German-Russian Natural Gas Relations in the Context of a Common European Energy Policy

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German-Russian Natural Gas Relations in the Context of a Common European Energy Policy Graduate School of Social Sciences (GSSS) German-Russian natural gas relations in the context of a common European energy policy Thesis to obtain the academic title of Master of Science (MS) in the program Political Science (International Relations) Academic year 2018/2019 Date of submission: June 21st 2019 Author: Caspar M. Henke (12299804) Supervisor: Dr. Mehdi P. Amineh Second Reader: Dr. Henk W. Houweling Research Project: The Political Economy of Energy Abstract This thesis analyses the interwoven commercial and political fabric of German-Russian natural gas relations. A theoretical lens that combines liberalist interdependence theory and the critical theoretical concepts of the state-society complex and social networks against the background of selected energy security dimensions will be employed. It will be argued that in order to assess the prospects for a common European Union energy policy, it is crucial to understand the importance of social forces and external relations shaping the energy policy of EU member states vis-á-vis the Russian Federation. It will be highlighted how the different perceptions of Russian natural gas as a political tool and a commercial commodity have resulted in different actors taking the lead in the natural gas strategies of the European Commission, the Central and Eastern European member states, and Germany. Portraying the Russian state-society complex of natural gas, it will be concluded that the German commercial-led approach is not compatible with a European Union energy policy that responds to the geopolitical threats of Russian gas perceived by other member states. Key words: Natural Gas, Russia, Germany, European Union, State-society complex 2 AcKnowledgements I would like to express my sincere gratitude to my thesis supervisor Dr. Mehdi P. Amineh for his valuable guidance in the writing process of this thesis. I would also like to thank the entire research project for their comments on the research proposal and their companionship throughout the final block of the Master’s programme. Enduring the stress of writing this thesis would not have been possible without the moral support of Karolina, my family, and my friends and colleagues at the University of Amsterdam. 3 Contents MAPS 6 LIST OF TABLES, FIGURES AND MAPS 10 LIST OF ABBREVIATIONS 12 CHAPTER 1: INTRODUCTION 14 1.1. Theoretical Framework 16 1.1.1. Interdependence Theory 16 1.1.2. The concept of the State-Society Complex and Social Networks 19 1.1.3. Energy Security and Diversification 22 1.2. Argumentation and Hypothesis 24 1.3. Data and Methods 26 1.4. Structure of the thesis 27 CHAPTER 2: THE ENERGY SITUATIONS IN THE EU WITH A FOCUS ON RUSSIAN NATURAL GAS IMPORTS 29 2.1. The Energy Situation of the European Union 29 2.2. The Energy Situation of Germany 34 2.3. The Visegrád states 37 2.4. The Baltic States 45 2.5. Conclusion 51 CHAPTER 3: EUROPEAN COMMISSION AND GERMAN ENERGY POLICY AGAINST THE BACKGROUND OF RUSSIAN NATURAL GAS SUPPLY DEPENDENCY 52 3.1. Development of EC energy policy 53 3.1.1. From the European Coal and Steel Community to the Treaty of Lisbon 53 3.1.2. From the Russian-Ukrainian Gas Disputes to the Energy Union 56 3.2. The policy dimensions of the Energy Union 60 3.3. Projects of Common Interest for the diversification of Natural Gas imports 64 4 3.4. Regulations for Natural Gas and Market Competition 70 3.5. The paradox of German energy policy in the EU 73 3.6. Conclusion 79 CHAPTER 4: ACTORS IN THE NEXUS OF NATURAL GAS BETWEEN GERMANY AND RUSSIA 83 4.1. The origins of German-Russian natural gas relations and OstpolitiK 83 4.2. German-Russian natural gas relations after the Cold War 91 4.3. Political Pragmatism in the Merkel era 97 4.4. Economic Actors, Interest Groups and Social Forces in German-Russian Relations 105 4.4.1. The German gas market and Gazprom 106 4.4.2. German-Russian Economy 112 4.4.3. Societal and Political Forces 117 4.5. The Russian state-society complex of natural gas under Putin 122 CHAPTER 5: THE PROSPECTS FOR A COMMON EUROPEAN ENERGY POLICY 129 Trends and further research 136 REFERENCES 138 Primary Sources 138 Secondary Sources 146 5 Maps 40° 50 ° WHITE CENTRAL AND EASTERN EUROPE SEA Arkhangel'sk (Archangel) Oulu I A Umeå N H Trondheim T FINLAND O B F O Lake F Petrozavodsk Onega L Bergen NORWAY Konosha U 60 G 60° ° Tampere Turku Lake Oslo (Åbo) Ladoga L. Beloye Helsinki Åland SWEDEN Is. Gulf of Finland Vologda Stockholm St. Petersburg Tallinn Rybinsk Reservoir Hiiumaa Lake Novgorod Göteborg ESTONIA Peipus A Saaremaa L. Il'men Yaroslavl' Tartu L. Pskov Ålborg E Jönköping Gulf of Pskov RUSSIAN FEDERATION S Riga Gotland