The main trends of a common energy market of the countries of central and eastern Europe and Russia’s interests Текст научной статьи по специальности «Социальная и экономическая география»

ЭКОНОМИКА (ECONOMICS)

DOI: 10.12731/2070-7568-2015-3-65-79 UDC 339

THE MAIN TRENDs of A coMMoN ENERGY MARKET

of the countries of central and eastern europe and Russia's interests

gokzhaeva E.B.

The article discusses the features of Russia's strategy for the EUenergy market, cooperation with the countries of the OPEC, to avoid further declines in oil prices and relations with the EU in connection with the operation of the «Third energy package».

It presents a forecast of energy consumption, the strategy of relations between the EU and Russia in the energy sphere and has the scientific novelty.

The paper is exploratory in nature, expressed in the fact that in-depth studied the structure of energy consumption in the EU and possible transition to new ways of «green energy» and the EU strategy for attracting new energy suppliers.

keywords: energy; Third energy package; EU; Russia.

основные тенденции общего энергетического рынка стран центральной и восточной европы и интересы россии

гокжаева Е.Б.

В статье рассматриваются особенности стратегии России на рынке энергоносителей ЕС, взаимодействие со странами ОПЕК, по вопросам недопущения дальнейшего снижения цен на нефть и отношениям с ЕС в связи с действием «Третьего энергопакета».

Представленный прогноз потребления энергоносителей, стратегии взаимоотношений ЕС и России в сфере энергетики обладают научной новизной.

Статья имеет исследовательский характер, выражающийся в том, что всесторонне изучена структура потребления энергоносителей в ЕС и возможных вариантов перехода на новые способы «зеленые виды энергии», а также стратегию ЕС в отношении привлечения новых поставщиков энергоносителей.

Ключевые слова: энергетика; «Третий энергопакет»; ЕС; Россия.

Purpose

The purpose is to determine new energy strategy between the EU and Russia.

Materials and methods of research

The research is based on ideas presented by A. Konoplyanik, V. Esheev, A. Hitun, A. Kurdin etc. The information was gathered from literature, newspapers, the Internet and by interviewing practitioners, official materials like sessions of the Russian Federation State Council Presidium Energy, The Analytical Centre of Strategic Research in Energy under the Government of the Russian Federation etc. The study of specialized foreign information resources such as the Independent Oxford Institute for Energy Studies was particularly important for the author's formative approach. The following methods were used - analysis, analogy, method of aggregating, synthesis.

Research results and their interpretation

The main long-term trends for the European market are: the consumption of traditional energy sources (primarily coal, oil, natural gas, hydropower and nuclear energy) from Russia and the status of an importer of these products.

The importer of energy leads to a significant dependence of the energy security of Europe's energy policy of Russia and other exporters.

Germany, France, Italy, Spain, Turkey, UK, as the main consumers, imported in 2013 just 245,5 billion cubic meters of gas (of which 195 billion cubic meters of the pipe and 38.8 billion cubic meters of LNG); approximately 34.8 per cent of world imports 1. The rest of Europe imported - 98 billion cubic meters of gas. Thus, the total import of gas is approaching 49% of the world.

1 http://ria.ru/analytics/20140318/999981940.html#14132715069304 &message=resize&relto=login&action=removeClass&value=registratio n#ixzz3G6OOqVwD

Denmark, Slovenia, Romania, Macedonia, Croatia, Greece, the Netherlands, Bosnia and Herzegovina, Switzerland - countries with negligible imports of gas, all of which are approaching 2% of world imports.

In Latvia, Lithuania, Estonia, Ukraine, Belarus, Finland, Bulgaria, the Czech Republic, Slovakia, the share of Russian gas in the import structure is about 100%. In Greece, Hungary 40-45%.

According to the International energy Agency (IEA), natural gas consumption in the EU will increase to 592-640 billion m3 in 2030, which implies an increase of 10-19%.

Simultaneously, the gas reserves of the EU countries on the North sea fields are depleted. In 2010 at the expense of domestic production, the European Union provided 38% of its gas needs. By 2035, the volume of gas production in the EU will fall by more than 50%, which our own production will meet only 18-20% of the total EU demand for gas. (Source - IEA: prospects of development of world energy, 2012).

