Eurasia Energy Policy

1
Eurasia Energy Policy

• Case Study
• Russia Ukraine Relations
• Vittorio Pagliaro

2
Entire Region
3
Baltic, Central-Eastern Europe, Balkans
4
Caucasus and Central Asia
5
What is Eurasia?

• Eurasia is the landmass made of the continents of
  Europe and Asia
• With the dissolution of the Soviet bloc, new
  developments are sweeping through Eurasia
• The Former Caucasus Soviet Republics and the
  Central Asia Republics make up the core of the
  New Eurasia
• Can the West formulate a new approach to the new
  Political and Economical Dynamics of the Eurasia
  Landmass?

6
Russia, East-Central Europe, and Central Asia
Overview and Economic History

• Early settlementstribes in Caucasus area before
  20,000 B.C.  Slavic tribes date to 2,000 B.C. in
  eastern Carpathians, spread west to Czech area,
  east to Russia, south to Balkans. 
• Greek realm united after 359 B.C. by Philip of
  Macedon, and his son Alexander conquered most of
  Persia, spreading Greek culture through an
  enormous empire.

7
The Roman Empire 14 A.C. and 177 A.C.

• Romans conquered Alexanders western empire and
  much of Europe. Empire divided East-West in 285
  A.C.

8
Byzantine Empire in 814

• Byzantine empire preserved classical civilization
  after Rome fell in 476 A.C. Eastern church
  adopted Greek liturgy. Led to schism in 1054.

9
   Bulgaria (6321018) First Slav State in the
6th century A.D.

• The First Bulgarian Empire was a medieval
  Bulgarian State founded in A. C. 632 in the lands
  near the Danube Delta and disintegrated in A. C.
  1018 after its annexation to the Byzantine Empire
  

10
Principalities of the Kievan Rus

• Kievan Rus On trade route, Kiev became capital
  of Russian city-states during 9th century.
  Kievans were cosmopolitan, but adoption of
  Eastern Orthodoxy in 980 contributed to Eastern
  separation

11
1054 The Great Schism

• The East-West Schism, or the Great Schism,
  divided medieval Christendom into Eastern (Greek)
  and Western (Latin) branches, which later became
  known as the Eastern Orthodox Church and the
  Roman Catholic Church

12
The Spread of Islam 622-750

• Mongol and Turkish Conquests  in 13th-17th
  centuries devastated Central Eurasia, severed
  Western ties, and caused Russian capital to move
  to Moscow, which became the Third Rome after
  the fall of Constantinople/Istanbul in 1453.
  Czechs, Slovaks, Poles, and Slovenes avoided
  Ottoman domination Hungary and Croatia were
  liberated early

13
The Mongol Empire and Tamerlane 12061405

• The Mongol Empire was an empire from the 13th and
  14th century spanning from Eastern Europe across
  Asia. It is the largest contiguous empire in the
  history of the world. It emerged from the
  unification of Mongol and Turkic tribes in modern
  day Mongolia, and grew through invasions
• Timur (13361405), commonly known as Tamerlane in
  the West,was a 14th century Turko-Mongol
  conqueror of much of western and Central Asia,
  and founder of the Timurid Empire and Timurid
  dynasty (13701405) in Central Asia, which
  survived until 1857 as the Mughal Empire of India

14
The Ottoman Empire, Expansion and Apogee
1453-1566

• The Ottoman Empire was an empire that lasted
  from 1299 to November 1922 (as an imperial
  monarchy) or July 24, 1923 (de jure, as a state)
  It was succeeded by the Republic of Turkey,which
  was officially proclaimed on October 29, 1923.
• At the height of its power (16th17th century),
  it spanned three continents, controlling much of
  Southeastern Europe, the Middle East and North
  Africa. The Ottoman Empire contained 29 provinces
  and numerous vassal states some of which were
  later absorbed into the empire, while others
  gained various types of autonomy during the
  course of centuries.
• The empire was at the centre of interactions
  between the Eastern and Western worlds for six
  centuries. With Constantinople as its capital
  city, and vast control of lands around the
  eastern Mediterranean during the reign of
  Suleiman the Magnificent, the Ottoman Empire was,
  in many respects, an Islamic successor to the
  Eastern Roman (Byzantine Empire),

15
Russian Empire

• The Russian Empire from 1721 until the
  Russian Revolution of 1917. It was the successor
  to the Tsardom of Russia (Russian state between
  Ivan IVs assumption of the title of Tsar
  (Emperor) in 1547 and Peter the Great's
  foundation of the Russian Empire in 1721. , and
  the predecessor of the Soviet Union. It was the
  second largest contiguous empire the world had
  seen, surpassed only by the Mongol Empire. At one
  point in 1866, it stretched from eastern Europe,
  across Asia, and into North America. At the
  beginning of the 19th century, Russia was the
  largest country in the world, extending from the
  Arctic Ocean to the north to the Black Sea on the
  south, from the Baltic Sea on the west to the
  Pacific Ocean on the east. Across this vast realm
  were scattered the Emperor's 176.4 million
  subjects, the third largest population of the
  world at the time, after Qing China and British
  India, but still represented a great disparity in
  economic, ethnic, and religious positions. Its
  government, ruled by the Emperor, was one of the
  last absolute monarchies left in Europe. Prior to
  the outbreak of World War I in August 1914 Russia
  was one of the five major Great Powers of Europe.