Nizhniy DENMARK Novgorod Århus Riga Tver' Liepaja LATVIA Copenhagen C Moscow Malmö I Siauliai Daugavpils T Klaipeda Panevezys L Kalin Vicebsk Ryazan' A ing LITHUANIA B ra d Kaunas Smolensk Tula Hamburg RUSSIAN Rostock FEDERATION Vilnius Barysau Gdansk Elblag Mahilëu Bremen Szczecin Minsk Olsztyn Bryansk Hannover Berlin Bydgoszcz Torun Bialystok BELARUS Orel Poznan´ Baranavicy Babrujsk GERMANY Warsaw Homel' Voronezh Leipzig POLAND Brest Pinsk Kursk Dresden Lódz Radom Wroclaw Lublin 50° Karlovy Opole Kielce Luts'k 50° Vary Prague Rovno Kyiv Zhytomyr Nürnberg Plzen (Pilsen) Kraków Rzeszów Kharkiv CZECHIA L'viv Ceské Brno Ternopil' Poltava München Budejovice Lugansk (Munich) Zilina Ivano- UKRAINE Vinnytsya Kosice Frankivs'k Dnipropetrovs'k Shakhty Linz Vienna SLOVAKIA Donets'k Bratislava Miskolc Chernivtsi Kryvyy Rih Innsbruck AUSTRIA Nyíregyháza Balti Mariupol' Graz Budapest Rostov REP. OF na Donu Baia Mare HUNGARY Debrecen MOLDOVA Mykolayiv Ljubljana Cluj Napoca Chisinau Verona Trieste Bacau Pécs Szeged O Sea of Azov Zagreb d SLOVENIA Arad e ROMANIA s Venice a Kerch Krasnodar Rijeka CROATIA Bologna Osijek Novi Sad Timisoara Sibiu Galati Crimea Novorossiysk Banja Luka SAN Pitesti Ploiesti MARINO BOSNIA Tuzla Sevastopol' A AND Bucharest Florence Belgrade Craiova D HERZEGOVINA Constanta Perugia R Split I Sarajevo A SERBIA T Mostar BLACK SEA ITALY I Nis Pleven C MONTENEGRO Varna Pescara Dubrovnik Rome BULGARIA Podgorica Stara Burgas S Sofia Foggia E Skopje Zagora A Plovdiv Tirana THE FORMER Naples Bari YUGOSLAV REP. OF MACEDONIA ALBANIA Istanbul 40 Thessaloníki Sea of ° Marmara 40° Bursa Ankara TURKEY TYRRHENIAN SEA IONIAN GREECE AEGEAN SEA Balikesir 0 200 400 600 km SEA The boundaries and names shown and the designations used on this map do not imply official endorsement or 20 Izmir 30 0 200 400 mi acceptance by the United Nations. ° ° Map No. 3877 Rev. 8 UNITED NATIONS Department of Field Support MapAugust 2016 I: Political Map of Central and Eastern Europe Geospatial Information Section (formerly Cartographic Section) Source: United Nations Department of Field Support, Cartographic Section 6 Map II: EU member states Source: BBC, online at: https://ichef.bbci.co.uk/news/1024/media/images/70233000/gif/_70233868_eunames.gif, accessed 18.06.2019. 7 Map III: Political Map of the Federal Republic of Germany Source: Encylopædia Britannica 8 Map IV: Political Map of the Russian Federation Source: United Nations Department of Field Support, Cartographic Section 9 List of Tables, Figures and Maps Tables Table 2.6. Gross Inland Consumption and overall Import Dependency of the 37 Visegrád states and the EU28 in 2017 Table 2.8. Gross Inland Consumption and overall Import Dependency of the 45 Baltic States and the EU28 in 2017 Table 4.9. Operators and Shareholders of major gas pipelines in Germany 111 Table 4.10. Imports and Exports between Russia and Germany 2018 112 Figures Figure 2.1. EU28 Total Energy Supply 2017 30 Figure 2.2. Gross Domestic consumption of Natural Gas of EU28 in mtoe/ 31 Russian imports in percent 2006-2016 Figure 2.3. Primary energy consumption and GDP of the EU since 1995 32 Figure 2.5. Total Energy Supply of Germany 2017 34 Figure 2.7. Cross-border natural gas volumes in Central and Eastern Europe 43 2010-2015 in bcm Figure 2.9. Flow map of gas interconnections in Europe 46 Figure 2.10. Primary Energy consumption of the Baltic states 2006-2016 in 48 mtoe Figure 3.5. Architecture of targets and objectives in Germany’s energy 74 concept Figure 3.6. Power Generation from different resources in Germany in TWh 75 Figure 4.1. Development of Soviet natural gas exports to (Western) Germany 88 until reunification as supplied volume in bcm and share (%) of German natural gas imports Figure 4.2. Development of Soviet natural gas exports to Europe between 88 1973 and 1990 Figure 4.3. German Natural Gas Imports in TJ by country of origin 2000-2015 99 Figure 4.4. Natural Gas imports in TJ and average annual import price at the 100 German border in €/TJ Figure 4.5. German Natural Gas Imports and Exports in TWh 106 Figure 4.7. Gas distributors in the German market by length of pipeline 108 network in km Figure 4.11. German Exports to Russia: Six most valuable groups of goods in 114 Thousands of US$ Figure 4.12. German Imports from Russia: Five most valuable groups of goods 115 in Thousands of US$ Figure 4.13. Shareholder structure of Gazprom OAO 2019 123 10 Figure 4.14. Model of Gazprom and the Russian state in the Russian state- 127 society complex Maps Map 2.4. Major Gas infrastructure in Europe 2018 33 Map 3.1. Projects of Common Interest: BEMIP Gas 65 Map 3.2. Projects of Common Interest: NSI East Gas 67 Map 3.3. Projects of Common Interest: Southern Gas Corridor 68 Map 3.4. Pipelines in the Greek section of the Southern Gas Corridor 69 Map 4.6.
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