EU Energy Relations With Russia

Solidarity and the Rule of Law

Umut Turksen

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351703024
• Edition: 1
• Topic: Jura
• Subtopic: Rechtstheorie & -praxis

This book provides a detailed analysis of the legal framework in which the energy trade between the European Union and the Russian Federation has been conducted. Using case studies of eight member states, it critically examines the EU's ability and the duty of its Member States to conduct their external energy trade in accordance with the principle of solidarity. Providing a comprehensive analysis of the principle of solidarity as provided in the acquis communautaire of the EU, the book critically analyses the legal framework pertaining to EU-Russia energy trade to ascertain whether, and to what extent, it satisfies the requirements of the rule of law.

1 Russia as an important supplier of energy for the EU

In order to put forward the argument that solidarity is a legal obligation and necessary in the EU’s external energy trade, it is important to provide the reasons and the logic behind it. The Russian Federation (Russia) is the primary energy supplier for the EU.¹ Russia is known to have the largest natural gas reserves (about 18%) and seventh largest crude oil reserves in the world. It is also the biggest exporter of oil and gas to the EU, with its supplies accounting for 25% of oil and 33% of gas.² In 2016, Russia’s share in the EU imports of natural gas was 38.2% (37.5% in 2015) and its share in EU imports of petroleum oil was 29.2% (32.5% in 2015).³ (See Table 1.1.)

Table 1.1 Eurostat – Extra-EU imports of natural gas, shares (%) of main trading partners, 2016⁶

Partner	Value (Share%)	Net mass (Share%)
Russia	39.7	38.2
Norway	34.1	35.8
Algeria	15.2	14.3
Qatar	5.1	5.8
Nigeria	2.1	2.1
Libya	1.4	1.5
Others	2.4	2.3

The EU as a whole is the world’s largest energy importer; importing approximately 55% of its energy supply – nearly 84% of its oil and 64% of its natural gas.⁴ The EU’s overall dependency on gas imports is expected to rise significantly by 2030⁵ with its energy consumption rising by 15% in comparison to the demand in 2000. This is particularly true with respect to EU’s imports of the natural gas.⁶ The future projections show that European gas production is expected to decline⁷ and the reliance on imported natural gas will grow considerably,⁸ a fact recognised already in the EU Council Directive 2004/67/EC.⁹ A growing reliance on natural gas is mainly due to its increasing popularity as a substitute to less eco-friendly fuels and its relatively low price in comparison with other energy resources such as coal and oil.¹⁰

On average, the EU’s dependence on Russian energy is 26%¹¹ however; the level of dependency strongly varies (see Table 1.2) between the Member States (MS).¹² Out of 28 EU Member States only Denmark and the United Kingdom are independent on oil imports, and the same countries with the addition of the Netherlands have no dependency on gas imports.¹³ Andris Piebalgs, former Energy Commissioner for the European Commission stated that ‘the relationship [with Russia] is one of interdependence not dependence which means that Russia needs us much as we need Russia … sales of Russian raw materials to the EU contribute to over 40% of its federal budget and the EU represents almost 80% of cumulative foreign investments in Russia. This clearly shows interdependence …’.¹⁵ The EU Commission’s Green Paper (2006) emphasises the EU’s interdependency with its ‘energy partners’ and confirms that ‘… the EU, as Russia’s largest energy buyer is an essential and equal partner in this relationship.’¹⁶ Others indicate that 50% of Russia’s budget is generated through the sale of oil and gas with the EU being the dominant buyer of this commodity.¹⁷

Table 1.2 EUROSTAT – Share (%) of Russia in national extra-EU imports of each Member State, 2016, trade in value.¹⁴

	Share (%) of Russia in national extra-EU28 imports
Country	Petroleum oils	Natural gas
Belgium	25–50	0–25
Bulgaria	75–100	75–100
Czech Republic	50–75	75–100
Denmark	0–25	0–25
Germany	25–50	50–75
Estonia	75–100	75–100
Ireland	0–25	0–25
Greece	0–25	50–75
Spain	0–25	0–25
France	0–25	0–25
Croatia	0–25	0–25
Italy	0–25	25–50
Cyprus	0–25	0–25
Latvia	0–25	75–100
Lithuania	75–100	25–50
Luxembourg	0–25	0–25
Hungary	75–100	50–75
Malta	0–25	0–25
Netherlands	25–50	25–50
Austria	0–25	75–100
Poland	75–100	75–100
Portugal	0–25	0–25
Romania	25–50	75–100
Slovenia	0–25	75–100
Slovakia	75–100	75–100
Finland	75–100	75–100
Sweden	25–50	0–25
United Kingdom	0–25	0–25

It is clear that Russia is and will continue to be, an important supplier of energy to the EU in the foreseeable future and it is engaged in promoting its Nord Stream and South Stream pipelines¹⁸ which are designed to feed Europe. Kratochvil and Tichy opine that ‘the energy interdependence between Russia and the EU is to some extent asymmetrical in favor of the EU as Russia is more dependent on the EU energy market than the EU is on the Russian energy supplies’.¹⁹ This asymmetry is created by two factors: a) the EU can replace its energy suppliers easily; b) Russia’s current energy policy and infrastructure rely heavily on the EU energy market both in terms of geography and finances.²⁰ Despite these factors, both parties see mutual benefit emanating from cooperation and strategic partnership in energy trade.

This interdependence is formally recognised by the Roadmap of the EU – Russia Energy Cooperation to 2050.²¹ However, this relationship is also described as one of ‘asymmetric interdependence’ whereby Russia has been able to exploit divisions within the EU and pursue bilateral energy trade agreements with a number of Member States and uses its energy as leverage in diplomatic, trade, economic and political disputes.²² Furthermore, if we were to confirm Christie’s argument that ‘it is rational for Europeans to understand Russia as an ambitious geopolitical player whose ruling elites are motivated by a combination of nationalism, domestic political survival and national economic gain’²³ then it becomes even more necessary to place this relationship on a legal, predictable mandate rather than leave it to less certain power politics. In the current global economic crisis, secure energy relations and supply are imperative for the functioning and growth of the EU and its common market effectively. Accordingly, solidarity among the EU Member States is essential and hence it is expressed explicitly in the provisions of EU law.

1.1. What is the security of energy supply?

Consideration of energy as a security issue is not a recent phenomenon. During the oil crisis in 1973 when the OPEC cut the supply of oil and oil prices increased by 400 percent, the vulnerability of oil depende...