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.

1. Ukrainian crisis, the role of the access to energy resources (oil and natural gas) in
developing/resolving the conflict
BY
Nedim Beganovic
World is changing rapidly and these changes are bringing the new challenges. Almost every
sphere of our lives is likely to be effected to the certain extend. Here, I will focus on one of
those, which is throughout the history proved to be one of the most important and that is,
availability of natural resources and row materials and free access to those with reflection
on the ongoing crisis in Ukraine. In particular, with this paper, I will try to provide the
overview of relations between two super powers (EU and Russian federation) in the light of
current crisis and with the focus on access to energy resources (oil and natural gas) as well
as the access to the energy markets.
Introduction;
Energy resources and access to those have often played the important role throughout the
history and have had thus a strong influence in defining the policies and relations between
the parties involved. For example, even the formation of the current EU has been initiated
with the idea of forming the union around the coal and steel exploitation and production,
the European Coal and Steel Community (ECSC), formally established by the Treaty of Paris
in 1951,1
and initially presented by the governmental proposal by the then French Foreign
Minister Robert Schuman in the Schuman Declaration on the 9th
of May 1950.2
Furthermore, for its future prosperity, every state has to secure the sufficient quantities of
energy required to stimulate its existence and growth. Therefore and taking in to
consideration the strong dependency on external energy resources (EU) or the access to the
potent European energy market (Russia), it is not surprising that the energy is playing one of
the crucial roles in defining the relations between these two actors and particularly in
connection with the ongoing conflict in the Ukraine.
1
MOOC Challenges in Global Affairs, The Changing Global Order week 4 video lesson.
2
Schuman, Robert. "The Schuman Declaration." (1950) http://europa.eu/about-eu/basic-
information/symbols/europe-day/schuman-declaration/index_en.htm.

2. • Current status
The importance of the energy and its availability is definitely on the agenda of the EU. This is
clearly to see in the document published by the European Commission on March 2014,
where the Günther Oettinger, European Commissioner for Energy stated the following;
“Securing reliable energy at affordable prices is one of the biggest challenges the EU
currently faces: further integration of our energy policies and speaking with one voice on the
global scene are crucial in order to succeed”3
.
On the other side, Russia is an re-emerging power and as such it is realistic to expect that
they will use the energy as the mean in order to promote its interests in the international
relations. And when taken in to consideration that both parties are willing to apply the
power politics like mentioned during the course4
it is not surprising that the Ukrainian crisis
has such an impact on the current relations between the two and how much it can influence
their future relations.
To be able to understand the influence of the Ukrainian crisis on the energy security and the
relations between the EU and Russia and wider it is necessary to briefly examine the
elements of the Energy security. Like Jakub M. Godzimirski stated in the report he provided
for the Polish Institute of International Affairs, “energy security in general is about four
things”.
 Availability
Availability relates to securing the Europe’s energy supply.
 Affordability
Affordability relates to ensuring the stable energy prices so that Europe can remain
competitive.
 Stewardship (sustainability of energy supply and use)
Stewardship focuses on sustainability while ensuring the protection of the
environment and combating the climate changes.
 Efficiency
Efficiency is focused on improvement of the performance of the energy equipment
and the users-producers behavior.
By looking at the statistical data we can better understand the importance of the issue of
energy for both UE and the Russia and especially in the light of Ukrainian crisis.
So, for example Russia exports around 62% of its mineral products to the EU. That means
that about one third of all imported oil or gas in the EU comes from Russia. Besides import
from Russia, EU relies on its own production and import from the OPEC countries
(Organization of Petroleum Exporting Countries).
The EU spends annually around €350 billion, almost 1 billion per day, to cover its energy
consumption and this amount can only get higher in the future given the fact that the costs
of energy are constantly increasing.
3
http://europa.eu/pol/ener/flipbook/en/energy_en.pdf
4
https://class.coursera.org/globalorder-001/wiki/Week2

