Pipeline Policy
Jan Osička
Pipeline Policy
 European gas network 1960 - 1990
 Pipeline policy: some thoughts on definition
 Case Study: Russia‘s pipeline strategy
Discussion topics
 Nabucco and South Stream: competent or
compliant?
 Diversification of routes or diversification of
sources?
 What impact would the new major projects have
onV4 countries?
 Iran as a gas supplier to the EU
 Turkey‘s energy strategy
 Russia as an energy bully
European gas network
 1920s – 1930s: first experiments with natural gas as a
substitute for manufactured gas in Europe
 WW II: scarce oil, coal locally unavailable (Romania,
Austria, n. Italy, sw. France, e. Poland)
 1960s: before Dutch, Algerian, Ukrainian, Siberian,
Central Asian discoveries the markets were scattered
and localized.
 1970s: rapid growth in gas use and network
development
 1965: EU consumption of 39 bcm
 1975: EU consumption of 216 bcm
 wider portfolio of customers (fuel, feedstock)
European gas network
Formative years of transnational links
 1966: Groningen – Germany, Belgium (1967)
 1967: Groningen – Belgium,
Ukraine – Czechoslovakia
(1944: Ukraine – Poland)
 Gas interaction between policaly similar
countries
 Netherlands ,W. Germany, Belgium, France (NATO,
ECSC, EURATOM)
 SU, Czechoslovakia, Poland (COMECON)
European gas network
Formative years of transnational links
 Late 1960s: gas emerges as an „European issue“
 Competition between Dutch, Libyan and Algerian gas
 Two pan-European pipelines planned
 Algeria – Spain – France – Britain
 Algeria – Italy
 First LNG projects on stream (Britain, France, Italy,
Yugoslavia, Spain)
 The SU steps in…
European gas network
Soviet gas inWestern Europe
 Initiator: Austria
 No coal
 A forerunner of European gas industry
 ÖMV struggling to meet demand
 The Brotherhood ppl passing just 16 km away from
Austrian network
 Established cooperation with CS over joint
development of border-situated large gas field
 The SU lacks spare export capacity
European gas network
Soviet gas inWestern Europe
 1965: Italian ENI starts negotiations over
development of recently discoveredW. Siberian
fields
 Italy/ENI
 Best relations with the SU among the W. European
companies
 Oil importer and exporter of oil industry equipment to the
communist block
 Strong Italian CP seeking stronger relations with the SU
 Trans-European Pipeline project (SU-Hungary-
Yugoslavia-Italy)
European gas network
Soviet gas inWestern Europe
 1965: Italian ENI starts negotiations over
development of recently discoveredW. Siberian
fields
 Italy/ENI
 Best relations with the SU among the W. European
companies
 Oil importer and exporter of oil industry equipment to the
communist block
 Strong Italian CP seeking stronger relations with the SU
 Trans-European Pipeline project (SU-Hungary-
Yugoslavia-Italy)
European gas network
Soviet gas inWestern Europe
 Austrian reaction: new series of negotiation with
the SU.
 Austrian steel companyVÖEST will provide the SU
with large-diameter steel pipes in exchange for rerouting
the pipeline
 Germany (the supplier of the pipes) decided not to
back up the plan, despite strong Bavarian support
 The Soviets finally agree after Austria getting closer to
EEC.
European gas network
Soviet gas inWestern Europe
 1968: Soviet supplies to Austria come on stream
 1970: agreements with Italy and Germany (Ost
Politik)
 1973: First Soviet deliveries to Germany, GDR also
linked to the system
 1974: First Soviet deliveries to France
 All through the same pipeline
European gas network
Changes of 1970s
 Reconsideration of energy policies
 environmental opposition to coal
 Economical opposition to nuclear
 Political opposition to oil
 Reconsideration of Dutch export policy
 North Sea deliveries on stream
European gas network
Changes of 1970s
 With new suppliers the gas markets became
regionalized and possibly globalized
 Gas-to-gas competition
 Consumer competition (LNG)
 1970s/1980s:
 Iran revolution
 Deteriorating East-West relations (Afghanistan,
Reagan)
Pipeline policy definition
 Different actors , different perspectives, different
motives
 Characteristic features:
 Yes/no nature of the decision making
 Long-term planning and consequences
 Both economic and politic factors
Pipeline policy definition
Producing country:
Economy-based political decision on a connection
with a consuming state(s).
- Supplies to GDR through CS (avoiding transit)
Pipeline policy definition
Transit country:
Economy-based political decision on whether to
become a transit country or not.
- Austria x Azerbaijan, Pakistan
Pipeline policy definition
Consuming country:
Economy-based political decision on whether to
connect itself with a particular supplier.
- Austria, the Czech Republic, the Nabucco states x
Germany, Poland,
Pipeline policy definition
Overall, pipeline policy is a degree to which
economy matters in the decision making process,
ranging from purely economicaly motivated
pipelines such as Groningen – Germany to purely
politicaly driven projects such as CS-Austria
connection.
Case study: Russia‘s pipeline
strategy
Case study: Russia‘s pipeline
strategy
Case study: Russia‘s pipeline
strategy
Case study: Russia‘s pipeline
strategy
Case study: Russia‘s pipeline
strategy
Discussion topics
 Nabucco and South Stream: competent or
compliant?
 Diversification of routes or diversification of
sources?
 What impact would the new major projects have
onV4 countries?
 Iran as a gas supplier to the EU
 Turkey‘s energy strategy
 Russia as an energy bully