Title: Russia’s gas pipeline strategy and Europe’s alternatives – European Council on Foreign Relations
Headings: Russia’s gas pipeline strategy and Europe’s alternatives
Russia’s gas pipeline strategy and Europe’s alternatives
Author

Content: In principle, Gazprom might continue using Ukrainian pipelines if ‘commercial’ conditions – such as the transit fee – are attractive. But recent announcements suggest that Ukraine is asking too much and Gazprom is unhappy with the proposed transit price. Furthermore, even if the commercial side of the transit question is resolved, a ‘transit–avoidance’ policy is deeply rooted in the minds of Gazprom’s masters in Kremlin. This policy dates back to the early 1990s and since then Russia’s gas policy has been to bypass Ukraine’s pipelines at any cost. It remains to be seen whether structural changes in the markets and geopolitics force Gazprom’s political masters to ‘rationalise’ its European strategy, and in particular its strategy vis-à-vis Ukraine. Should this rationalisation happen, then the Russians could ‘flood’ European markets with cheap gas, fuelling the much sought re-industrialisation of European economies. But this would require more than just a rational business plan – investing political capital to rebuild trust at the highest level between Russia and Europe, and most importantly, between Russia and Ukraine. Russia’s pipeline strategy and the threat to gas supplies pose real challenges, but instead of focusing on real diversification, the Commission has to mediate the negotiations and be the ‘financial broker’. Chi-Kong Chyong is Director of Energy Policy Forum, EPRG, University of Cambridge and the author of the ECFR publication Why Europe should support reform of the Ukrainian gas market – or risk a cut-off (October 2014). The European Council on Foreign Relations does not take collective positions.