Once again Russia and the Ukraine are at it over the issue of the latter’s unpaid gas bills. Out of the 390 cubic metres of Russian natural gas that go through Ukrainian territory each day, 300 are bound to be transited to other European countries. While Gazprom, Russia’s natural gas monopoly, has announced it has limited its deliveries to these 300, final destinations, among them Bulgaria and Romania, have been experiencing a drop in deliveries, something which has raised suspicions that Ukraine is siphoning off gas meant for transit rather than its own consumption. Ukraine on the other hand is claiming this is happening for technical reasons. Since siphoning off is what is generally assumed to have happened the last time we saw a similar row, it is difficult to make this claim and still expect people to believe you. Nervousness is about and the European Union’s Czech presidency has demanded the conflict be resolved quickly so as not to jeopardise deliveries and is also attempting to mediate.

This situation has several interesting features to it. First of all, this is not merely a show-off of Russian power (even though there is an element of it in there); there is no doubt that Ukraine has been receiving subsidised gas all this time and there has for several years been a genuine eagerness on the part of Russia to receive prices closer to the correct market value and this has not only affected Ukraine but also Belarus, which has had a far cosier relationship to its neighbour these past years, to no avail. Secondly, it is likely to have an effect on Ukraine’s relationship to the European Union. If, yet again, Ukraine is indeed siphoning off gas that is meant for EU countries, irritation is likely to rise. It might increase support for the new Russian pipeline running across the Baltic Sea, circumventing the most troublesome transit countries, and thus in the long run make Ukraine less able to rely on the EU to exert pressure on its main energy supplier. Russia could easily live with such an outcome. Ukraine on the other hand might have to enjoy a somewhat colder day after tomorrow. There is after all no coincidence that these conflicts have a tendency to erupt during winter time.

e-Governance in India has both positive and negative elements.

First the positive ones

• India has the largest number of “award winning” eGovernance projects (Bhoomi in Karnataka, Dhrishti in Rajasthan and e-Sewa in Andhra Pradesh, for example)
• Indian projects have seen many innovations
• There are projects like MCA21 (where half a million companies file their quarterly returns online), Courts computerization (judgements becoming available on the Net within 24 hours) etc.
• Under National e-Governance Project (NeGP) Government of India has committed more than Rs 20,000 Crores
• Under NeGP there is a proposal to set up 100,000 kiosks under Public Private Partnership

The negative ones

• There is more emphasis on spending money than on creating value
• The emphasis is on “e” (computerization) and NOT on governance
• Too many “pilots” (what Prof Keniston of MIT terms as “graveyard of failed projects”)

(Keynote address in e-Governance Conference, Dayanand Sagar Institutions, Bangalore, November 27, 2008)

I got an opportunity to speak at Regional Round Table on Implementing NeGP, September 9-11, 2008, Guwahati, Assam. This was organized by DIT, Govt. of India and the NISG. I presented on the topic “Insight into Gateway project” on the last day of the summit. It was nice experience addressing the participants from the North-East states.  I explained all about the Gatewaty project. There was good feedback. I came to know their concern about how the state gateways will fit to fulfill their requirements and what is the roadmap.

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There is intensive debating regarding the European Union’s relationship to Russia within the energy sphere at the moment. It has been specially visible with regards to the North European Gas Pipeline (NEGP) that Gazprom, the Russian state gas monopoly, wants to put on the bottom of the Baltic Sea. In Sweden the discussion has been somewhat heated, because the pipeline would pass within the boundaries of Sweden’s economic zone. Many people obviously do not feel at ease with this, since they fear increased military activity on behalf of Russia in the region. Environmental issues have also been raised, even though this is most likely an attempt to simply hide the fact that what lies behind all of this remains the angst with which these people look at Russia. Putting a pipeline on the bottom of the sea without setting off any disposed of chemical weapons from World War II should not constitute a severe difficulty; after all it is not the first thing put there. Also, an increased military presence in the Baltic Sea might look threatening, but is not the most serious of scenarios in this case.

What should be, and to some extent is, of concern in this matter is the subject of energy security. The question is not whether the European Union will grow dependent on Russian gas. It already is. In 2005 the Russian share of EU gas imports was 50%. (Larsson, Robert. Sweden and the NEGP – A Pilot Study of the North European Gas Pipeline and Sweden’s Dependence on Russian Energy. FOI 2006) That is obviously a dependency too large to be ignored. At the same time, and this too is of vital importance for understanding why there even is an NEGP, the EU share of Russian gas exports amounts to 60% (Larsson, 2006).