Eurozone countries consume 9.5 million barrels per day of oil and oil products, of which the lack of domestic energy resources is about 98%, which is almost all imported from external sources. Estimated imports for 2012-2013 is 370-380 billion dollars a year. The EU, Norway and Switzerland consume about 13 million barrels per day. Total expenditure on the consumption of oil and oil products - 510-520 billion a year. The domestic shortage of energy in the EU - 75% with regard to Norway, if without Norway - 90-92%. The estimated volume of imports from outside - 380-400 billion with regard to Norway.

The total oil production in Europe covers only a quarter of the needs of the European economy and for the long term is reduced due to the depletion of deposits, and as of 2012 is about 3,000 barrels a

year. Norway produces 1.9 million barrels of oil per day, UK 0.9 million barrels per day. All other European countries produced 0.5 million barrels per day.

Dependence on Russian oil in Europe is even more than from gas. Almost half of all imports came from countries of the former USSR, of which approximately 90% are in Russia, the rest - on Kazakhstan, Azerbaijan, Turkmenistan. Russia supplies to Europe about five million barrels a day.

Any problems with oil supplies from Russia will lead to an inevitable increase in energy prices by tens of percent, and in the long term - to the collapse of the European economy, as the dependence on Russian energy is more than 40%.

For Europe (excluding oil and gas supplies from Russia) it could mean:

• stopping or severe problems for more than 25-30% of power plants in the EU;

• stopping or interruptions in 50% of refinery and 60% of steel companies;

• guaranteed cold winters without heating for one third of the EU population (over 100 million), if the problem of substitution of Russian supplies will not be resolved by the next heating season (Bulgaria and Slovakia - 100%);

• the collapse of public, private and commercial vehicles (due to the shortage of fuel);

• the suspension in most steel and chemical plants;

• the fall of GDP in some countries of the EU which can amount to tens of percent.

The evaluation of the Green book, the European original coal is largely uncompetitive compared with imported coal. More complex geological conditions of its production and regulation of social protection of the European Union causes a 3-4 fold excess of the coal cost production in the EU against global coal prices (us $ 150). per ton, compared to $ 40). Today the EU imports more than 50% of consumed coal, the EU predicts growth of import dependency to 70% by 2020 (and according to some analysts, given in «the Green book» - up to 100%, because its own production of coal in the EU is mainly driven by subsidies). The Russian energy strategy predicts that under favorable conditions coal production in Russia may reach 410-445 million tons by 2020, under less favorable or unfavorable combination of external and internal conditions and factors of coal production will be less: 270-300 million tons in 2010 and 310-375 million tons in 2020. The share of deliveries of Russian coal in the structure of EU imports is less than 5%.

Russia attaches great importance to the expansion of the zone of parallel work of power systems of EU member States, provides for the organization of parallel operation of UES of Russia with power systems of European countries. Overall energy system of Russia and the EU energy abundance - total installed capacity of power plants in the EU today is 600 GW and is projected to increase by 2020 to 800-900 GW. In Russia today the total energy abundance is about 30 GWh, while energy strategy predicts in a favorable embodiment, the inputs of the generating capacity of power plants of Russia (with the replacement modernization) to 2020 of up to 180 GW and in the moderate form up to 120 GW. Thus the production of electricity is the only

energy sector where the relations EU-Russia beyond the traditional chain «manufacturer-importer» creat the conditions for energy trade on the principles of mutual export/import.

Integration of electricity markets of the EU and Russia would be possible only if they are included in the parallel operation of electric power systems of Russia and Europe. According to the Russian energy strategy the growth of demand for Russian energy to Europe up to 30-75 billion kWh by 2020 Green book estimates the growth in electricity demand in the coming decade as the fastest (which corresponds to today's trends) - 3% annually against the growth of general energy demand within 1%.

It should be noted that the Green paper mentions the need to take measures to prevent the sale on the EU market electricity generated at nuclear power plants, the operation of which does not meet the European safety requirements. In this regard the project on synchronization of energy systems of Russia and the EU in parallel may encounter difficulties associated with the need to confirm compliance with the safety requirements of not only the nuclear power plants operating in Russia and nuclear power plants, operating on the territory of other states which will participate in parallel with the Association (including Ukraine).

