IMPLICATIONS OF ENERGY INTERDEPENDENCE

BETWEEN EASTERN EUROPEAN POST-SOVIET

STATES AND RUSSIA FOR GEOPOLITICAL

TENDENCIES IN THE REGION

The European Union is one of the largest energy consumers in the world. Given that

most internal deposits are mostly depleted, it becomes increasingly reliant on outside

supplies. In 2020 Russian gas supplies comprised 43% of total EU gas imports 1. And it is

worth considering that this kind of energy dependence is unevenly distributed with the

heaviest dependence of Germany and Eastern European countries due to the common Soviet

Past of the latter, and, respectively, common energy grid.

European Union admitted its energy dependency arguing that Russia is as dependent

on the EU consumers as the EU consumers are dependent on Russian supplies. However,

recent events in the Eastern Europe with Russian invasion of Ukraine prove the contrary. The

EU’s energy dependence and that of Eastern Europe poses a threat to European security and

integrity while Russia uses its pipelines as a foreign policy weapon.

An interesting aspect of European gas dependency is that, as mentioned before, it is

distributed unevenly throughout Europe. One of the most significant factors of the given

tendency is inherited from Soviet Union economic dependencies on “center” of the former

Soviet Union. After dissolution of the Soviet Union some of the former Soviet Union states

started the process of rebuilding energy supplies. The most prominent example is Lithuania, a

small Baltic state, which managed to reduce its dependency to almost zero point. Other

1
https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690705/EPRS_BRI(2021)690705_EN.pdf p. 3
countries did not manage to effectively modify their policies and, respectively, supply chains,

becoming hostages of energy power.

HISTORY OF DEVELOPMENT OF RUSSIAN ENERGY SUPPLY GRID

Discovery of Siberian gas fields in 1970s was followed by the opening of the Druzhba

pipeline (the Friendship pipeline) in 1964, running through the territory of Ukraine and

Belarus. The second pipeline which is called Yamal-Europe runs through the territory of

Belarus bringing gas to Poland and Germany and began being operational in 1996. In 2003

they launched another pipeline (Blue Stream), supplying Turkey with gas, and TurkStream

in 2020 supplying Turkey and southeastern Europe. And Nord Stream I pipeline via which

Russian gas is delivered straight to Germany became operational in 20112.

After the fall of the Soviet Union Russia continued to exert influence on the Eastern

European region through supply of discounted gas “as a part of a barter agreement that

allowed Russian and Central Asian resources to flow through to the west” 3.Ukraine was (and,

obviously, still is) a region of interest of Russia. With Orange revolution which took place in

2006 and following rise of pro-Western politicians in Ukraine, Russia-Ukraine gas dispute

took place when Russia asked Ukraine to pay a one-time payment at “European level” prices

for the 7.8 bcm in Ukrainian reserves4. At roughly the same time Russia started looking for

alternative ways of supplying gas to Europe.

The South Stream pipeline is one of the cancelled projects. It was proposed in 2007 5

supposed to supply gas from Russia straight to Bulgaria, bypassing other transit countries

2
https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690705/EPRS_BRI(2021)690705_EN.pdf
3
https://www.jstor.org/stable/43152432?searchText=russian+pipelines&searchUri=%2Faction
%2FdoBasicSearch%3FQuery%3Drussian
%2Bpipelines&ab_segments=0%2Fbasic_search_gsv2%2Fcontrol&refreqid=fastly-default
%3A86e80e7f879f646c6cfa6b546b80c2f4&seq=4
4
https://www.nytimes.com/2006/01/01/world/europe/twists-and-turns-in-russiaukraine-gas-dispute.html?
searchResultPosition=3
5
https://www.nytimes.com/2014/12/03/business/south-stream-pipeline-cancellation-fallout.html?
searchResultPosition=3
such as Ukraine and Poland, and thus making these supplies more secure. The EU found

South Stream project uncompilable with European legislation, namely the EU Third Energy

Package, about energy and competition laws which were aimed at elimination of “energy

monopolies that control prices and supplies”6. South Stream was seen as a straight rival of

Nabucco pipeline project, which was supposed to supply Caspian and Iraqi gas fields to

Europe via Turkey, bypassing countries like Ukraine and Russia. However, in case of South

Stream construction, Nabucco would have become economically unprofitable7. Eventually,

South Stream project was scrapped in 20148.

Nord Stream 1 and Nord Stream 2 are two identical pipeline projects which would

allow to supply Russian gas to Western Europe, namely Germany, bypassing all the Baltic

States and Poland. Nord Stream 1 was approved in 2005 9 and commissioned entirely in 2012.

