Title: Europe's Strategic Dependence on Russian Energy | The Heritage Foundation
Headings: Europe's Strategic Dependence on Russian Energy
Europe's Strategic Dependence on Russian Energy
Ariel Cohen
Director, CENRG and Senior Fellow, IAGS
Energy Dependence on Russia
Implications for European Energy Security
Policy Implications for the United States
Authors
Ariel Cohen
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Content: The Kremlin has advanced this strategy through a series of policies. It creates dependency by locking in demand with energy importers, consolidating the supply of oil and gas by signing long-term contracts with Central Asian energy producers, and securing control of strategic energy infrastructure in Europe and Eurasia. This includes extending the Gazprom monopoly and attempting to create an OPEC-style gas cartel. [ 10] At the August 2007 summit of the Shanghai Cooperation Organization, the presidents of Kazakhstan and Russia called for establishment of an "Asian energy club" to expand energy ties among the member states, including creation of a unified energy infrastructure to serve as the basis for a common energy market. [ 11]
Locking in Demand. Russia is attempting to lock in demand by signing long-term bilateral and multilateral contracts with European countries. Moscow prefers to deal with the EU member states separately rather than as a group so that Russia can price-discriminate among its customers, charging each country as close to its full paying potential as possible. Gazprom has negotiated long-term supply contracts with most Western European countries, including France, Germany, Italy, and Austria. Russia has contracted for portions of Central and Eastern European demand that are much greater than that of Western Europe. Newer EU members, such as Slovakia, Bulgaria, and the Czech Republic, are almost entirely dependent on Russian gas.