The reserves of natural uranium in the EU is limited (approximately 2% of world volume) and the EU expects the closing of the uranium mines due to depletion of reserves and economic reasons (excessive the cost of uranium production compared to world prices). Already today the EU is 95% dependent on imports of uranium, the dependence will increase. Although energostrategy EU calls nuclear

energy among the «undesirable» sources of energy, mainly in connection with the possible influence of radiation on the health of citizens and the problem of nuclear waste, the share of nuclear generation in the total electricity mix is 35% - while the overall share of nuclear energy in the structure of primary energy consumption in the EU is projected to decline from the current 15% to 8.1% by 2020, and in the coming years (with the exception, perhaps, of Finland) construction of new nuclear power plants is not expected.

Russia is the largest supplier of natural uranium to the EU (29% of supplies of uranium, including 6% in the form of processed tailings processing production), however, in the «Green book», this proportion of supplies is not marked as critical dependence on imports of uranium from Russia.

The total damage will be many times stronger than in the 20082009 crysis, and significantly greater than that of the oil embargo by Arab countries in the early 1970-ies. Countries in southern and eastern Europe will suffer especially hard.

In an effort to diversify energy suppliers and change the structure of energy carriers (meaning the consumption of solar energy, wind energy, bioenergy, etc.), Europe is taking the following steps:

1) the juxtaposition of the «southern gas corridor» and South stream, investing in the last one - use of Azerbaijani and Turkmen oil and gas;

2) in may 2014 Canada shipped oil to Europe. However, the quality of canadian oil does not meet European;

3) the development of alternative sources of energy takes place, considerable space and resources (for example, solar energy

is about 5 times more expensive than gas or oil; biodiesel is more expensive than diesel fuel, etc.); however, the power of these generators is very low (in the whole of Germany 1 thousand MW of electricity is produced «from the Sun». This roughly corresponds to the capacity of a single conventional power station. In Germany wind turbines produce about 15% of all electricity in the country, in Denmark - all 20%. But the EU average of wind is producing only about 3% of electricity. During the construction of wind turbines of 1.5 million square meters will be totally unfit for humans) and, as practice shows, ecological safety is not guaranteed. Ultimately the application of these types of energy increases the cost of production in Europe, it will become uncompetitive.

4) in 2015 supplies of shale gas from the US are planned, which cannot be considered as a full alternative to Russian;

5) in general it is difficult to predict the reorientation of Europian LNG as the Asian market, especially in Japan, offers a great price, besides the world volumes are insufficient;

6) active look for other suppliers as within the European market (Norway, Poland) and in other countries and continents (e.g., shifted the centre of gravity of energy supplies in Central Asia and North Africa (to 2020). However, one must remember that delivery for example, from Qatar to Dominica is 10 times more expensive than from Russia).

Double-edged economic sanctions of the EU and Russia due to the Ukraine crisis, accelerate profound transformation of the economic re-

lations of Europe and Russia, primarily the EU. It is clear that the largest European market for Russia, (the history of the supply lasts about 50 years), started funding many extractive and infrastructure projects, so Russia should not move away from this market quickly, and will even fail to do it if there are contracts with other large consumers, such as with China. «The energy industry has significant inertia and to switch from one supplier to another is not easy, particularly in the gas business», said General Director of National Energy Security Fund Konstantin Simonov.

Apparently the primary addressee of the unfriendly policy of the company «Transneft» - does not suffer from the sanctions regime or, at least, will suffer less than the economy of Europe, particularly Hungary, Slovakia and the Czech Republic. We see that the leaders of these countries in the EU already publicly protest against confrontation with Russia 2.

In connection with the sanctions two documents are of special concern.

The first is the contract between «Naftogaz of Ukraine» and «Gazprom» for the transit of Russian gas. The second is The Energy Charter Treaty, which Ukraine has not only signed but also ratified. Under the Treaty, this country is obliged to freely pass through its territory energy of other states, if and when technically possible. Under penalty Ukraine will have to comply with their obligations under the contracts.

2 Хайтун А. Международные санкции ударят по российской энергетике. Независимая газета. №195, 13 сентября 2014, с. 5.

Steps are currently being taken the essence of which is the elimination of the monopoly of Gazprom in gas sales in the European market. The ultimate goal of Ukrainian politics now put the creation of legal prerequisites for the conclusion of transactions with Russia on the Eastern borders of Ukraine, and also the provision of reverse gas supplies from European countries. The first steps have already been done: Slovakia announced the start of the reverse.