The term energy security has a dual meaning in Russia- EU relations. In the EU it refers to the access of a stable flow of energy from a reliable provider. For Russia it means to be able to control its own flow of exports. These interpretations, as we shall see, are highly correlated and at the moment neither is fulfilled to an extent that would satisfy both parties. First of all, Russia prefers to negotiate on a bilateral basis in these questions, i.e. not with the EU as a whole, but with the recipient buyers, e.g. Germany, directly. So far, Germany, which is a huge consumer of Russian gas, has been fine with this. Russian gas exports today go through the Ukraine, Belarus and Poland. Not only are these countries able to charge transfer fees for having the pipelines run through their territories, they also receive their own imports through the same system. When arguments have arisen about the heavily subsidized gas tariffs that CIS countries, such as Ukraine and Belarus, pay for the gas they use themselves, Russia has not long ago on two separate occasions responded by turning off the tap. It is not the same as shutting down Germany, because gas still flows there, but there is a very noticeable effect there as well, as could be witnessed during the Ukraine/Russia gas crisis in 2005/06. When such an important customer like Germany is affected, it serves to tarnish the reputation of Russia as a supplier. Energy security is nowhere.

Therefore, Russia is building the NEGP, thus bypassing the troublesome countries, which, supposedly, will give both Russia and Germany (other countries too would benefit, of course) energy security. At least one would think. However, there are other factors involved that are cause for alarm. Firstly, it is about the old transit countries, since Russia would then be able to put pressure on them without jeopardising the relationship with bigger and more important customers. Also, it could punish these larger countries without having to involve the others should they wish so. Of course Russia claims it would never do the latter and while they do they like to point to the fact that the Soviet Union proved to be a reliable energy supplier for Western Europe throughout the cold war. The situation now is, however, somewhat different for this to have any bearing on what we are discussing here. First of all, energy exports were a vital source of foreign currency, which the Soviet Union was constantly lacking but which Russia could not care less about at the moment. Also, modern Russia has on several occasions proven that, if deemed necessary, it does not hesitate to use the energy weapon against countries that have in some way displeased it.

But would Russia really use these methods against the EU? Probably, if it wanted to. Russia is fairly good at creating wedges and Poland, heavily dependent on Russian gas, has continuously not only resisted Russian pressure but also offered one or two provocations of its own. Now one might comment that still Russia has not punished Poland using the energy weapon (it has, however, used other types of pressure such as import restrictions on Polish goods), which might make it tempting to believe that these dangers are exaggerated. Not necessarily, since Russia might have resisted out of a concern that such actions would hurt what it believes to be more important EU customers. With the NEGP it would not have to worry. The interesting part is how these big clients would react to a Russian threat against Poland (or why not one of the Baltic countries which too have strained relations with Russia) that does not affect them directly. Objecting might cause Russia to turn part of its anger towards these countries as well. That is the problem of being dependent on someone. Energy security for Russia, but not for the EU.

There is absolutely nothing wrong with building the NEGP. The pipeline itself does not constitute a major security issue. The problem lies within the lack of diversification when it comes to securing the energy needs of the EU. More domestic energy production combined with a larger share of energy imports from other countries than Russia could solve this problem. Building the NEGP would also serve the purpose of strengthening the ties between Russia and the EU. As stated earlier, half of EU imports of gas come from Russia, while 60 % of Russian gas exports go to the EU. It is not only Europe that is dependent on Russia. Russia today lacks the infrastructure to let the gas flow in the other direction; China would then be the most likely recipient. But even though Russia has hinted that it might reconsider the EU as its primary export market for gas in the future, it also sees China as its main competitor in many ways. China becoming richer and more powerful might not be stoppable, but it is unlikely that Russia will go out of its way to offer a helping hand in this respect. Russia wants to be an energy supplier to the EU, it just should not be an almighty one that does not need to consider the consequences of how it treats its customers. The European Union could avoid being solely dependent on an energy supplier that on numerous occasion has proven unreliable. That would mean energy security for everyone. 

German cancelor, Angela Merkel, has recently offered Poland political guarantees regarding gas supply security in connection with the North European gas pipeline project (Nord Stream). In her opinion there are some companies that would be able to build a gas transportation infrastructure that would allow to supply Poland with gas from Germany. This gas could come either from the North European gas pipeline, i.e. Russia, or Wilhelmshaven LNG terminal.

Even if construction of additional gas interconnectors between Germany and Poland would be beneficial for both countries as they’d allow exchanging gas in situation of supply disruption or temporary surplus in one of the countries, what is the reason for transporting Russian gas to Germany and then sending it back to Poland? Even more challenging would be transporting this gas to the Baltic States that, as recent events demonstrated, might also be affected by disruption of gas supply from Russia.

There is a simpler alternative to Ms. Merkel’s proposition – the Amber pipeline project. This pipeline could deliver Russian gas to Germany through stable countries, being members of the EU, such as Latvia, Lithuania and Poland. A branch to Estonia might also be build. All those countries are reluctant to the North European pipeline project, since it creates a risk they might be cut off from the deliveries from Russia when it enters a dispute with Belarus or Ukraine again from which countries they currently get their supplies. In addition, the Amber pipeline should be significantly cheaper than the undersea North European pipeline (Nord Stream).

It’s clear that Ms. Merkel supports the North European gas pipeline project (Nord Stream) in which major German energy companies (E.On, BASF) are involved. Also, the construction of the proposed transportation infrastructure from Germany to Poland would mean additional revenues for German companies. They would also benefit from the transit fees when the Russian gas would be transported back East. However, this does not look like an atractive proposal for Poland and the Baltic States.