Nord Stream 2 project was way more controversial due to the existence of the EU Third

Energy Package and Russian annexation of Crimean Peninsula and invasion of the Eastern

Ukraine. Numerous estimations of the economical profitability of the Nord Stream pipelines

proved that the latter does not make any commercial sense for Russia. Despite heated debate,

the Nord Stream 2 project was adopted by the European Commission and began being

constructed in 201810. As expected by numerous policy analytics, construction of the Nord

Stream pipelines would have heavy geopolitical implications.

6
https://www.nytimes.com/2014/12/03/business/south-stream-pipeline-cancellation-fallout.html?
searchResultPosition=3
7
https://www.economist.com/europe/2008/01/24/pipedreams
8
https://www.nytimes.com/2014/12/03/business/south-stream-pipeline-cancellation-fallout.html?
searchResultPosition=3
9
https://www.jstor.org/stable/resrep17117?searchText=nord+stream&searchUri=%2Faction
%2FdoBasicSearch%3FQuery%3Dnord
%2Bstream&ab_segments=0%2Fbasic_search_gsv2%2Fcontrol&refreqid=fastly-default
%3A160e7ee060e9c4ada1a66e79efdff1a2&seq=6
10
https://www.jstor.org/stable/j.ctv1prsr27.10?searchText=nord+stream&searchUri=%2Faction
%2FdoBasicSearch%3FQuery%3Dnord%2Bstream%26acc%3Don%26sd
%3D2021&ab_segments=0%2Fbasic_search_gsv2%2Fcontrol&refreqid=fastly-default
%3A24f57d12c690316c05192a907655354c&seq=4
 Capacity of the pipelines and supplied territories. It is worth noting that different

pipelines have different capacities. Given the data on design capacity of the pipelines,

Druzhba pipeline running through Ukrainian corridor has the largest capacity of 146 billion

cubic meters per year (bcm/year). On the contrary, Yamal pipeline running through the

territory of Belarus has capacity of only 33 bcm/year. Blue Stream and TurkStream have the

capacity of 11 bcm/year and 32 bcm/year, respectively. Nord Stream 1 and Nord Stream 2,

two identical pipeline projects, have the capacity of 55 bcm/year both11.

After dissolution of the Soviet Union, Boris Yeltsin, Russian then-president,

privatized Gazprom. Thus, Gazprom is allegedly driven only by commercial benefit.

However, the company’s policy is clearly in line with the idea of geopolitical dominance. The

latter has economic, political, and geopolitical implications of various scale for post-Soviet

countries of the Eastern Europe.

TENSIONS OF DIFFERENT COUNTRIES LINKED TO CERTAIN PIPELINE

The gas dispute had a continuation in 2009 when the pressure in Hungarian,

Romanian, Polish, and Bulgarian pipelines dropped, leaving these countries freezing in

winter.

In 2014, when the Russian Federation invaded and annexed the Crimean Peninsula, Russia

provided roughly a quarter of all the gas supplied to the European Union. In some countries

such as Finland, Estonia, Latvia, Lithuania, and Bulgaria, almost all of the gas supply was

secured by Russia12. Gas supplied to Hungary in 2012 accounted for 80% of its total das

supply.13

11
https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690705/EPRS_BRI(2021)690705_EN.pdf
12
https://www.economist.com/europe/2014/03/22/adrift-over-energy
13
https://www.economist.com/briefing/2014/04/03/conscious-uncoupling
 Russian full-scale invasion on February of 2022 put a great challenge to the EU.

Support of the EU countries was highly dependent on their exposure to Russian gas supplies.

Hungary has high exposure to these supplies. This country repeatedly blocked the EU

assistance to Ukraine to fight the aggressor. Although such a behavior of Hungary cannot be

explained only by oil and gas cut offs, it definitely plays a role.

Viktor Orbán, current prime minister of Hungary, carried on its policy of “Eastern Opening”

under which he fostered financial, and what is more important energy dependency.

On the contrary Estonia, Latvia, and Lithuania, which are often referred to as the

“Baltic States”, were trying to foster their energy independence from Russia right after the

collapse of the Soviet Union, and exceptionally intensively after pipeline “Druzhba”

shutdowns in 2006. In this quest for energy independence Liquified Natural Gas (LNG)

terminals became a breakthrough.

One of the conditions of Lithuania’s joining the EU was compliance with

environmental policies of the EU, and, subsequently, shut down of the nuclear power plant

Ignalina. This shut down paved the way for the EU accession of Lithuania and made its

dependency on Russian energy increased about 50%14. Limited energy resources of the region

made it one of the most vulnerable parts of the EU. Projects like he Baltic Energy Market

Interconnection Plan (BEMIP) and the Baltic Sea Region Energy Cooperation (BASREC)

were created to target region’s energy vulnerability15.

