Transcript Eurasia Energy Policy

Eurasia Energy
Policy
Case Study
Russia – Ukraine Relations
Vittorio Pagliaro
Entire Region
Baltic, Central-Eastern Europe, Balkans
Caucasus and Central Asia
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?
Russia, East-Central Europe, and Central
Asia: Overview and Economic History


Early settlements—
tribes 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.
The Roman Empire: 14 A.C. and 177 A.C.

Romans
conquered
Alexander’s
western
empire and
much of
Europe.
Empire divided
East-West in
285 A.C.
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.
Bulgaria (632–1018): 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
Principalities of the Kievan Rus

Kievan Rus: On
trade route, Kiev
became capital
of Russian citystates during 9th
century. Kievans
were
cosmopolitan,
but adoption of
Eastern
Orthodoxy in
980 contributed
to Eastern
separation
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
The Spread of Islam: 622-750

Mongol and
Turkish
Conquests in 13th17th 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/Istan
bul in 1453. Czechs,
Slovaks, Poles, and
Slovenes avoided
Ottoman domination;
Hungary and Croatia
were liberated early
The Mongol Empire and Tamerlane: 1206–1405


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 (1336–1405),
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 (1370–
1405) in Central Asia,
which survived until 1857
as the Mughal Empire of
India
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 (16th–
17th 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),
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 IV’s
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.
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
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.
Mensheviks—Russia not ready for socialism; party
should be mass organization.
V.I. Lenin Bolsheviks—Russia was ripe for socialism;
membership restricted to elite revolutionaries.
1905 Revolution—Bloody 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. Kerensky’s 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
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.
New Economic Policy
The New Economic Policy (1921-1928)
Design—a 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.
Performance—After 1921, NEP supported rapid
recovery, but with rising inequality.

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 debate—Geneticists versus teleologists.
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 nation’s
military stance, but eventually turned a major
grain exporter into an importer.
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.
Tito’s hero status.
Initial acceptance of Soviet political/economic system.
Conflicts with Stalin, 1948 expulsion from Comintern.
Reversal in 1950—acceptance of Western aid and adoption of
labor self-management.
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.
 Khrushchev’s abortive attempt to introduce
supranational planning.
Early Reforms (1960-1970)
Early Reforms (1960-1970)

A.
Soviet system inappropriate for small, tradedependent 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.
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
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
Geopolitical Pipelines
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
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%
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
Dependence Upon Russian Natural Gas
by Selected European Countries
Natural Gas Imports from RussiaQuantity (billion cu. ft./yr)















Germany
Italy
Turkey
France
Austria
Poland
Netherlands
Greece
Sweden
Belgium
Denmark
Ireland
Portugal
Spain
United Kingdom
1,290
855
506
406
212
212
94
78
39
7
% of Domestic Consumption
39%
31%
65%
24%
69%
43%
6%
82%
Zero or less than 0.5%
1%
Zero or less than 500 million cubic feet
Zero or less than 0.5%
Zero or less than 500 million cubic feet
Zero or less than 0.5%
Zero or less than 500 million cubic feet
Zero or less than 0.5%
Zero or less than 500 million cubic feet
Zero or less than 0.5%
Zero or less than 500 million cubic feet
Zero or less than 0.5%
Dependence Upon Russian Natural Gas
by Selected Former Soviet and Soviet Satellite Countries

COUNTRY

Ukraine
Belarus
Hungary
Czech Republic
Slovakia
Poland
Finland
Romania
Lithuania
Bulgaria
Moldova
Latvia
Georgia
Estonia
Slovenia

Japan














BILLION CUBIC FEET
850
698
318
253
226
212
163
138
103
99
77
62
39
34
20
% OF DOMESTIC CONSUMPTION
35%
99%
64%
77%
99%
43%
98%
22%
100%
99%
100%
100%
100%
100%
52%
85%
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, Russia’s
Gazprom and the Belarus
government’s State Property
Committee signed
agreements to turn the
Belarus state-owned gas
pipeline company
Beltransgaz into a RussiaBelarus joint company.
Betransgaz handles both the
transit of Russian gas to
European Union countries
and the internal distribution
of Russian gas in Belarus.
Gas Pipelines
Routes of the pipelines from Russia to Europe
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 BOTAŞ. 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, Russia’s Gazprom and the Belarus government’s
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 Russo–
German gas pipeline or the Baltic Sea gas pipeline) is a planned natural gas pipeline from
Russia to Germany by the company Nord Stream AG
Alternative Routes To Ukraine
Nabucco Pipeline Project In Detail
Baltic Pipeline Project In Detail
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-EilatAshkelon (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
The Odessa-Brody-Plotsk (OBP) Pipeline
The Baku Tblisi Ceyan (BTC) Pipeline
Project of Submarine Pipeline Trans-Israël-EilatAshkelon (TIEA) from Caspian Sea to Israel



Israel is now part of the AngloAmerican 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 rerouting of Caspian sea oil are far
Kazakhstan-Chine Pipeline (KCP)
LNG (Liquefied Natural Gas) - Russia’s New Energy Blackmail
Tool, a Russia’s New Energy Weapon

Putin was the
architect of Russia’s
use of energy as a
foreign policy tool.
He is now
threatening to use
Liquefied Natural
Gas (LNG) as
Russia’s 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.
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 Georgia’s 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
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.
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 Ukraine–People'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 Ukraine–People'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 People’s 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.
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
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 Earth’s 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
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
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 Russia’s Arctic continental shelf
Sibneft, petroleum exploration, production, refining,
and marketing
Russia–Ukraine 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
EURASIA GAS AND OIL PIPELINES
ACTORS 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 Ukraine–People's SelfDefense 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)