Energy Security in Central and Eastern Europe and the Operations of Russian State-Owned Energy Enterprises Martin Jirušek and Tomáš Vlček with Hedvika Koďousková, Roger W. Robinson, Jr., Anna Leshchenko, Filip Černoch, Lukáš Lehotský, Veronika Zapletalová Masaryk University EnergySecurityin Central and Eastern Europe and the Operations ofRussian State-Owned Energy Enterprises MARTIN JIRUŠEK AND TOMÁŠ VLČEK with HEDVIKA KOĎOUSKOVÁ,ROGER W. ROBINSON,JR., ANNA LESHCHENKO,FILIP ČERNOCH,LUKÁŠ LEHOTSKÝ, VERONIKA ZAPLETALOVÁ Masaryk University Brno 2015 Authors: Mgr. Martin Jirušek (chapters 1, 3, 5.3, 5.4, 5.9, 5.11, 6) PhDr. Tomáš Vlček, Ph.D. (chapters 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.14) Mgr. Hedvika Koďousková, Ph.D. (chapters 4.13, 4.14, 5.14, 5.15) Roger W. Robinson, Jr. (chapters 2, 6) Mgr. Anna Leshchenko, Ph.D. (chapters 5.2, 5.13) Mgr. Filip Černoch, Ph.D. (chapter 5.1) Mgr. Lukáš Lehotský (chapters 5.5, 5.6, 5.12) Mgr. et Mgr. Veronika Zapletalová (chapters 5.7, 5.8, 5.10) Contacts: Mgr. Martin Jirušek ([email protected]) PhDr. Tomáš Vlček, Ph.D. ([email protected]) Reviewed by Ing. Bc. Jiří Martinec, Ph.D. All rights reserved. No part of this e-book may be reproduced or transmitted in any form or by any means without prior written permission of copyright administrator which can be contacted at Masaryk University Press, Žerotínovo náměstí 9, 601 77 Brno. © 2015 Martin Jirušek, Tomáš Vlček, Hedvika Koďousková, Roger W. Robinson, Jr., Anna Leshchenko, Filip Černoch, Lukáš Lehotský, Veronika Zapletalová © 2015 Masarykova univerzita ISBN 978-80-210-8048-5. DOI: 10.5817/CZ.MUNI.M210-8048-2015 Acknowledgements The authors would like to thank all those who contributed to the research. Especially all the people in state administration, industry and academy in Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia, Ukraine, who, though they did not want their names to be mentioned or could not be mentioned, with great willingness answered our numerous questions during our field trips in the recent years. The authors would also like to thank the staff of the Prague Security Studies Institute and RWR Advisory Group, LLC for close cooperation during the course of writing this study and for the opportunity to use IntelTrak, analytic tool without which the study would not be possible to realize. Content Content.............................................................................................4 List ofTables.................................................................................. 13 Foreword........................................................................................ 1 7 1. Introduction...............................................................................19 2. Strategic Operations ofRussian State-Owned Energy Enterprises........................................................................ 24 2.1 Commercial Versus Strategic....................................................... 24 2.2 Economic Backdrop.................................................................... 25 2.3 The Strategic Dimensions of Russian Energy SOEs...................26 2.4 Specific Strategic Transactions/Projects.......................................31 2.4.1 Rosatom....................................................................................31 2.4.2 Gazprom...................................................................................35 2.5 Conclusion...................................................................................45 2.6 Sources.........................................................................................48 5 ENERGY SECURITY IN CEE AND THE OPERATIONS OF RUSSIAN STATE-OWNED ENERGY ENTERPRISES 3. Research Methodology.............................................................49 3.1 Introduction.................................................................................49 3.2 Model for Assessment of theNuclear Sector................................52 3.3 Theoretical Basis of theModel for Assessing the Gas Sector.......57 3.3.1 Realist Tradition of Thinking as a Basis for *the Assessment Model in Gas Sector..........................................................................57 3.4 Theoretical model for assessing natural gas sector....................... 67 3.5 Sources.........................................................................................70 4. Sector ofNuclear Energyin Central and Eastern Europe.......73 4.1 Country Case Study:Belarus................................................... 74 4.1.1 Introduction..............................................................................74 4.1.2 New Units and Financing of the Nuclear Power Plant.............77 4.1.3 The Front End of the Nuclear Fuel Cycle................................ 