russia also underpriced gas exports to former Soviet republics, but prices were substantially increased for
the Baltic countries in 2005, for Ukraine, Moldova, Armenia, Azerbaijan and Georgia in 2006 and for Belarus in
2007; Gazprom intends to bring prices for all of these customers up to levels that provide equal profitability to
sales to EU customers by 2011.
8 Turkmenistan exports 75% of its gas. Uzbekistan produces similar amounts (65 bcm in 2007), but with over five
times the population of Turkmenistan it consumes most of this domestically and only exported 15 bcm in 2007.
Kazakhstan has had much lower output, 13 bcm in 2007, almost all of which is consumed domestically, but has
potential to increase gas output substantially in the coming years.
9 According to Judith Thornton (2009, 15-16) over half of payments in 1996 were by offsets or barter.
10 In 2000 Itera (International Trading Energy and Resources Association) bought Turkmenistan gas for $35.37
per thousand cubic metres, and sold about a third of it to Gazprom for $45 per thousand cubic metres. The main
holding company of Itera was registered in the Dutch Antilles with over 60% of the shares held in trust for
unnamed individuals, one of whom turned out to be a former Deputy Prime Minister of Turkmenistan and others
were believed to include high-ranking Gazprom managers (Global Witness, 2006).
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his own close associates (Dmitry Medvedev and Alexei Miller), with the aim of reducing
asset-stripping and tax evasion and centralizing control over energy rents, but arrangements
for intra-CIS gas trade remained very opaque.11
During the 1990s, when the bargaining position of energy exporters was weak,
Turkmenistan's customers often settled their bills through barter agreements or simply did
not pay, leading to Turkmenistan cutting off supplies to Ukraine from March 1997 until
January 1999 (Sagers, 1999). Anecdotes of low quality or unusable goods being supplied to
satisfy the barter terms abound. In one 1990s deal Ukraine supplied twelve million galoshes
in payment for gas; this was to a nation of four million people living in the desert! At the core
of these arrangements was the rampant corruption in Ukraine, centred on energy imports
(Babanin, Dubrovskiy and Ivaschenko, 2004); managers of inefficient state-owned or recently
privatized enterprises would provide unsellable goods in return for gas which had a market
value. Many barter goods were passed on; after Russia received Volvo cars in a barter deal
with Sweden in the early 1990s, Turkmenistan received Volvo cars in payment for exports to
Russia. The role of intermediaries and of barter began to decline after Ukraine's Orange
Revolution in late 2004 and early 2005.12
In 2002 Russia tried to take advantage of the opaque nature of Turkmenistan’s gas deals
and its control over pipelines by locking Turkmenistan into a long-term agreement at what
was already a low price ($44 per thousand m3, half in hard currency and half barter). As a
rule of thumb, the true value of barter may be half its contract value, which would bring the
true price for the gas in 2003-5 down to $33 per 1,000 m3. As oil prices and the price
received by Gazprom for gas exports to the EU increased, Turkmenistan sought to improve
the terms of its gas sales to Russia. In December 2004 Turkmenistan stopped gas supplies
to Russia and demanded a price of $58 per 1,000 m3, expecting that Gazprom’s inability to
meet its export and domestic commitments without Turkmen gas would force it to offer better
terms, but Gazprom survived the rest of the winter without Turkmen supplies. In April 2005
11 After the Gazprom senior management was revamped, Itera lost the Turkmenistan contract to TransUral Gas.
According to Blank (2003), under Moscow’s 2003 deal with Turkmenistan: "A large quantity of Turkmen gas will
be shipped through Russia to Ukraine by a little-known gas company, TransUral, whose major stockholder,
Semyon Mogilevich, is one of Russia’s most notorious criminal kingpins. The Trans-Ural firm will earn from $320
million to $1 billion from this deal alone. And all the firms involved, including Gazprom, already are contributing to
Putin’s reelection." On the Turkmenistan side most of the revenue went into non-transparent off-budget funds,
including a Deutsche Bank account in Frankfurt in the Turkmenistan President’s name. TransUral Gas was
displaced in 2004 in favour of RosUkrEnergo, a 50-50 joint venture between Gazprom and a consortium of
unnamed Ukrainian and Russian businessmen represented by Austria’s Raffeisen Bank; Mogilevich was reputed
to have a major interest in RosUkrEnergo. Although Mogilevich was put on the FBI’s most wanted list in 2003 for
fraud, he lived openly in Moscow until he was arrested in January 2008 on tax evasion charges. The arrest
appeared to be a prelude to the March 2008 agreement which eliminated intermediaries from the Russia-Ukraine
gas trade.