16
Russia From Peter the Grate to Revolutionary
Movements

• Peter the Great and Russian Expansion (18th-19th
  Centuries)
• After Russian independence from Mongols in
  1452, isolationism and  feudal institutions.
• Early in 18th century, Peter the Great
• 1.      Introduced Western science, technology,
  art, and architecture.
• 2.      Moved capital to St. Petersburg.
• 3.      Avoided Western political and economic
  philosophies.
• 4.      Levied heavy taxes and imposed forced
  labor.
• 5.      Mounted territorial expansion and
  industrialization.
• Emancipation and Industrialization (1853-1900)
• Long maintenance of feudalism thwarted Russian
  development, led to defeat in Crimean War (fought
  during 1853-1856 against the British and French,
  who were protecting the Ottoman Empire from
  destruction by the Russians).
• Emancipation Decree of 1861 nominally abolished
  serfdom
• 1.      Serfs freed from the arbitrary rule.
• 2.      Land given to serfs, but
• a.       Better land kept by gentry.
• b.      Serfs required to pay redemption payments
  and taxes.
• c.       Land held collectively by village
  communes, responsible for tax collection and
  apportionment. Handled by inefficient strip
  agriculture.
• 3.      Tax and redemption payments forced
  agricultural sales and exports, monetized the
  economy, and supported railroad construction
  boom, which supported production of iron, steel,
  and petroleum
• Emancipation and industrialization caused little
  improvement in the living standards.
  Revolutionary movements began

17
The Russian Revolutions and World War I
(1900-1918)

• Russian Social Democrats, first congresses in
  1903 called for overthrow of monarchy and the
  adoption of socialism.
• MensheviksRussia not ready for socialism party
  should be mass organization.
• V.I. Lenin BolsheviksRussia was ripe for
  socialism membership restricted to elite
  revolutionaries.
• 1905 RevolutionBloody Sunday precipitated
  demonstrations and general strike in October.
  Tsar granted formation of Duma, and Stolypin
  reforms helped agricultural peasants.
• World War I arose from Balkan struggle for
  independence.
• In Russia, WWI exacted horrible price, led to
  food riots, forcing Tsar to abdicate. Kerenskys
  provisional government acted slowly, was
  overthrown by Bolsheviks with little fighting in
  November 1917.
• In Treaty of Versailles, 1919, regions of
  Habsburg empire ceded to Serbian, Czech, and
  Polish control

18
First Russian Communism

• War Communism (1918-1921)
• New Bolshevik leaders faced problems.
• Promise of socialism.
• Consolidation of Bolshevik rule.
• Allied invasion after 1918 Brest-Litovsk Treaty
• Provisions of War Communism
• Confiscation of private and church land without
  compensation.  
• Forcibly extracted "surpluses" from agricultural
  workers.
• Goods and food rationed, private trade outlawed. 
  
• Most industrial enterprises nationalized and
  administered by commissariats headed by
  Vesenkha. 
• "Labor armies" rebuilt roads and railways, and
  worked in mines.
• Performance
• Production plummeted, arising from poor work
  incentives, concealment of surpluses, and chaotic
  management, but also from wartime disruption.

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New Economic Policy

• The New Economic Policy (1921-1928)
• Designa temporary experiment in market socialism
• 1.      Progressive agricultural tax.
• 2.      Private trade was legalized.
• 3.      Small enterprises leased to
  entrepreneurs and  larger enterprises operated
  as public trusts.  Only "the commanding heights
  of industry" were kept under direct governmental
  control. 
• 4.      Freer labor mobility, market-determined
  wages, and pro-labor legislation.
• PerformanceAfter 1921, NEP supported rapid
  recovery, but with rising inequality.

20
The Industrialization Debate

• The Industrialization Debate
• Stimulated by the Scissors Crisis and Lenin's
  death in 1924.
• Bukharin and "right-deviation" faction
• Continuation of the market-oriented policies of
  NEP, following comparative advantage in
  agriculture.
• Maintain smychka, or alliance, between
  agricultural and industrial workers.
• Agricultural investments in the short run would
  most effectively support industrial development
  in the long run.
• Trotsky, Preobrazhensky, and left-deviation"
  faction
• NEP will lead to return of capitalism
• USSR, surrounded by enemies, needs heavy
  industry.
• Industrialization accelerated by exploitation of
  the private sector and agriculture.
• Worldwide socialist revolution versus socialism
  in one country
• Planning debateGeneticists versus teleologists.

