Pipes for a new natural gas pipeline lie on the former airfield in Ellund, Germany, 20 January 2014.
"EU-Russia Cooperation in a Rapidly Changing Interregional Gas Market"
Journal Article, Economics and Policy of Energy and the Environment, issue 3
Author: Morena Skalamera, Associate, Geopolitics of Energy Project
Belfer Center Programs or Projects: Geopolitics of Energy Project
In the past few years the gas sector has experienced a wave of unprecedented changes. The increasing globalization of gas markets and the technological breakthrough of shale gas production in the United States have triggered deep changes in Eurasian gas market governance. The long-established oil indexation in gas contracts is now challenged not only by the European Commission’s efforts at liberalization but also by the private sector. The industrial sector’s support for change has provoked a robust redefinition of gas governance structures between Russia and the EU, amidst Russian calls for the support of long-term gas contracts. The latter, from its perspective as a rising power in its own right, has no intention of importing EU’s regulatory structures on its territory and is resisting them while operating in the EU. Against this background, this paper seeks to investigate the issues that are arising with respect to the EU’s desire to change the institutional arrangements in gas trade with Russia. If the EU seizes the paradigm change as a moment to take Russia’s proposals and ideas into consideration, the energy partnership could become more solid and symmetrical. In contrast, should the downward spiral of mutual disappointment continue, Russia will increasingly turn eastwards. In that context, if the US decides to withhold its shale gas bonanza for domestic use during a complicated shale revolution in the Old continent, the unreliability of Russian gas could force Europe to rethink its strategies.
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