Baltic States stopped importing Russian gas in April of 2022, relying on imported

LNG16.
14
https://www.economist.com/europe/2008/06/19/lithuania-split-by-the-atom
15
https://www.jstor.org/stable/resrep09670?searchText=lithuania+energy&searchUri=%2Faction
%2FdoBasicSearch%3FQuery%3Dlithuania
%2Benergy&ab_segments=0%2Fbasic_search_gsv2%2Fcontrol&refreqid=fastly-default
%3Abb1c4489820bd436c2f24a520fd8086c
16
https://www.economist.com/europe/2022/05/07/europes-hard-hit-east-is-pushing-the-toughest-response-
in-ukraine
 Poland rejected request to pay for Russian energy, namely natural gas, in rubbles. It

already had a plan of importing LNG through its own LNG-terminal and relying on newly

built undersea gas pipeline to Norway.

GEOPOLITICAL IMPLICATIONS FOR RUSSIAN ENERGY DIPLOMACY

Over the last two decades major political and geopolitical events happened to overlap

with changes in energy supplies. One of the most prominent cases is Ukraine. As mentioned

earlier, the events of the pro-European Orange Revolution were followed by never-ending

Russia-Ukraine gas disputes. Commissioning of the Nord Stream 1 was preceded by

annexation of Crimea and the Russo-Ukrainian War. The Nord Stream 2 was completed in

September of 2021. It was pure coincidence that it had not entered its service before the full-

scale invasion of Ukraine.

The case of Baltic states was simpler because these countries doesn’t own any

significant energy resources and were almost fully reliant on Russia. On the contrary, before

the full-scale invasion Ukraine was among 3 largest producers of the coal in Europe. Most of

the coal production was concentrated in the Donbas region. Ukraine owns gas fields in

Carpathians region. Although due to the extensive mining during the rule of Austro-

Hungarian Empire oil and gas reserves were largely depleted, it is important to elaborate that

there are huge gas deposits in the areas with solid rock which require advances and costly

mining technology.

According to Reuters article “Ukraine has Europe’s third-largest shale gas reserves at 42

trillion cubic feet (1.2 trillion cubic metres), according to the U.S. Energy Information

Administration, behind France and Norway.”.

In 2010 Yuzivska gas field was discovered in Donbas region along with Oleska shale

gas deposit in Western Ukraine. In 2012 they discovered Skifska gas field in the Black Sea.
In the same year Shell and Chevron won the tenders which would have allowed exploration

and development of Yuzivska and Oleska gas fields17. Later on this year Shell won another

tender which would have allowed them to explore and develop the field. The latter was

predominantly expected to produce around 5 billion cubic meters per year with estimated

reservoirs of 200-250 billion cubic meters18. Projects were estimated as highly profitable

because of the vast already existing systems of pipelines and spaces for storage.

Nord Stream claims that “The gas transportation system is comprised of its twin,

1,224-kilometre pipelines through the Baltic Sea. Each has the capacity to transport 27.5

billion cubic metres of natural gas a year.”19. These observations lead us to the conclusion

that if they start developing shell gas fields in Ukraine, demand for Russian gas which

requires often costly transportation.

But what if the Nord Stream projects initially had comparatively low profits? As I

have already mentioned before it turned out that the cost of the construction and exploitation

of the pipelines was unreasonably high. But with the Nord Stream project Russia was able to

secure its supplies (Nord Stream 2, which did not come into exploitation, by and large, is an

exceptional case).

CONCLUSION

For the past two decades Russian energy diplomacy, also referred to as pipeline

diplomacy20, was aiming to secure its gas supplies to the Western Europe. By and large, they

met that goal, however, often at unreasonably high cost. Numerous studies keep on

mentioning implications of the Soviet Union’s institutions which tied the newborn post-

Soviet states to the old system. I do not refute these conclusions. And yet, they do not trace

17
https://www.reuters.com/article/idUSL5E8GBAE020120511
18
https://www.reuters.com/article/us-shell-exxonmobil-ukraine-idUSBRE87E0C320120815
19
https://www.nord-stream.com/operations/
20
https://www.jstor.org/stable/43152432
implications of post-Soviet states’ integration into energy grid of Western Europe and their

scale. One of the most tangible consequences is the loss of the control and ability to influence

the region. For the past two decades Russia tried to consolidate its influence in the region.

When failing to achieve its goals by the means of energy policy, Russia tries to gain a

foothold by military means.