21
The Planning Era

• The Planning Era Begins (1929-1945)
• After vacillation, Stalin adopted a leftist and
  teleological strategy. The First Five-Year Plan
  called for rapid rates growth of all sectors, but
  highest for producer goods and lowest for
  agriculture. Fulfillment of the plan was even
  more leftist.
• Falling agricultural production caused by low
  plan priority and violent collectivization.
  Industrialization strengthened the nations
  military stance, but eventually turned a major
  grain exporter into an importer.

22
After World War II (1945-1953)

• After World War II (1945-1953)
• From capitalist encirclement, and Soviet
  autarky, to the socialist commonwealth.
• Adoption of Soviet-style systems throughout
  region (Iron Curtain).
• Creation of Council for Mutual Economic
  Assistance to answer the Marshall Plan.
  Redirection of trade.
• East German, Romanian, and Hungarian reparations
  to USSR.
• Tito's Yugoslavia
• Impact of WWII.
• Titos hero status.
• Initial acceptance of Soviet political/economic
  system.
• Conflicts with Stalin, 1948 expulsion from
  Comintern.
• Reversal in 1950acceptance of  Western aid and
  adoption of labor self-management.

23
After Stalin (1953-1960)

• After Stalin (1953-1960)
• 1953 Stalin's death in 1953
• 1956 Khrushchev's denunciation of Stalin's
  terror 
• Albanian schism
• Hungarian revolt crushed by Soviet troops
• Upgrading of CMEA
• 1962          Basic Principles of the
  International Socialist Division of Labor called
  for specialization and integration of production.
• Khrushchevs abortive attempt to introduce
  supranational planning.

24
Early Reforms (1960-1970)

• Early Reforms (1960-1970)
• A.      Soviet system inappropriate for small,
  trade-dependent countries. Hungary and Poland
  initiated  reforms.
• B.      Deterioration of Soviet growth. Kosygin
  reforms of mid-1960s.
• C.      Watershed in 1968 Prague Spring and
  Hungarian New Economic Mechanism.
• XIII. Prelude to the Fall (1970-1985)
• 1970 Food price hikes in Poland lead to strikes,
  repression, and resignation of Gomulka.
• 1972 Nixon visits Moscow, launches détente.
• 1976 Polish indebtedness culminates again in
  price hikes, strikes, repression.
• 1978  Selection of Polish pope.
• 1980 Birth of Solidarity trade union in Poland.
• 1981 Polish martial law.

25
The Dissolution of Soviet Empire

• The End and the New Beginning (1985-1991)
• 1985 Mikhail Gorbachev takes office in the Soviet
  Union, introduces glasnost (openness) and
  perestroika (restructuring), and repudiates
  Brezhnev Doctrine.
• 1989 Mass demonstrations, destruction of Berlin
  Wall, removal of Communist leaders throughout the
  region.
• 1990 Balcerowicz shock therapy in Poland.
• 1991  Abortive coup against Gorbachev causes
  Russian President Yeltsin to suspend Communist
  Party activities and Gorbachev to dissolve USSR.
• 1999 Vladimir Putin the New Zar of Russia
• 2008 Dmitrij Medvedev become Republic President
  of Russia. Putin Prime Minister

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PART 2 Overview on the energy policy in Eurasia

• Is there a pipelines war in Eurasia? Recent
  events like the conflict with Ukraine for the gas
  pipeline and the war against Georgia (where
  Russia is military presents in Abkhazia and South
  Ossetia) show it. Russia from one end, USA from
  the other tries to control the Eurasian Strategic
  Corridor. Iran, China and India are going to play
  a decisive role.
• The geopolitic balance of the region is based,
  not (not only) on religious or ethnic divisions,
  but on the energy policy oil and gas fields and
  wells, pipelines networks and commercialization
  of raw materials
• One of the most important problems of the Russian
  distribution gas network is the original,
  centralized structure, following the Soviet
  Union philosophy. Instead, 90 of the Russian gas
  flow (Western Europe direction) goes trough
  Ukraine
• The Central and Eastern Europe Nations like
  Germany, Austria, Italy, Baltic Countries, Czech
  Republic, Bulgaria, Slovakia, Poland, Serbia,
  Slovenia, Hungary needs to find alternative
  routes to gas supplies

