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Natural Gas Conflict in the EU, Ukraine, and Russia Nexus Kenny Laskowski

Gas problems with russian and ukrainian indigestion Final

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Page 1: Gas problems with russian and ukrainian indigestion Final

Natural Gas Conflict in the EU, Ukraine, and Russia Nexus

Kenny Laskowski

Page 2: Gas problems with russian and ukrainian indigestion Final

Basics of InterdependenceEU imports from Russia (as % of total resource imported)

Russia exports to EU (as % of total resource exported)

Gas 36% 70%

Oil 31% 80%

Coal 30% 50%

Page 3: Gas problems with russian and ukrainian indigestion Final

Importance of the Ukraine

Page 4: Gas problems with russian and ukrainian indigestion Final

History of Ukrainian-Russian Gas ProblemsRussian Gazprom placed

vital assets in Ukraine under USSR

Grazprom lost direct control over assets to Ukraine after the collapse of the USSR

Ukraine control of pipelines and Russian control of gas creates massive ties between the two in the gas industry

At collapse of USSR, 90% of gas to Europe went through Ukraine

Page 5: Gas problems with russian and ukrainian indigestion Final

History of Ukrainian-Russian Gas Problems (con’t)

1990

2009

1992: Russia halts gas allocations to Ukraine

1992: Russia reduces gas flow to Ukraine

1994 Gas Agreement balancing interests of two countries

1998: Dispute over Ukrainian siphoning gas intended for Europe

1999: Ukraine agrees to relieve debt by selling equipment

2001: Russia and Ukraine reach 2001 Transit Agreement

2004: Orange Revolution

2006: Russia cuts off gas to Ukraine; reach 2006 Gas Agreement

2009 Gas Crisis shuts off gas to Europe for 22 days until agreement was reached

Page 6: Gas problems with russian and ukrainian indigestion Final

Better Understanding Ukraine-Russian Gas Problems

http://www.youtube.com/watch?v=ka7S0R9dhGg

Page 7: Gas problems with russian and ukrainian indigestion Final

Future Pipeline PossibilitiesNord Stream Pipeline

•Connects Russian gas w/EU more directly•“European interest”•Line 1 is already operational•Financing for Line 2 secured in March 2011•Set to be complete later this year (2012)

Page 8: Gas problems with russian and ukrainian indigestion Final

South Stream

Future Pipeline Possibilities

•Construction to begin 2013•Important for Russian influence and European energy security•Cost: 12-15 billion euros•First gas supplies to flow late 2015

Page 9: Gas problems with russian and ukrainian indigestion Final

Nabucco Pipeline

Future Pipeline Possibilities

•Construction set to begin 2013•Costs roughly 8 billion euros•Gas will be supplied from Caspain region and Middle East•Significant because it is free from Russian interest and supply•Set to be completed in 2017

Page 10: Gas problems with russian and ukrainian indigestion Final

Possibilities for the future of the Ukraine

Possible transportation of Iranian gas

Turning inward to own natural resources

Must first deal with internal problems before such a scenario is possible

Page 11: Gas problems with russian and ukrainian indigestion Final

Addressing Ukraine’s Internal Problems

Corruption in politics and gas supply to Ukraine

Legislation difficulties relating to the bureaucratic nature of the Ukrainian political system

Energy management or lack thereof; inefficient use by populace and inability of government to make change

Lack of resource use; the potential and lack of progress towards this potential