12 The new head of the Ukrainian gas company, Naftohaz Ukrainy, announced that the contract with
Turkmenistan active from 1st. July 2005 would involve no barter terms. The January 2006 Russia-Ukraine energy
dispute ended with what appeared to be a definitive movement towards cash payments on gas transactions
involving Russia, Ukraine and Turkmenistan, although the role of the shadowy intermediary RosUkrEnergo
remained unclear. Intermediaries were finally eliminated from sales to Ukraine in March 2008 when Naftogaz
Ukrainy and Gazprom signed a new agreement.
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Russia and Turkmenistan agreed that Gazprom would make all payments in cash instead of
the earlier barter arrangements, but the price remained $44 per thousand m3.
In CIS gas markets, greater transparency since 2006 has been accompanied by conflict over
price increases, as Central Asian gas suppliers tried to benefit from continuing increases in
oil prices. Until 2006 Turkmen President Niyazov, who preferred to be known as
Turkmenbashi the Great, appeared content with existing arrangements with Russia.13 In April
2006 he made a rare foreign trip to Beijing, whose main purpose was to negotiate a gas
pipeline and long-term supply contract with China. In May 2006 construction began on the
7,000 kilometre long pipeline from Turkmenistan through Uzbekistan and Kazakhstan to the
Chinese border where it connects to the Chinese gas pipeline network. After Turkmenbashi
died in December 2006, his successor Gurbanguly Berdymukhamedov continued the
process of diversifying export routes for his country's gas (Pomfret, 2008). China became a
significant demander of Turkmenistan’s future gas output, and in July 2007 China signed a
contract to buy 30 bcm a year. At the same time, the China National Petroleum Corporation
(CNPC) was granted drilling rights in Turkmenistan.14
Russia responded by signing agreements to build a new pipeline to increase Turkmenistan's
gas export capacity to Russia, to transfer to the Turkmenistan government Soviet era
geological data covering Turkmen energy deposits that had been kept in Moscow, and to
increase the gas price received by Turkmenistan. The agreements appeared to be a
package deal to keep Turkmenistan within the Russian energy network. The price increases
are, however, bound to be destabilizing as they reduce Gazprom’s profits from the Turkmen
trade.
In May 2007 Russia, Turkmenistan and Kazakhstan signed an agreement to build a ten
billion m3 a year pipeline along the eastern coast of the Caspian, the Prikaspiisky route,
feeding into the Russian pipeline network. The agreement was widely seen as a pre-emptive
move to forestall Caspian gas going to China, but it did not stop the July 2007 Turkmenistan-
China agreement. In December 2007 the proposed capacity of the Prikaspiisky pipeline was
doubled, to carry 10 bcm from each of Kazakhstan and Turkmenistan. In July 2008 it was
increased further in order to accommodate larger deliveries from Turkmenistan. The
13 Apart from a small pipeline to Iran built in 1997, all of Turkmenistan's gas exports went by pipeline to Russia.
Luca Anceschi (2009, 95) observes that after 1998 Russia “de facto became the international patron of the
increasingly sultanistic Turkmen regime”. No non-Russian pipelines were built after that, confirming Russia’s
monopoly, but by 2006 the temptation to obtain higher prices had become too great. For more details of the
corrupt and often bizarre practices surrounding Turkmenistan's gas trade under Turkmenbashi, see Garcia (2006)
and Global Witness (2006).
14 China’s heightened interest in Caspian energy (Kazakhstan’s oil as well as Turkmenistan’s natural gas) has, in
part, been born out of frustration with Russia’s failure to guarantee supplies of its Far East energy to China
(Blank, 2008). Proposals for an energy club within the Shanghai Cooperation Organization (SCO) are aimed at
moderating Russia-China energy conflicts, but the proposals have made no headway and tensions within the
SCO are likely to grow after Russia’s support for secession by Abkhazia and South Ossetia from Georgia, which
is anathema (as “splitism”) to China.
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December 2007 agreement also called for modernization of the existing Central Asia -
Centre pipeline from Turkmenistan through Kazakhstan to Russia, which would increase its
annual capacity from the current 50+ bcm a year.