27
Geopolitical Pipelines
28
Gas Exporting Countries Forum (GECF)

• The Gas Exporting Countries Forum (GECF) is an
  organization of some of the world's leading gas
  producers. The members are Algeria, Bolivia,
  Brunei, Egypt, Equatorial Guinea, Indonesia,
  Iran, Libya, Malaysia, Nigeria, Qatar, Russia,
  Trinidad and Tobago, the United Arab Emirates and
  Venezuela. Kazakhstan and Norway are observers
• The GECF was established in Tehran in 2001. Until
  the seventh ministerial meeting in Moscow, it
  operated without charter and fixed membership
  structure. The seventh ministerial meeting, held
  on 23 December 2008 in Moscow, adapted the
  organization's charter
• The objectives of the GECF are to foster the
  concept of mutuality of interests by favouring
  dialogue between producers, between producers and
  consumers and between governments and
  energy-related industries to provide a platform
  to promote study and exchange of views to
  promote a stable and transparent energy market
• GECF does not have headquarters yet Qatar's
  national oil company Qatar Petroleum serves as a
  GECF Liaison Office. Although Russia's Prime
  Minister Vladimir Putin offered to give GECF full
  diplomatic status in a location in St.
  Petersburg, it was decided on 23 December 2008 to
  set up an Executive Office and a Secretariat in
  Doha, Qatar. The Secretary General will be
  elected on the eight ministerial meeting

29
OIL PRODUCTION IN THE WORLD
NUMBER COUNTRY OIL DRUMS (MILLION PER YEAR) ON TOTAL
1 Arabia Saudita 264.300 21,9
2 Iran 137.500 11,4
3 Iraq 115.000 9,5
4 Kuwait 101.500 8,4
5 Emirati Arabi Uniti 97.800 8,1
6 Venezuela 80.000 6,6
7 Russia 79.500 6,6
8 Libia 41.500 3,5
9 Kazakhstan 39.800 3,3
10 Nigeria 36.200 3,0
11 USA 29.900 2,5
12 Canada 17.100 1,4
13 Cina 16.300 1,3
14 Qatar 15.200 1,2
15 Messico 12.900 1,1
16 Algeria 12.300 1,0
17 Brasile 12.200 1,0
18 Angola 9.000 0,7
19 Norvegia 8.500 0,7
20 Azerbaijan 7.000 0,6
21 Resto del Mondo 74.700 6,2
Tot. 1.208.200 100
30
GAS PRODUCTION AND RESERVES
NUMBER COUNTRY GAS (BILLION CUBIC METRE PER YEAR) RESERVES (BILLION CUBIC METRE)
1 Russia 607,67 48.000
2 Stati Uniti 526,51 5.353
3 Canada 178,35 1.603
4 United Kingdom 103,75 905
5 Algeria 95,12 4.545
6 Norvegia 84,96 3.188
7 Iraq 83,20 3.080
8 Indonesia 82,76 2.557
9 Iran 81,99 26.500
10 Nederlands 74,20 1.492
11 Arabia Saudita 63,99 6.654
12 Uzbekistan 58,01 1.860
13 Turkmenistan 57,31 2.900
14 Malesia 52,69 2.464
15 Cina 51,19 1.823
16 Emirati Arabi Uniti 45,22 6.654
17 Qatar 40,39 25.783
18 Australia 40,07 2.548
19 Egitto 30,81 1.756
20 Venezuela 29.39 4.223
21 Kazakistan 21,87 1.900
22 Nigeria 20,81 5.055
31
Dependence Upon Russian Natural Gasby Selected
European Countries

• Natural Gas Imports from RussiaQuantity (billion
  cu. ft./yr) of Domestic
  Consumption
• Germany 1,290
  39
• Italy 855
  31
• Turkey 506
  65
• France 406
  24
• Austria 212
  69
• Poland 212
  43
• Netherlands 94
  6
• Greece 78
  82
• Sweden 39
  Zero or less than 0.5
• Belgium 7
  1
• Denmark Zero or less than 500
  million cubic feet Zero or less than
  0.5
• Ireland Zero or less than 500
  million cubic feet Zero or less than
  0.5
• Portugal Zero or less than 500
  million cubic feet Zero or less
  than 0.5
• Spain Zero or less than 500
  million cubic feet Zero or less
  than 0.5
• United Kingdom Zero or less than 500
  million cubic feet Zero or less
  than 0.5

32
Dependence Upon Russian Natural Gasby Selected
Former Soviet and Soviet Satellite Countries

• COUNTRY BILLION CUBIC FEET
  OF DOMESTIC CONSUMPTION
• Ukraine 850
  35
• Belarus 698
  99
• Hungary 318
  64
• Czech Republic 253
  77
• Slovakia 226
  99
• Poland 212
  43
• Finland 163
  98
• Romania 138
  22
• Lithuania 103
  100
• Bulgaria 99
  99
• Moldova 77
  100
• Latvia 62
  100
• Georgia 39
  100
• Estonia 34
  100
• Slovenia 20
  52
• Japan
  85

