Analysis  |  20 November 2014

Russia. Still-life Under Sanctions

From the headlines that we see in the press lately it seems that Russia’s main problem is economic sanctions imposed by the West in relation to the Ukrainian crisis. The Russian economic situation can be characterized as cautiously pessimistic: in light of the sanctions currently in place, the 2015 economic development prospects aren't very positive. There are certain expectations that the sanctions will be lifted at some point sooner or later; but as it stands today, the Rouble is becoming weaker, prices are increasing and oil price developments aren't favourable for the Russian budget dependent on oil export income. However, it is questionable whether these developments are solely the result of sanctions introduced against Russia by US and the EU throughout 2014; moreover, it is questionable whether the lifting of the sanctions will solve any of the problems effectively, as many of the commenters hope.

Report  |  6 November 2014

Finns are not nuclear power friendly – they are pragmatic

By Reiner Gatermann

The Finns are attributed with two national characteristics: Sisu (best described as the strength not to give up, bravery, resilience and acting rationally in the face of adversity) and – secondly – they are pragmatic. Finland’s entire history of nuclear power, commencing at the end of the seventies and still going strong, is characterised by these two attributes. There cannot be many countries in the world where about half of the population is in favour of nuclear power, where communities were competing to become the home of a new nuclear power plant, where government, parliament and companies are not deterred by the extreme – about nine years - delay of the still pending start up of a nuclear power plant, and where Greenpeace is in vain looking for stronger support in the population and the media. According to Katarina Koivisto, energy writer for the Swedish speaking Finnish newspaper Huvudstadsbladet, “the Finns see nuclear power as the one alternative to get more power to a price that does not rise too high”.

Analysis  |  23 October 2014

The Persian Promise or Betting on Uncertainty

By Saltanat Berdikeeva

The Russia-Ukraine political crisis and the armed conflict in eastern Ukraine served as a wake-up call to Europe’s stance toward the rising Russian power in the post-Soviet space and the new challenges it poses to the region. As the crisis hit closer to home after downing of the Malaysian airliner in eastern Ukraine and after Kiev’s announcement that it may ban the transit of Russian gas through Ukraine, the European Union (EU) imposed economic sanctions on Russia and began seeking diversification of gas supplies. Facing uncertainty over the stable supply of Russian gas that satisfies the EU’s 30% of gas imports, the EU’s energy diversification plan includes increasing gas storage, switching to alternative fuels, and integrating other external gas providers.

Analysis  |  9 October 2014

Putting a price on EU’s energy security

By Daria Nochevnik

As the energy landscape goes through significant changes both in the European Union and outside its borders, the EU finds itself in the middle of energy transformations. On-going liberalisation of European energy markets, completion of the Single European Energy Market initially scheduled for the year 2014, as well as the ambitious decarbonisation strategies that the EU has committed to - these are some of the key issues on the European energy agenda. While taking stock of the achievements that are made after the implementation of the 2020 targets, EU has nearly completed setting itself a new ambitious goal – the 2030 climate and energy policy framework. At the same time, such multidimensional strategies of the EU that aim at the simultaneous achievement of three parallel targets - reducing GHG emissions, increasing energy efficiency and increasing the share of the renewables in the energy mix – expose the European energy markets and industries to unprecedented challenges. The latter do not only impact the energy bills of consumers, but also create critical uncertainties for the investors in the sector, when policy risk becomes an independent variable. The multidimensional character of the European energy concerns, particularly in electricity and gas supplies, is reflected in the multiplicity of accounts of European energy security.
However, if the political rationale behind EU’s energy security strategy has been at the spotlight of debates, since the gas crises of 2006 and 2009, the economic challenge that energy security brings about for Europe has often been out of focus.

Viewpoint  |  25 September 2014

The Role of 'European formulas' in the Russia-Ukraine Gas Debate (part 3)

How modernization of Ukrainian GTS changes the economics of bringing Russian gas to the EU

By Andrey Konoplyanik

As was shown in the first of the two previous articles, Ukrainian factual Euro-integration in gas since 2004 has led to severe economic conflict for the country: import gas pricing based on 'European formulas' has resulted in high import prices for Russian gas which Ukraine considers to be purely politically motivated (EER, June 19, 2014). In the second article, I showed that Ukraine’s accession in 2011 to the Energy Community Treaty has created, inter alia, yet to be settled legal problems related to the conflict between contractual and public law within Ukraine: its public law obligation as a result of implementing provisions of the Third EU Energy package to possess reverse flow capacities at its Western borders, conflicts with its earlier contractual law obligation to offtake specific amounts of import gas deliveries from the East according to the Russia-Ukraine 2009-2019 gas supply contract (EER, August 4, 2014). In this article I will address the issue of Ukraine’s Euro-integration impact on Russian gas transit to the EU. Ongoing reforms of the management structure of the Ukrainian gas transportation system (UGTS), also resulted from the legal obligation of the Energy Community member states to adapt their energy systems to provisions of the EU energy 'acquis communautaire' (Third EU Energy Package), as well as from the current Ukrainian leadership's implementation of its own “sanctions” against Russia, which can cover energy transit, have been changing comparative economics of Russian gas transit to the EU.

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