The price from Gazprom was increased to $65 per thousand cubic metres in January 2006,
and in September 2006 Turkmenistan negotiated an increase in the price received from
Gazprom to $100 per 1,000 m3 for 2007-9. In November 2007 this was raised to $130 for the
first half of 2008 and $150 for the second half of 2008.15 On 28 January 2008 China agreed
to pay $195 for the gas that it would obtain from Turkmenistan, but this included a $50
premium to finance the Turkmenistan-China pipeline. On 11 March 2008 Gazprom
announced that it would pay ‘European’ prices for Central Asian gas in 2009, i.e. in the range
of $200-300 per 1,000 m3. In sum, between 2006 and 2008 there was a substantial upward
shift in the prices being agreed on trade involving Turkmenistan and its major customers,
Russia and Ukraine.
Long-term agreements, even if they have become more frequent and more readily
adjustable, still lack flexibility to respond to changes in demand and supply conditions. With
the rapid decline in oil prices in 2008, Gazprom found that its revenues from the EU under
the oil-related index price would fall while it had committed to high dollar amounts (reportedly
$375.50 per thousand cubic metres) to Turkmenistan. When Russia President Medvedev
visited Turkmenistan in September 2009 it was anticipated that the pricing issue would be
resolved, but when Turkmenistan refused to accept the proposed price cut Gazprom
announced that it would not purchase any Turkmen gas in the remainder of 2009. In the
absence of sufficient completed pipelines to alternative markets, Turkmenistan faces loss of
its major export revenue and will have to come to terms with Gazprom. The 2009 dispute
between Russia and Turkmenistan is only indirectly related to EU energy security concerns,
but it illustrated Russia's willingness to use control over pipelines as a weapon to achieve its
goals.16
15 At the same time, Turkmenistan was receiving $75 per 1,000 m3 from Iran and, when Turkmenistan tried to
raise the price, Iran offered a super-premium price (reportedly $300) to Azerbaijan in February 2008 to teach
Turkmenistan that Iran was not a captive market. The conflict appeared to have been resolved by September
2008 when Reza Kasaei-Zadeh, the Deputy Oil Minister in charge of the National Iranian Gas Company,
announced that Iran would import 9.2 bcm from Turkmenistan in 2008 and hoped to increase the flow to14 bcm,
the maximum amount set as the trade in the countries’ long-term agreement and that as of 1st. January 2009 the
price would float according to a formula linked to the price of various fuel products (interview with Petroleum
Intelligence Weekly, reported in Tehran Times 16 September 2008).
16 Earlier in 2009 a pipeline explosion, which many in Turkmenistan believed to be deliberate Gazprom sabotage,
disrupted Turkmen gas exports. The hardball Russia-Turkmenistan negotiations are in a context of increasing
gas exports from Kazakhstan and Uzbekistan to Russia. In 2008 the three Central Asian governments, previously
noted for their fractious relations, negotiated jointly with Gazprom. In 2009 Gazprom seemed determined to
divide the three countries by making differing (and non-transparent) price/quantity offers for their gas.
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15
4. EU Gas Security
EU concerns about the security of gas supplies from the CIS were raised in January 2006,
when a Russia-Ukraine dispute involving Russia increasing its gas price to Ukraine and
ensuing cuts in Russian gas supply to Ukraine had short-run spillover effects on European
supplies. The intra-CIS conflicts have often had a geopolitical component as well as pure
commercial interests, with Russia more willing to put pressure on Georgia or Ukraine after
the rose and orange revolutions of November 2003 and November 2004. The Russian
invasion of Georgia in August 2008 did not affect gas exports to the EU, but it did highlight
the security risks that might be associated with a TransCaspian pipeline bypassing Russia
and connecting Central Asian gas to the Baku-Tbilisi-Erzurum pipeline. The January 2009
dispute over Russian gas supplies to Ukraine, once again and more seriously than in 2006,
highlighted the dangers of over-reliance on Russia as a gas supplier to the EU and the
disregard in which both Russia and Ukraine appeared to hold contractual obligations.
A politicised gas relationship not only applies to intra-CIS trade, but is a central part of
Russia’s European strategy. This explains the failure of the EU-Russia “energy dialogue” of
the late 1990s, the failure to secure Russia’s ratification of the Energy Charter Treaty, and
the failure to link Russia’s entry into the WTO to liberalisation of its gas sector. At the EU-Russia
summit in Sochi on 25 May 2006, Russia explicitly rejected proposals advanced by
the EU to restructure and depoliticise the gas relationship (Noël, 2008).