33
Oilpipelines and Gaspipelines in Russia, European
Union and Middle-East

• Naftohaz Ukrainy Ukraine Pipeline. According to
  the contract on 21 June 2002, signed between
  Gazprom and Naftohaz, the payment for the
  transfer of Russian natural gas through Ukrainian
  pipeline system had been made in the form of
  barter exchange up to 15 of gas pumped through
  the Ukrainian territory was taken by Ukraine
  instead of payments in cash. This contract was
  supposed to be valid until the end of 2013
• Betransgaz On May 18, 2007, in Minsk, Russias
  Gazprom and the Belarus governments State
  Property Committee signed agreements to turn the
  Belarus state-owned gas pipeline company
  Beltransgaz into a Russia-Belarus joint company.
  Betransgaz handles both the transit of Russian
  gas to European Union countries and the internal
  distribution of Russian gas in Belarus.

34
Gas Pipelines
35
Routes of the pipelines from Russia to Europe
36
Alternative Routes to Ukraine

• Yamal-Europe pipelineThe planning of the
  Yamal-Europe pipeline started in 1992.
  Intergovernmental agreements between Russia,
  Belarus and Poland were signed in 1993. In 1994,
  Wingas, the joint venture of Gazprom and
  Wintershall, a subsidiary of BASF, started
  building the German section of the pipeline. The
  first gas was delivered to Germany through the
  Belarus-Polish corridor in 1997. The Belarusian
  and Polish sections were completed in September
  1999 and the pipeline reached its rated annual
  capacity of about 33 billion cubic meters of
  natural gas in 2005, after completion of all
  compressor stations.
• Blue Stream (IGIT Pipeline) is a major
  trans-Black Sea gas pipeline that carries natural
  gas from Russia into Turkey. The pipeline has
  been constructed by the Blue Stream Pipeline
  B.V., the Netherlands based joint venture of
  Russian Gazprom and Italian Eni. The Blue Stream
  Pipeline B.V. is an owner of the subsea section
  of pipeline, including Beregovaya compressor
  station, while Gazprom owns and operates the
  Russian land section of the pipeline and the
  Turkish land section is owned and operated by the
  Turkish energy company BOTAS. According to
  Gazprom the pipeline was built with the intent of
  diversifying Russian gas delivery routes to
  Turkey and avoiding third countries.
• Betransgaz On May 18, 2007, in Minsk, Russias
  Gazprom and the Belarus governments State
  Property Committee signed agreements to turn the
  Belarus state-owned gas pipeline company
  Beltransgaz into a Russia-Belarus joint company.
  Betransgaz handles both the transit of Russian
  gas to European Union countries and the internal
  distribution of Russian gas in Belarus.
• Nabucco pipeline is a planned natural gas
  pipeline that will transport natural gas from
  Turkey to Austria, via Bulgaria, Romania, and
  Hungary. It will run from Erzurum in Turkey to
  Baumgarten an der March, a major natural gas hub
  in Austria. This pipeline is a diversion from the
  current methods of importing natural gas solely
  from Russia. The project is backed by several
  European Union states and the United States.
• Nord Stream North Transgas and North European Gas
  Pipeline also known as the RussoGerman gas
  pipeline or the Baltic Sea gas pipeline) is a
  planned natural gas pipeline from Russia to
  Germany by the company Nord Stream AG

37
Alternative Routes To Ukraine
38
Nabucco Pipeline Project In Detail
39
Baltic Pipeline Project In Detail
40
Geopolitical Pipelines Alternative Routes out
of Russian Control

• GUAM-NATO Alliance
• Pipeline Odessa-Brody-Plotsk (OBP) from Ukraine
  to Polonia
• Pipeline Bakou Tbilisi Ceyhan (BTC) from Caspian
  Sea to Mediterranean and Turkey
• Project of Submarine Pipeline Trans-Israël-Eilat-A
  shkelon (TIEA) from Caspian Sea to Israel
• Project TRACECA, Silk Road Stategy (SRS), a
  multichannel Corridor Europe, Caucasus, Asia
• Kazakhstan-Chine Pipeline (KCP), a gas pipeline
  from Kazakhstan to Autonomous Region of Xinjian

41
The Odessa-Brody-Plotsk (OBP) Pipeline
42
The Baku Tblisi Ceyan (BTC) Pipeline
43
Project of Submarine Pipeline Trans-Israël-Eilat-A
shkelon (TIEA) from Caspian Sea to Israel

• Israel is now part of the Anglo-American military
  axis, which serves the interests of the Western
  oil giants in the Middle East and Central Asia.
  Not surprisingly, Israel has military cooperation
  agreements with Georgia and Azerbaijan
• an underwater Israeli-Turkish pipeline project
  has been envisaged which would link Ceyhan to the
  Israeli port of Ashkelon and from there through
  Israel's main pipeline system, to the Red Sea
• The objective of Israel is not only to acquire
  Caspian sea oil for its own consumption needs but
  also to play a key role in re-exporting Caspian
  sea oil back to the Asian markets through the Red
  Sea port of Eilat. The strategic implications of
  this re-routing of Caspian sea oil are far
  reaching

