Institutional aspects of EU-Russia Energy Cooperation (an overview of challenges and issues to be addressed) Michael I. S A V V A Deputy Director Department of Economic Cooperation Ministry of Foreign Affairs Russian Federation

State of play  The EU-Russia energy cooperation is doing well - Russian Exports of oil and gas have reached quite impressive figures  Cooperation is facing new challenges, particularly in Legal Capacity building - Negotiations on a number of important bilateral documents, referring to the energy cooperation, remind a stalemate situation

Success stories and valuable assets  EU-Russia Partnership and Cooperation Agreement - signed on (Corfu Island); expired on ; it is prolonged on a year by year basis according to the relevant provision of the Agreement  Draft EU-Russia Basic Agreement (intended to replace the expired PSA), negotiations started in 2008  Set of bilateral agreements on energy cooperation between Russia and EU member-countries

Projects jammed in the pipeline  Transit Protocol (within the Energy Charter process) - negotiations started in 2000; never completed; as a result Russia officially informed the Depository on that it would not become a Party to the Energy Charter Treaty, signed in December 1994  Draft Convention on Global Energy Security  Draft EU-Russia Agreement on joint functioning of the United Electric Energy System of Russia and Energy Systems of Estonia, Latvia and Lithuania in synchronous mode.  Draft EU-Russia Agreement on the implementation of international infrastructure projects intended for energy transportation

ENERGY SECURITY  No generally recognized definition, so far (What is that?) Was ist das?

Supply and Demand equation  Consuming countries : Energy security = Security of supply unimpeded access to natural resources and uninterrupted supply of energy at a low price unimpeded access to natural resources and uninterrupted supply of energy at a low price  Producing countries : Energy security = Security of demand sustainable demand and nondiscriminatory access to markets in order to sell the energy at a competitive price sustainable demand and nondiscriminatory access to markets in order to sell the energy at a competitive price

Natural Gas Pipelines of the Former Soviet Union CENTRE for GLOBAL ENERGY STUDIES 17 Knightsbridge, London SW1X 7LY, UK Tel: +44 (0) Fax: +44 (0) Total capacity km Equator length ,7 km

Merits and Benefits of energy cooperation  Russian exporters are making good money on the EU market  Triple benefit effect for the EU: - It gets energy resources, which are much needed to sustain its economic growth on a long term basis - The supply of Russian natural gas is supportive to the EU goals on reduction of greenhouse emissions - Money spent on energy products from Russia magically returns back to EU countries in form of Russian payments for equipment, goods and services

Caspian hydrocarbons as a major option for the diversification of energy supply … or why Russia is so important for the energy supply of the EU

Oil Production ofAzerbaijan and Kazakhstan (mln tons per year) Sources: International Energy Agency (IEA) Oil Information, 2011

Sources: International Energy Agency (IEA) Oil Information, 2012 Oil Production Azerbaijan, Kazakhstan and Russia (mln tons per year)

Sources: International Energy Agency (IEA) Oil Information, 2012 Oil Production Azerbaijan, Kazakhstan, Russia and Saudi Arabia (mln tons per year)

Sources: International Energy Agency (IEA) Gas Information, 2012 State Statistics Agencies of Azerbaijan, Kazakhstan and Russia Gas Production (bln cub m) of Azerbaijan, Kazakhstan, Turkmenistan and Russia

Try to bypass it …

ALL WE NEED IS … AN INTERFACE The first US-Soviet joint space flight APOLLO-SOYZ took place on 15 July 1975

The basic importance of sovereign equality  In particular, sovereign equality includes the following elements:  (a) States are judicially equal;  (b) Each State has the right freely to choose and develop its political, social, economic and cultural systems;  Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in accordance with the Charter of the United Nations, G.A. res. 2625, Annex, 25 UN GAOR, Supp. (No. 28), U.N. Doc. A/5217 at 121 (1970).

CONCLUSIONS  Cooperation with Russia will be crucial for the energy security, economic growth and prosperity of the EU  The EU market will remain of strategic importance for Russia in the foreseeable future  Therefore, the EU and Russia are strongly motivated to further promote the energy cooperation  A new Institutional Interface in the form of an Agreement (or a set of agreements) is in great demand to grant non discriminatory access to markets, facilitate flow of capitals and protection of investments in energy assets  The principles of equal rights and mutual advantage shall be regarded as the basis for the Institutional Capacity Building in this area  Long term contracts and their essential provisions, particularly the “ take or pay ” rule, remain crucial for the reliable energy supply, as well as for a fair share of risks and benefits between producers and consumers of energy resources.

Спасибо! Thank you!