The EU has not been too concerned about gas prices. The formula negotiated with Russia
entailed the EU paying higher prices than reported spot prices in North America or Japanese
LNG prices, but not by a large margin. What the EU has been concerned with is security of
supply. This is in a context of internal disagreement about the appropriate relations with
Russia, with countries keen to remain on good terms with Russia led by Germany and Italy,
which together purchase almost half of Russian gas exports to the EU, and countries keen to
reduce dependence on Russia as an energy supplier led by the UK, with the support of
eastern European EU members. The EU debate has thus largely boiled down to one over
pipeline routes: should it support the Nord Stream and South Stream pipelines proposed by
Russia,17 or should it encourage construction of a TransCaspian pipeline and the Nabucco
project that would allow the EU to import gas from Central Asia without relying on Russia for
transit?
17 The Nord Stream pipeline would pass under the Baltic Sea from Russia to Germany and South Stream would
pass under the Black Sea through the Balkans to Italy.
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Several proposals to construct a gas pipeline under the Caspian Sea and then through
Azerbaijan and Georgia to Turkey were aired during the 1990s and early 2000s, but the
project was eventually limited to the Baku-Tbilisi-Erzurum pipeline from Azerbaijan to Turkey
which opened in late 2006.18 The TransCaspian portion was only resurrected after
Turkmenbashi’s death in December 2006. In August 2007 the USA granted $1.7 million to
Azerbaijan for a feasibility study on TransCaspian oil and gas pipelines, and on 29 February
2008 Azerbaijan’s state energy company, SOCAR, awarded the feasibility study contract to a
US firm, KBR. The TransCaspian would link up to the Baku-Tbilisi-Erzurum pipeline and the
proposed Nabucco pipeline from Turkey to Hungary via Bulgaria and Romania. The
feasibility of the TransCaspian and Nabucco projects is linked, because Turkmen supplies
are needed to justify Nabucco’s capacity.19
The economic attractiveness of Nabucco to Western European buyers depends upon the
capacity of and the terms for Russian gas transiting the proposed, and competing, South
Stream pipeline from southern Russia to Italy via Serbia. The prospects for a TransCaspian
pipeline connecting Turkmenistan to EU markets also depend upon the support of potential
investors within the EU. At the Community level, EU policy has become slightly more active
since 2007. In April 2008 the Commission proposed extending the mandate of the European
Investment Bank (EIB) to permit lending to Central Asian borrowers; this amendment was
approved by the European Parliament, and is believed to be clearing the way for EU
investment in energy infrastructure. In January 2009 the Commission President Jose
Manuel Barroso commented on the Russia-Ukraine dispute’s implications for the EU in
strong terms, saying that "If the agreement [to supply EU customers] is not honoured, it
means that Russia and Ukraine can no longer be regarded as reliable".20 The post-2007
rapprochement between Turkmenistan and Azerbaijan should facilitate exploration of the
southern Caspian to the benefit of both countries, and could herald a positive commitment to
the TransCaspian pipeline by two key Caspian gas producers.21
18 In 1999-2000 the US government funded a $750,000 feasibility study by Enron for a pipeline supplying gas
from Azerbaijan and Turkmenistan to Turkey, but the project fell afoul of poor relations between Turkmenbashi
and President Heydar Aliev of Azerbaijan.
19 Some Azeri commentators believe that Azerbaijan’s Shah Deniz field could produce enough gas to justify
Nabucco’s planned capacity of 30 bcm a year, but most observers doubt this. Iran might also provide gas for
Nabucco and the EU Energy Commissioner Andris Piebalgs has flagged this prospect (reported in Khadija
Ismayilova “Azerbaijan: Baku hesitates on Nabucco pipeline project”, posted on www.eurasianet.org 10 April
2008), but even if Iran were willing and able to supply gas it is likely to be effectively vetoed by the USA.