44
Kazakhstan-Chine Pipeline (KCP)
45
LNG (Liquefied Natural Gas) - Russias New Energy
Blackmail Tool, a Russias New Energy Weapon

• Putin was the architect of Russias use of energy
  as a foreign policy tool. He is now threatening
  to use Liquefied Natural Gas (LNG) as Russias
  new energy weapon. In essence, this will be
  utilized as a means of coercing the EU in order
  to achieve de facto recognition of a Russian
  sphere of influence within the former Soviet
  Union.

46
Part 3 Russia-Ukraine, The Pipeline War Case
Study

• One of the most important problems of the Russian
  distribution gas network is the original,
  centralized structure, following the Soviet
  Union philosophy. Instead, 90 of the Russian gas
  flow (Western Europe direction) goes trough
  Ukraine
• December 2005, The disputes came to a head for
  the first time in 2005, when the Russian
  government-controlled gas supplier Gazprom and
  Ukrainian national gas company Naftohaz Ukrainy
  failed to reach an agreement on gas prices
  (Political Price for Ex Sovietic Republic 50
  -1000 cubic metre Market Price 240)
• On January 1, 2006, Russia cut off its gas
  supply to Ukraine. The flow was restored just
  three days later when an agreement was reached
  (95 for 1000 cubic metre, but the relationship
  between the two countries remained tense about
  Krimea (Russian Navy) and during the Georgias
  War
• The latest dispute began when Gazprom officials
  made statements on Russian television saying
  Ukraine had neither paid its gas debt owed to
  Russia, nor signed a gas supply contract for
  2009. During December 2008 Ukrainian President
  Victor Yushchenko and Russian President Dmitry
  Medvedev traded barbs over the claims. Yushchenko
  denied reports Ukraine was in debt of close to
  1.6 billion, indicating that the figure was much
  less, while President Medvedev warned that Russia
  would use its "entire arsenal of possibilities"
  if Ukraine did not pay its full debt
• Unable to resolve the dispute, Russia cut off its
  gas supply to Ukraine on New Year's Day 2009
• On Jan. 7, one week after the initial cut-off,
  the pipelines to Europe stopped flowing
• Finally, on Jan. 20, Russia's gas supply to
  Europe was restored after an agreement was
  reached by Russian Prime Minister Vladimir Putin
  and Ukranian Prime Minister Yulia Tymoshenko. The
  new agreement stated that Ukraine would not raise
  the fee for Russian gas transit, and Ukraine
  would receive a 20 percent discount on the basic
  price for gas
• Russia is currently experiencing a recession in
  most sectors of the economy, and Ukraine, which
  has fewer natural resources, had a 20 percent
  decline in national production in late 2008. The
  damages incurred on each side during the latest
  gas dispute are undoubtedly major blows to both
  wounded economies
• The European Commission and Ukraine (March, 2009)
  signed a joint declaration on the modernization
  of Ukraine's gas pipeline network. The Commission
  estimated the cost of the necessary improvements
  at 2.5 billion euros (3.4 billion), Russia is
  ready to participate in and partially finance the
  modernization of Ukraine's natural gas pipeline
  system but underiline that The modernization of
  Ukraine's gas transportation system could cost
  16 billion, not the some 3 billion suggested by
  European Commission experts

47
Ukraine

• Ukraine is bordered by Russia to the east
  Belarus to the north Poland, Slovakia, and
  Hungary to the west Romania and Moldova to the
  southwest and the Black Sea and Sea Azov to the
  south. The city of Kiev (Kyiv) is both the
  capital and the largest city of Ukraine
• Ukraine is subdivided into twenty-four oblasts
  (provinces) and one autonomous republic, Crimea.
  Additionally, the cities of Kiev, the capital,
  and Sevastopol, both have a special legal status.
  The 24 oblasts and Crimea are subdivided into 490
  raions (districts), or second-level
  administrative units. The average area of a
  Ukrainian raion is 1,200 square kilometres
  (460 sq mi) the average population of a raion is
  52,000 people.