3. On the other side, Russia as previously stated, largely depends on the access to the potent
European energy market. Given the fact that around 50% of the Russia’s state budget is
generated from the production and trade in energy and that the most of it comes from the
trade with the EU, provides a clear picture about the importance of access to energy markets
to Russia.
Besides access to energy markets, especially the potent ones like the EU, Russia needs stable
oil prices in order to balance its budget. It is estimated that Russia needs $117 per barrel in
order to balance its budget which is made up to 50% from the revenues generated from the
production, sale and export of energy commodities5
. Therefore, it is not surprising that
dropping the oil price has been used as a method to put the pressure on the Russian
government in the light of the Ukrainian crisis.
• The effect of Ukrainian crisis on relations between EU and Russia
Ukraine is largely depending on Russia’s energy. Therefore, it was to expect that Russia will
apply a coercion as essential part of its policy towards Ukraine by using the access and
availability of its natural gas supplies as a method6
. At the same time they are denying their
physical presence or any military involvement in the ongoing conflict in Ukraine. The same
applies for Russian annexation of the Crimea on the basis of referendum whose results were
not recognized by any other country except Russia.
So, besides being dependable on the Russian energy, Ukraine is the main crossroad for
Russian natural gas intended for the territory of the EU. Almost 80% of the EU’s external gas
supplies comes through the pipeline that goes through the Ukraine.
So for example, EU was shocked when it faced supply shortages in 2006 as the result of the
dispute between Ukraine and Russia (Gazprom) over the gas prices increase for the Ukraine
and on the other side the request from Ukraine for higher export tariffs for Russian gas that
is being exported throughout the Ukraine. This and other similar events have, to certain
extent, had influenced the creation of the new EU’s energy strategy.
Another important aspect of the ongoing crisis in Ukraine and its influence in relations
between EU and Russia with regard to energy, is of course the South Stream Pipeline
project. This project, initially intended to provide the alternative route for the Russian gas to
reach the EU market, was abounded doe to the political pressure exercised both by EU and
the Russia.
Of course, situation in the Ukraine has influenced the decision making process at the both
sides and subsequently the defining of policies. As a result, Russia has decided to look for the
alternative solution and has chosen for to create a new route and bring its natural gas to
Turkey at the border with the EU7
.
5
http://www.naturalgaseurope.com/european-energy-security-russia-ukraine-crisis
6
https://class.coursera.org/globalorder-001/wiki/Week5
7
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2493665

4. This brings another player in the energy relations between EU and Russia which might
further complicate the relations with regard to energy security or perhaps be a part of the
solution.
Complication might arise from the fact that the new circumstances could lead towards the
policy fragmentation between EU and Turkey which could then generate the rivalry between
the two.
Possible positive outcome might be the policy change with regard to Turkey joining the EU
which is not only interesting in relation with the Ukrainian crisis and South Stream Pipeline,
but also taking in to account the importance of the strategic position of Turkey.
The strategic position of Turkey will again come in to play when considering the alternatives
for the Russian gas, first it would be necessary to make an agreement between EU and
Turkey with regard to bringing the natural gas from the Kurdish region of Iraq throughout
the Turkey to EU and the same applies for the natural gas from Israel8
.
Further to this issue, Ukraine has recently announced that they are planning to increase the
import of natural gas from EU so they could escape from being dependent on Russian gas.
This, in my opinion, can only further complicate the relations between EU and Russia which
are already weaken with the Russia’s involvement in conflict in Ukraine and sanctions that
EU has applied towards Russia.
• Perspective, possible outcomes and suggestions.
Given the fact that EU has to import 53% of energy9
in order to cover its own energy
consumption and so it could secure the competiveness of its economy, while taking care
about the sustainability of the energy production and use, and of course the security of
supply. It is not surprising that availability of energy is of essential importance for the EU.
This, together with the ongoing crisis in Ukraine have set de issue of energy security even
higher on the EU agenda and has lead toward development of the European Energy Security
Strategy published on May 2014.10
In this strategy, several measures were suggested aimed to deal with the EU energy security
in relation with the current situation and also the future course of action is presented. Eight
key pillars are identified that should “together promote closer cooperation beneficial for all
Member States while respecting national energy choices, and are underpinned by the
principle of solidarity:
1. Immediate actions aimed at increasing the EU's capacity to overcome a major disruption
during the winter 2014/2015;
2. Strengthening emergency/solidarity mechanisms including coordination of risk
assessments and contingency plans; and protecting strategic infrastructure;
3. Moderating energy demand;
4. Building a well-functioning and fully integrated internal market;
5. Increasing energy production in the European Union;
8
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2493665
9
http://www.naturalgaseurope.com/european-energy-security-russia-ukraine-crisis
10
http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52014DC0330&qid=1407855611566