20 Barroso told the European Parliament that the dispute between Ukraine and Russia was “most unacceptable
and incredible” and that, if agreements sponsored by the European Union are not observed “as a matter of
urgency”, he would advise energy companies that have deals with Gazprom and Naftogaz Ukrainy, to file lawsuits
against them; reported on 14 January 2009 at http://news.bbc.co.uk/2/hi/europe/7827829.st In March 2009 the
EU and Ukraine issued a joint declaration emphasizing cooperation in gas deliveries, which was resented by
Russia
21 In 2007 relations between Turkmenistan and Azerbaijan warmed as Turkmenistan reopened its Embassy in
Baku, which had been closed since 2001, and in June proposals were announced for joint exploration of the
Serdar/Kapaz field under the South Caspian Sea. In March 2008 a high level delegation from Turkmenistan
visited Baku and reached agreement on the debt disputes between Azerbaijan and Turkmenistan. Although both
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Nevertheless, the financial prospects for the pipeline have become less positive in the post-
2008 era of lower energy prices. There is also an issue of whether Turkmenistan has
sufficient gas, possibly augmented by gas from Kazakhstan or Uzbekistan, to fill an
economical pipeline given Turkmenistan's commitments to Russia, China and Iran By the
2020s Turkmenistan has commitments to supply 80 bcm a year through Russia and 30 bcm
a year to China as well as up to 14 bcm a year to Iran, and is negotiating perhaps 30 bcm a
year through the TransCaspian and perhaps supplies to South Asia. If Turkmenistan's gas
production (66 bcm in 2008) can be more than doubled over the next decade and a half, then
all these commitments and dreams might be satisfied22 -- but, if not, then Turkmenistan will
have no gas left to supply another new pipeline.
5. In the Long-term Russia's Gas Power will Decline - but how
far off is that?
Concerns about EU gas security centre on the role of Russia as supplier of a quarter of EU
gas through a pipeline system that can be disrupted by conflicts between Russia and
Ukraine. The extent to which such concerns continue to be valid depends upon Russia's
ability to produce gas (and sell it to EU customers) and the availability of alternative sources
of supply.
Estimates of gas reserves and future production costs are uncertain. Russia's existing gas
fields are running out and future production will rely on development of the Shtokman field in
the Barents Sea, Yamal in the far north of Siberia and Far Eastern gas fields. Some western
commentators argue that, especially since 2004, Gazprom has become technically inefficient
and incapable of generating the physical capital to implement large new projects, although it
is difficult to verify this claim.23 The erosion of favourable arrangements with Central Asian
countries acknowledged the debts, in 1991-3 they both still used the rouble, whose hard-currency value was
disputed. Turkmenistan sought $56 million while Azerbaijan offered $18 million; under the March 2008
agreement Azerbaijan will pay $44.8 million.
22 External analysts are, not surprisingly given the secrecy surrounding the country’s reserves, divided over the
long-term potential; Marina Tsygankova (2008) contrasts Turkmen claims of 2030 production levels around 250
bcm with the scepticism of International Energy Agency (IEA) Reports about whether Turkmenistan can increase
production at all. In 2008 President Berdymukamedov initiated an independent assessment of the country's gas
reserves by a British firm, Gaffney Cline & Associates, whose preliminary findings, based on the South Yolotan
field, are optimistic about the extent of Turkmenistan's reserves. In December 2009 Turkmengaz awarded to a
group consisting of China National Petroleum Corporation (CNPC), Abu Dhabi’s Petrofac Emirates, Dubai’s Gulf
Oil and Gas, and South Korea’s LG International and Hyundai Engineering the rights to develop the South
Yolotan field, which is thought to contain about 6 trillion cubic metres of gas.
23 See, for example, Anders Åslund's speech before the European People’s Party, European Parliament,
Brussels, 15 May 2008 or Michael Mihalka (2008). Jonathan Stern (2009) is more optimistic about Russian
output potential. Alan Riley (2008, 11-12) provides further references on this debate. Judith Thornton (2009)
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producers has already put more pressure on Russia to meet its EU commitments out of own
resources, and this will be even more true after the Turkmenistan-China pipeline becomes
operational.24 Domestic market reforms will bring Russia's domestic prices closer to world
prices, reducing domestic demand and freeing up more gas for export. On the other hand,
the location of the new gas fields may favour delivery to Asian rather than European markets.
Although prediction is difficult, it seems likely that supply constraints will reduce Russia's
share in EU gas markets over the next decade.
A TransCaspian and Nabucco pipeline would further erode Russian market power by
providing EU countries, especially those to the south and east, with an alternative pipeline
source. Pipeline economics are, however, complex, given the large upfront construction
costs, the mutually exclusive nature of projects the long life of pipelines and the uncertainty
of future gas prices. On all of these counts the financial viability of the
TransCaspian/Nabucco can be questioned, although the political support (from the USA as
well as the EU) could help to assuage the doubts.