48
Major Ukrainian Parties and Blocs

• The Party of Regions was created in March 2001.
  The party ideologically defends and upholds the
  rights of ethnic Russians and speakers of the
  Russian language in Ukraine. It originally
  supported president Leonid Kuchma and joined the
  pro-government United Ukraine alliance during the
  parliamentary elections on 30 March 2002. The
  party's leader is former Ukrainian Prime Minister
  Viktor Yanukovych. The areas the Party of Regions
  does well in are mostly parts of historic
  Novorossiya. Its electoral and financial base is
  located primarily in the east and south-east of
  Ukraine, where it enjoys wide popular support. In
  the Eastern Ukrainian Donetsk Oblast the party
  claims to have over 700,000 members.
• Bloc Yuliya Tymoshenko is the name of the bloc of
  political parties in Ukraine led by Yulia
  Tymoshenko Although the party attracts most of
  its voters from Western Ukrainian, Ukrainian
  speaking provinces (Oblasts) it has in recent
  years recruited several politicians from Russian
  speaking provinces like Crimea (Lyudmyla
  Denisova) and Luhansk Oblast (Natalia Korolevska)
• Our UkrainePeople's Self-Defense Bloc is an
  electoral alliance active in Ukraine, associated
  with President Viktor Yushchenko. Since 2005, the
  bloc has been dominated by a core consisting of
  the People's Union "OurUkraine" party and five
  smaller partner parties. The Our Ukraine Bloc is
  most closely associated with the Orange
  Revolution and continues to use orange as its
  political colour. In July 2007, the old Our
  Ukraine bloc had been reorganized into the Our
  UkrainePeople's Self-Defense Bloc for the 2007
  parliamentary election in September 2007. The
  member parties had planned to merge into a single
  party in December 2007 but on November 16, 2007
  Peoples Self-Defense decided to end its
  participation in the process of forming a united
  party since then that process is unclear. The
  alliance currently holds 72 out of 450
  parliamentary seats.

49
Oil and gas companies of Ukraine

• Naftohaz Ukrainy is the state company of Ukraine
  concerned with extraction, transportation, and
  refinement of natural gas and crude oil. The
  company is also active in Egypt and in the United
  Arab Emirates
• JSC Nadra Group, specialising in oil and gas
  exploration and production, and water
  purification equipment
• JSC Nikopol Pipeline Fitting Plant,
  manufacturer of pressure gates and check valves
  for petrochemical and water/steam applications,
  located in the Dnipopetrovsk region
• JSC Sumy Frunze NPO, Manufacturer of Equipment
  for the Oil, Gas, and Chemical Industries,
  located in Sumy, Ukraine
• The Deane Group, provides consultancy and
  business services to companies operating within
  the oil and gas industry in Ukraine and to
  foreign or Ukrainian companies wishing to
  establish new oil/gas-related businesses in
  Ukraine. The Company has particular expertise and
  experience in Ukraine's oil and gas sector and
  offers advice and services in areas such as
  oil/gas business strategy development, investment
  project development, business and political
  analysis, government and external relations, and
  corporate representation. Through its network of
  Associates, the Company can provide expert and
  informed comment and advice on all areas of
  Ukraine's fuel and energy complex
• Ukrainian Petroleum and Energy Consultants,
  leading information resource in the oil and gas
  sector of Ukraine

50
Russia

• Russia is a semi-presidential republic comprising
  83 federal subjects. Russia shares land borders
  with the following countries Norway, Finland,
  Estonia, Latvia, Lithuania (via Kaliningrad
  Oblast), Poland (via Kaliningrad Oblast),
  Belarus, Ukraine, Georgia, Azerbaijan,
  Kazakhstan, China, Mongolia and the Democratic
  People's Republic of Korea. At 17,075,400 square
  kilometres (6,592,800 sq mi), Russia is by far
  the largest country in the world, covering more
  than an eighth of the Earths land area with 142
  million people, it is the ninth largest by
  population
• Russia is a federation and formally a
  semi-presidential republic, where in the
  President is the head of state and the Prime
  Minister is the head of government. The Russian
  Federation is fundamentally structured as a
  representative democracy. Executive power is
  exercised by the government.90 Legislative
  power is vested in the two chambers of the
  Federal Assembly. The government is regulated by
  a system of checks and balances defined by the
  Constitution of the Russian Federation, which
  serves as the country's supreme legal document
  and as a social contract for the people of the
  Russian Federation

51
Major Russian Parties

• United Russia the major political party in the
  Russian Federation. United Russia supports
  President Dmitry Medvedev, and is currently the
  largest political party in the Russian
  Federation. On April 15, 2008, Vladimir Putin
  (Prime Minister) accepted the nomination to
  become chairman of the party
• Communist Party of the Russian Federation is a
  Russian political party under the leadership of
  Gennady Zyuganov. It is sometimes seen as a
  successor to the Communist Party of the Soviet
  Union (CPSU) and the Bolshevik Party
• Liberal Democratic Party of Russia has been led
  by Vladimir Zhirinovsky almost since its
  founding, in 1989, as the Liberal Democratic
  Party of the Soviet Union. The LDPR describes
  itself as a centrist, pro-reform democratic
  party. The programme of the party calls for
  democracy and social liberalism. Despite the
  name, a widespread opinion in the West is that
  the party's ideology is not liberal and it is
  often regarded, especially in external media, as
  an ultranationalist party. The LDPR states that
  its main political opponents are Yabloko and the
  Communist Party of the Russian Federation (CPRF).
  It describes itself as an opposition party
  however its deputies hardly ever voted against
  the Putin government
• Fair Russia formed on 28 October 2006 as a merger
  of Rodina, the Russian Party of Life and the
  Russian Pensioners' Party. First party chairman
  Sergey Mironov, the chairman of the Federation