80 4.1.4 The Service Part of the Nuclear Fuel Cycle..............................80 4.1.5 The Back End of the Nuclear Fuel Cycle................................. 81 4.1.6 Sources......................................................................................83 4.2 Country Case Study:Bulgaria................................................. 86 4.2.1 Introduction..............................................................................86 4.2.2 New Units and Financing of the Nuclear Power Plant.............90 4.2.3 The Front End of the Nuclear Fuel Cycle................................ 94 4.2.4 The Service Part of the Nuclear Fuel Cycle..............................96 4.2.5 The Back End of the Nuclear Fuel Cycle................................. 98 4.2.6 Summary................................................................................. 100 4.2.7 Sources.................................................................................... 102 CONTENT 6 4.3 Country Case Study:Czech Republic....................................106 4.3.1 Introduction.............................................................................106 4.3.2 New Units and Financing of the Nuclear Power Plant............113 4.3.3 The Front End of the Nuclear Fuel Cycle...............................116 4.3.4 The Service Part of the Nuclear Fuel Cycle.............................120 4.3.5 The Back End of the Nuclear Fuel Cycle................................123 4.3.6 Sources.................................................................................... 127 4.4 Country Case Study:Estonia................................................. 131 4.4.1 Introduction.............................................................................131 4.4.2 New Units and Financing of the Nuclear Power Plant............134 4.4.3 The Front End of the Nuclear Fuel Cycle...............................134 4.4.4 The Service Part of the Nuclear Fuel Cycle.............................135 4.4.5 The Back End of the Nuclear Fuel Cycle................................135 4.4.6 Sources.................................................................................... 138 4.5 Country Case Study: Hungary..............................................141 4.5.1 Introduction.............................................................................141 4.5.2 New Units and Financing of the Nuclear Power Plant............145 4.5.3 The Front End of the Nuclear Fuel Cycle...............................150 4.5.4 The Service Part of the Nuclear Fuel Cycle.............................151 4.5.5 The Back End of the Nuclear Fuel Cycle................................154 4.5.6 Sources.................................................................................... 158 4.6 Country Case Study: Latvia.................................................. 163 4.6.1 Introduction.............................................................................163 4.6.2 New Units and Financing of the Nuclear Power Plant............165 7 ENERGY SECURITY IN CEE AND THE OPERATIONS OF RUSSIAN STATE-OWNED ENERGY ENTERPRISES 4.6.3 The Front End of the Nuclear Fuel Cycle...............................166 4.6.4 The Service Part of the Nuclear Fuel Cycle.............................166 4.6.5 The Back End of the Nuclear Fuel Cycle................................167 4.6.6 Sources.................................................................................... 169 4.7 Country Case Study: Lithuania.............................................170 4.7.1 Introduction.............................................................................170 4.7.2 New Units and Financing of the Nuclear Power Plant............173 4.7.3 The Front End of the Nuclear Fuel Cycle...............................183 4.7.4 The Service Part of the Nuclear Fuel Cycle.............................183 4.7.5 The Back End of the Nuclear Fuel Cycle................................186 4.7.6 Sources.................................................................................... 189 4.8 Country Case Study: Moldova..............................................196 4.8.1 Introduction.............................................................................196 4.8.2 New Units and Financing of the Nuclear Plant.......................201 4.8.3 The Front End of the Nuclear Fuel Cycle...............................202 4.8.4 The Service Part of the Nuclear Fuel Cycle.............................202 4.8.5 The Back End of the Nuclear Fuel Cycle................................203 4.8.6 Sources.................................................................................... 204 4.9 Country Case Study: Poland.................................................206