The biggest challenge to the long-term viability of gas pipelines is technological. The future
prospects of Russia, Azerbaijan and Central Asia as gas suppliers to the EU will be affected
by technical change in transporting liquefied natural gas (LNG). Advances in liquefying, in
specialized ships and in degasification terminals are eroding the dominance of pipelines as
the least-cost delivery mode for gas. This will benefit suppliers with ocean port access such
as Qatar or Australia, at the cost of landlocked gas suppliers.
The diffusion process for LNG was slow in the three decades after the first liquefication unit
came into operation in Algeria in 1964 and the second plant in Alaska in 1969. Mads
Greaker and Eirik Lund Sagen (2008) argue that this was due to monopoly behaviour.
Additionally, in the 1980s and throughout the 1990s there was little incentive to invest in LNG
facilities when energy prices were low. The fall in costs and the rate of construction of new
plants accelerated after 1999 when competing technologies became available. Expensive
projects need to be coordinated; liquefication facilities have little use without regasification
capacity at the point of importation. During the 2000s Qatar took the lead in building LNG
liquefication terminals and shipping capacity, as well as co-financing some regasification
plants, and this in turn led to greater LNG trade and increased exploration of offshore gas
fields.
The biggest liquefication plant, Ras Laffan in Qatar, built at a cost of $60 billion, produces a
quarter of the world's LNG. As of 29 December 2008, there were 300 ships engaged in the
argues that under Putin Russia was more concerned about nationalizing natural resource companies, even if this
meant discouraging foreign investors with the technical capacity to develop the country's gas reserves. Pauline
Jones Luong and Erika Weinthal (2006) also emphasise the role of domestic politics and institutions in
determining economic outcomes in CIS energy producing countries.
24 There are also proposals to link Central Asia to the booming South Asian markets, but progress is unlikely as
long as the security situation in Afghanistan remains dubious.
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deep-sea movement of LNG (up from 150 in 2003), and there were more than 140 vessels
on order at the world's shipyards. The majority of the new ships under construction are in the
size of 120,000 m³ to 140,000 m3, but there are orders for ships with capacity up to 260,000
m³. The largest Q-Max tankers, which cost $300 million, not only benefit from scale
economies but also have technological advantages, e.g. they carry a unit to capture and
liquefy gases that escape from the storage tanks during the journey (on older ships about
0.14% of the LNG escapes every day). Among newly discovered offshore gas fields, the
Gorgon project off Western Australia, with Chevron as lead investor in a joint venture which
will invest $36 billion, will catapult Australia from its current sixth position in LNG output to
second, behind Qatar, in 2014.
There are about a dozen operational LNG regasification terminals in the EU, including five in
Spain (Barcelona, Bilbao, Huelva, Sagunto (Valencia), and El Mussel), three in the UK
(South Hook and Dragon at Milford Haven in South Wales and Isle of Grain in Kent), two in
France (Fos-sur-Mer and Montoir) and one in Belgium. It is difficult to keep track because
many are recent, and over fifty LNG regasification terminal projects are either under
consideration or have commenced construction in the EU (in Cyprus, Germany, Ireland, Italy,
the Netherlands, Poland, Romania, Lithuania and a joint project between Estonia and
Finland). The South Hook terminal, a joint venture between Qatar Petroleum, Exxon Mobil
and Total which opened in May 2009, is Europe's largest, supplying 11 bcm per year on
opening and anticipated to quickly reach a capacity of 21 bcm.
These developments suggest that the era of gas pipelines' domination may be close to
extinction. If LNG can be delivered in a spot market at prices that compete with pipeline-delivered
gas, then it is unlikely that large new pipelines can be economic and customers for
gas delivered along existing pipelines will be less exposed to hold-up tactics in periods of
scarcity. This has major implications for the CIS gas suppliers and for EU gas importers.
Russia is already switching its attention in the Far East from pipelines to LNG, which
provides greater flexibility in selecting where to sell the gas and avoids dependence on a
monopoly buyer.25 Although much of the publicity had focused on whether pipelines will
connect to China or to Japan, ExxonMobil, the lead developer of Sakhalin-I, has placed
emphasis since 2004 on LNG and exports have gone to the USA, and Mexico inter alia.
LNG has also been exported from Sakhalin-II. Looking further ahead, liquefication may
become the best option for delivering gas from Russia's Arctic Ocean gas fields if global
warming increases the ice-free shipping season. Such options are not available to the
landlocked Central Asian and Caspian producers, who may come to rue their failure to build
pipelines and develop gas exports while they still had value.