52
Oil and gas companies of Russia

• Gazprom, is the world's biggest gas exploration
  and production company
• Gazflot, russian exploration and ship owning
  company
• JSC Gazprom Neft, is one of the largest oil and
  gas producing companies in Russia
• Lukoil, is Russia's leading oil company
• Rosneft, russian oil and gas exploration company
  (bought Yukos)
• Sevmorneftegaz, CJSC, Development of oil and gas
  fields on Russias Arctic continental shelf
• Sibneft, petroleum exploration, production,
  refining, and marketing

53
RussiaUkraine recent relations

• Ukraine's recent attempts to joint the EU and
  NATO was seen as change of course to only a
  pro-Western, anti-Russian orientiation of Ukraine
  and thus a sign of hostility and this resulted in
  a drop of Ukraine's perception in Russia
• The status of the Russian Black Sea Fleet in
  Sevastopol remains a matter of disagreement and
  tensions. During the 2008 South Ossetia war
  relations with Russia also deteriorated over the
  new rules for the Russian Black Sea Fleet to
  obtain permission when crossing the Ukrainian
  border, which Russia refused to comply with.
• In February 2008 Russia unilaterally withdrew
  from the Ukrainian-Russian intergovernmental
  agreement on SPRN signed in 1997. The SRPN-2
  Prognoz programme, commonly known as just
  Prognoz, is a Russian, previously Soviet, missile
  defence early warning programme
• During the 2008 South Ossetia war, relations
  between Ukraine and Russia deteriored, due to
  Ukraine's support of Georgia's territorial
  integrity and selling of arms to Georgia. Further
  disagreements over position on Georgia and
  relations with Russia were among the issues
  (Domestic Crises) that brought down the Our
  Ukraine-Peoples Self Defence Bloc Yulia
  Tymoshenko coalition in the Ukrainian parliament
  during September 2008 (on December 16, 2008 the
  coalition did remerge with a new coalition
  partner, the Lytvyn Bloc
• Russia is heavily opposed to Ukraine and Georgia
  becoming members of NATO. NATO Summit (April,
  2008) denied the Membership to Ukraine and
  Georgia. Russia, naturally, approved this
  decision
• January 2009, dispute about natural gas prices.
  The war of pipelines. Relations further
  deteriorated

54
EURASIA GAS AND OIL PIPELINESACTORS ABLE TO
INFLUENCE THE REGION

• Domestic and Foreign Actors United States
  Western Europe Bloc Central Europe Bloc Baltic
  Eastern Europe Bloc Caucasus Countries Middle
  East Countries (Israel) North of Africa Nigeria
  and Central Africa Oil and Gas Producers Central
  Asia Countries India China.
• International Organizations European Union
  NATO GUAM (Organization for Democracy and
  Economic Development) GECF (Gas Exporting
  Countries Forum) SCO (Shanghai Cooperation
  Organization) CSTO (Collective Security Treaty
  Organization) Eurasian Economic Community
  (EurAsEC) ASEAN ASEAN DIALOGUE PARTNERS OPEC
• National Actors (Crises Russia-Ukraine, Major
  Political Parties) United Russia (Vladimir
  Putin, Dimitry Medvedev) Communist Party of the
  Russian Federation (Gennady Zyuganov) Liberal
  Democratic Party of Russia (Vladimir
  Zhirinovsky) Fair Russia (Sergey Mironov) The
  Party of Regions (Viktor Yanukovych) The Yulia
  Tymoshenko Bloc (Yulia Tymoshenko) The Our
  UkrainePeople's Self-Defense Bloc (Viktor
  Yushchenko)
• Gas Economic Actors Gazprom (Russia) Rosneft
  (Russia) Naftohaz Ukrainy Beltransgaz
  (Belarus) Exxon Mobil (United States) British
  Petroleum (Great Britain) Total Fina Elf
  (France) Royal Dutch Petroleum (Nederlands)
  ChevronTexaco (United States) Eni (Italy) Shell
  Transport and Trading (Great Britain) Basf
  (Germany) Wintershall (Germany) QatarGas (Qatar
  Petroleum) National Iranian Oil Company (NIOC)
  Gassco (Norway) StatoilHydro (Norway) DONG
  Energy (Denmark) China National Petroleum
  Corporation (CNPC)