5. 6. Further developing energy technologies;
7. Diversifying external supplies and related infrastructure;
8. Improving coordination of national energy policies and speaking with one voice in
external energy policy”11
.
Russia has also undertaken several measures with regard to its energy security in reaction to
the situation in Ukraine and the sanctions from the west. So for example, they have started
increasing their presence in other energy markets like Asia, several deals were made with
China and bringing other regional players in to the game like re-routing the South Stream
Pipeline to Turkey.
Clearly, both EU and Russia are aware of the importance of the energy security and the risks
involved, in connection with the crisis in Ukraine and in general. Both have taken several
measures and defined the new policies and have shown the readiness to implement them.
Of course, further developments of the situation and which way this is going to happen is
largely depending on situation in Ukraine. Currently there are no signs indicating that the
conflict might soon to be resolved. Therefore, it is realistic to expect that in the close future,
situation and relations between EU and Russia with regard to energy security, might get
further complicated.
This might have as a consequence, from the EU side, even stronger commitment in
implementing its new Energy Security Strategy, especially the parts related to the availability
of the energy, sustainability and of course the diversification.
From the Russian side, this might lead towards Russia’s further concentrating to other
energy markets and perhaps choosing the China as a main strategic partner for the future.
Even though, the current situation is not promising, I personally do not think that the
relations between EU and Russia related to the energy security and in connection with the
crisis in Ukraine could radicalize to such extent that they could significantly jeopardize the
relations between the two in the long term. The interconnectedness of the world markets
and interdependence of the state’s economies will definitely play an important role and I
believe will push parties to each other and towards finding the solution for the current crisis.
Surely, the upcoming end of the winter could also play an role at the negotiations table,
since the need for the Russian natural gas will be slight lover or slightly less important during
the spring and the summer.
In my opinion, EU should continue with its efforts in securing the availability of sufficient
energy to cover its consumption needs and to secure that its economy remain competitive in
the future. This might include, creating stronger relations with the new and new potential
players in the energy market. Diplomatic and any other efforts in order to resolve the
existing disputes with the Russia to try to keep this important energy supplier at its disposal.
Russia on the other side and in my opinion, should look for the quick or as soon as possible,
the resolution for the ongoing crisis in Ukraine if they are interested in having the access
11
http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52014DC0330&qid=1407855611566

6. short and long term, to the potent EU energy market. They have already and should
continue looking and working on the alternatives for the EU energy market if the crisis in
Ukraine and the current relations between EU and Russia remain as it is now.
• Conclusion
After looking at all the facts and data presented, it is clear that the issue of energy security
will be for the long period of time at the agenda of both parties I have focused on, EU and
Russia. Also, the experiences from the past will continue to have an important role for the
parties while defining their policies and will impact their relations in the future. As we have
seen, they have already taken several measures, introduced the new strategies and started
making new strategic partnerships.
The ongoing conflict in the Ukraine and the way it would finally be resolved will have a
significant impact in defining the relations between the two. This in combination with the
possible geo-strategic changes that might occur as a result from this crisis might to certain
extent influence the future power relations in Europe, Asia and wider.
However, bearing in mind the strong connection of the economies in question and even
dependency on each other, I believe that parties will be rather going in the direction
towards finding the solution which will be acceptable for both, than going towards even
deeper crisis and complications in their relations. At least in the long term. Also it is worth
mentioning the fact that any alternative to current relations with regard to energy, is not
possible to be implemented in the short term and requires significant investments and
political consensus in order to succeed.
In the short term I’m afraid that in the coming months, no positive developments could be
expected. Even though, recent diplomatic initiative and the ongoing negotiations between
Russia and Ukraine with the presence of German chancellor Angela Merkel and French
president Francois Hollande might bring some positive effects since the cease-fire is likely to
be agreed. It is more realistic that situation in the short term, will continue to have a
negative impact on the relations between EU and Russia and specifically on energy relations
between the two.
I have tried to give an overview of relations between the two super powers in the light of
the Ukrainian crisis with the focus on the energy issue. We have looked at the facts that
show us the importance of the issue and actions that were taken by the parties in order to
protect their interests. Number of scenarios were presented and suggestions were made
and finally concluded with my own opinion.
How this will finally end up, the future will show us.

7. • References
Schuman Declaration - http://www.eurotreaties.com/documents.html#schuman
THE EUROPEAN UNION EXPLAINED – Energy -
http://europa.eu/pol/ener/flipbook/en/energy_en.pdf
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE
COUNCIL European Energy Security Strategy - http://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=CELEX:52014DC0330&qid=1407855611566
European Energy Security in the Wake of the Russia–Ukraine Crisis -
http://www.naturalgaseurope.com/european-energy-security-russia-ukraine-crisis
MOOC Challenges in Global Affairs, The Changing Global Order –
https://www.coursera.org/specialization/#globalaffairs/3
The EU-Turkey Energy Relations after the 2014 Ukraine Crisis: Enhancing the Partnership in a
Rapidly Changing Environment -
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2493665