25 Gazprom has also announced that gas from the Shtokman field in the Barents Sea will be exported as LNG
(Riley, 2008, 3).
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For the EU the establishment of an efficient LNG world market with virtually unlimited
availability at the current spot price will mean the end of gas security concerns, although in
the short-term there will be country-specific implications. Until the establishment of a single
EU gas market, the LNG option will be especially valuable to countries with their own
regasification facilities such as Spain and France. In 2008 Spain purchased LNG from
Australia in the spot market, providing striking evidence that the EU’s dependence on
importing gas by pipeline may be ending and that gas can be sourced worldwide. It is also
noteworthy that after 2006 the UK began preparing for the decline of its North Sea gas
production by a vigorous regasification plant construction program.26
Most striking for the debates about pipeline projects is that Italy too has embraced LNG
imports, which is bad news for the viability of either South Stream or Nabucco. Italian energy
companies had difficulty obtaining local government permission to build regasification plant,
but by 2009 this had been resolved by constructing three large offshore terminals. The first
offshore LNG regasification facility was built by the Italian utility Edison in conjunction with
ExxonMobil and Qatar Petroleum in the Adriatic Sea 40 kilometres south of Venice. A
second regasification plant is under construction near Brindisi, with a proposed capacity of
16 bcm and the third, Toscana Offshore, is near Livorno on Italy's west coast.27 These
projects are especially relevant to the contest between the proposed South Stream and
Nabucco pipelines, because added LNG capacity of 20-30 bcm per year is equivalent to a
substantial additional pipeline to Italy and thus reduces the likelihood that either new pipeline
could be profitable.
The most stubborn resistance to importing LNG among large EU members is from Germany,
which remains committed to the Nord Stream project despite opposition from most north-eastern
EU members.28 The cost of the project has escalated since the agreement was
signed in 2005, in part because of opposition from Finland and Sweden to the original route
26 In 2006 the Langeled pipeline was built from Norway to the UK under the North Sea, but after that the UK focus
shifted to very large LNG terminals, especially those in South Wales which were located to receive very large
ocean-going ships.
27 Toscana Offshore was delayed by ecological concerns, and is smaller than the others, with a capacity of 3 bcm.
Contracts have been signed with Nigeria and Qatar to supply one bcm per year apiece. The project includes the
acquisition of an existing LNG carrier and its conversion into a Floating Storage and Re-gasification Unit with a
storage capacity of 137,000 m3, at a cost of around 600 million euros, for which the European investment Bank
provided a 200 million euro loan in April 2008. The EIB's objectives explicitly mentioned energy security "The
project will increase EU and Italy gas import capacity and contribute to meeting the gap resulting from growing
demand and declining indigenous gas production in Italy. It will also enhance the security of supply by allowing
imports diversification from a growing number of LNG producing countries and enhance competition in the Italian
gas market." http://www.eib.europa.eu/projects/pipeline/2006/20060560.htm
28 Background on Nord Stream is provided by Bendik Solum Whist (2008). The opposition has had differing focus
with Sweden concerned about military implications, Finland about environmental issues and the Baltic countries
about security of their own energy supplies from the CIS. Poland, which is less directly implicated because it is
unaffected by the route and its primary energy is largely provided by domestic coal, seems to be most disturbed
by the political implications of closer Russian-German ties. Sweden and Finland have diversified domestically
produced primary energy sources, including nuclear energy and hydropower and other renewable energy.
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which passed under waters over which they had rights under the Law of the Sea.29
Nevertheless, German support for the Nord Stream project remains strong, and, although
Germany argues that Nord Stream is a European project to enhance EU energy security
(and the EU granted it the status of Trans-Europe Network in 2002), German support reflects
national concerns about domestic gas supplies and about relations with Russia.30
Germany's domestic energy imbalance was exacerbated by the 2000 decision to phase out
nuclear power by 2022, which led to increased dependence on imported energy, first and
foremost gas from Russia. Alternative solutions to Germany's energy problems include
construction of LNG terminals or establishing an integrated EU gas market, in which gas
could be imported via pipelines from the large Atlantic or Mediterranean LNG terminals, but
Germany has shunned either of these options, and has been, together with France, the
principal opponent of deregulation and integration of EU gas markets, preferring to maintain
market segregation with national champions enjoying monopoly supplier status.