See also:

links about the North European gas pipeline (NEGP, Nord Stream) on del.icio.us

Just two minutes before the deadline, at 23:58 Moscow time on December 31^st 2006, Belarus and Gazprom signed the new gas contract.

After signing the agreement with Belarus, Gazprom can focus on its two main projects in this region of Europe – construction of the Nord Stream and formation of the consortium that would control the Ukrainian gas transit system.

Parallel to the gas issue, the Russians and Belarusians were discussing the topic of crude oil taxation. Judging on the basis of money involved, the oil dispute is more important for Belarus than the gas one. It is possible that Belarusian government decided to settle the later to allow for more constructive discussions about the former.

The history of energy relations between Belarus and Russia suggests that the gas agreement signed just two minutes before the January 1^st, 2007 deadline does not necessarily finish the process initiated in April 2002, when two countries concluded an intergovernmental accord about the formation of the gas joint-venture. Both parties refrained from the direct confrontation and reached an agreement that seems like a temporary solution at best. Russians got closer to the control of the Belarusian gas industry and won time to purse other important objectives in the region while Belarusians decided it was better to back down a little and compensate the obvious loses in the gas field by keeping some revenues from the favorably taxed re-export of the oil products. Most probably, the parties will reach later an agreement about the tax arrangement that will reduce but not completely eliminate Belarusian revenues. However, if Russians will continue pushing for more, the conflict may heat up again.

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  The PDF version of the document is available here (185kB).

The success of the currently being prepared gas diversification projects for Poland hinges on the cooperation with foreign partners – mainly energy companies from the Central European region as well as with the EU institutions. On the other hand, forced diversification may result in the construction of the expensive and underutilized infrastructure. And even if the additional channels for the import of gas to Poland are opened, it’s close to impossible to reduce the share of the Russian gas in the Polish gas balance to under 50% – at least till the Jamal long-term gas delivery contract is in force, and that is planned till 2022. In addition, it is not clear, what are the intentions of the majority shareholder of the Polish Gas Company (PGNiG) – the Polish treasury – for the future of the company. Some of the recent comments from the government officials may suggest a break up of the company what would result in its decline or would lead to auctioning of the distribution companies currently constituting the group.

(summary of the analysis published in the ReAKKT Newsletter 2006-06-14; complete English version available on request – mjaniec(at)reakkt.com)

Właśnie ukazał się nowy ReAKKT Newsletter 2006-06-14.

Znajduje się w nim jedna analiza: "Scenariusze dla dywersyfikacji gazu i PGNiG"

Sukces przygotowywanych projektów mających na celu dywersyfikację dostaw gazu do Polski zależy od współpracy międzynarodowej – z koncernami z regionu oraz instytucjami Unii Europejskiej. Dywersyfikacja na siłę może doprowadzić do budowy kosztownej i niewykorzystywanej infrastruktury. Pomimo stworzenia dodatkowych kanałów importu gazu do Polski, zmniejszenie udziału rosyjskiego gazu w krajowym bilansie energetycznym poniżej 50% do 2022 roku włącznie, tj. w okresie obowiązywania tzw. kontraktu jamalskiego, może nie być możliwe. Równocześnie niejasne są zamiary większościowego akcjonariusza PGNiG – Skarbu Państwa – co do przyszłości spółki. Niektóre wypowiedzi mogą sugerować „rozbiór” Grupy, co doprowadziłoby do jej marginalizacji albo sprzedaży spółek dystrybucyjnych inwestorom zagranicznym.

Pełna wersja w formacie PDF jest dostępna tutaj.

Jak wynika z głębszego przeglądu materiałów archiwalnych, nie tylko polskiemu Ministrowi Obrony Narodowej, Radkowi Sikorskiemu, Rosyjsko-Niemiecki projekt budowy Rurociągu Północnoeuropejskiego (NEGP) kojarzy się z paktem Ribbentrop-Mołotow.

O podobnych skojarzeniach w państwach bałtyckich w związku z tym projektem pisały już we wrześniu 2005 r. Novosti:

Polski Prezydent Aleksander Kwaśniewski przedstawił umowę dot. NEGP jako Pakt Schroeder-Putin, co wywołało przewidywalne skojarzenia w Państwach Bałtyckich, gdzie umowa jest postrzegana jako gazowa wersja Paktu Mołotow-Ribbentrop. "Z niemieckim poparciem, Rosja może kontrolować rozległe terytorium i dzielić je według własnego uznania. Zdając sobie sprawę z tego, o czym myślą rosyjscy planiści polityczni, nikt nie może mieć wątpliwości, że tak zwana unia gospodarcza między Rosją i Niemcami będzie sojuszem politycznym" – stwierdził Vytautas Landsbergis, członek Parlamentu Europejskiego, były przewodniczący Litewskiego parlamentu.

Skąd zatem tyle hałasu o wypowiedź polskiego ministra z 30. kwietnia 2006 r.?