Russian interest in the active development of workarounds supplies to Europe:

■ through Belarus and the Baltic sea (Nord stream). Main hopes on gas supply in Central Europe, are connected with it once (if) the routes through Ukraine will be blocked or limited in capacity. But in this case the whole of southern Europe (Bulgaria, Hungary, Austria) will be left without Russian gas and that is why there is demand for new versions of the transit of energy resources;

■ the gas pipeline «Blue stream» running through the Black sea to Turkey, but throughput is small;

■ major project «South stream» providing for the laying of pipes with a total capacity of 63 billion cubic meters a year, on the route Novorossiysk - the Balkans to southern Europe. But on June 19, 2014 Bulgaria once again froze work on the project «South stream» with the wording: «To bring the project into compliance with the Antimonopoly legislation of the EU.

Strategic goals of Russia in the EU energy market include:

■ development of domestic technologies in the field of mining

in complex fields such as the development of the Arctic and the Arctic shelf;

■ increasing its presence in the gas sector of Iran, as a major competitor for the European market;

■ requirements of the Third energy package in relation to Bulgaria, Serbia, Hungary, Slovenia and Croatia can be postponed because of an agreement with Russia at the time of their confinement in 2008-2009 was consistent with EU law and, in fact it's in Russia's interests to make the effort to prolong the contracts in the original form, based on the fact that the intergovernmental agreement based on international law should have a higher priority than the EU laws.

■ Bulgaria is actually obeyed to the EU, Hungary and Slovenia, and Serbia being more dependent on Russian energy supplies (they have no energostores), opposes sanctions;

■ interaction with the OPEC countries for the prevention of further decline in oil prices and relations with the EU;

■ building an energy-efficient economy both in Russia and in the European Union - a task that meets the interests of both Russian and European economic policy, regardless of the nature of the components of energy demand (through internal or external energy sources). Perhaps this can become the basis for the discussion of energy problems;

■ direction of energy policy of mutual interest is to encourage the reduction in the negative pressure of the energy sector on the environment and reduce the level of greenhouse gases in the atmosphere;

■ the goals and objectives of the energy policy of Russia and the EU, harmonization of conditions of mutual trade meet the synchronization policy of liberalization of energy markets, energy infrastructure development, linking Russia and the EU in the framework of the most convenient and cost-effective transport corridors;

■ develop a comprehensive program to provide guarantees of the reliability of energy supplies from Russia to Europe;

■ cooperation in the fight against climate change;

■ issues of energy transit through the territories of third countries;

■ mutual investment;

■ security of energy systems;

■ development of mutually acceptable principles of long-term energy supplies.

Conclusion

At the same time according to the analytical review of the investment Bank of America Merrill Lynch, the EU in the short and medium future is unlikely to abandon Russian energy. At the same time in the long term the energy dependence of the EU on Russia can be reduced3.

References

1. http://www.evolutio.info/content/view72124/232/

2. http://vz.ru/news/2014/4/23/683564.html

3 http://vz.ru/news/2014/4/23/683564.html

3. http://ria.ru/analytics/20140318/999981940.html

4. http://ac.gov.ru/files/publication/a/2194.pdf

5. http://www.posprikaz.ru/2014/03/bez-rossijskix-energonositelej-ne-vyzhivut-ni-evropa-ni-ukraina/

6. Hitun A. International sanctions hit the Russian energy sector. Nezavisimaya Gazeta, no.195, September 13, 2014, p. 5.

Список литературы

1. http://www.evolutio.info/content/view/2124/232/

2. http://vz.ru/news/2014/4/23/683564.html

3. http://ria.ru/analytics/20140318/999981940.html

4. http://ac.gov.ru/files/publication/a/2194.pdf

5. http://www.posprikaz.ru/2014/03/bez-rossijskix-energonositelej-ne-vyzhivut-ni-evropa-ni-ukraina/

6. Хайтун А. Международные санкции ударят по российской энергетике // Независимая газета. №195, 13 сентября 2014. С. 5.

ДАННЫЕ ОБ АВТОРЕ

Гокжаева Елена Борисовна, доктор экономических наук

Ростовский государственный экономический университет (РИНХ)

ул. Большая Садовая, 69, г. Ростов-на-Дону, 344002, Российская Федерация

e-mail: egokzhaeva@mail.ru

DATA ABouT THE AUTHOR

Gokzhaeva elena Borisovna, Doctor of Economics

Rostov State University of Economics

69, B. Sadovaya st., Rostov-on-Don, Rostovskaya area, 344002, Russian Federation

e-mail: egokzhaeva@mail.ru