Deregulation and creation of an integrated EU market for gas is, however, the logical EU
outcome, undermining both the position of Russian gas in the German market and the
profitability of Nord Stream.
Alignments within the EU on the two issues of an integrated EU gas market and a non-confrontational
approach to Russia overlap, with the UK and Eastern European countries in
favour of the integrated market but sceptical of Russia's intentions, and Germany and France
opposing market integration but more accommodating towards Russia. How these positions
will be reconciled is unclear and it will take time, but whatever the eventual EU consensus
the factors analysed in this section will work against Russia's "Gas Power" because EU
countries will diversify their sources of energy away from natural gas and their sources of gas
away from Russia.
29 Finland's requested in 2007 that the pipeline should pass under Estonian waters rather than across the more
difficult seabed under Finnish waters, but in 2008 Estonia rejected the request and Nord Stream returned to
negotiations with Finland. In 2008 the governments of both Sweden and Finland rejected the initial environmental
impact assessments presented by the consortium.
30 The Nord Stream agreement was signed in September 2005 in the presence of Chancellor Schroeder and
Prime Minister Putin. The Schroeder government authorized a loan guarantee of one billion euros to Gazprom,
which has a 51% share in the Nord Stream consortium, weeks before the end of the government's term in office.
Schroeder subsequently became Chair of the consortium. Despite the project's EU Trans-Europe Network status,
the consortium chose to incorporate in Switzerland, where it can benefit from secrecy laws to reduce the project's
transparency (Whist, 2008, 18).
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22
6. Conclusions
From the perspective of EU energy security there are parallels between current concerns
about dependence on Russian gas and 1973, when after decades of artificially low oil prices
energy importers suddenly seemed hostage to the power of a few oil exporters (and briefly
did suffer insecurity when the Netherlands was subject to an oil embargo). There was,
however, a spot market for oil and, as high prices led to the emergence of new producers,
OPEC lost its power. Since the early 1980s, any importer can obtain oil, at a price, and
energy security issues now focus more on gas, where pipeline networks limit the feasible
sources of supply and have left several EU gas importers vulnerable to disruption of supply
from Russia.
The ability of any supplier or group of suppliers with monopoly power in the provision of a
crucial good to turn this power into political influence sufficient to threaten the security of
importers depends upon the time horizon, the existence of substitutes and technological
change, which may all be interconnected. Coal in the nineteenth century and oil in the 1970s
were prime candidates for security concerns because they were important inputs into a
modern economy and appeared to be without close substitutes. In both cases, elasticities of
demand and supply were low in the short-run, but the elasticities proved to be higher in the
long-run as customers economized in the use of the fuel and as new sources of supply were
found and with technological change. Some of the technological change was exogenous, as
in the replacement of trains pulled by coal-fired steam engine by the petroleum-driven car as
a preferred means of transport, but much was endogenous, e.g. more fuel-efficient cars were
developed after the 1970s oil shocks.
As with earlier concerns about energy security, current EU fears of dependence on Russia
will be transient. Russia's currently large market share, about a quarter of gas supplies in the
EU, will likely fall due to supply-side problems, notably declining yields from Russia's existing
gas fields and difficulty developing the new fields. Dependence on Russian gas arises not
simply from market share but also from pipelines being the least-cost delivery mode for gas
and from the existing pipeline network, which directs not just Russian gas but also Central
Asian gas through Russian-controlled pipelines. This situation could change if new pipeline
routes were opened, such as the TransCaspian-Nabucco route, although this is likely to
require substantial support from Western governments and EU members are split about the
desirability of Russian versus non-Russian pipelines.
More importantly, the rapid development of LNG facilities will have huge implications for both
sellers and buyers of natural gas. Russia will lose its monopoly power in EU markets, but will
25. CASE Network Studies & Analyses No. 400 - Energy Security in the EU and Beyond
have options to ship gas from its growing Far Eastern and Arctic operations to the customers
in Asia, Europe or the Americas willing to pay the best price. The landlocked Central Asian
producers, on the other hand, will remain bound by pipeline routes and largely dependent on
Russian and Chinese markets. Construction of LNG regasification terminals is giving EU
importers the option of buying gas in a spot market with many suppliers, although this
development is being embraced to varying degrees by individual EU members and without
an integrated EU gas market the LNG option will not be available to all countries. Precisely
how the spot market for natural gas will develop is uncertain, but the pipeline issues and the
Russian threat to EU energy security will become as anachronistic as 1970s fears of OPEC
world domination.
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